Corrtech Energy Ltd., (Formerly known as MJB India Gas Turbine Services Pvt. Ltd., ), Ahmedabad V. The Dy.CIT, (OSD), Range-1, Ahmedabad

ITA 3433/AHD/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8216 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 22-12-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD , , BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ./ I.T.A. NO.3443/AHD/2014 ( / ASSESSMENT YEAR : 2010-11) M/S.CORRTECH ENERGY LTD. ( FORMERLY KNOWN AS MJB INDIA GAS TURBINE SERVICES PVT.LTD. ) 22, DHARA CENTRE VIJAY CHAR ROAD NAVRANGPURA AHMEDABAD / VS. THE DY.CIT (OSD) RANGE-1, AHMEDABAD # ./ ./ PAN/GIR NO. : AAACI 8838 F ( #& / APPELLANT ) .. ( '#& / RESPONDENT ) #&( / APPELLANT BY : SHRI G.C. PIPARA, AR '#& )( / RESPONDENT BY : SHRI MUDIT NAGPAL, SR.DR *+ ), / DATE OF HEARING 26/09/2017 -./0 ), / DATE OF PRONOUNCEMENT 30/ 10 /2017 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL FILED AT THE INSTANCE OF THE ASSESSEE IS AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-XVI, AHMEDABAD [CIT(A) IN SHORT] DATED 13/10/2014 IN THE MATTER OF ASSESSMENT ORDER UNDER S.143(3) OF THE INCOME TAX A CT, 1961 ITA NO.3433/AHD /2014 CORRTECH ENERGY LTD. VS. DCIT ASST.YEAR 2010-11 - 2 - (HEREINAFTER REFERRED TO AS 'THE ACT') DATED 25/03/ 2013 FOR THE ASSESSMENT YEAR (AY) 2010-11. 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE R EAD AS UNDER:- 1. THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.86,765/- ON ACCOUNT OF LATE REMITTANCE OF EMPLOY EES CONTRIBUTION TO P.P. RELYING UPON THE DECISION OF T HE HON'BLE GUJARAT HIGH COURT IN THE APPELLANT'S OWN CASE WHER EIN THE DECISION OF GUJARAT STATE ROAD TRANSPORT CORPORATIO N [2014] 41 TAXMANN.COM 100 (GUJ.) HAS BEEN RELIED UPON. IT IS SUBMITTED WITH DUE RESPECT TO THE ABOVE DECISION THAT SUBSEQUENTLY THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF ESSAE TERAOKA ( P.) LTD. VS. DOT [2014] 43 TAXMANN.COM 33 (KARNATAKA) HAS TAKEN A VIEW IN FAVOR OF THE ASSESSEE WHILE DISAGREEING WITH THE DE CISION OF THE HON'BLE GUJARAT HIGH COURT. THAT APART, SINCE THE S LP FILED AGAINST THE SAID DECISION BEFORE THE HON'BLE SUPREM E COURT HAVING BEEN ADMITTED, THE ISSUE IN DISPUTE BEING ADDITION OF RS.86,765/- BE DECIDED ACCORDINGLY. 2. THE APPELLANT STATES THAT THE ID. CIT(A) H AS ERRED IN NOT APPRECIATING THE FACT THAT THE AMOUNT OF RS.86,765/ - BEING EMPLOYEES' CONTRIBUTION FOR THE MONTH OF APRIL, 200 9 HAVING BEEN PAID BY THE APPELLANT BEFORE THE DUE DATE FOR FILIN G THE RETURN OF INCOME, NO DISALLOWANCE IS WARRANTED BASED ON THE D ECISION OF VARIOUS OTHER HIGH COURTS AS WELL AS THE HON'BLE APEX COURT IN CIT V. ATOM EXTRUSIONS LTD. [2009]319ITR 306. 3. THE ID. CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS IN CONFIRMING THE ADDITION ON ACCOUNT OF DISALLOWANCE OF RS.7,81,321/- MADE BY THE AO WHILE APPLYING THE PRO VISIONS OF SECTION 14A OF THE IT. ACT, 1961 READ WITH RULE 8D OF THE I.T. RULES, 1962 WITHOUT PROPER CONSIDERATION AND APPREC IATION OF ITA NO.3433/AHD /2014 CORRTECH ENERGY LTD. VS. DCIT ASST.YEAR 2010-11 - 3 - FACTS AND SETTLED LEGAL POSITION THAT SECTION 14A C ANNOT BE APPLIED UNLESS THERE IS PROXIMATE CAUSE FOR DISALLOWANCE AS HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. WALFOR T SHARE & STOCK BROKERS (P.) LTD. 326 ITR 1 (SO. THE IMPUGNED ADDITION OF RS.7,81,321/- THUS OUGHT TO HAVE BEEN DELETED. 4. THE ID. C1T(A) HAS FURTHER ERRED IN NOT AP PRECIATING AND/OR IGNORING THE FACT THAT IDENTICAL ISSUE I.E. DISALLO WANCE U/S.!4A OF THE ACT HAS BEEN DECIDED IN FAVOR OF THE APPELLANT IN ITS OWN CASE FOR PREVIOUS YEAR I.E. A.Y.2009-10 BY THE HON'BLE I TAT, AHMEDABAD BENCH AS WELL AS HON'BLE GUJARAT HIGH COU RT. THUS, THE AO AS WELL AS THE ID. CIT(A) WERE DUTY BOUND TO FOLLOW THE SAID DECISION OF THE JURISDICTIONAL COURT OF LAW AN D DELETE THE IMPUGNED ADDITION OF RS.7,81,321/-. 