ACIT, Kota V. CHAMBAL FERTILISERS & CHEMICALS LIMITED, Kota

ITA 334/JPR/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2204 (ITAT-JAIPUR)
• Duration Of Justice: 8 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 02-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VARINDAR MEHTA
• Keywords: Corroborative evidences
• Section: 143(3)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH FOT; IKWY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA -@ ITA. NO. 334/JP/2017 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2008-09 ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-2, KOTA CUKE VS. M/S CHAMBAL FERTILIZERS & CHEMICALS LTD., GADEPAN, KOTA LFKK;H YS[KK LA -@THVKBZVKJ LA -@ PAN/GIR NO.: AAACC9762A VIHYKFKHZ@ AP PELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS @ REVENUE BY : SHRI VARINDAR MEHTA (CIT) FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI PARSI PARDIWALA SHRI M. L. PATODI (ADV.) MRS. RITU G.P.DAS (CA) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 03/11/2017 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 18/01/2018 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A), KOTA DATED 28.02.2017 FOR ASSESSMENT YEAR 2008-09 WHEREIN THE REVENUE HAS CHALLENGED DELETION OF PENALTY OF RS. 1,23,23,258/- IMPOSED U/S 271(1)(C) OF THE ACT. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSMENT PROCEEDINGS U/S 143(3) WERE COMPLETED ON 31.12.2010 WHEREIN AN ITA NO. 334/JP/2017 ACIT, KOTA VS. M/S CHAMBAL FERTILISERS & CHEMICALS LTD., 2 ADDITION OF RS. 61,06,26,670/- WAS MADE BY THE ASSESSING OFFICER. SEPARATELY, PENALTY PROCEEDINGS WERE INITIATED U/S 271(1)(C) OF THE ACT. 3. ON APPEAL, THE LD. CIT(A) DELETED THE ADDITION TO THE EXTENT OF RS. 57,15,59,130/-. THE ADDITIONS WHICH WAS SUSTAINED BY THE LD. CIT(A) RELATES TO CLAIM U/S 80IA IN RESPECT OF POWER PLANT AMOUNTING TO RS. 3,62,55,540/- AND DISALLOWANCE OF INTEREST IN RELATION TO INVESTMENT MADE WITH THE SUBSIDIARY COMPANIES AMOUNTING TO RS. 28,12,000/-. 4. SUBSEQUENT TO RECEIPT OF THE LD. CIT(A) ORDER DATED 30.03.2012, A FRESH SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE ON 07.01.2014. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE, THE AO LEVIED PENALTY IN RESPECT OF THE ADDITIONS SO SUSTAINED BY THE LD. CIT(A) HOLDING THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME. THE PENALTY @ 100% OF TAX SOUGHT TO BE EVADED DETERMINED AT RS. 1,23,23,258/- WAS ACCORDINGLY LEVIED BY THE ASSESSING OFFICER. 5. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD CIT(A) AND DRAWN REFERENCE OF THE LD. CIT(A) TO THE ORDER PASSED BY THE CO-ORDINATE BENCH IN ITA NO. 459 & 558/JP/2012 DATED 28.10.2016 IN THE QUANTUM PROCEEDINGS WHEREIN THE MATTER IN RELATION TO BOTH OF THE ABOVE ADDITIONS, SO SUSTAINED BY THE LD. CIT(A), AND THE BASIS FOR LEVY OF PENALTY BY THE AO, WAS SET ASIDE TO THE FILE OF THE ASSESSING OFFICER TO EXAMINE THE MATTER OF AFRESH. 