Sagar Agencies Pvt.Ltd., Ahmedabad V. The ACIT.,(OSD)Circle-8, Ahmedabad

ITA 493/AHD/2012

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8461 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 22-06-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 23-02-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: M J SHAH
• Keywords: Depreciation; Earning of tax free income; Retrospective amendment; Tax effect; Capital receipt
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD BEFORE, SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NOS. 493 & 604/AHD/2012 (ASSESSMENT YEAR: 2008-09) SAGAR AGENCIES PVT. LTD., 803, SAHJANAD COMPLEX, SHAHIBAUG ROAD, AHMEDABAD - 380004 APPELLANT VS. ASSTT. COMMISSIONER OF INCOME TAX (OSD), CIRCLE-8, AHMEDABAD RESPONDENT / CROSS APPELLANT PAN: AADCS0473P /BY ASSESSEE : SHRI M. J. SHAH, A.R. /BY REVENUE : SHRI MUDIT NAGPAL, SR. D.R. /DATE OF HEARING : 21.08.2017 /DATE OF PRONOUNCEMENT : 28.09.2017 ORDER PER S. S. GODARA, JUDICIAL MEMBER ASSESSEE AND REVENUE HAVE INSTITUTED THE INSTANT CR OSS APPEALS FOR ASSESSMENT YEAR 2008-09 AGAINST THE CIT(A)-XIV, AHM EDABADS ORDER DATED 12.12.2011, IN CASE NO. CIT(A) XIV/ACIT CIR.8/126/1 0-11, IN PROCEEDINGS U/S. 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE A CT. 2. WE COME TO ASSESSEES APPEAL ITA NO.493/AHD/2012 . ITS FORMER SUBSTANTIVE GROUND SEEKS TO DELETE SECTION 14A R.W. 8D DISALLOWANCE OF RS.1,11,834/- MADE IN THE COURSE OF ASSESSMENT AS A FFIRMED IN LOWER APPELLATE PROCEEDINGS TO THE EXTENT OF RS.53,037/-. THERE IS NO DISPUTE THAT THE ASSESSEE HAS DERIVED EXEMPT INCOME IN QUESTION IN RELEVANT PREVI OUS YEAR. THE ASSESSING ITA NOS. 493 & 604/AHD/12 (SAGAR AGENCIES PVT. LTD. ) A.Y. 2008-09 - 2 - OFFICER APPEARS TO HAVE INVOKED RULE 8D (2) FOR DIS ALLOWING THE IMPUGNED SUM @ % OF AVERAGE INVESTMENT COMING TO RS. 53,037/-. T HERE IS NO DISPUTE THAT RULE 8D VERY MUCH APPLIES FROM THE IMPUGNED ASSESSMENT Y EAR 2008-09. LEARNED AUTHORIZED REPRESENTATIVE VEHEMENTLY CONTENDED BEFO RE US THAT BOTH THE LOWER AUTHORITIES HAVE ERRED IN COMPUTING THE IMPUGNED DI SALLOWANCE WITHOUT RECORDING ANY SPECIFIC SATISFACTION IN THEIR RESPECTIVE ORDER S. HI FURTHER CASE IS THAT THE ASSESSEE IS HAVING SUFFICIENT INTEREST FREE FUNDS I N THE NATURE OF SHARE CAPITAL, RESERVE DEFERRED TAX AND INTERNAL ACCRUAL ETC. TO D ISCHARGE ITS INITIAL ONUS NOT TO HAVE MADE TAX FREE INVESTMENTS FROM INTEREST BEARING FUN DS. WE FIND NO MERIT IN THESE TWO PLEAS. WE FIND THAT THE IMPUGNED DISALLOWANCE IS THAT OF ADMINISTRATIVE EXPENDITURE THAN DIRECT OR INDIRECT EXPENSES REGARD ING THE ABOVESTATED EXEMPT INCOME. BOTH THE LOWER AUTHORITIES HAVE APPLIED TH E SPECIFIED STATUTORY COMPUTATION FORMULA IN THE INSTANT CASE. THE SAME IS THEREFORE AFFIRMED. 3. THE ASSESSEES LATTER SUBSTANTIVE GROUND PLEADS THAT BOTH THE LOWER AUTHORITIES HAVE ERRED IN LAW AS WELL AS ON FACTS I N DISALLOWING ITS DEDUCTION CLAIM OF RS.13,84,763/- U/S.80IA OF THE ACT. THE RELEVAN T FACTS QUA THIS ISSUE ARE IN A NARROW COMPASS. THE ASSESSEE ADMITTEDLY HAD INSTAL LED WINDMILL POWER PROJECT IN SATARA DISTRICT, MAHARASHTRA. IT THEREAFTER RECEIV ED SALES TAX INCENTIVE ON INSTALLATION OF WINDMILL POWER PROJECT. BOTH THE L OWER AUTHORITIES HOLD THAT THE SAID SALES TAX INCENTIVE AMOUNT IN QUESTION IS NOT IN TH E NATURE OF PROFIT DERIVED FROM ELIGIBLE UNDERTAKING FOR THE PURPOSE OF IMPUGNED DE DUCTION AS PER HONBLE APEX COURTS DECISION IN LIBERTY INDIA V. COMMISSIONER O F INCOME TAX (2009) 317 ITR 218 (SC). 4. BOTHE THE PARTIES REITERATE THEIR RESPECTIVE PLE ADINGS IN THE COURSE OF HEARING. THE ASSESSEE ALSO SEEKS TO RAISE AN ADDITIONAL GROU ND THAT THE ABOVE SALES TAX INCENTIVE AMOUNT DISALLOWED IN BOTH THE LOWER PROCE EDINGS IS IN THE NATURE OF A CAPITAL RECEIPT NOT EXCISABLE TO TAX. LEARNED DEPA RTMENTAL REPRESENTATIVE VEHEMENTLY OPPOSES ADMISSION OF THIS ADDITIONAL GRO UND. WE FIND THAT THIS TRIBUNALS SPECIAL BENCH DECISION IN ALL CARGO GLOB AL LOGISTICS LTD. VS. DCIT ITA NOS. 493 & 604/AHD/12 (SAGAR AGENCIES PVT. LTD. ) A.Y. 2008-09 - 3 - (2012) 137 ITD 26 (MUM)) QUOTES HONBLE APEX COURT S JUDGMENT IN NTPCS CASE 229 ITR 383 (SC) THAT SUCH ADDITIONAL GROUND CAN BE ADMITTED IN ORDER TO DETERMINE APPROPRIATE TAX LIABILITY OF AN ASSESSEE. WE THEREFORE ADMIT ASSESSEES ADDITIONAL GROUND. 5. WE NOW ADVERT TO MERITS OF THE ISSUE. IT IS NOT IN DISPUTE THAT THE RELEVANT SALES TAX INCENTIVE SCHEME ANNOUNCED BY THE MAHARAS HTRA STATE GOVERNMENT DOES NOT FORM PART OF CASE RECORDS BEFORE US. LEARNED C IT(A) OBSERVES THAT THE SAID SCHEME ENVISAGES INCENTIVE @1/6 TH OF THE COST FOR A PERIOD OF SIX YEARS ON THE WINDMILLS INSTALLED IN MAHARASHTRA. HE THEN CONCLU DES THAT NOTHING DEPEND ON QUANTUM OF ELECTRICITY GENERATED FROM THE WINDMILL LEADING TO THE IMPUGNED ELIGIBLE PROFIT. THE ASSESSEE INVITES OUR ATTENTIO N TO A CO-ORDINATE BENCH DECISION IN (2014) 62 SOT 74 (AHD-TRIB) JIVRAJ TEA & INDUSTRIES LTD. VS. ACIT REMITTING AN IDENTICAL ISSUE BACK TO THE ASSESSING OFFICER PERTA INING TO THE ABOVE SALES TAX INCENTIVE SCHEME FOR AFRESH ADJUDICATION AFTER VERI FYING RELEVANT DETAILS THEREOF. WE REITERATE THAT SUCH DETAILS ARE ALSO NOT FORTHCO MING FROM THE INSTANT CASE RECORDS. LEARNED DEPARTMENTAL REPRESENTATIVE IS AL SO UNABLE TO REBUT ALL THESE LEGAL DEVELOPMENTS. WE THEREFORE RESTORE THE INSTA NT ISSUE AS WELL BACK TO THE ASSESSING OFFICER FOR AFRESH ADJUDICATION AS PER LA W. ASSESSEES APPEAL ITA NO.493/AHD/2012 IS PARTLY ACCEPTED FOR STATISTICAL PURPOSES. 6. THIS LEAVES US WITH REVENUES APPEAL ITA NO. 604 /AHD/2012. IT RAISES FIVE INCENTIVE GROUNDS SEEKING TO RESTORE ASSESSING OFFI CERS ACTION DISALLOWING THE AMOUNT OF RS.18,421/- PERTAINING TO AMORTIZATION OF LEASE RENT IN RESPECT OF LAND, WINDMILL DEPRECIATION CLAIM OF RS.2,69,453/-, 14A D ISALLOWANCE OF RS.1,11,834/-, INTEREST DISALLOWANCE OF RS.3,01,600/- AND CESSATIO N OF LIABILITY ADDITION U/S.41(1) OF THE ACT AMOUNTING TO RS.5,09,219/-; RESPECTIVELY . LEARNED DEPARTMENTAL REPRESENTATIVE FAILS TO DISPUTE THE FACT THAT THE T AX EFFECT INVOLVED IN THE REVENUES INSTANT APPEAL IS ADMITTEDLY LESS THAN THAT RS.10LA CS. WE FIND THAT THE CENTRAL BOARD OF DIRECT TAXES; HEREAFTER THE BOARD HAS IS SUED THE CIRCULAR NO. 21/2015 DATED 10.12.2015 CLEARLY ENVISAGING THEREIN THAT DE PARTMENTS PENDING APPEALS BEFORE THE TRIBUNAL/HIGH COURTS ARE TO BE WITHDRAWN /NOT PRESSED AS PER THE ABOVE ITA NOS. 493 & 604/AHD/12 (SAGAR AGENCIES PVT. LTD. ) A.Y. 2008-09 - 4 - STATED CIRCULAR. THE SAME HAS BEEN DECLARED TO BE HAVING RETROSPECTIVE EFFECT IN OTHER WORDS. WE TAKE INTO CONSIDERATION THE ABOVE STATED BOARDS CIRCULAR AND DISMISS THE INSTANT APPEAL ACCORDINGLY. 7. WE THEREFORE PARTLY ACCEPT THE ASSESSEES APPEAL ITA NO.493/AHD/2012 FOR STATISTICAL PURPOSES AND DISMISS REVENUES APPEAL I TA NO.604/AHD/2012 FOR INVOLVING LOW TAX EFFECT. [PRONOUNCED IN THE OPEN COURT ON THIS THE 28 TH DAY OF SEPTEMBER, 2017.] SD/- SD/- ( MANISH BORAD ) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL M EMBER AHMEDABAD: DATED 28/09/2017 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ( )*+ ,--. . /0 / DR, ITAT, AHMEDABAD 1 +23 / GUARD FILE. BY ORDER / . // . /0