ACIT CC 22, MUMBAI V. THE INDIAN HUME PIPE CO. LTD, MUMBAI

ITA 47/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78991 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 26-05-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 02-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DEEPAK SUTARIYA
• Keywords: Capital expenditure
• Section: 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL I, BENC H MUMBAI .. , . . , !' # BEFORE SHRI H.L.KARWA, PRESIDENT & SHRI B.R.BASKARA N, AM ./ ITA NO.16/MUM/2013 ( $ $ $ $ / ASSESSMENT YEAR :2009-10) THE INDIAN HUME PIPE CO. LTD. CONSTRUCTION HOUSE, 2 ND FLOOR, WALCHAND HIRACHAND RD., BALLARD ESTATE, MUMBAI- 400 001 VS. ACIT, CEN. CIRCLE 22, MUMBAI-400 020 % !' ./ &' ./ PAN/GIR NO. : AAACT 4063 D ( %( / APPELLANT ) .. ( )*%( / RESPONDENT ) AND ./ ITA NO.47/MUM/2013 ( $ $ $ $ / ASSESSMENT YEAR :2009-10) ACIT, CEN. CIRCLE 22, MUMBAI-400 020 VS. THE INDIAN HUME PIPE CO. LTD. CONSTRUCTION HOUSE, 2 ND FLOOR, WALCHAND HIRACHAND RD., BALLARD ESTATE, MUMBAI- 400 001 % !' ./ &' ./ PAN/GIR NO. : AAACT 4063 D ( %( / APPELLANT ) .. ( )*%( / RESPONDENT ) +, - -- - . . . . ! !! ! /ASSESSEE BY : MR. BHAVIN SHAH & - -- - . . . . ! !! ! /REVENUE BY : MR. DEEPAK SUTARIYA - ,/' / DATE OF HEARING : 26 TH MAY, 2014 01$ - ,/' / DATE OF PRONOUNCEMENT : 28 TH MAY, 2014 #!2 #!2 #!2 #!2 / O R D E R PER B.R.BASKARAN (A.M.) : THESE CROSS APPEALS ARE DIRECTED AGAINST THE ORDER DATED 11.10.2012 PASSED BY LD. CIT(A) - 39, MUMBAI AND TH EY RELATE TO THE ASSESSMENT YEAR 2009-10. ITA NOS.16/13 & 47/13 2 2 . THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD C IT(A) IN NOT ALLOWING DEDUCTION U/S 80IA OF THE ACT CLAIMED BY T HE ASSESSEE BEFORE HIM. 3 . THE REVENUE IS AGGRIEVED BY THE DECISION OF L D CIT(A) IN DELETING THE DISALLOWANCE MADE U/S 14A OF THE ACT AND ALSO IN DE LETING THE EXPENSES CLAIMED ON REPAIR OF NEW SAND BINS. 4 . THE FACTS RELATING TO THE CASE ARE SET OUT IN BRI EF. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF DESIGNING, MA NUFACTURING AND LAYING OF PIPE LINES OF VARIOUS TYPES FOR WATER SUP PLY AND HYDRO-ELECTRIC PROJECTS FOR GOVT., SEMI GOVT., AND PRIVATE AGENCIE S. THE ASSESSMENT OF THE YEAR UNDER CONSIDERATION WAS COMPLETED BY THE A SSESSING OFFICER BY MAKING VARIOUS TYPES OF ADDITIONS. THE LD CIT(A), IN THE APPEAL FILED BY THE ASSESSEE, GRANTED PARTIAL RELIEF. AGGRIEVED, B OTH THE PARTIES HAVE FILED APPEALS BEFORE US ON THE ABOVE SAID ISSUES. 5 . WE SHALL TAKE UP THE APPEAL FILED BY THE ASSE SSEE WITH REGARD TO THE CLAIM FOR DEDUCTION U/S 80IA OF THE ACT. THE ASSES SEE SUBMITTED THAT THE SIMILAR CLAIM MADE IN THE IMMEDIATELY PRECEDING YEA R, I.E., AY 2008-09 WAS CONSIDERED BY THE CO-ORDINATE BENCH OF TRIBUNAL AND THE TRIBUNAL, VIDE ITS ORDER DATED 19-06-2013 IN ITA NO.413/MUM/2 012, HAS SET ASIDE THE MATTER TO THE FILE OF THE LD CIT(A) FOR PASSING FRESH ORDER IN THE LIGHT OF OBSERVATIONS MADE BY THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.8234/MUM/2010 AND ITA NO.8216/MUM/2010 RELATING TO THE ASSESSMENT YEAR 2007-08. ACCORDINGLY, HE SUBMITTED THAT THIS ISSUE MAY ALSO BE SET ASIDE TO THE FILE OF THE LD CIT(A) FOR MAKING FRESH EXAMINATION. ITA NOS.16/13 & 47/13 3 6 . HOWEVER, THE LD D.R SUBMITTED THAT THERE IS A DIFFERENCE IN THE FACTS OF THE IMPUGNED CLAIM MADE IN THIS YEAR VIS--VIS T HE CLAIM MADE IN THE EARLIER YEARS. HE SUBMITTED THAT THE ASSESSEE DID NOT MAKE ANY CLAIM FOR DEDUCTION U/S 80IA OF THE ACT IN ITS RETURN OF INCO ME. BY PLACING RELIANCE ON THE DECISION OF HONBLE SUPREME COURT IN THE CAS E OF GOETZ (INDIA) LTD VS. CIT (284 ITR 323)(SC) , THE LD D.R SUBMITTED THAT THE ASSESSEE COULD MAKE FRESH CLAIMS ONLY BY FILING REVISED RETU RN OF INCOME. 7 . WE HAVE HEARD RIVAL CONTENTIONS ON THIS ISSUE. THE CONTENTION RAISED BY LD D.R. BY PLACING RELIANCE ON THE DECISION OF H ONBLE SUPREME COURT IN THE CASE OF GOETZ (INDIA ) LTD (SUPRA) IS NOT ACCEPTABLE. A CAREFUL PERUSAL OF THE SAID ORDER OF THE HONBLE APEX COURT WOULD SHOW THAT THE HONBLE SUPREME COURT HAS, IN CLEAR TERMS, STATED T HAT THE DECISION RENDERED IN THE ABOVE SAID CASE IS LIMITED TO THE P OWER OF THE ASSESSING OFFICER AND IT DOES NOT IMPINGE ON THE POWER OF THE ITAT U/S 254 OF THE ACT. 8 . FURTHER, WE NOTICE THAT THIS IS NOT THE CLAIM WHICH IS MADE FOR THE FIRST TIME BEFORE THE TRIBUNAL. ADMITTEDLY, THE ASSESSEE HAS URGED THIS CLAIM BEFORE LD CIT(A) AND THE FIRST APPELLATE AUTHORITY HAS ALSO ADJUDICATED THE SAME. HENCE, THIS ISSUE IS ARISING OUT OF THE ORDE R OF LD CIT(A). ON A PERUSAL OF THE ORDER PASSED BY LD CIT(A), WE NOTICE THAT THE FIRST APPELLATE AUTHORITY HAS FOLLOWED THE DECISION RENDERED BY THE TRIBUNAL IN THE ASSESSEES OWN CASE WITH THE UNDERSTANDING THAT THE TRIBUNAL HAS CONFIRMED THE DISALLOWANCE OF CLAIM MADE U/S 80IA O F THE ACT. A PERUSAL OF THE ORDER PASSED BY THE TRIBUNAL FOR ASSESSMENT YEAR 2008-09 ITA NOS.16/13 & 47/13 4 (REFERRED SUPRA) WOULD SHOW THAT THE ITAT HAS UPHEL D THE DISALLOWANCE MADE U/S 80IA ONLY IN RESPECT OF THE PROJECTS UNDER TAKEN IN THE EARLIER YEARS. IN RESPECT OF THE PROJECTS UNDERTAKEN DURIN G THE YEARS RELEVANT TO THE ASSESSMENT YEARS 2007-08 AND 2008-09, THE MATTE R OF CLAIM FOR DEDUCTION U/S 80IA WAS RESTORED BACK TO THE FILE OF THE LD CIT(A) FOR FRESH EXAMINATION. CONSISTENT WITH THE VIEW TAKEN BY THE TRIBUNAL IN THE EARLIER YEARS, WE RESTORE THE MATTER RELATING TO DEDUCTION U/S 80IA IN RESPECT OF THE PROJECTS UNDERTAKEN DURING THE YEARS RELEVANT T O THE ASSESSMENT YEARS 2007-08, 2008-09 AND ALSO THE YEAR UNDER CONS IDERATION TO THE FILE OF THE LD CIT(A) FOR MAKING FRESH EXAMINATION IN TH E LIGHT OF OBSERVATIONS MADE BY THE TRIBUNAL IN ITS ORDER PASSED FOR ASSESS MENT YEAR 2007-08. 9 . WE SHALL NOW TAKE UP THE APPEAL FILED BY THE REVENUE. THE FIST ISSUE RELATES TO THE DELETION OF DISALLOWANCE MADE U/S 14 A OF THE ACT. THE ASSESSING OFFICER COMPUTED THE DISALLOWANCE IN TERM S OF RULE 8D OF THE IT RULES. THE LD CIT(A) EXAMINED THE ISSUE IN DETAILS AND CAME TO THE CONCLUSION THAT THERE IS NO REQUIREMENT OF MAKING A NY DISALLOWANCE OF INTEREST U/R 8D(II), SINCE THE ASSESSEE IS HAVING S UFFICIENT INTEREST FREE FUNDS. ACCORDINGLY, HE DIRECTED THE AO TO DELETE T HE DISALLOWANCE OF INTEREST AMOUNT OF RS.9,62,258/- MADE U/R 8D(II) OF THE IT RULES. HOWEVER, HE SUSTAINED THE DISALLOWANCE MADE U/R 8D( III) RELATING TO ADMINISTRATIVE EXPENSES. THE REVENUE IS AGGRIEVED BY THE RELIEF GRANTED BY LD CIT(A). 10 . WE HAVE HEARD THE RIVAL CONTENTIONS ON THIS I SSUE. THE LD A.R SUBMITTED THAT THE TRIBUNAL, IN ITS ORDER DATED 19. 6.2013 IN ITA ITA NOS.16/13 & 47/13 5 NO.413/MUM/2012 AND ITA NO.896/MUM/2012 RELATING TO THE ASSESSMENT YEAR 2008-09, HAS CONSIDERED AN IDENTICAL DISALLOWA NCE MADE IN THAT YEAR AND CONFIRMED THE ORDER PASSED BY LD CIT(A) IN THAT YEAR. WE ALSO HEARD LD D.R ON THIS ISSUE. A PERUSAL OF THE ORDER PASSE D BY THE TRIBUNAL IN THE HANDS OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2008- 09 WOULD SHOW THAT THE TRIBUNAL HAS EXTRACTED THE ORDER PASSED BY LD C IT(A) IN THAT YEAR, WHEREIN THE FIRST APPELLATE AUTHORITY HAS EXAMINED THE FINANCIAL POSITION OF THE ASSESSEE IN DETAIL AND HAS COME TO THE CONCLUSI ON THAT THE ASSESSEE HAS GOT SUFFICIENT INTEREST FREE FUNDS AND THE INVE STMENTS WERE MADE OUT OF INTEREST FREE FUNDS ONLY. ACCORDINGLY, THE TRIB UNAL, IN AY 2008-09, HAS HELD THAT THERE IS NO REASON TO INTERFERE WITH THE ORDER PASSED BY LD CIT(A). SINCE THE TRIBUNAL HAS UPHELD THE FINDING GIVEN BY THE FIRST APPELLATE AUTHORITY THAT THE INVESTMENTS HAVE BEEN MADE OUT OF INTEREST FREE FUNDS AND FURTHER THE SAID INVESTMENTS CONTINU E IN THIS YEAR ALSO, WE ALSO DO NOT FIND ANY REASON TO TAKE A CONTRADICTORY STAND. ACCORDINGLY, WE UPHOLD THE ORDER OF LD CIT(A) ON THIS ISSUE. 11 . THE NEXT ISSUE RELATES TO THE DISALLOWANCE OF EXPENDITURE INCURRED ON SAND BIN. THE AO TOOK THE VIEW THAT THE ASSESSE E HAS INCURRED THE EXPENDITURE OF RS.1,52,889/- ON CONSTRUCTION OF NEW SAND BIN AND HENCE IT IS A CAPITAL EXPENDITURE. HENCE HE DISALLOWED THE ABOVE SAID CLAIM. BEFORE LD CIT(A), THE ASSESSEE SUBMITTED THAT THE A BOVE SAID EXPENSES WERE INCURRED ON REPAIR OF SAND BINS THAT WERE ALRE ADY IN EXISTENCE AT ITS PATTANCHERU FACTORY. ACCORDINGLY, THE LD CIT(A) DE LETED THE ABOVE SAID DISALLOWANCE. ITA NOS.16/13 & 47/13 6 12 . WE HAVE HEARD RIVAL SUBMISSIONS ON THIS ISSUE . ADMITTEDLY, THE AO HAS DISALLOWED THE IMPUGNED CLAIM ON THE REASONING THAT IT WAS CAPITAL EXPENDITURE. HOWEVER, THE SUBMISSION OF THE ASSESS EE IS THAT THE SAND BINS WERE ALREADY IN EXISTENCE AND THEY WERE IN DIL APIDATED CONDITION. ACCORDINGLY IT WAS SUBMITTED THAT THE ASSESSEE INCU RRED ABOVE SAID EXPENSES IN REPAIRING THE SAND BINS AND IT IS IN TH E NATURE OF CURRENT REPAIRS. WE NOTICE THAT THE LD CIT(A) HAS ACCEPTED THE CONTENTIONS OF THE ASSESSEE BY CONSIDERING THE FACTS AND CIRCUMSTANCES AND HENCE WE DO NOT FIND ANY REASON TO INTERFERE WITH HIS ORDER ON THIS ISSUE. 13 . IN THE RESULT, THE APPEAL FILED BY THE ASSESS EE IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES AND THE APPEAL OF THE REVENUE IS DISMISSED. + ,3 +, - 4- 56!7 ! 2 8, - &, 9: & - '+& - &, 9: ORDER PRONOUNCED IN THE OPEN COURT ON THIS 28 TH MAY, 2014. #!2 - 01$ ' ! ; <# 3 28 TH MAY,2014 1 - = SD/- SD/- ( . . ) ( H.L. KARWA ) ( . . ) ( B.R.BASKARAN ) / PRESIDENT !' # !' # !' # !' # / ACCOUNTANT MEMBER MUMBAI ; <# DATED 28/05/2014 ). . /PKM , . / PS #!2 #!2 #!2 #!2 - -- - ),> ),> ),> ),> ?!>$, ?!>$, ?!>$, ?!>$, / COPY OF THE ORDER FORWARDED TO : 1. %( / THE APPELLANT 2. )*%( / THE RESPONDENT. 3. @ ( ) / THE CIT(A), MUMBAI. 4. @ / CIT 5. >A= ), , , / DR, ITAT, MUMBAI 6. =B C / GUARD FILE. ITA NOS.16/13 & 47/13 7 #!2 #!2 #!2 #!2 / BY ORDER, 5 55 5 / 9 9 9 9 & & & & ( ASSTT. REGISTRAR) , / ITAT, MUMBAI *>, ), //TRUE COPY//