6. THE LD. CIT(A) REFERRED TO THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF K.C. BUILDERS VS. ASSISTANT COMMISSIONER OF INCOME-TAX 135 TAXMAN 461 (SC) WHEREIN IT WAS HELD THAT WHERE THE ITA NO. 334/JP/2017 ACIT, KOTA VS. M/S CHAMBAL FERTILISERS & CHEMICALS LTD., 3 ASSESSMENT ORDER OR REASSESSMENT ORDER ON BASIS OF WHICH PENALTY HAS BEEN LEVIED ON THE ASSESSEE ITSELF BEEN FINALLY SET ASIDE OR CANCELED BY THE TRIBUNAL, PENALTY CANNOT STAND BY ITSELF AND THE SAME IS LIABLE TO BE CANCELLED. THE LD. CIT(A) HAS ALSO REFERRED TO THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN CASE OF CIT VS. ROY DURLABHJI 211 ITR 470 WHEREIN IT WAS HELD THAT WHEREIN QUANTUM APPEAL, ADDITION HAD ALREADY BEEN DELETED, NO PENALTY U/S 271(1)(C) COULD BE LEVIED. 7. TAKING INTO CONSIDERATION THE ABOVE REFERRED LEGAL AUTHORITIES, THE LD. CIT(A) HELD THAT THE LIMITED ISSUE REMAINING TO BE DECIDED IN THE INSTANT APPEAL IS THAT ONCE THE VERY BASIS OF LEVY OF PENALTY BEING THE ASSESSMENT ORDER, DOES NOT SURVIVE IN ITS ORIGINAL FORM & IS DIRECTED TO BE FRAMED AFRESH BY A HIGHER JUDICIAL AUTHORITY ON THE ISSUES ON WHICH THE PENALTY WAS LEVIED, THEN BY CONSEQUENCE, THE PENALTY RELEVANT UPON THE SAME ORDER CANNOT SURVIVE. THE PENALTY OF RS. 1,23,23,258/- (WRONGLY MENTIONED AS RS 3,62,55,540/-) WAS THEREFORE DIRECTED TO BE DELETED BY THE LD. CIT(A). 8. NOW THE REVENUE IS IN APPEAL BEFORE US. THE LD DR SUPPORTED THE ORDER OF THE ASSESSING OFFICER. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PURUSED THE MATERIAL AVAILABLE ON RECORD. FIRSTLY, WE REFER TO THE RELEVANT FINDING OF THE CO- ORDINATE BENCH IN THE QUANTUM PROCEEDINGS IN ITA NO. 459 & 558/JP/2012 DATED 28.10.2016 WHICH ARE REPRODUCED AS UNDER:- 52.1 NOW, COMING TO THE QUANTUM OF DEDUCTION CLAIMED UNDER SECTION 80IA, THE LD CIT(A) HAS STATED THAT THE ASSESSEE CLAIMED EXCESS PRICE OF SALE OF POWER BY RS. 64,02,938/- AND UNDER STATED ITA NO. 334/JP/2017 ACIT, KOTA VS. M/S CHAMBAL FERTILISERS & CHEMICALS LTD., 4 THE COST OF GAS BY RS. 20,83,589/- AND EXPENSES OF RS. 20,83,589/- AND EXPENSES OF RS. 2,77,69,013/- RELATED TO RECOVERY IN HRSG WERE NOT PROVIDED WHICH HAS RESULTED IN EXCESS CLAIM OF 80IA BY RS. 3,62,55,540/-. FIRSTLY, REGARDING EXPENSES OF RS. 2,77,69,013/-, THE ASSESSEE HAS CLAIMED THAT STEAM WORTH RS. 18,51,26,755/- WAS GENERATED THROUGH HRSG BY RECOVERING ENERGY FROM EXHAUST OF TURBINE OF CAPTIVE POWER PLANT, HOWEVER, NO EXPENDITURE OF HRSG WAS ATTRIBUTED TO THE SAME. IN THE OPINION OF LD. CIT(A), FOR RECOVERY OF ENERGY IN HRSG, THE ASSESSEE MUST HAVE INCURRED CERTAIN EXPENDITURE TO RECOVER SUCH HUGE AMOUNT OF ENERGY AND HE THEREFORE ESTIMATED 15% OF THE ABOVE AMOUNT CAN BE ATTRIBUTED TO RECOVERY OF ENERGY WORTH RS. 18,51,26,755/- WHICH COMES TO RS. 2,77,69,013/-. IN OUR VIEW, WHAT IS RELEVANT TO DETERMINE IS THE TREATMENT OF STEAM WORTH RS. 18,51,26,755/- AND HOW THE SAME HAS BEEN ACCOUNTED FOR WHILE COMPUTING THE DEDUCTION UNDER SECTION 80IA. SECONDLY, THE ASSESSEE HAS IDENTIFIED BOTH DIRECT AND INDIRECT EXPENSES WHICH HAVE BEEN ALLOCATED TO CAPTIVE POWER PLANT FOLLOWING CERTAIN ALLOCATION METHODOLOGY