M/s Punjab State Coop Milk Producers Federation Ltd., Chandigarh V. ACIT, C-4(1), Chandigarh

ITA 459/CHANDI/2018

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9213 (ITAT-CHANDIGARH)
• Duration Of Justice: 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-12-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 19-09-2018
• Assessment Year: 2010-2011
• Appeal Filed On: 13-04-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ASHISH GUPTA
• Assessee Lawyers: AMITOZ SINGH
• Keywords: Depreciation
• Section: 80HHC; 14A; 80P; 154

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH B , CHANDIGARH , !'# $' % & , '( BEFORE: SHRI SANJAY GARG, JM & SMT.ANNAPURNA GUPTA, AM ./ ITA NO.459/CHD/2018 / ASSESSMENT YEAR : 2010-11 M/S THE PUNJAB STATE CO-OPERATIVE MILK PRODUCE FEDERATION LIMITED, SCO 153-155, SECTOR 34-A, CHANDIGARH. THE A.C.I.T., CIRCLE 4(1), CHANDIGARH. ./PAN NO: AAAAP1208Q /ASSESSEE BY : SHRI AMITOZ SINGH, CA / REVENUE BY : SHRI ASHISH GUPTA, CIT DR ! /DATE OF HEARING : 19.09.2018 '#$% /DATE OF PRONOUNCEMENT: 17.12.2018 ') /ORDER PER ANNAPURNA GUPTA, AM : THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-2, CHANDIGARH (IN SHORT CIT(A) DATED 18 .1.2018 PASSED U/S 250(6) OF THE INCOME TAX AT, 1961 (HEREI NAFTER REFERRED TO AS ACT). 2. THE SOLE ISSUE RAISED BEFORE US RELATES TO WHETH ER THE A.O. IN REMAND PROCEEDINGS COULD HAVE ENHANCED THE DISALLOWANCE MADE EARLIER AND THE GROUND RAISED BY THE ASSESSEE READS AS UNDER: 1. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AS WELL AS ON FACTS IN UPHOLDING THE DISALLOWANCES AS PER RULE 8D IGNORING THE FACT THAT THE SAID DISALLOWANCE RESULTED TO FURTHER ADDITION TO T HE INCOME OF THE ASSESSEE WHICH IS NOT PERMISSIBLE IN LAW AS ITA NO.459/CHD/2018 A.Y.2010-11 2 IT RESULTED IN ENHANCEMENT IN INCOME OF THE ASSESSE E BY RS.3,21,88,682/-. 3. BRIEF FACTS RELATING TO THE CASE ARE THAT THE AS SESSEE HAD CLAIMED DEDUCTION U/S 80P(2)(D) OF THE ACT IN R ESPECT OF INTEREST EARNED FROM THE MEMBER SOCIETIES. THE ASSE SSEE DID NOT TAKE INTO ACCOUNT THE ENTIRE EXPENDITURE ATTRIBUTABLE TO THE EARNING OF INTEREST INCOME WHIL E COMPUTING THIS DEDUCTION. THE A.O. NOTED THAT THE T RIBUNAL HAD DECIDED THIS ISSUE AGAINST THE ASSESSEE FOR ASS ESSMENT YEARS 2002-03, 2005-06 AND 2006-07 IN THE EARLIER Y EAR, THE APPEAL OF THE ASSESSEE AGAINST WHICH HAD BEEN DISMISSED BY THE HON'BLE HIGH COURT. THE A.O., THER EFORE, RECOMPUTED THE EXPENSES FOLLOWING THE ORDER OF THE TRIBUNAL AND ACCORDINGLY DISALLOWED THE EXPENSES TO THE TUNE OF RS.60,58,021/- OUT OF FINANCIAL AND ADMINIS TRATIVE EXPENSES ATTRIBUTING THE SAME TO THE EARNING OF INT EREST INCOME. THE MATTER WENT UP TO THE I.T.A.T. WHO RES TORED THE ISSUE BACK TO THE A.O. FOR RECOMPUTING THE DISA LLOWANCE AS PER THE PROVISIONS OF SECTION 14A R.W.R. 8D OF T HE INCOME TAX RULES, 1962. IN THE SET ASIDE PROCEEDINGS THE A .O. ACCORDINGLY COMPUTED THE DISALLOWANCE AT RS.3,82,46 ,703/- WHICH WAS UPHELD BY THE CIT(A). 4. BEFORE US THE LD. COUNSEL FOR ASSESSEE CONTENDED THAT PURSUANT TO THE DIRECTIONS OF THE TRIBUNAL THE A.O. COULD NOT HAVE ENHANCED THE DISALLOWANCE SINCE IT IS SETT LED LAW THAT THE I.T.A.T. HAS NO POWER OF ENHANCEMENT. RELI ANCE WAS PLACED ON THE FOLLOWING CASE LAWS: ITA NO.459/CHD/2018 A.Y.2010-11 3 1) MCORP GLOBAL(P) LTD. VS. CIT, GHAZIABAD(SC)(2009)178 TAXMAN 347, 309 ITR 434(SC)(2009), 222 CTR 110 (SC)(2009) 2) SANMAR SPECIALTY CHEMICALS LTD. VS. INCOME TAX OFFICER, COMPANY WARD VI(1), CHENNAI 3) FIDELITY SHARES & SECURITIES LTD. VS. DEPUTY COMMISSIONER OF INCOME/TAX(ASSESSMENT) (2017) 82 TAXMANN.COM 108(GUJARAT)/390 ITR 267 5. THE LD. DR, ON THE OTHER HAND, HEAVILY RELIED UP ON THE ORDER OF THE CIT(A) STATING THAT THE CASE LAWS RELI ED UPON BY THE ASSESSEE ARE OF NO ASSISTANCE TO IT SINCE THE C IT(A) HAD RIGHTLY POINTED OUT THAT THE ASSESSEE HIMSELF HAD P LEADED BEFORE THE I.T.A.T. THAT CALCULATION OF THE DISALLO WANCE TO BE WORKED OUT AS PER SECTION 14A R.W.R. 8D OF THE I NCOME TAX RULES AND THE FINDING OF THE A.O. AS A CONSEQUE NCE IS WHAT THE ASSESSEE ITSELF WANTED. THE LD. DR POINTED OUT FROM THE ORDER OF THE CIT(A) THAT IN FACT, THE LAW HAD BEEN CORRECTLY APPLIED IN THE PRESENT CASE AND THAT IN E ARLIER YEARS WHEN SIMILAR APPLICATION OF RULE 8D HAD RESUL TED EITHER IN NO CHANGE IN THE DISALLOWANCE OR REDUCTIO N IN THE DISALLOWANCE, THE ASSESSEE HAD ACCEPTED THE SAME. THEREFORE, THE LAW HAVING TO BE APPLIED UNIFORMLY, THE SAME CANNOT BE CHANGED IN THE IMPUGNED YEAR MERELY ON TH E GROUND THAT IT HAS RESULTED IN ENHANCEMENT OF DISAL LOWANCE WHICH IS IMPERMISSIBLE AS PER SETTLED POSITION OF L AW. OUR ATTENTION WAS DRAWN TO THE RELEVANT FINDINGS OF THE CIT(A) AT PARA 9.3.2 OF HIS ORDER AS UNDER: 9.3.2 AFTER CONSIDERING THE ABOVE CASE LAWS, I PROCEED TO EXAMINE THE FACTS OF THE ASSESSEE'S CASE . IN THE PRESENT CASE THE ASSESSEE HAD ITSELF PLEADED BEFORE THE ITAT IN GROUND NO 3 THAT ' THE ORDER OF THE ASSESSING OFFICER AS UPHELD BY THE COMMISSIONER OF ITA NO.459/CHD/2018 A.Y.2010-11 4 INCOME TAX, CHANDIGARH HOLDING RS 60,58,021/- AS EXPENSE ATTRIBUTABLE TO THE DEDUCTION U/S 80P(2)D O N THE BASIS OF EARLIER YEARS MORE SO WHEN RULE 8D WAS APPLICABLE TO DETERMINE SUCH EXPENSE IS BAD IN LAW AND NEED TO BE SET ASIDE'. THUS THE ASSESSEE HAD ITSELF REQUESTED THE ITAT THAT THE PROVISIONS OF RU LE 8D MAY BE APPLIED TO IT. THE DECISIONS QUOTED BY TH E ASSESSEE ARE DIFFERENT IN FACTS AS IN NO SUCH CASE THE ENHANCEMENT HAD RESULTED IN CONSEQUENCE OF A PRAYER BY THE ASSESSEE HIMSELF. THE FINDING IS NOT ADVERSE TO THE ASSESSEE BUT TO THE CONTRARY IT IS WHAT THE ASSESSEE HIMSELF WANTED. IF THE CONSEQUENCE OF THE CORRECT APPLICATION OF LAW RESUL TS IN MORE DISALLOWANCE, THE SAME IS NOT CONTRARY TO LAW. THE INCREASE IN THE DISALLOWANCE HAS RESULTED FROM THE CORRECT APPLICATION OF RULE 8D. MOREOVER IN OTH ER YEARS WHERE THE SIMILAR APPLICATION RULE 8D HAS RESULTED IN EITHER NO CHANGE IN THE DISALLOWANCE OR REDUCED THE DISALLOWANCE, THE SAME HAS BEEN ACCEPTED BY THE ASSESSEE. SUCH A POSITION IS NOT PERMISSIBLE IN LAW. THE LAW HAS TO BE APPLIED UNIFORMLY IN ALL THE YEARS. THUS I DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE AO AND THE SAME IS UPHELD. GROUND OF APPEAL NO 4 IS DISMISSED . 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND GON E THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND ALS O CAREFULLY GONE THROUGH THE CASE LAWS REFERRED TO BE FORE US. THE ISSUE TO BE DECIDED AND ADJUDICATED BY US IS WH ETHER PURSUANT TO THE DIRECTIONS OF THE I.T.A.T. THE DISA LLOWANCE OF EXPENSES RELATABLE TO EARNING OF INTEREST INCOME ELIGIBLE FOR DEDUCTION U/S 80P OF THE ACT, COMPUTED BY THE A O, WHICH WAS MORE THAN THAT DISALLOWED IN THE ORIGINAL PROCEEDINGS WAS PERMISSIBLE AS PER LAW. THE CONTENT ION OF THE LD.COUNSEL FOR THE ASSESSEE IS THAT THE ITAT HA VING NO POWER OF ENHANCEMENT U/S 254 OF THE ACT, THE AO COU LD NOT HAVE ENHANCED THE AMOUNT OF DISALLOWANCE PURSUANT T O DIRECTION OF THE ITAT. THE CONTENTION OF THE REVENU E ON THE OTHER HAND IS THAT, THE ENHANCEMENT HAS RESULTED ON ACCOUNT OF THE PRAYER OF THE ASSESSEE ITSELF TO APP LY RULE 8D ITA NO.459/CHD/2018 A.Y.2010-11 5 ENHANCING THE DISALLOWANCE WHICH THE ITAT HAS NO PO WERS TO DIRECT AND THAT EVEN OTHERWISE ,SUCH DISALLOWANC E CALCULATED IN OTHER YEARS HAS BEEN ACCEPTED BY THE ASSESSEE. THEREFORE, THE LD.DR HAS CONTENDED THAT T HE DISALLOWANCE HAS BEEN CORRECTLY WORKED OUT AS PER L AW AND CANNOT NOW BE CHALLENGED FOR THE AFORESTATED REASON . 7. WE DO NOT FIND ANY MERIT IN THE CONTENTION OF TH E LD.COUNSEL FOR THE ASSESSEE AT ALL. IN FACT WE FIND THAT THE ITAT IN THE PRESENT CASE HAS NOT DIRECTED ANY ENHAN CEMENT OF DISALLOWANCE AT ALL. THE ITAT HAD ONLY LAID DOW N A PRINCIPLE TO APPLY RULE 8D FOR CALCULATING THE DISA LLOWANCE, THAT TOO JUDICIOUSLY ACCEPTING THE CONTENTION OF T HE ASSESSEE IN THIS REGARD. THIS IS EVIDENT FROM PARA 13 & 14 OF THE ORDER OF THE ITAT WHICH IS REPRODUCED HEREUN DER: THEREFORE FOLLOWING THE ORDER OF THE HON'BLE HIGH COURT IN ITA NO.444 OF 2011 AND WE DECIDE THIS ISSUE AGAINST THE ASSESSEE.'1?WAS ALSO CONTENDED THAT IN ANY CASE RULE 8 D HAS BECOME APPLICABLE FROM ASSESSMENT YEAR 2008-09 AND THEREFORE FOR COMPUTING THE DISALLOWANCE UNDER RULE 8D READ WITH SECTION 14-A, DISALLOWANCE SHOULD BE CALC ULATED AS PER THIS RULE. 14. WE FIND MERIT IN THIS CONTENTION AND THEREFORE SET ASIDE THE ORDER OF LD. CIT(A) AND REMIT THE MATTER B ACK TO THE FILE OF AO FOR RE-COMPUTING THE DISALLOWANCE U/S 1 4-A READ WITH RULE 8P(2)(D). 15. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. WHILE GIVING THE DIRECTION IT WAS NOT IN THE KNOWL EDGE OF THE ITAT THAT IT WOULD RESULT IN ENHANCEMENT OF DISALLOWANCE.FOR THAT MATTER EVEN THE ASSESSEE WAS ALSO NOT AWARE OF THIS FACT ,OR IT WOULD NOT HAVE MADE SUCH A REQUEST IN THE FIRST PLACE.THAT THE DIRECTION RESULTED IN ITA NO.459/CHD/2018 A.Y.2010-11 6 ENHANCEMENT OF DISALLOWANCE IS ONLY CONSEQUENTIAL. IN SUCH CIRCUMSTANCES IT CANNOT BE SAID THAT THE ITAT HAD D IRECTED FOR ENHANCEMENT OF THE DISALLOWANCE. THE ITAT HAD O NLY DIRECTED APPLICATION OF A PARTICULAR METHOD FOR CA LCULATING THE DISALLOWANCE,WHICH IS A DIRECTION REGARDING APPLICABILITY OF CORRECT LAW, AND WHILE GIVING SUCH DIRECTIONS COURTS CANNOT POSSIBLY TAKE NOTE OF THE CONSEQUENCE S OF THE SAME WHETHER IT RESULTS IN ENHANCEMENT OR REDUCTIO N OF ADDITION/DISALLOWANCE MADE. IT IS NOT THE CASE THA T THE DIRECTION OF THE ITAT WAS TO DISALLOW A SPECIFIC SUM ,APPLYING A PARTICULAR RULE. IT IS ONLY IN SUCH CA SES THAT THE DIRECTION COULD BE SAID TO BE FOR ENHANCING DIS ALLOWANCE ,WHICH UNDOUBTEDLY THE ITAT HAS NO POWER.IN THE PRE SENT CASE,THE QUANTUM OF DISALLOWANCE HAD NOT BEEN SPECI FIED BY THE ITAT IN ITS DIRECTION NOR WAS IT KNOWN TO IT,AS STATED ABOVE. THE DIRECTION WAS ONLY CONFINED TO APPLICABI LITY OF A PARTICULAR METHOD/RULE FOR CALCULATING DISALLOWANCE .IN SUCH CASES THE DIRECTION GIVEN BY THE ITAT ,CANNOT BY ANY STRETCH OF LOGIC BE SAID TO BE A DIRECTION FOR ENHA NCEMENT OF DISALLOWANCE MADE.THE CASE LAWS RELIED UPON BY THE LD.COUNSEL FOR THE ASSESSEE ARE OF NO ASSISTANCE S INCE IN THE FACTS OF THOSE CASES THE DIRECTION OF THE ITAT WAS TO ENHANCE THE INCOME/DISALLOWANCE.IN THE CASE OF MCOR P GLOBAL(SUPRA) ,RELIED UPON BY THE LD.COUNSEL FOR TH E ASSESSEE,THE ASSESSEE HAD CLAIMED DEPRECIATION OF RS.1,80,30,489/- ON LEASED ASSETS ,WHICH THE AO HAD DISALLOWED TO THE EXTENT OF RS.48,21,694/-,ALLOWING THE BALANCE OF RS.1,32,08,795/-.THE ITAT DIRECTED DISAL LOWANCE ITA NO.459/CHD/2018 A.Y.2010-11 7 OF ENTIRE DEPRECIATION,TO WHICH THE HONBLE SUPREME COURTHELD THAT IT WAS NOT EMPOWERED TO TAKE BACK TH E BENEFIT GRANTED BY THE AO.CLEARLY ,THE DIRECTION OF THE ITAT IN THE SAID CASE WAS TO ENHANCE THE DISALLOWANCE OF DEPRECIATION ,WHICH WAS RULED OUT BY THE APEX COURT .IN THE CASE OF SANMAR SPECIALITY (SUPRA),THE QUESTION FRAM ED BEFORE THE HONBLE MADRAS HIGH COURT WAS WHETHER TH E TRIBUNAL WAS EMPOWERED TO GIVE SUCH DIRECTIONS TO T HE AO, KNOWING THAT THEY WOULD RESULT IN ENHANCING THE ASSESSMENT.THIS WAS ANSWERED IN THE NEGATIVE BY THE HONBLE HIGH COURT RELYING UPON THE LAW LAID DOWN I N THIS REGARD BY THE APEX COURT IN MCORP GLOBAL(SUPRA).THE QUESTION FRAMED WAS AS UNDER: 2.WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE TRIBUNAL WAS RIGHT IN DIRECTING THE ASSESSING O FFICER TO DETERMINE THE DEPRECIATION OR BUSINESS LOSS OF EACH YEAR AND TO CARRY FORWARD LOWER OF TWO FOR ADJUSTMENT WHICH WILL RESULT IN ENHANCEMENT OF ASSESSMENT FOR WHICH THE T RIBUNAL HAS NO POWER CLEARLY IN THE AFORESAID CASE ALSO THE DIRECTION OF THE TRIBUNAL WAS TO ENHANCE THE ASSESSMENT AFTER MAKIN G CERTAIN ADJUSTMENTS, SINCE AS IS EVIDENT FROM THE Q UESTION FRAMED, THE DIRECTION WAS TO MAKE CERTAIN ADJUSTME NTS WHICH WOULD RESULT IN ENHANCEMENT OF ASSESSMENT,MEA NING THEREBY THAT THERE WAS NO DOUBT THAT THE ADJUSTMENT S WOULD RESULT IN ENHANCEMENT AND KNOWING THE SAME THE DIRE CTION OF THE TRIBUNAL WAS FOR ALL PURPOSES SPECIFICALLY F OR ENHANCEMENT. IN THE PRESENT CASE NEITHER THE TRIBUN AL NOR THE ASSESSEE WERE IN THE KNOW THAT THE DIRECTION WO ULD ITA NO.459/CHD/2018 A.Y.2010-11 8 RESULT IN ENHANCING THE DISALLOWANCE WHICH WAS ONLY CONSEQUENTIAL THEREFORE. THE DIRECTION ,IN THE IMPU GNED CASE THEREFORE ,AS HELD BY US ABOVE,CANNOT BE SAID TO BE FOR ENHANCING THE DISALLOWANCE. IN THE CASE OF FIDELITY SHARES(SUPRA) ,THE QUESTION BEFORE THE HONBLE GUJR AT HIGH COURT WAS: 5. WHETHER THE TRIBUNAL HAD POWER TO PASS SUCH AN ORDE R WHEREBY THE TOTAL INCOME OF THE ASSESSEE WAS FAR MO RE THAN THE TOTAL INCOME ASSESSED BY THE ASSESSING OFFICER AND THAT TOO IN THE ABSENCE OF ANY GROUNDS OF APPEAL TAKEN B Y THE REVENUE PRAYING FOR SUCH DECISION AND WITHOUT HEARI NG THE ASSESSEE ON SUCH PROPOSED RESULT THE FACTS BEFORE THE HONBLE HIGH COURT WAS THAT , THE AO HAD REDUCED THE DEDUCTION CLAIMED BY THE ASSESSEE U /S 80HHC OF THE ACT FROM RS.1.96 CRORES TO RS.1.33 CR ORES WHICH WAS RECTIFIED BY HIM U/S 154 TO RS.1.29 CRORE S.THE CIT(A) HAD ALLOWED ASSESSEES CLAIM UPTO RS.1.95 CRO RES.THE ITAT IN TURN HAD REDUCED THE CLAIM TO EVEN LESS THA N WHAT WAS ALLOWED BY THE AO TO RS.48.92 LACS. IN THIS CAS E ALSO THERE WAS A SPECIFIC DIRECTION FOR ENHANCING THE IN COME OF THE ASSESSEE.THEREFORE THE SAME IS DISTINGUISHABLE FROM THE PRESENT CASE WHERE SUCH SPECIFIC DIRECTION IS C LEARLY ABSENT. MOREOVER AS RIGHTLY POINTED OUT BY THE LD.DR ON TH E BASIS OF THE ARGUMENT OF THE ASSESSEE IN THIS REGARD,JUDI CIOUSLY ACCEPTING THE ARGUMENT ,A PRINCIPLE WAS LAID DOWN B Y THE TRIBUNAL IN CONSONANCE WITH LAW.THIS PRINCIPLE WAS BENEFICIAL AND THUS ACCEPTED BY THE ASSESSEE IN OTH ER YEARS,WHEREAS IN THE IMPUGNED YEAR,THE ASSESSEE HAS COME UP WITH A GRIEVANCE AGAINST THE SAID PRINCIPLE LAID DOWN ITA NO.459/CHD/2018 A.Y.2010-11 9 ,SINCE IT DID NOT BENEFIT IT.A PRINCIPLE LAID DOWN IN CONSONANCE WITH LAW CANNOT BE ALTERED DEPENDING UPO N THE BENEFIT DERIVED OR NOT DERIVED.ANY OUTCOME WOULD BE THE RESULT OF FOLLOWING THE DUE PROCESS OF IMPLEMENTATI ON OF THE PRINCIPLE LAID DOWN AND INTERPRETATION OF LAW AND I T CANNOT BE CHANGED AT THE WHIMS AND FANCIES OF ANY PARTY IN VOLVED. THE GROUND OF APPEAL RAISED BY THE ASSESSEE IS, THEREFORE, DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- # $' % & (SANJAY GARG) (ANNAPURNA GUPTA) / JUDICIAL MEMBER '( / ACCOUNTANT MEMBER *# /DATED: 17 TH DECEMBER, 2018 * ' * #&' ()*) / COPY OF THE ORDER FORWARDED TO : 1. + / THE APPELLANT 2. ',+ / THE RESPONDENT 3. - ! / CIT 4. - ! ( )/ THE CIT(A) 5. )./' 0 , 0 , 123/4 / DR, ITAT, CHANDIGARH 6. /35 / GUARD FILE #& ! / BY ORDER, 6 / ASSISTANT REGISTRAR