M/S. PREMIER INDUSTRIES (INDIA) LTD., Indore V. THE ACIT 1(2), Indore

ITA 386/IND/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5643 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-11-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 07-11-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 27-05-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MOHD JAVED
• Assessee Lawyers: S N AGRAWAL
• Section: 14A

Judgement Text

ITA NOS 386IND2015,395/IND/2010 & 28/IND/2016 M/S PREMIER INDUSTRIES 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE .., ..!', #$ # !% BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI O.P. MEENA, ACCOUNTANT MEMBER I.T.A. NO. 386/IND/2015,395/IND/2010 & 28/IND/2016 ASSESSMENT YEARS: 2009-10, 2007-08 & 2008-09 M/S PREMIER INDUSTRIES (INDIA) LTD. INDORE PAN AABCP 1890P :: APPELLANT VS ACIT 1(2) INDORE :: RESPONDENT REVENUE BY SHRI MOHD. JAVED ASSESSEE BY SHRI S.N. AGRAWAL ! ' #$ DATE OF HEARING 7.11.2016 %&'( #$ DATE OF PRONOUNCEMENT 7.11.2016 * O R D E R PER SHRI D.T. GARASIA, JM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST DIFFERENT ORDERS OF THE LEARNED CIT(A), INDORE, DATED 27.2.2015, 26.3.2010 AND 19.10.2015. ITA NOS 386IND2015,395/IND/2010 & 28/IND/2016 M/S PREMIER INDUSTRIES 2 2. THE ONLY GROUND IN ALL THESE APPEALS RELATES TO DISALLOWANCE OF INTEREST UNDER THE PROVISIONS OF SECT ION 14A OF THE ACT READ WITH RULE 8D OF THE INCOME TAX RULES . 3. THE SHORT FACTS OF THE CASE ARE THAT IN THE ASSESSME NT YEAR 2007-08 THE ASSESSEE HAS MADE INVESTMENT OF RS. 88 LACS IN SHARES OF NARMADA SUGAR LIMITED IN EARLIER YEAR. IT WAS HELD THAT THE INVESTMENT IN SHARES OF THE ABOVE COMPANY WAS FOR THE PURPOSE OF EARNING DIVIDEND. THIS INVESTMENT WAS MADE FROM CC/AC, THEREFORE, THE INTERE ST ON INVESTMENT WAS TREATED FOR EARNING DIVIDEND. THIS INVESTMENT HAS BEEN SHOWN AT RS. 88 LACS. CONSIDERING THE DISALLOWANCE MADE IN EARLIER YEARS, THE INTEREST @ 12% ON THE ABOVE INVESTMENT, WHICH COMES TO RS. 10,56,000/- , WAS DISALLOWED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 3. THE MATTER WAS CARRIED IN APPEAL TO THE LEARNED CIT(A) AND THE LEARNED CIT(A), FOLLOWING THE ORDERS OF EARLIE R YEARS, ITA NOS 386IND2015,395/IND/2010 & 28/IND/2016 M/S PREMIER INDUSTRIES 3 RESTRICTED THE DISALLOWANCE TO THE TUNE OF RS. 2,74,6 14/-. THE MATTER WAS CARRIED TO THE TRIBUNAL IN THE ASSESSMEN T YEAR 2006-07 WHEREIN THE TRIBUNAL HAS DELETED SUCH DISALLOWANCE ON THE GROUND THAT THE ASSESSEE COMPANY HAS DERIVED BENEFIT UNDER THE SALES TAX DEFERMENT SCHEME , THEREFORE, NO DISALLOWANCE CAN BE MADE. HOWEVER, THE TRIBUNAL, FOLLOWING THE DECISION OF THE HON'BLE BOMB AY HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG. CO. LT D. VS. DCIT; 15 ITJ 329 HELD THAT THE DISALLOWANCE CAN BE MADE UPTO 50% OF AVERAGE INVESTMENT OF RS. 88 LACS. 3. DURING THE COURSE OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE WAS ASKED TO GIVE THE WORKIKNG OF DISALLOWANCE OF INTEREST UNDER SECTION 14A READ WITH R ULE 8D OF THE IT RULES. THE LEARNED COUNSEL FOR THE ASSES SEE HAS GIVEN THE CALCULATION AS UNDER :- ITA NOS 386IND2015,395/IND/2010 & 28/IND/2016 M/S PREMIER INDUSTRIES 4 S.NO. NAME OF THE SCRIPTS OPENING BALANCE CLOSING BALANCE AV BALANCE 1 MP GOVT. BONDS 1200 1200 1200 2 SHARE OF GIRDHARILAL SUGAR & ALLIED IND LTD. 88,00,000 88,00,000 88,00,000 88,01,200 88,01,200 88,01,200 THE LEARNED DR HAS ALSO GONE THROUGH THE WORKING OF TH E ASSESSEE. 4. HAVING HEARD BOTH THE PARTIES AND LOOKING TO THE FACT S AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE ONLY DISALLOWANCE OF INTEREST UNDER SECTION 14A READ WITH R ULE 8D OF THE IT RULES, THE ASSESSEE HAD SHARE OF GIRDHARIL AL SUGAR & ALLIED IND LTD. COSTING RS. 88 LACS AND AS PER RULE 8D THE INTEREST DISALLOWANCE CAN BE MADE 050% OF AVERAGE INVESTMENT WHICH COMES TO RS. 44,006/-. ACCORDINGLY , WE ALLOW THE APPEALS OF THE ASSESSEE FOR THE ASSESSMENT YEAR S 2007-08, 2008-09 AND 2009-10 BECAUSE THE SAME INVESTMENT OF RS. 88 LACS IS COMING OUT FROM THE ASSESSMENT YEAR 2006-07, 2007-08, 2008-09 AND 2009-10 . ITA NOS 386IND2015,395/IND/2010 & 28/IND/2016 M/S PREMIER INDUSTRIES 5 5. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE ARE ALLOWED IN ITA NOS. 395/IND/2010, 28/IND/2016 AND 386/IND/2015. 6. THE NEXT ISSUE IN ITA NO. 28/IND/2016 FOR THE ASSESSMENT YEAR 2008-09 IS THE DISALLOWANCE U/S 40(A)(IA) OF THE ACT. 7. THE SHORT FACTS OF THE CASE ARE THAT IN THE ASSESSME NT YEAR 2008-09 THE ASSESSING OFFICER HAS MADE THE ADDITIO N OF RS.1,52,000/- U/S 40(A)(IA) OF THE ACT UNDER THE HEAD PRINTING AND STATIONARY EXPENSES. THE ASSESSING OFFI CER PROVED THAT THE ASSESSEE HAS MADE PAYMENT OF RS.1,52,000/- TO MORYA PRINTERS FOR PRINTING BALANCE S HEET, TDS NOT DEDUCTED, THEREFORE, THE ENTIRE AMOUNT OF EXPENDITURE WAS DISALLOWED. SIMILARLY IN THE ASSESSMENT YEAR 2009-10 THE ASSESSING OFFICER HAS DISALLOWED RS.1,62,150/- U/S 40(A)(IA) OF THE ACT. ITA NOS 386IND2015,395/IND/2010 & 28/IND/2016 M/S PREMIER INDUSTRIES 6 8. THE MATTER WAS CARRIED IN APPEAL TO THE LEARNED CIT(A) AND THE LEARNED CIT(A) HAS, FOLLOWING THE ORDER OF ITA T, TREATED 25% OF TOTAL EXPENSES RELATING TO WORKS CONTRAC T AND LIABLE FOR TDS. THEREFORE, THE LEARNED CIT(A) REST RICTED THE DISALLOWANCE TO RS. 38,000/- IN THE ASSESSMENT YEAR 2008-09 AND RS. 4,05,380/- IN THE ASSESSMENT YEAR 2009 - 10. 9. DURING THE COURSE OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE HAS DRAWN OUR ATTENTION TO THE DECISION O F THE AHMEDABAD BENCH OF THE TRIBUNAL WHEREIN THE TRIBUNAL HAS HELD THAT 25% OF THE WORKS CONTRACT IS LIABLE FOR TDS BUT IN THAT CASE IT WAS HELD THAT AFTER THE AMENDMENT IN SECTION 40(A)(IA) OF THE ACT WITH EFFECT FROM 1.4.20 15 IT WAS HELD THAT DISALLOWANCE U/S 40(A)(IA) OF THE ACT SHOULD B E RESTRICTED TO 30% OF THE AMOUNT OF INTEREST PAID. THE REFORE, THE ASSESSING OFFICER HAS GIVEN CALCULATION THAT THE DISALLOWANCE OF 30% COMES TO RS. 11,400/- IN THE ITA NOS 386IND2015,395/IND/2010 & 28/IND/2016 M/S PREMIER INDUSTRIES 7 ASSESSMENT YEAR 2008-09 AND IN THE ASSESSMENT YEAR 2009-10 THE DISALLOWANCE COMES TO RS. 12,161/-. 10. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE SIDES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE ISSUE IN CONTROVERSY IS COVERED BY THE DECISION OF THE ITAT, JAIPUR BENCH, IN THE CASE OF SH RI ARIDAMAN VS. ITO; ITA NO. 39/JP/2014 WHEREIN IT WAS H ELD AS UNDER :- 11. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH TH E PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. ON ISSUE OF AMOUNT ALREADY PAID DURING THE YEAR OR AMOUNT SHOWN PAYABLE AS ON 31 ST MARCH OF EVERY YEAR, THE VARIOUS COURTS HAVE DIFFERENT VIEWS I.E. IN FAVOUR OF THE ASSESSEE AND AGAINST THE ASSESSEE. THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. VEGETABLE PRODUCTS LTD. (SUPRA) HAS HELD THAT WHEN THERE ARE TO VIEWS ON AN ISSUE, THE VIEW IN FAVOUR OF THE ITA NOS 386IND2015,395/IND/2010 & 28/IND/2016 M/S PREMIER INDUSTRIES 8 ASSESSEE HAS TO BE PREFERRED. THEREFORE, WE CONFIRM THE ORDER OF THE LD. CIT(A). FURTHER THE RECIPIENT ARE NBFC, THEREFORE, NOT POSSIBLE TO NOT BE ASSESSED TO TAX, THESE PAYMENTS WERE RELATED FOR A.Y. 2009-10 AND RETURN F OR A.Y. 2009-10 ALREADY MIGHT HAVE BEEN FILED BY THESE NBFC B Y INCLUDING THESE INTEREST RECEIPTS AS THEIR INCOME. THEREFORE, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF THE LD. CIT(A). 2.2 THE LD. DR IS HEARD. 2.3 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. RESECTFULLY FOLLOWING THE JUDGMENT OF THIS BENCH IN THE CASE OF ACIT, CIRCLE- 4, JAIPUR VS. SHRI GIRDHARI LAL BARGOTI (SUPRA), THE DISALLOWANCE MADE BY THE A.O. U/S 40(A)(IA) OF THE ACT AS RAISED IN THE GROUNDS OF APPEAL IS DELETED. THUS , THE SOLITARY GROUND OF THE ASSESSEE IS ALLOWED. ITA NOS 386IND2015,395/IND/2010 & 28/IND/2016 M/S PREMIER INDUSTRIES 9 WE, RESPECTFULLY FOLLOWING THE ABOVE ORDER OF THE TR IBUNAL, RESTRICT THE DISALLOWANCE U/S 40(A)(IA) OF THE ACT TO 30% WHICH COMES TO RS. 11,400/- IN THE ASSESSMENT YEAR 2 008- 09 AND RS. 12,161/- IN THE ASSESSMENT YEAR 2009-10. WE ORDER ACCORDINGLY. 11. IN THE RESULT, ALL THE APPEALS ARE PARTLY ALLOWED AS INDICATED ABOVE. THE ORDER HAS BEEN PRONOUNCED IN OPEN COURT ON 7 NOVEMBER, 2016. SD SD ( ..!') (..) #$ (O.P.MEENA) (D.T.GARASIA) ACCOUNTANT MEMBER J UDICIAL MEMBER (') / DATED : 7 NOVEMBER, 2016. DN/ ITA NOS 386IND2015,395/IND/2010 & 28/IND/2016 M/S PREMIER INDUSTRIES 10