5. THE ID. CU(A) HAS FURTHER ERRED IN NOT APP RECIATING AND/OR IGNORING THE FACT THAT THE INVESTMENTS HAVE NEITHER BEEN MADE DURING THE YEAR NOR THE SAME HAVE BEEN MADE OUT OF BORROWED FUNDS APART FROM THE VERY BASIC FACT THAT NO EXEMPT INCOME WHATSOEVER HAS BEEN EARNED OR CLAIMED BY THE APPELL ANT DURING THE YEAR AND HENCE THE QUESTION OF APPLICABILITY OF THE PROVISIONS OF SECTION 14A DOES NOT ARISE AT ALL. ACCORDINGLY, THE IMPUGNED ADDITION OF RS.7,81,321/- EVEN OTHERWISE REQUIRES T O BE DELETED. 6. THE ID. CIT(A) HAS ALSO ERRED IN RELYING UPON THE CBDT CIRCULAR DATED 11/02/2014 WITHOUT PROPERLY CONSIDER ING THE DECISION OF THE HON'BLE ITAT, CHENNAI BENCH IN THE CASE OF M. BHASKARAN IN ITA NO. 1717/MDS/2013 DATED 31/07/2014 , WHEREIN INTERALIA, IDENTICAL ISSUE HAS BEEN DECIDED IN FAVO R OF THE ASSESSEE AFTER CONSIDERING THE CBDT CIRCULAR DATED 11/02/201 4 RELIED UPON BY THE ID. OT(A). ITA NO.3433/AHD /2014 CORRTECH ENERGY LTD. VS. DCIT ASST.YEAR 2010-11 - 4 - 3. THE ASSESSEE HAS FAIRLY STATED THAT GROUND NO.1 IS COVERED AGAINST THE ASSESSEE IN VIEW OF THE DECISION OF THE JURISDICTIO NAL HIGH COURT IN THE CASE OF GUJARAT STATE ROAD TRANSPORT CORPORATION (2 014) 41 TAXMANN.COM 100 (GUJ.). HOWEVER, SLP FILED AGAINST THE SAID DECISION HAS BEEN ADMITTED BY THE HONBLE SUPREME COURT. IN VIEW OF THE DECISION OF THE HONBLE GUJARAT HIGH COURT, GROUND NO.1 OF THE ASSESSEES APPEAL IS DISMISSED. 4. GROUND NO.2 CONCERNS DISALLOWANCE UNDER S.14A RE AD WITH RULE 8D OF THE INCOME TAX RULES, 1962. IN THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER (AO) NOTICED THA T ASSESSEE HAS MADE CERTAIN INVESTMENTS TO THE TUNE OF RS.275.80 LAKHS, THE DIVIDEND INCOME WHEREFROM IS EXEMPT FROM TAX. THE AO ACCORDINGLY P ROCEEDED TO MAKE DISALLOWANCE OF RS.7,81,321/- BY APPLYING STATUTOR Y FORMULA PROVIDED IN RULE 8D OF THE I.T.RULES. 5. IN FIRST APPEAL, THE CIT(A) ALSO CONFIRMED THE A CTION OF THE AO. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESSEE HAS REFERRED THE MATTER TO THE TRIBUNAL. 6. WITH THE ASSISTANCE OF THE LD.AR FOR THE ASSESSE E, WE NOTICE THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE H AS NOT CLAIMED ANY EXEMPT INCOME EARNED FROM THE AFORESAID INVESTMENTS . WE FIND FORCE IN ITA NO.3433/AHD /2014 CORRTECH ENERGY LTD. VS. DCIT ASST.YEAR 2010-11 - 5 - THE CONTENTION OF THE ASSESSEE THAT IN THE ABSENCE OF ANY EXEMPT INCOME, SECTION 14A OF THE ACT IS NOT APPLICABLE. THERE BE ING NO EXEMPT INCOME, WE DO NOT FIND ANY PROXIMATE CAUSE FOR DISALLOWANCE OF DEEMED EXPENDITURE INCURRED IN RELATION TO SOME NON-EXISTE NT INCOME. IDENTICAL ISSUE HAS COME UP IN ASSESSEES OWN CASE BEFORE THE HONBLE JURISDICTIONAL HIGH COURT IN CIT VS. CORRTECH ENERG Y (P.) LTD. (2014) 45 TAXMANN.COM 116 (GUJ.) RELEVANT TO AY 2009-10 WHER E THE ISSUE WAS DECIDED IN FAVOUR OF ASSESSEE. THEREFORE, RESPECTFU LLY FOLLOWING THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN ASSES SEES OWN CASE, GROUND NO.2 IS ALLOWED. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 30/ 10 /2017 SD/- SD/- ( ) ( ) ( MAHAVIR PRASAD ) ( PRADIP KUMAR KEDIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 30/ 10 /2017 4..*,.*../ T.C. NAIR, SR. PS ITA NO.3433/AHD /2014 CORRTECH ENERGY LTD. VS. DCIT ASST.YEAR 2010-11 - 6 - !'#$#! / COPY OF THE ORDER FORWARDED TO : 1. #& / THE APPELLANT 2. '#& / THE RESPONDENT. 3. 567, 8, / CONCERNED CIT 4. 8, ( ) / THE CIT(A)-XVI, AHMEDABAD 5. 9:;,*67 , 67 0 , 5 / DR, ITAT, AHMEDABAD 6. ; + / GUARD FILE. / BY ORDER, '9,, //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 30.10.17 (DICTATION-PAD 6 -PAGES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 30.10.17 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 30.10.17 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 30.10.17 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER