Century Enka Limited, Pune V. DCIT, Circle-6(1), Kolkata, Kolkata

ITA 432/KOL/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0787 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 03-03-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SAURABH KUMAR CIT SRDR
• Assessee Lawyers: AKASH MANSINGH
• Keywords: Earning of tax free income; Proportionate interest
• Section: 143(3); 14A

Judgement Text

, C , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH C KOLKATA BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND SHRI, M. BALAGANESH, ACCOUNTANT MEMBER ITA NO. 432 / KOL / 20 17 ASSESSMENT YEAR :2013-14 CENTURY ENKA LTD. PLOT NO. 72 & 72A, TELCO BHOSARI ROAD, MIDC- BHOSARI, PUNE-411026 [ PAN NO.AABCC 2491 D ] V/S . DCIT, CIRCLE-6(1), AAYAKAR BHAVAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-69 /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI AKASH MANSINGH, AR /BY RESPONDENT SHRI SAURABH KUMAR, ADDL. CIT-SR-DR /DATE OF HEARING 12-11-2018 /DATE OF PRONOUNCEMENT 30-11-2018 / O R D E R PER S.S.GODARA, JUDICIAL MEMBER:- THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2013-14 ARISES AGAINST COMMISSIONER OF INCOME TAX (APPEALS)-2,KOLK ATAS ORDER DATED 05.12.2016 PASSED IN CASE NO.17/CIT(A)-2/16-17, INV OLVING PROCEEDINGS U/S 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT T HE ACT. HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. THE ASSESSEES FIRST SUBSTANTIVE GROUND CHALLENG ES CORRECTNESS OF BOTH THE LOWER AUTHORITIES ACTION INVOKING SEC. 14A R.W.S. RULE 8D DISALLOWANCE OF 6,31,301/- IN RELATION TO ITS EXEMPT INCOME OF ITA NO.432/KOL/2017 A.Y. 2013-14 CENTURY ENKA LTD. VS. DCIT, CIR-6(1) KO L. PAGE 2 16,44,994/-. WE FIND THAT THE ASSESSING OFFICER HAD ARRIVED AT THE IMPUGNED DISALLOWANCE UNDER RULE 8D(2)(II) IN RESPE CT OF PROPORTIONATE INTEREST EXPENDITURE AS AFFIRMED IN THE LOWER APPEL LATE PROCEEDINGS. IT EMERGES FROM THE CASE FILE THAT ASSESSEES OWN FUN DS / SHAREHOLDERS FUNDS COMPRISING OF SHARE CAPITAL AS WELL RESERVED AND SURPLUS READ FIGURES OF 653.83 CRORES AS AGAINST THEREFORE INVESTMENT OF 3.19 CRORES. IT HAS ATTACHED ITS FINANCIAL STATEMENTS E XTRACTS RELEVANT TO THE IMPUGNED ASSESSMENT YEAR AS ANNEXURE A-3 DURING THE COURSE OF HEARING. THE REVENUE FAILS TO DISPUTE CORRECTNESS T HEREOF. COUPLED WITH THIS, WE FIND THAT THIS TRIBUNAL CO-ORDINATE BENCH S DECISION IN ASSESSEES OWN CASE ITA NO.335/KOL/2012 DECIDED ON 18.05.2016 HOLDS THAT THE RELEVANT PRESUMPTION IN SUCH AN INSTANCE IS THAT OF UTILIZATION OF NON- INTEREST BEARING FUND IS TAXPAYERS INVESTMENT ONLY AS PER HON'BLE BOMBAY HIGH COURTS LANDMARK DECISION IN CIT VS. RELIANCE UTILITIES & POWER LTD. 313 ITR 340 (BOM). WE THEREFORE ADOPT JUDICIAL CON SISTENCY TO DELETE THE IMPUGNED DISALLOWANCE OF 6,31,301/-. THE ASSESSEE SUCCEEDS IN ITS FIRST SUBSTANTIVE GROUND. 3. NEXT COMES ASSESSEES SECOND SUBSTANTIVE GROUND THAT THE ABOVE SEC. 14A DISALLOWANCE OUGHT NOT TO HAVE BEEN INCLUD ED IN MAT COMPUTATION UNDER SEC.115JB OF THE ACT. THE SAME I S RENDERED INFRUCTUOUS AS THE VERY FOUNDATION OF THE SEC. 14A R.W.S 8D DISALLOWANCE NO MORE SURVIVES AS PER OUR FOREGOING DISCUSSION. T HE ASSESSEE SUCCEEDS IN ITS INSTANT SECOND SUBSTANTIVE GROUND A S WELL. 4. THIS LEAVES US WITH ASSESSEES THIRD AND LAST GR IEVANCE SEEKING ADDITIONAL MAT CREDIT OF 2,27,793/- PERTAINING TO ASSESSMENT YEAR 2012-13 AS AGAINST MAT CREDIT OF 1,13,591/- ONLY ALLOWED IN ASSESSMENT ORDER. BOTH THE LEARNED REPRESENTATIVES ARE UNANIMOUS THAT ITA NO.432/KOL/2017 A.Y. 2013-14 CENTURY ENKA LTD. VS. DCIT, CIR-6(1) KO L. PAGE 3 THIS LAST ISSUE REQUIRES FACTUAL VERIFICATION AT TH E ASSESSING OFFICERS END. WE THEREFORE RESTORE ASSESSEES INSTANT GRIEVANCE T O THE ASSESSING OFFICER FOR FACTUAL VERIFICATION AS PER LAW. 5. THIS ASSESSEES APPEAL IS PARTLY ALLOWED IN ABOV E TERMS. ORDER PRONOUNCED IN THE OPEN COURT 30/11/2018 SD/- SD/- ( %) (' %) (M.BALAGANESH) (S.S.GODARA) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) KOLKATA, *DKP, SR.P.S (- 30 / 11 /201 8 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-CENTURY ENKA LTD. PLOT NO.72&&72A, TELCO -BHOSARI ROAD, MIDC- BHOSARI, PUNE-4 11026 2. /RESPONDENT-DCIT, CIRI-6(1), AAYAKAR BHAVAN, P-7, C HOWRINGHEE SQ. KOLKATA-69 3. 3 4 / CONCERNED CIT KOLKATA 4. 4- / CIT (A) KOLKATA 5. 7 ''3, 3, / DR, ITAT, KOLKATA 6. < / GUARD FILE. BY ORDER/ , /TRUE COPY/ / 3,