Addl. CIT, Special Range- 6, New Delhi V. National Textile Corporation Ltd., New Delhi

ITA 4668/DEL/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8366 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2014-2015
• Appeal Filed On: 19-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Earning of tax free income; Rule 8D
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES E: DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER ITA.NO.4668/DEL./2017 ASSESSMENT YEAR 2014-2015 THE ADDL. CIT, SPECIAL RANGE-6, ROOM NO.352, C.R. BUILDING, I.P. ESTATE, NEW DELHI. VS., M/S. NATIONAL TEXTILE CORPORATION LTD., SCOPE COMPLEX CORE-IV, 7- INSTITUTIONAL AREA, LODHI ROAD, NEW DELHI 110003 PAN AAACN2847D (APP E L L ANT) (RESPONDENT) FOR REVENUE : MS. RAKHI VIMAL, SR. DR FOR ASSESSEE : SHRI MANOJ KUMAR ANAND, FCA DATE OF HEARING : 16 .0 1 .20 20 DATE OF PRONOUNCEMENT : 22 .0 1 .20 20 ORDER PER BHAVNESH SAINI, J.M. THIS APPEAL BY REVENUE HAS BEEN DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-6, DELHI, DATED 09.05.2017 FOR THE A.Y. 2014-2015. 2. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. 2 ITA.NO.4668/DEL./2017 M/S. NATIONAL TEXTILE CORPORATION LTD., NEW DELHI. 3. ON GROUND NOS.1, 2 AND 3, THE REVENUE CHALLENGED THE DELETION OF RS.25,01,015/- UNDER SECTION 14A OF THE I.T. ACT, 1961. 3.1. IT IS MENTIONED IN THE IMPUGNED ORDER THAT A.O. HAS STATED THAT ASSESSEE HAS EARNED DIVIDEND INCOME OF RS.6.45 CRORES AND CLAIMED IT AS EXEMPT INCOME UNDER SECTION 10(34) OF THE I.T. ACT AND THE ASSESSEE HIMSELF HAS DISALLOWED RS.9,05,942/- AS PER RULE 8D. THE A.O. HOWEVER, COMPUTED THE DISALLOWANCE AT RS.25,01,015/-. THE ASSESSEE SUBMITTED BEFORE THE LD. CIT(A) THAT IT IS A COVERED MATTER AND SIMILAR RELIEF HAVE BEEN GRANTED IN EARLIER YEARS BY THE LD. CIT(A) IN A.YS. 2008-2009, 2009-2010 AND 2010-2011. EVEN IN A.Y. 2009-2010 DEPARTMENTAL APPEAL HAVE BEEN DISMISSED BY ITAT VIDE ORDER DATED 19.11.2014. IT WAS SUBMITTED THAT SINCE ASSESSEE HAS DISALLOWED RS.9,05,942/- BEING 0.5% ON AN AVERAGE INVESTMENT OF RS.1811.88 LAKHS, THEREFORE, NO FURTHER DISALLOWANCE IS TO BE MADE. IT WAS ALSO SUBMITTED THAT NTC HAS MADE NON-CASH INVESTMENT AT RS.1793.32 LAKHS IN SUBSIDIARY AND ASSOCIATED COMPANIES AS A JOINT VENTURE TO REVIVED CERTAIN CLOSED MILLS. IN 3 ITA.NO.4668/DEL./2017 M/S. NATIONAL TEXTILE CORPORATION LTD., NEW DELHI. OTHERWORDS, WHEN NO FUNDS ARE USED IN INVESTMENT, THEN NO DISALLOWANCE OF INTEREST EXPENSES UNDER SECTION 14A IS APPLICABLE. THE AMOUNT OF NET INVESTMENT WAS SAME IN THE PRECEDING ASSESSMENT YEAR AS WELL AS IN ASSESSMENT YEAR UNDER APPEAL. THE DETAILS OF THE SAME IS NOTED AT PAGE-4 OF THE APPELLATE ORDER. THE ASSESSEE ALSO RELIED UPON SEVERAL DECISIONS IN SUPPORT OF THE CONTENTION THAT ADDITION IS WHOLLY UNJUSTIFIED. THE LD. CIT(A) FOUND THAT ITAT IN A.Y. 2009-2010, ON SIMILAR FACTS, DELETED THE ADDITION AND DEPARTMENT HAS ACCEPTED THE ORDER OF THE TRIBUNAL. IN EARLIER YEAR ALSO, THE LD. CIT(A) HAS DELETED SIMILAR ADDITION ON SIMILAR FACTS, THEREFORE, FOLLOWING THESE ORDERS, THE LD. CIT(A) ALLOWED THE CLAIM OF ASSESSEE. 4. ON GROUND NOS. 4 TO 6, THE REVENUE CHALLENGED THE DISALLOWANCE OF PRIOR PERIOD EXPENDITURE OF RS.5,19,24,746/-. IT IS NOTED IN THE IMPUGNED ORDER THAT A.O. HAS STATED IN THE ORDER THAT ASSESSEE HAS CLAIMED PRIOR PERIOD EXPENDITURE OF RS.6,76,71,843/-, BUT, ADDED BACK ONLY RS.1,57,47,097/- IN THE COMPUTATION OF INCOME. IT HAS BEEN DONE BECAUSE ASSESSEE IS ADDING BACK ONLY NET PRIOR 4 ITA.NO.4668/DEL./2017 M/S. NATIONAL TEXTILE CORPORATION LTD., NEW DELHI. PERIOD EXPENDITURE [ I.E., EXPENSES (-) INCOME ] SINCE INCORPORATION AND THE SAME WERE DULY ACCEPTED BY THE DEPARTMENT ALSO IN ALL THESE YEARS. FURTHER, THESE EXPENSES PERTAINS TO EARLIER YEARS, BUT, HAVE CRYSTALLIZED ONLY IN THE CURRENT FINANCIAL YEAR AND THE SAME ARE DONE SEPARATELY IN COMPLIANCE TO AS-5 OF ICAI. THE A.O, HOWEVER, DID NOT ACCEPT THE SAME AND MADE THE ADDITION. THE ASSESSEE SIMILARLY SUBMITTED BEFORE THE LD. CIT(A) THAT IN EARLIER A.YS. 2007-2008, 2008-2009, 2009-2010 AND 2012-2013, THE LD. CIT(A) DELETED SIMILAR ADDITION ON SAME FACTS AND IN A.Y. 2009-2010 THE ITAT HAS ALSO DISMISSED THE DEPARTMENTAL APPEAL VIDE ODER DATED 19.11.2014 (SUPRA). THE LD. CIT(A) FOUND THAT THE ISSUE IS SAME AND ON THE SAME FACTS. THEREFORE, THE LD. CIT(A) HAS DELETED SIMILAR ADDITION IN EARLIER YEAR AND IN A.Y. 2009-2010, THE ITAT HAS DISMISSED THE DEPARTMENTAL APPEAL VIDE ORDER DATED 19.11.2014 (SUPRA), THEREFORE, THE ADDITION WAS DELETED. 5. THE LD. D.R. CONTENDED THAT SECOND ISSUE IS COVERED BY THE ORDER OF ITAT DATED 19.11.2014 (SUPRA). 5 ITA.NO.4668/DEL./2017 M/S. NATIONAL TEXTILE CORPORATION LTD., NEW DELHI. HOWEVER, ON FIRST ISSUE THE ASSESSEE WAS NOT JUSTIFIED IN DISALLOWING ONLY RS.9,05,940/-. 6. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT BOTH THE ISSUES ARE COVERED BY THE ORDER OF ITAT, DATED 19.11.2014 FOR THE A.Y. 2009-2010 (SUPRA). 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE LD. CIT(A). THE ASSESSEE HAS SPECIFICALLY SUBMITTED BEFORE THE LD. CIT(A) THAT ASSESSEE MADE NON-CASH INVESTMENT OF RS.1793.32 LAKHS IN SUBSIDIARY AND ASSOCIATED COMPANIES AS JOINT VENTURE TO REVIVE CERTAIN CLOSED MILLS. IN OTHERWORDS, NO FUNDS ARE USED TO MAKE INVESTMENTS. THE NET INVESTMENT IN ASSESSMENT YEAR UNDER APPEAL IS SAME AS WERE IN PRECEDING A.Y. 2013-2014. THESE FACTS ARE SAME AS HAVE BEEN CONSIDERED IN EARLIER YEAR. IN EARLIER YEAR, THE LD. CIT(A) HAS DELETED THE ADDITION, BUT, NO APPEAL HAVE BEEN FILED BY THE DEPARTMENT EXCEPT IN A.Y. 2009-2010 BEFORE THE TRIBUNAL AND THE TRIBUNAL VIDE ORDER DATED 19.11.2014 FOR THE A.Y. 2009-2010 DISMISSED THE DEPARTMENTAL APPEAL ON 6 ITA.NO.4668/DEL./2017 M/S. NATIONAL TEXTILE CORPORATION LTD., NEW DELHI. THE SAME GROUND AND ON SAME FACTS. THEREFORE, THIS ISSUE IS ALSO COVERED BY THE ORDER OF ITAT (SUPRA). 7.1. THE SECOND ISSUE OF PRIOR PERIOD EXPENDITURE IS ADMITTEDLY COVERED BY THE ORDER OF ITAT DATED 19.11.2014 (SUPRA). FOLLOWING THE SAME REASONS FOR DECISION FOR THE A.Y. 2009-2010 ON IDENTICAL FACTS, WE DO NOT FIND ANY MERIT IN THE DEPARTMENTAL APPEAL AND THE SAME IS ACCORDINGLY DISMISSED. 8. IN THE RESULT, APPEAL OF THE DEPARTMENT DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (O.P. KANT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DELHI, DATED 22 ND JANUARY, 2020 VBP/- COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT(A) CONCERNED 4. CIT CONCERNED 5. D.R. ITAT E BENCH 6. GUARD FILE // BY ORDER // ASST. REGISTRAR, ITAT, DELHI BENCHES, DELHI.