WHICH HAS BEEN ACCEPTED BY THE REVENUE. FOLLOWING THE SAME METHODOLOGY, THE EXPENSES IN RELATION TO GENERATION OF STEAM NEEDS TO BE IDENTIFIED AND PROPERLY ACCOUNTED FOR. THE LD. CIT(A) HAS NOT GIVEN ANY BASIS AS TO HOW HE HAS DETERMINED 15% AN APPROPRIATE BASIS. SIMILAR IS THE CASE WHERE THE LD. CIT(A) HAS HELD THAT THE COST OF GAS CONSUMPTION HAS BEEN UNDERSTAND BY RS. 20,83,589/-. IN OUR VIEW, THE MATTER REQUIRE A FRESH EXAMINATION AND ITA NO. 334/JP/2017 ACIT, KOTA VS. M/S CHAMBAL FERTILISERS & CHEMICALS LTD., 5 WE ACCORDINGLY SET ASIDE THESE TWO MATTERS TO THE FILE OF THE AO. AS WE HAVE STATED ABOVE, THE AUTHORITIES BELOW HAVE NOT EXAMINED THE MATTER AFTER TAKING INTO CONSIDERATION THE PROVISIONS OF SECTION 80A(6) OF THE ACT. IN THE INTEREST OF JUSTICE AND FAIR PLAY, WE DEEM IT APPROPRIATE TO REFER THE MATTER BACK TO THE FILE OF THE AO TO EXAMINE THE MATTER A FRESH TAKING INTO CONSIDERATION THE ABOVE DISCUSSIONS. 52.3 IN LIGHT OF ABOVE DISCUSSIONS, COMMON GROUND NO. 1 OF THE REVENUES APPEAL AS WELL AS ASSESSEES APPEAL ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. 57. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE LD. CIT(A) HAS GIVEN A FINDING THAT THE ASSESSEE CLAIMED THAT THESE INVESTMENTS WERE MADE OUT OF SURPLUS FUNDS AVAILABLE WITH THE ASSESSEE, HOWEVER, NO SUPPORTING EVIDENCE WAS FURNISHED. THE ONUS TO ESTABLISH THAT THE INVESTMENTS ARE MADE OUT OF SURPLUS FUNDS AND NOT BORROWED FUNDS IS ON THE ASSESSEE AND THE SAME HAS NOT BEEN DISCHARGED IN THE INSTANT CASE. WE ACCORDINGLY SET- ASIDE THE MATTER TO THE FILE OF THE AO TO EXAMINE THE MATTER AFRESH. ACCORDINGLY, THIS GROUND OF APPEAL OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 10. ON PERUSAL OF THE ABOVE FINDINGS OF THE COORDINATE BENCH, IT IS CLEAR THAT THE MATTER IN RELATION TO BOTH THE ADDITIONS NAMELY CLAIM U/S 80IA IN RESPECT OF POWER PLANT AMOUNTING TO RS. 3,62,55,540/- AND DISALLOWANCE OF INTEREST IN RELATION TO INVESTMENT MADE WITH THE ITA NO. 334/JP/2017 ACIT, KOTA VS. M/S CHAMBAL FERTILISERS & CHEMICALS LTD., 6 SUBSIDIARY COMPANIES AMOUNTING TO RS. 28,12,000/- WHICH IS THE SUBJECT MATTER OF PENALTY ORDER AND FORM THE BASIS FOR LEVY OF PENALTY U/S 271(1)(C) BY THE AO HAS BEEN SET ASIDE TO THE FILE OF THE ASSESSING OFFICER TO EXAMINE THE MATTER OF AFRESH. WHERE THE VERY BASIS FOR LEVY OF PENALTY HAS BEEN SET-ASIDE TO THE FILE OF THE AO, IT IS NOT NECESSARY FOR US TO GO INTO THE MERITS OF THE CASE AND THE PENALTY ORDER PASSED U/S 271(1)(C) DESERVES TO BE SET-ASIDE. IN THE RESULT, THE GROUND TAKEN BY THE REVENUE IS DISMISSED. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18/01/2018. SD/- SD/- FOT; IKWY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 18/01/2018. * GANESH KR. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- ACIT, CIRCLE-2, KOTA 2. IZR;FKHZ@ THE RESPONDENT- M/S CHAMBAL FERTILIZERS & CHEMICALS LTD., GADEPAN, KOTA 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE { ITA NO. 334/JP/2017} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR