Appeal details
Counselvise Citation
[2020] 111 COUNSELVISE.COM (IT) 8063 (ITAT-CHANDIGARH)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 year(s) 10 month(s) 18 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
20-01-2020
Appeal Filed By
Department
Order Result
Partly Allowed
Bench Allotted
Not Allotted
Assessment Year
2012-2013
Appeal Filed On
03-03-2017
Judgement Text
, , IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, B, CHANDIGARH . . , , BEFORE SHRI N.K. SAINI, VICE PRESIDENT & SHRI SANJAY GARG, JUDICIAL MEMBER ./ ITA NO. 391/CHD/2017 / ASSESSMENT YEAR : 2012-13 M/S VARDHMAN POLYTEX LIMITED, VARDHMAN PARK CHANDIGARH ROAD, LUDHIANA VS. ! THE DCIT , CIRCLE-1, LUDHIANA ' # ./ PAN NO: AAACV5821H APPEAL AGAINST THE ORDER OF CIT(A)-1, LUDHIANA 28.1 2.2016 '$/ APPELLANT &'
'$ / RESPONDENT ./ ITA NO. 413/CHD/2017 / ASSESSMENT YEAR : 2012-13 THE DCIT , CIRCLE-1, LUDHIANA VS. ! M/S VARDHMAN POLYTEX LIMITED, CHANDIGARH ROAD, LUDHIANA ' # ./ PAN NO: AAACV5821H APPEAL AGAINST THE ORDER OF CIT(A)-1, LUDHIANA 28.1 2.2016 '$/ APPELLANT &'
'$ / RESPONDENT ./ ITA NO. 802/CHD/2018 / ASSESSMENT YEAR : 2013-14 THE DCIT , CIRCLE-1, LUDHIANA VS. ! M/S VARDHMAN POLYTEX LIMITED, VARDHMAN PARK CHANDIGARH ROAD, LUDHIANA ' # ./ PAN NO: AAACV5821H APPEAL AGAINST THE ORDER OF CIT(A)-1, LUDHIANA 30.3 .2018 '$/ APPELLANT &'
'$ / RESPONDENT ITA NOS. 413 & 391-CHD-2017 & 802 & 803-CHD-2018 M/S VARDHMAN POLYTEX LIMITED, LUDHIANA 2 & ./ ITA NO. 803/CHD/2018 / ASSESSMENT YEAR : 2014-15 THE DCIT , CIRCLE-1, LUDHIANA VS. ! M/S VARDHMAN POLYTEX LIMITED, VARDHMAN PARK, CHANDIGARH ROAD, LUDHIANA ' # ./ PAN NO: AAACV5821H APPEAL AGAINST THE ORDER OF CIT(A)-1, LUDHIANA 30.3 .2018 '$/ APPELLANT &'
'$ / RESPONDENT )*+, /ASSESSEE BY : SHRI SUBHASH AGGARWAL, ADVOCATE +, / REVENUE BY : SMT. VEENA JOSHI, CIT DR - .+* /# /DATE OF HEARING : 21.10.2019 01 +* /# / DATE OF PRONOUNCEMENT : 20.12 .2019 / ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE CAPTIONED APPEALS PREFERRED BY THE REVENUE AS W ELL AS THE ASSESSEE AGAINST THE RESPECTIVE ORDERS OF THE COMMI SSIONER OF INCOME TAX (APPEALS), CHANDIGARH [HEREINAFTER REFERRED TO AS CIT(A)] PERTAINS TO THE SAME ASSESSEE AND EVEN THE ISSUES I NVOLVED IN ALL THE APPEALS ARE ALMOST IDENTICAL, HENCE, THESE WERE HEA RD TOGETHER AND ARE BEING ADJUDICATED BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRSTLY, WE SHALL TAKE UP ASSESSEES APPEAL IN ITA NO. 391/CHD/2017 FOR ASSESSMENT YEAR 2012-13, WHEREIN, THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL:- ITA NOS. 413 & 391-CHD-2017 & 802 & 803-CHD-2018 M/S VARDHMAN POLYTEX LIMITED, LUDHIANA 3 ITA NO. 391/CHD/2017 (A.Y.2012-13) 1. THAT THE LEARNED CIT(A)-1 HAS ERRED IN CONFIRMIN G THE DISALLOWANCE OF PREMIUM PAYABLE OF RS. 98,91,159/- ON REDEMPTION OF FOREIGN CURRENCY CONVERTIBLE BONDS BY WRONGLY TREATING THE SAME AS CAPITAL EXPENDITURE. 2. THAT THE ORDER OF THE LD. CIT(A) IS AGAINST THE LAW AND FACTS OF THE CASE. 3. THAT THE APPELLANT CRAVES LEAVE FOR PERMISSION T O ADD, AMEND OR ALTER ANY GROUND OF APPEAL AT THE TIME OF HEARING. 3. THE SOLE ISSUE RAISED BY THE ASSESSEE IN THIS AP PEAL IS AGAINST THE CONFIRMATION OF DISALLOWANCE OF PREMIUM PAYABLE ON REDEMPTION OF FOREIGN CURRENCY CONVERTIBLE BONDS (FCCB) BY TREATI NG THE SAME AS CAPITAL EXPENDITURE. 4. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THIS ISSUE IS SQUARELY COVERED BY THE DECISION OF T HE TRIBUNAL IN THE OWN CASE OF THE ASSESSEE FOR THE EARLIER ASSESSMENT YEA RS VIDE ORDER DATED 21.6.2019 PASSED IN ITA NOS. 837/CHD/2018 & ORS RELATING TO ASSESSMENT YEARS 2010-11 AND 2011-12. THE RELEVANT PART OF FINDINGS GIVEN BY THE TRIBUNAL IS REPRODUCED AS UNDER:- 7. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET POINTED OUT THAT IDENTICAL ISSUE HAD BEE N DEALT WITH BY THE ITAT CHANDIGARH BENCH IN THE CASE OF VARDHMAN TEXTILES LTD. VS. ADDL.CIT IN ITA NO.787/2015, 894/2015, 483/2016 AND 518/2016 DATED 14.3.2019 HOLDING THE PREMIUM ON FCCB BONDS TO BE REVENUE IN NATURE. RELIANCE WAS ALSO PLACED ON THE DECISION OF THE I.T.A.T., HYDERABAD BENCH IN THE CA SE OF GATI LTD. VS. ACIT IN ITA NO.1467/2017, DATED 20.6.2018 AND ON THE DECISION OF THE I.T.A.T., MUMB AI BENCH IN THE CASE OF STRIDES SHASUN LTD. VS. ACIT I N ITA NOS. 413 & 391-CHD-2017 & 802 & 803-CHD-2018 M/S VARDHMAN POLYTEX LIMITED, LUDHIANA 4 ITA NO.864/2011 DATED 8.6.2018. COPIES OF ALL THE ABOVE ORDERS WERE PLACED BEFORE US. 8. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE LD.CIT(A). 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. WE HA VE ALSO GONE THROUGH THE ORDER OF THE ITAT CHANDIGARH BENCH IN THE CASE OF VARDHMAN TEXTILES LTD. (SUPRA) AND FIND THAT THE I.T.A.T. IN THE SAID CASE HAD DEA LT WITH THE TREATMENT OF THE PREMIUM PAID ON FCCB BONDS WHETHER CAPITAL OR REVENUE IN NATURE AND HAD HELD THAT THE SAME WAS REVENUE IN NATURE. AT THE SA ME TIME, WE FIND THAT THE I.T.A.T. HAD ALSO HELD THAT THE SAID EXPENDITURE WAS TO BE ALLOWED ONLY FOR THE YEA R OF PAYMENT AND THE RELEVANT FINDINGS OF THE I.T.A.T . AT PARA NOS.13 TO 15 OF THE ORDER ARE AS UNDER: 13. GROUND NO.5 : VIDE GROUND NO.5, THE ASSESSEE HAS AGITATED THE ACTION OF THE LOWER AUTHORITIES IN HOLDING THAT THE PREMIUM PAID ON REDEMPTION OF FOREIGN CURRENCY CONVERTIBLE BONDS (FCCB) IS CAPITAL RECEIPT AS AGAINST THE CLAIM OF THE ASSESSEE THAT THE SAME IS REVENUE EXPENDITURE. THE FACTS RELEVANT TO THE ISSUE ARE THAT THE ASSESSEE ISSUED FOREIGN CURRENCY CONVERTIBLE BONDS IN THE YEAR 2006 AND THESE WERE TO BE MATURED IN FEBRUARY 2011. AS THE BONDS HOLDERS DID NOT EXERCISE THEIR OPTION TO CONVERT THE BONDS IN EQUITY SHARES, SO FCCB WERE REPAID ALONG WITH PREMIUM / INTEREST @ 6% PER ANNUM. THE LOWER AUTHORITIES TREATED THE AFORESAID PAYMENT AS CAPITAL PAYMENT AND DENIED THE DEDUCTION OF EXPENDITURE IN THIS RESPECT. 14. THE LD. COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION TO THE DECISION OF THE TRIBUNAL IN THE OWN CASE OF THE ASSESSEE M/S VARDHMAN TEXTILES LTD VS. ADDL. CIT LUDHIANA IN ITA NO. 1429/CHD/2010 FOR THE ASSESSMENT YEAR 2006-07 AND IN ITA NO. 270/CHD/2011 FOR ASSESSMENT YEAR 2007-08 ORDER DATED 18.12.2018, WHEREIN, ON IDENTICAL FACTS, THE TRIBUNAL AFTER CONSIDERING THE RELEVANT FACTS HAS HELD THAT THE SAID EXPENDITURE IS TO BE TREATED AS ITA NOS. 413 & 391-CHD-2017 & 802 & 803-CHD-2018 M/S VARDHMAN POLYTEX LIMITED, LUDHIANA 5 REVENUE EXPENDITURE, IN THE YEAR OF PAYMENT. THE RELEVANT FINDINGS OF THE TRIBUNAL ON THIS ISSUE ARE REPRODUCED AS UNDER:- 20. GROUND NO. 9 : VIDE GROUND NO.9, THE ASSESSEE HAS AGITATED THE ACTION OF THE CIT(A) IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN NOT ALLOWING PREMIUM PAYABLE ON REDEMPTION OF OPTIONALLY CONVERTIBLE FOREIGN CURRENCY BONDS AS REVENUE EXPENDITURE. 21. THE LD. COUNSEL FOR THE ASSESSEE IN THIS RESPECT HAS RELIED UPON THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT PATIALA VS. INDUSTRIAL CABLES (P) LTD. REPORTED IN (2007) 162 TAXMAN 272 (P&H), WHEREIN, THE ISSUE IS AS TO WHETHER THE PREMIUM PAID ON EXPIRY / REDEMPTION OF DEBENTURES WAS TO BE TREATED AS CAPITAL EXPENDITURE OR REVENUE EXPENDITURE. THE HON'BLE COURT WHILE RELYING UPON THE OTHER CASE LAWS HELD THAT THE SAID PREMIUM PAID BY THE ASSESSEE ON REDEMPTION OF DEBENTURES AS REVENUE EXPENDITURE. THE LD. COUNSEL HAS FURTHER RELIED UPON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF TAPARIA TOOLS LTD VS. JCIT (2015) 7 TAXMAN 361 WHEREIN, THE HON'BLE SUPREME COURT HAS HELD THAT SUCH TYPE OF PREMIUM / INTEREST PAID TO DEBENTURE HOLDERS WAS TO BE ALLOWED AS REVENUE EXPENDITURE IN THE YEAR OF PAYMENT ITSELF. ADMITTEDLY, IN THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS BOOKED THE AFORESAID EXPENSES PAYABLE WHICH WAS PAID IN THE ASSESSMENT YEAR 2011-12. IN VIEW OF THIS, THE SAID EXPENDITURE IS TO BE ALLOWED IN THE YEAR OF PAYMENT. SUBJECT TO THE ABOVE OBSERVATION, THIS GROUND OF THE ASSESSEES APPEAL FOR THE YEAR UNDER CONSIDERATION IS HEREBY DISMISSED. 15. THE LD. DR COULD NOT REBUT THE ABOVE FINDINGS OF THE TRIBUNAL BY BRINGING OUT ANY DISTINGUISHING FACT OR CASE LAW. IN VIEW OF THIS, THIS ISSUE, IN THE ABOVE TERMS, I S DECIDED IN FAVOUR OF THE ASSESSEE. 10. SINCE THE ISSUE INVOLVED IN THE PRESENT CASE IS IDENTICAL TO THAT IN THE CASE OF VARDHMAN TEXTILES LTD. ITA NOS. 413 & 391-CHD-2017 & 802 & 803-CHD-2018 M/S VARDHMAN POLYTEX LIMITED, LUDHIANA 6 (SUPRA) AND THE LD. DR HAVING NOT BROUGHT ANY DISTINGUISHING FACTS TO OUR NOTICE, NOR HAVING DRAW N OUR ATTENTION TO THE DECISION OF THE HON'BLE HIGH COURT OR HIGHER AUTHORITY CONTRARY TO THAT RENDERED BY THE I.T.A.T. IN THE CASE OF VARDHMAN TEXTILES LT D. (SUPRA), THE DECISION RENDERED BY THE I.T.A.T. IN THE CASE OF VARDHMAN TEXTILES LTD. (SUPRA) WILL APPLY T O THE PRESENT CASE ALSO, FOLLOWING WHICH, WE HOLD THA T THE PREMIUM ON FCCB BONDS IS IN THE NATURE OF REVENUE AND IS TO BE ALLOWED IN THE YEAR OF PAYMENT OF THE SAME. GROUND OF APPEAL NO.3 RAISED BY THE ASSESSEE IS ALLOWED IN THE ABOVE TERMS. 5. FOLLOWING THE ABOVE DECISION OF THE TRIBUNAL IN THE OWN CASE OF THE ASSESSEE FOR THE EARLIER ASSESSMENT YEARS, WE HOLD THAT THE PREMIUM PAYABLE ON FOREIGN CURRENCY CONVERTIBLE BONDS IS IN THE NATURE OF REVENUE RECEIPT, HOWEVER, IS TO BE ALLOWED IN THE YEAR OF PAYMENT OF THE SAME. IN VIEW OF THIS, THIS APPEAL THIS APPEAL OF THE ASS ESSEE STANDS ALLOWED. 6. NOW COMING TO THE REVENUES APPEAL FOR ASSESSMEN T YEAR 2012-13 (ITA NO. 413/CHD/2017). THE REVENUE IN THIS APPEAL HAS TAKEN FOLLOWING GROUNDS OF APPEAL:- ITA NO. 413/CHD/2017 1. WHETHER IN LAW AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION AMOUNTING TO RS. 13,57,51,945/- MADE U/S 14A OF INCOME TAX ACT, 1961 READ WITH RULE 8D? 2. WHETHER IN LAW AND CIRCUMSTANCES OF THE CASE, TH E LD.CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION MA DE ON ACCOUNT OF DISALLOWANCE OF INTEREST ON ITA NOS. 413 & 391-CHD-2017 & 802 & 803-CHD-2018 M/S VARDHMAN POLYTEX LIMITED, LUDHIANA 7 INVESTMENTS FOR NON-BUSINESS PURPOSE MADE U/S 36(1)(III) OF INCOME-TAX ACT, 1961 AMOUNTING TO RS. 11,18,63,706/-? 3. WHETHER IN LAW AND CIRCUMSTANCES OF THE CASE, TH E LD. CIT(A| WAS JUSTIFIED IN DELETING THE ADDITION M ADE ON ACCOUNT OF DISALLOWANCE OF INTEREST ON LOANS AND ADVANCES GIVEN FOR NON-BUSINESS PURPOSES AMOUNTING TO RS. 2,10,23,259/- MADE U/S 36(1)(III) OF INCOME- TAX ACT, 1961? 4. WHETHER IN LAW AND CIRCUMSTANCES OF THE CASE, TH E LD. CIT(A) WAS JUSTIFIED IN DELETING THE DISALLOWAN CE OF DEPRECIATION OF RS. 1,15,19,946/- MADE AFTER REDUCING THE CAPITAL PROFIT EARNED ON BUY BACK OF FOREIGN CURRENCY CONVERTIBLE BONDS FROM THE WRITTEN - DOWN VALUE OF THE BLOCK OF ASSETS? 5. THAT THE ORDER OF THE LD. CIT (A) BE SET ASIDE A ND THAT OF THE ASSESSING OFFICER BE RESTORED. 6. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY GROUND OF APPEAL BEFORE IT IS FINALLY DISPOSED OFF. 7. GROUND NO.1 : VIDE GROUND NO.1, THE REVENUE HAS CONTESTED THE ACTION OF THE CIT(A) IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER U/S 14A OF THE INCOME TAX ACT, 1961 (IN SHO RT 'THE ACT') READ WITH RULE 8D OF THE INCOME TAX RULES, 1962 ON ACCOU NT OF EXPENDITURE INCURRED FOR EARNING OF TAX EXEMPT INCOME. 8. THE LD. COUNSEL FOR THE ASSESSEE, AT THE OUTSET, HAS INVITED OUR ATTENTION TO THE IMPUGNED ORDER OF THE LD. CIT(A) T O SUBMIT THAT THE LD. CIT(A) HAS DELETED THE ADDITION HOLDING THAT THE AS SESSEE WAS POSSESSED OF SUFFICIENT OWN FUNDS / INTEREST FREE FUNDS TO ME ET THE INVESTMENT IN QUESTION. THE LD. COUNSEL, IN THIS RESPECT HAS REL IED UPON THE DECISION OF THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF ITA NOS. 413 & 391-CHD-2017 & 802 & 803-CHD-2018 M/S VARDHMAN POLYTEX LIMITED, LUDHIANA 8 BRIGHT ENTERPRISES LTD VS CIT (ITA NO. 224 OF 20 13) DATED 24.7.2015 AND THE RECENT DECISION OF THE HON'BLE SUPREME COU RT IN CIT (LTU) VS. RELIANCE INDUSTRIES LTD. [2019] 410 ITR 466 (S C). HE HAS FURTHER SUBMITTED THAT THESE WERE OLD INVESTMENTS AND NO NE W INVESTMENTS WERE MADE. 9. THE LD. DR, ON THE OTHER HAND, HAS SUBMITTED THA T A PERUSAL OF THE CHART SUBMITTED BY THE ASSESSEE SHOWS THAT THE ASSE SSEE WAS NOT POSSESSED OF OWN SUFFICIENT FUNDS TO MEET THE INVES TMENTS. 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PER USAL OF THE IMPUGNED ORDER OF THE CIT(A) REVEALS THAT IT WAS SU BMITTED BEFORE THE LD. CIT(A) THAT THE INVESTMENTS IN SECURITIES WERE MADE IN THE PREVIOUS YEAR BY THE ASSESSEE OUT OF ITS OWN FUNDS. THAT THE INVESTMENTS OF RS. 901.99 LACS WAS MADE IN THE FINANCIAL YEAR 2006-07 AGAINST THE TOTAL ASSETS OF THE COMPANY AT RS. 650.47 CRORES AND THAT THE ASSESSEE COMPANY DURING THE FINANCIAL YEAR 2006-07 HAD PROFI T OF RS. 21.23 CRORES. IT HAS BEEN FURTHER SUBMITTED BEFORE THE L D. CIT(A) THAT DURING THE FINANCIAL YEAR 2011-12, THERE WAS IN-FLOW OF RS . 450.60 LACS FROM THE SALE OF INVESTMENTS AND RS. 18.15 CRORES FROM T HE SALE OF FIXED ASSETS. AFTER CONSIDERING THESE FACTS, THE LD. CIT (A) FOLLOWING HIS OWN ORDER IN THE ASSESSEES CASE FOR ASSESSMENT YEAR 20 11-12 DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE HOLDING THAT THE A SSESSEE WAS POSSESSED OF SUFFICIENT OWN FUNDS TO MEET THE INVESTMENT IN Q UESTION. THE LD. ITA NOS. 413 & 391-CHD-2017 & 802 & 803-CHD-2018 M/S VARDHMAN POLYTEX LIMITED, LUDHIANA 9 COUNSEL HAS SUBMITTED THAT AGAINST THE ORDER OF THE CIT(A) DATED 26.7.2016, THE REVENUE PREFERRED APPEAL BEFORE THIS TRIBUNAL WHICH HAS BEEN DISMISSED VIDE ORDER DATED 21.6.2019 (SUPRA). 11. WE HAVE GONE THOUGHT THE ORDER OF THE TRIBUNAL AND FIND THAT THE TRIBUNAL HAS NOTED THAT AS ON 31.3.2011, AS PER THE BALANCE SHEET, THE ASSESSEE WAS POSSESSED OF RS. 17603.45 LACS OF SHAR E CAPITAL, RESERVE AND SURPLUSES BESIDES THAT THE INCOME OF THE ASSESS EE FOR THE YEAR WAS RS. 3585.22 LACS WHILE THE INVESTMENT MADE AMOUNT ED TO RS. 13260.07 LACS. THE TRIBUNAL, RELYING UPON THE DECISION IN TH E OWN CASE OF THE ASSESSEE FOR EARLIER ASSESSMENT YEAR, HELD THAT SIN CE THE ASSESSEE DURING THE YEAR WAS POSSESSED OF SUFFICIENT OWN / INTEREST FREE FUNDS RELATING TO DISALLOWANCE U/S 14A OF THE ACT, HENCE, THE PRESUMP TION WOULD ARISE THAT THE INVESTMENTS WERE MADE OUT OF OWN / INTERES T FREE FUNDS, THEREFORE, THE TRIBUNAL UPHELD THE FINDINGS OF THE CIT(A) IN DELETING THE DISALLOWANCE OUT OF INTEREST EXPENDITURE. SO FAR AS THE DISALLOWANCE OF ADMINISTRATIVE EXPEND ITURE U/S 14A OF THE ACT READ WITH RULE 8D(2)(III) OF THE I.T. R ULES IS CONCERNED, THE ISSUE WAS RESTORED BACK TO THE FILE OF THE CIT(A) T O BE ADJUDICATED AFRESH AFTER GIVEN DUE OPPORTUNITY OF HEARING TO TH E ASSESSEE. 12. HOWEVER, WE FIND THAT THE FACTS OF THE CASE FO R THE YEAR UNDER CONSIDERATION, SO FAR AS THE AVAILABILITY OF OWN F UNDS IS CONCERNED, ARE DIFFERENT. AS PER THE WORKING GIVEN BY THE ASSESSEE VIDE ITS LETTER DATED 18.10.2019, THE TOTAL INVESTMENTS MADE AS ON 31.3.2 011 WERE RS. ITA NOS. 413 & 391-CHD-2017 & 802 & 803-CHD-2018 M/S VARDHMAN POLYTEX LIMITED, LUDHIANA 10 136742.47 LACS, HOWEVER, THE SAME WERE AT RS. 13260 .07 LACS AS ON 31.3.2012. THE ASSESSEE SHARE CAPITAL AS ON 31.3.20 11 WAS RS. 1627.75 LACS AND THERE WAS NO CHANGE AS ON 31.3.2012 IN THI S RESPECT. HOWEVER, THE ASSESSEES RESERVE AND SURPLUSES WERE AT RS. 15 975.70 LACS AS ON 31.3.2011 AND THE SAME GOT DECREASED TO RS. 7752.36 LACS AS ON 31.3.2012. THE INTEREST FREE OWN FUNDS WHICH WERE A VAILABLE WITH THE ASSESSEE AS ON 31.3.2012 WERE AT RS. 9380.11 LACS W HEREAS THE TOTAL INVESTMENTS AS ON 31.3.2012 WERE AT RS. 13260.07 LACS WHICH SHOWS THAT THE ASSESSEE SHARE CAPITAL AND RESERVES AND SU RPLUSES WERE NOT ENOUGH TO MEET THE INVESTMENTS IN QUESTION. EVEN A PPLYING THE OWN FUNDS PRESUMPTION THEORY, OWN FUNDS OF THE ASSESSEE WERE NOT SUFFICIENT TO MEET THE INVESTMENT. AS NOTED ABOVE, THE INVEST MENTS WERE MADE OUT OF MIXED / COMMON FUNDS. IN VIEW OF THIS, THE ORDER OF THE CIT(A) ON THIS IS SUE IN DELETING THE ENTIRE INTEREST DISALLOWANCE MADE BY THE ASSES SING OFFICER IS NOT SUSTAINABLE. THE ORDER OF THE CIT(A) ON THIS ISSUE IS, THEREFORE, SET ASIDE AND THE ISSUE IS RESTORED BACK TO THE FILE OF THE A SSESSING OFFICER TO DECIDE IT AFRESH CONSIDERING THE AVAILABILITY OF TH E OWN FUNDS / INTEREST FREE FUNDS WITH THE ASSESSEE TO MEET THE INVESTMENT AND IN THE LIGHT OF THE CASE LAWS AS MAY BE APPLICABLE INCLUDING THE DE CISION OF THE HON'BLE SUPREME COURT IN CIT (LTU) VS. RELIANCE INDUSTRIES LTD. [2019] 410 ITR 466 (SC). ITA NOS. 413 & 391-CHD-2017 & 802 & 803-CHD-2018 M/S VARDHMAN POLYTEX LIMITED, LUDHIANA 11 THE ISSUE RELATING TO THE DISALLOWANCE OUT OF ADMIN ISTRATIVE EXPENSES U/S 8D(2)(III) IS ALSO RESTORED TO THE FIL E OF THE CIT(A) ON THE SAME LINES AS DIRECTED IN THE ORDER OF THE TRIBUNAL IN THE OWN CASE OF THE ASSESSEE FOR ASSESSMENT YEAR 2011-12 VIDE DATED 21. 6.2019 (SUPRA). 13. GROUND NOS.2 & 3 : THE REVENUE VIDE THESE GROUNDS HAS AGITATED THE ACTION OF THE CIT(A) IN DELETING THE D ISALLOWANCE MADE BY THE ASSESSING OFFICER OUT OF INTEREST EXPENDITURE IN RESPECT OF INTEREST FREE ADVANCES MADE BY THE ASSESSEE FOR NON-BUSINESS PURPOSES. 14. THE LD. COUNSEL FOR THE ASSESSEE HAS RELIED UPO N THE FINDINGS OF THE TRIBUNAL FOR THE ASSESSMENT YEAR 2011-12 ON THI S ISSUE VIDE ORDER DATED 21.6.2019 (SUPRA). HOWEVER, WE FIND THAT THE TRIBUNAL HAS DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE OBSERV ING THAT THE ASSESSEES OWN / INTEREST FREE FUNDS WERE SUFFICIENT TO MEET T HE INVESTMENTS AND INTEREST FREE ADVANCES GIVEN BY IT FOR NON-BUSINESS PURPOSES. HOWEVER, AS OBSERVED ABOVE, WHILE DECIDING THE ISSUE RELATIN G TO DISALLOWANCE U/S 14A OF THE ACT, WE HAVE NOTED THAT IT DOES NOT APPE AR THAT FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE WAS POSSESSED OF SUFFICIENT OWN / INTEREST FREE FUNDS TO MEET THE INVESTMENTS / INTER EST FREE ADVANCES. THIS ISSUE IS, ACCORDINGLY, RESTORED TO THE FILE O F THE ASSESSING OFFICER TO EXAMINE THE FACTS OF THE CASE AND TO DEC IDE IT AFRESH AFTER CONSIDERING THE CONTENTION OF THE ASSESSEE AND ALSO AFTER CONSIDERING THE ITA NOS. 413 & 391-CHD-2017 & 802 & 803-CHD-2018 M/S VARDHMAN POLYTEX LIMITED, LUDHIANA 12 AVAILABILITY OF THE FUNDS WITH THE ASSESSEE AND IN THE LIGHT OF THE DECISIONS AVAILABLE OF THE HIGHER / HIGHEST COURT I NCLUDING THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT (L TU) VS. RELIANCE INDUSTRIES LTD. (SUPRA) 15. GROUND NO.4 : VIDE GROUND NO. 4, THE REVENUE HAS AGITATED THE ACTION OF THE CIT(A) IN DELETING THE DISALLOWANCE O F DEPRECIATION MADE BY THE ASSESSING OFFICER AFTER REDUCING THE CAPITA L PROFIT EARNED ON BUY BACK OF FOREIGN CURRENCY CONVERTIBLE BONDS FROM THE WRITTEN DOWN VALUE OF THE BLOCK OF ASSETS. 16. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT THE ASSESSEE EARNED CERTAIN PROFITS FORM THE BUY BACK OF THE FOREIGN E XCHANGE CONVERTIBLE BONDS. THE ASSESSING OFFICER OBSERVED THAT SINCE AS PER THE SCHEME, THE ASSESSEE HAD TO INVEST FUNDS RECEIVED FROM ISSUE O F FOREIGN EXCHANGE CONVERTIBLE BONDS IN ITS CAPITAL ASSETS, THEREFORE, ANY PROFITS EARNED BY THE ASSESSEE FROM BUY BACK OF FOREIGN EXCHANGE CONV ERTIBLE BONDS WOULD BE A CAPITAL RECEIPT AND WILL GO ON TO REDUC E THE COST OF ASSETS PURCHASED OUT OF FUNDS RECEIVED FROM ISSUE OF FORE IGN EXCHANGE CONVERTIBLE BONDS. HE, ACCORDINGLY REDUCED THE COS T OF ASSETS FROM THE WRITTEN DOWN VALUE OF THE AMOUNT OF PROFITS EARNED ON BUYBACK OF FOREIGN EXCHANGE CONVERTIBLE BONDS AND ACCORDINGLY REDUCED THE ALLOWABLE DEPRECIATION ON THE WRITTEN DOWN VALUE OF THE ASSETS. ITA NOS. 413 & 391-CHD-2017 & 802 & 803-CHD-2018 M/S VARDHMAN POLYTEX LIMITED, LUDHIANA 13 17. BEFORE US, LD. COUNSEL FOR THE ASSESSEE HAS SUB MITTED THAT THE LD. CIT(A) HAS DELETED THE DISALLOWANCE SO MADE BY THE ASSESSING OFFICER OBSERVING THAT THE PROFITS EARNED ON BUY BACK OF F OREIGN EXCHANGE CONVERTIBLE BONDS WERE NOT REDUCED FROM THE BLOCK OF ASSETS. THAT THE COST INCURRED BY THE ASSESSEE ON THE ASSETS HAS NO RELEVANCY WITH THE PROFITS EARNED ON BUY BACK OF FOREIGN EXCHANGE CONV ERTIBLE BONDS. 18. WE FIND FORCE IN THE ABOVE CONTENTION OF THE LD . COUNSEL FOR THE ASSESSEE. HOWEVER, WE ALSO FIND FORCE IN THE ALTERN ATIVE CONTENTION OF THE LD. DR THAT THE ASSESSEE HAS CLAIMED PREMIUM PAID O N REDEMPTION OF FOREIGN EXCHANGE CONVERTIBLE BONDS AS REVENUE EXPEN DITURE. THAT APPLYING THE SAME ANALOGY, IF THE ASSESSEE BUYS BAC K THE FOREIGN EXCHANGE CONVERTIBLE BONDS AT A LOWER RATE, THEN TH E PROFIT EARNED BY THE ASSESSEE FORM FOREIGN EXCHANGE CONVERTIBLE BOND S SHOULD BE TREATED AS REVENUE RECEIPT. AFTER CONSIDERING THE RIVAL SUB MISSIONS, WE ARE OF THE VIEW, THAT THIS ISSUE REQUIRES FACTUAL EXAMINAT ION AS TO THE NATURE OF RECEIPTS IN THE HANDS OF THE ASSESSEE ON BUY BACK O F FOREIGN EXCHANGE CONVERTIBLE BONDS. IT IS TO BE NOTED THAT IN THE EARLIER PARAS OF THIS ORDER, WE WHILE ADJUDICATING THE ISSUE RAISED IN ASSESSEES APPEAL ITA NO. 391/CHD/2017 HAVE ALREADY HELD THE PREMIUM OF INTEREST PAYMENT O N REDEMPTION OF FOREIGN EXCHANGE CONVERTIBLE BONDS AS REVENUE EXPEN DITURE. IN VIEW OF THIS, THIS ISSUE IS RESTORED TO THE FILE OF THE ASSESSING OFFICER TO ITA NOS. 413 & 391-CHD-2017 & 802 & 803-CHD-2018 M/S VARDHMAN POLYTEX LIMITED, LUDHIANA 14 EXAMINE THE NATURE OF THE RECEIPTS ON BUY BACK OF F OREIGN EXCHANGE CONVERTIBLE BONDS AND THEN TO DECIDE THE ISSUE AFRE SH AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE RELEVANT CA SE LAWS AS MAY BE CITED BY THE ASSESSEE. THIS GROUND IS ACCORDINGLY TREATED AS ALLOWED FOR S TATISTICAL PURPOSES. 19. GROUND NO.5 & 6: THESE GROUNDS ARE GENERAL IN NATURE AND DO NOT REQUIRE ANY SPECIFIC ADJUDICATION. IN VIEW OF THE FINDINGS GIVEN ABOVE, THE APPEAL OF THE REVENUE IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 20. ITA NO. 802/CHD/2018 (A.Y.2013-14) THE REVENUE IN THIS APPEAL HAS TAKEN FOLLOWING GROU NDS OF APPEAL:- 1. WHETHER UPON FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS JUSTIFIED IN LAW AND ON FACTS IN DELETING THE ADDITION MADE ON ACCOUNT OF DISALLOWANCE U/S. 14A OF THE INCOME TAX ACT, 1961? 2. WHETHER UPON FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS JUSTIFIED IN LAW AND ON FACTS IN DELETING THE ADDITION ON ACCOUNT OF DISALLOWANCE OF INTEREST U/S. 36(1)(III) OF THE INCOME TAX ACT, 1961 ON INVESTMENTS & CAPITAL ADVANCES? 3. WHETHER UPON FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS JUSTIFIED IN LAW AND ON FACTS IN DELETING THE ADDITION MADE ON ACCOUNT OF INTEREST PAYMENT ON 'FOREIGN ITA NOS. 413 & 391-CHD-2017 & 802 & 803-CHD-2018 M/S VARDHMAN POLYTEX LIMITED, LUDHIANA 15 CURRENCY CONVERTIBLE BONDS' BY TREATING THE SAME AS REVENUE IN NATURE? 4. THAT THE ORDER OF THE LD. CIT (A) BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 5. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY GROUND OF APPEAL BEFORE IT IS FINALLY DISPOSED OFF. 21. GROUND NO.1 : VIDE GROUND NO.1, THE REVENUE HAS AGITATED THE ACTION OF THE LD. CIT(A) IN DELETING THE ADDITI ON MADE U/S 14A OF THE ACT ON ACCOUNT OF DISALLOWANCE OUT OF IN TEREST EXPENDITURE INCURRED FOR EARNING OF TAX EXEMPT INCO ME. 22. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE DURING THE YEAR DID NOT EARN ANY TAX FREE DIVIDEND INCOME. THE ASSESSEE RECEIVED INTERES T ON MUTUAL FUNDS WHICH WAS WRONGLY TREATED AS DIVIDEND INCOME. THE LD.CIT(A) CONSIDERING THE ENTIRE FACTS AND CIRCUMST ANCES OF THE CASE AND RELYING UPON THE DECISION OF THE HON'BLE J URISDICTIONAL HIGH COURT IN THE CASE OF CIT, FARIDABAD VS LAKHAN I MARKETING INC. (2014) 49 TAXMANN. COM 257 AND FURT HER OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CHEMINVEST LTD [2015] 378 ITR 33 (DELHI), COORTECH ENERGY (P) LTD . (GUJ) 378 ITR 33 (DELHI) AND SHIVAM MOTORS (P) [2015] 272 CTR 277 (ALL) HELD THAT UNLESS THERE IS A RECEIPT OF EXEMPT INCOME DURING THE ASSESSMENT YEAR UNDER CONSIDERATION, DISALLOWAN CE U/S 14A ITA NOS. 413 & 391-CHD-2017 & 802 & 803-CHD-2018 M/S VARDHMAN POLYTEX LIMITED, LUDHIANA 16 OF THE ACT READ WITH RULE 8D OF THE RULES WOULD NOT BE ATTRACTED. IN ALL THE ABOVE REFERRED TO CASE LAWS, THE HON'BLE HIGH COURTS HAVE BEEN UNANIMOUS TO HOLD THAT NO DISALLOWANCE IS ATTRACTED U/S 14A IN CASE THE ASSESSEE HAS NOT EARNED ANY INCOME NOT FORMING PART OF THE TOTAL INCOME. SINCE THE ASSESSEE DID NOT EARN ANY TAX EXEMPT INCOME, HENCE, NO DISALLOWANCE U/S 14A IS ATTRACTED. 23. IN VIEW OF THIS, WE DO NOT FIND ANY INFIRMITY I N THE ORDER OF THE CIT(A) IN DELETING THE IMPUGNED DISALLOWANCE MA DE U/S 14A READ WITH RULE 8D OF THE I.T. RULES., 24. GROUND NO.2 : VIDE GROUND NO.2, THE REVENUE HAS AGITATED THE ACTION OF THE CIT(A) IN DELETING THE D ISALLOWANCE OF NOTIONAL INTEREST EXPENDITURE ON ACCOUNT OF INTERES T FREE ADVANCES MADE BY THE ASSESSEE OUT OF INTEREST BEARI NG FUNDS. THE LD. COUNSEL FOR THE ASSESSEE IN RESPECT OF THE ABOVE ISSUE HAS SUBMITTED THAT ASSESSEE WAS POSSESSED OF SUFFIC IENT OWN FUNDS TO MEET THE INVESTMENT / INTEREST FREE ADVANC ES. HE, IN THIS RESPECT HAS RELIED ON THE DECISION OF THE TRIBUNAL DATED 21.06.2019 (SUPRA) IN THE OWN CASE OF ASSESSEE (SUP RA) FOR ASSESSMENT YEAR ASSESSMENT YEARS 2010-11 & 2011-12. HOWEVER, AS PER THE DETAILS GIVEN BY THE COUNSEL FOR THE ASS ESSEE VIDE LETTER DATED 18.10.2019, THE TOTAL INVESTMENTS AS O N 31.3.2013 ITA NOS. 413 & 391-CHD-2017 & 802 & 803-CHD-2018 M/S VARDHMAN POLYTEX LIMITED, LUDHIANA 17 WERE AT RS. 13742.47 LACS AND INTEREST FREE FUNDS O F RS. 2648.28 LACS WERE GIVEN TO THE SUBSIDIARIES, HOWEVER, THE S HARE CAPITAL OF THE ASSESSEE AS ON 31.3.2013 WAS RS. 1787.75 LACS, WHEREAS, RESERVES AND SURPLUSES WERE AT RS. 8439.94 LACS TOT ALLING RS. 10227.69 LACS WHICH WERE LESS THAN THE TOTAL INVEST MENT AND INTEREST FREE ADVANCES. IN VIEW OF THIS, THE MATTER NEEDS FACTUAL EXAMINATION AT THE HANDS OF THE ASSESSING OFFICER. FOLLOWING THE SAME LINES AS DIRECTED ABOVE WHILE ADJUDICATING THE IDENTICAL ISSUE FOR ASSESSMENT YEAR 2012-13, THIS ISSUE IS AL SO RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR DECISION AFRE SH, AS DIRECTED ABOVE. 25. GROUND NO.3 : VIDE GROUND NO.3, THE REVENUE HAS AGITATED THE ACTION OF THE CIT(A) IN DELETING THE ADDITION M ADE ON ACCOUNT OF INTEREST PAYMENT ON 'FOREIGN CURRENCY CO NVERTIBLE BONDS BY TREATING THE SAME AS REVENUE IN NATURE. 26. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THIS ISSUE IS SQUARELY COVERED IN FA VOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBUNAL DATED 21. 6.2019 (SUPRA) PASSED IN RESPECT OF ASSESSMENT YEARS 2010- 11 AND 2011- 12, WHEREIN, THE ISSUE HAS BEEN DEALT WITH IN PARA 38 ONWARDS OF THE SAID ORDER. THE RELEVANT PART OF THE FINDINGS O F THE TRIBUNAL IS REPRODUCED AS UNDER:- ITA NOS. 413 & 391-CHD-2017 & 802 & 803-CHD-2018 M/S VARDHMAN POLYTEX LIMITED, LUDHIANA 18 42. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. THE ISSUE BEFORE US RELATES TO CLAIM OF THE ASSESSEE OF INTEREST EXPENDITURE INCURRED ON FCCB ISSUED BY IT. THE FACT THAT THE SAID BONDS WERE ISSUED AT INTEREST RATE OF 2% PER ANNUM TO BE PAID SEMI-ANNUALLY IS NOT DISPUTED. IT IS ALSO NOT DISPUTED THAT THE INTEREST WAS PAID ON THE BONDS AND NOT ON THEIR CONVERSION INTO EQUITY. THEREFORE, THE FINDINGS OF THE LD.CIT(A) THAT THE INTEREST EXPENDITURE WAS THE ACTUAL LIABILITY OF THE ASSESSEE ON LOANS TAKEN BY IT IN THE FORM OF BONDS, WE FIND IS CORRECT. THE LD. DR HAS BEEN UNABLE TO DRAW OUR ATTENTION TO ANY INFIRMITY IN THE FINDINGS OF THE LD.CIT(A) IN THIS REGARD. FURTHER THE LD. DR HAS BEEN UNABLE TO DRAW OUR ATTENTION /POINT OUT, AS TO WHY THE ASSESSEES CLAIM OF INTEREST EXPENDITURE WAS DISALLOWABLE. IN VIEW OF THE SAME, WE HAVE NO HESITATION IN UPHOLDING THE ORDER OF THE CIT(A) IN ALLOWING THE CLAIM OF INTEREST EXPENSES INCURRED ON FCCB AMOUNTING TO RS.1,20,92,984/-. THE GROUND OF APPEAL NO.4 AND 5 RAISED BY THE REVENUE ARE DISMISSED. 27. IN VIEW OF THIS, THERE IS NO MERIT IN THE GROUN D OF THE APPEAL AND, THEREFORE, GROUND NO.3 OF THE REVENUES APPEAL IS ACCORDINGLY DISMISSED. 28. GROUND NO. 4 & 5 : THESE GROUNDS ARE GENERAL IN NATURE AND DO NOT NEED ANY SPECIFIC ADJUDICATION. ITA NOS. 413 & 391-CHD-2017 & 802 & 803-CHD-2018 M/S VARDHMAN POLYTEX LIMITED, LUDHIANA 19 ITA NO. 803/CHD/2018( A.Y. 2014-15): 29. THE REVENUE IN THIS APPEAL HAS TAKEN THE FOLLOW ING GROUNDS OF APPEAL:- 1 WHETHER UPON FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A)WAS JUSTIFIED IN LAW AND ON FACTS IN DELETING THE ADDITION MADE ON ACCOUNT OF DISALLOWANCE U/S 14A OF THE INCOME TAX ACT, 1961? 2. WHETHER UPON FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS JUSTIFIED IN LAW AND ON FACTS IN DELETING THE ADDITION ON ACCOUNT OF DISALLOWANCE OF INTEREST U/S 36(L)(III) OF THE INCOME TAX ACT, 1961 ON INVESTMENTS & CAPITAL ADVANCES? 3. WHETHER UPON FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS JUSTIFIED IN LAW AND ON FACTS IN DELETING THE ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF DEPRECIATION OF RS.1,85,73,445/- MADE AFTER REDUCING THE CAPITAL PROFIT EARNED ON BUY BACK OF 'FOREIGN CURRENCY CONVERTIBLE BONDS' FROM THE WRITTEN DOWN VALUE OF THE BLOCK OF ASSETS? 4. THAT THE ORDER OF THE LD. CIT (A) BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 5. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY GROUND OF APPEAL BEFORE IT IS FINALLY DISPOSED OFF . 30. GROUND NO. 1 : VIDE GROUND NO.1, THE REVENUE HAS AGITATED THE ACTION OF THE LD. CIT(A) IN DELETING T HE ADDITION ITA NOS. 413 & 391-CHD-2017 & 802 & 803-CHD-2018 M/S VARDHMAN POLYTEX LIMITED, LUDHIANA 20 MADE U/S 14A OF THE ACT READ WITH RULE 8D OF THE IN COME TAX RULES ON ACCOUNT OF DISALLOWANCE OUT OF INTEREST EX PENDITURE WHICH HAS BEEN INCURRED FOR EARNING OF TAX EXEMPT I NCOME. WE FIND THAT THE FACTS AND ISSUE RAISED IS SIMILAR T O THAT HAS BEEN RAISED VIDE GROUND NO.1 BY THE REVENUE IN ITS APPEA L FOR ASSESSMENT YEAR 2013-14 IN ITA NO. 802/CHD/2018. 31. IN VIEW OF OUR FINDINGS ARRIVED AT WHILE DECIDI NG GROUND NO.1 OF THE REVENUES APPEAL FOR ASSESSMENT YEAR 20 13-14, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A ) IN DELETING THE IMPUGNED DISALLOWANCE MADE U/S 14A READ WITH RU LE 8D OF THE I.T. RULES. 32. GROUND NO.2 : VIDE THIS GROUND, THE REVENUE HAS AGITATED THE ACTION OF THE CIT(A) IN DELETING THE ADDITION M ADE BY THE ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE OUT OF INTEREST EXPENDITURE U/S 36(1)(III) OF THE ACT IN RESPECT O F INVESTMENT AND ADVANCE MADE FOR NON-BUSINESS PURPOSES OUT OF I NTEREST BEARING FUNDS. 33. THE LD. CIT(A) DELETED THE DISALLOWANCE SO MADE BY THE ASSESSING OFFICER ON THIS ISSUE OBSERVING THAT THE ASSESSEE WAS POSSESSED OF SUFFICIENT OWN FUNDS / INTEREST FREE F UNDS TO MEET THE INVESTMENT IN QUESTION OUT OF INTEREST BEARING FUNDS MADE BY THE ASSESSEE. THE REVENUE HAS, THUS, COME IN APPEAL BEFORE US. ITA NOS. 413 & 391-CHD-2017 & 802 & 803-CHD-2018 M/S VARDHMAN POLYTEX LIMITED, LUDHIANA 21 34. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AS PE R THE DETAILS GIVEN IN THE LETTER DATED OCTOBER,18, 2019 BY THE COUNSEL FOR THE ASSESSEE, THE TOTAL INVESTMENT AS ON 31.3.2 013 OF THE ASSESSEE WERE TA RS. 13742.47 LACS, WHEREAS, THE SA ME WERE AT RS. 13720.03 LACS AS ON 31.3.2014. THE SHARE CAPIT AL AND RESERVES AND SURPLUSES OF THE ASSESSEE WERE AT RS. 10227.69 LACS AS ON 31.3.2013, WHEREAS, THE SAME WERE AT RS. 1188 8.88 LACS AS ON 31.3.2014. THE ABOVE FACTS SHOWS THAT THE FINDI NGS OF THE CIT(A) THAT ASSESSEE WAS POSSESSED OF SUFFICIENT OW N FUNDS TO MEET THE INVESTMENT FROM INTEREST FREE ADVANCES DO NOT SEEM TO BE CORRECT. 35. AS ORDERED ABOVE WHILE DECIDING THE IDENTICAL G ROUND NO.2 OF THE APPEAL OF THE REVENUE FOR THE ASSESSMENT YEA R 2013-14, THIS ISSUE IS ALSO RESTORED TO THE FILE OF THE ASSE SSING OFFICER TO EXAMINE THE ACCOUNTS AND THE FUNDS AVAILABLE WITH T HE ASSESSEE AND ALSO TO CONSIDER THE OTHER CONTENTIONS AS MAY B E MADE OR RAISED BY THE ASSESSEE AND DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW. 36. GROUND NO. 3 : VIDE GROUND NO.3, THE REVENUE HAS AGITATED THE ACTION OF THE CIT(A) IN DELETING THE ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF DEPRECIATION OF RS.1,85,73,445/- MA DE AFTER REDUCING THE ITA NOS. 413 & 391-CHD-2017 & 802 & 803-CHD-2018 M/S VARDHMAN POLYTEX LIMITED, LUDHIANA 22 CAPITAL PROFIT EARNED ON BUY BACK OF 'FOREIGN CURRE NCY CONVERTIBLE BONDS' FROM THE WRITTEN DOWN VALUE OF THE BLOCK OF ASSETS. 37. WE FIND THAT THIS GROUND IS IDENTICAL TO THAT HAS BEEN RAISED BY THE REVENUE VIDE GROUND NO.4 OF ITS APPEAL FOR ASSESSM ENT YEAR 2012-13. IN VIEW OF OUR FINDING GIVEN ABOVE WHILE DECIDING T HE GROUND NO.4 OF THE REVENUES APPEAL FOR ASSESSMENT YEAR 2012-13 , THIS ISSUE IS RESTORED TO THE FILE OF THE ASSESSING OFFICER TO EX AMINE THE NATURE OF THE RECEIPTS OF BUY BACK OF FOREIGN EXCHANGE CONVERTIBL E BONDS AND THEN TO DECIDE THE ISSUE AFRESH AFTER CONSIDERING THE SUBMI SSIONS OF THE ASSESSEE AND THE RELEVANT CASE LAWS AS MAY BE CITED BY THE A SSESSEE. THIS GROUND IS ACCORDINGLY TREATED AS ALLOWED FOR S TATISTICAL PURPOSES. 38. GROUND NOS.4 & 5 : THESE GROUNDS ARE GENERAL IN NATURE AND DO NOT REQUIRE ANY SPECIFIC ADJUDICATION. IN VIEW OF THIS, ASSESSEES APPEAL IN ITA NO. 391/C HD/2017 IS ALLOWED AND REVENUES APPEALS IN ITA NOS. 413/CH D/2017, 802 & 803/CHD/2018 STAND PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20.12.2019. SD/- SD/- ( . . / N.K. SAINI) ( ! / SANJAY GARG) '#$ / VICE PRESIDENT %& / JUDICIAL MEMBER DATED : 20.12.2019 ITA NOS. 413 & 391-CHD-2017 & 802 & 803-CHD-2018 M/S VARDHMAN POLYTEX LIMITED, LUDHIANA 23 .. 3+&*4565* / COPY OF THE ORDER FORWARDED TO : 1. '$ / THE APPELLANT 2. &'
'$ / THE RESPONDENT 3. - 7* / CIT 4. - 7* ( )/ THE CIT(A) 5. 58 &*9 , /
9 , :;<= / DR, ITAT, CHANDIGARH 6. <> . / GUARD FILE 3 - / BY ORDER, ? / ASSISTANT REGISTRAR
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