ASSISTANT COMMISSIONER OF INCOME TAX -11(3)(2), MUMBAI V. TIME TECHNOPLAST LTD, MUMBAI

ITA 4930/MUM/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5056 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2019
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2012-2013
• Appeal Filed On: 14-07-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D G PANSARI
• Keywords: Depreciation; Opportunity of being heard; Additional depreciation; Earning of tax free income
• Section: 12; 10; 11; 133A; 14A; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, AM AND SHRI RAM LAL NEGI , JM ITA NO. 4930 /MUM/ 2017 (ASSESSMENT YEAR: 2012 - 13 ) ACIT, CIRCLE - 11(3)( 1 ), ROOM NO. 204, AAYAKAR BHAVAN, 2 ND FLOOR, M. K. MARG, MUMBAI - 400 020 VS. M/S. TIME TECHNOPLAST LTD. 102, TODI COMPLEX, SAKI VIHAR ROAD, ANDHERI (E), MUMBAI - 400 072 PAN/GIR NO. AAACW 0563 D ( APPELLANT ) : ( RESPONDENT ) APPELLANT BY : SHRI D. G. PANSARI RESPONDENT BY : SHRI RAKESH JOSHI DATE OF HEARING : 27.11.2018 DATE OF PRONOUNCEMENT : 06.02 .2019 O R D E R PER SHAMIM YAHYA, A. M.: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 18, MUMBAI (LD.CIT(A) FOR SHORT) DATED 20.03.2017 AND PERTAINS TO THE ASSESSMENT YEAR (A.Y.) 2012 - 13. 2. THE GROUNDS OF APPEAL READ AS UNDER: 1. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION OF RS. 5,44,77,643/ - MADE BY THE AO ON ACCOUNT OF CLAIM OF DEDUCTION U /S.801C WITHOUT APPRECIATING THE FACT THAT DURING THE COURSE OF SURVEY U/S.133A, IT WAS FOUND AND ADMITTED THAT THERE WAS INTER - UNIT TRANSFER OF PRE - USED PLANT AND MACHINERY AND THE VALUE OF PRE - USED PLANT AND MACHINERY OF PANT NAGAR UNIT I & II WAS FOUND TO BE MORE THAN 20% OF THE TOTAL VALUE OF PLANT AND MACHINERY. THE ASSESSEE COMPANY HAD VIOLATED THE CONDITIONS SPECIFIED IN SECTION 801C OF THE ACT IN RESPECT OF THESE UNITS.' 2. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED C1T(A) ERRED IN DELETING THE ADDITION OF RS. 3,94,83,174/ - MADE BY THE AO U/S.14A R.W. RULE 8D WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF COMPOSITE ACTIVITY ALSO AND PART OF EXPENDITURE WHICH RELATABLE TO EARNING OF EXEMPT INCOME HAS BEEN INCURRED FOR DAY - TO - DAY ACTIVITIES.' 3. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION OF RS. 3,94,83,174/ - MADE BY THE AO U/S.14A R.W. RULE 8D WITHOUT APPRECIATING THE FACT THAT THE DISALLOWANCE U/S .14A R.W. RULE 8D IS MANDATORY W.E.F. A.Y. 2008 - 09 AS PER JURISDICTIONAL HON'BLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE 2 ITA NO. 4930/MUM/2017 MFG. CO. LTD. VS. DCIT (334 CTR 1) WHEREIN IT UPHELD CONSTITUTIONAL VALIDITY OF SUB - SECTION (2) AND (3) OF SECTION 14A.' 4. 'ON TH E FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION OF RS. 3,94,83,174/ - MADE BY THE AO WHILE COMPUTING BOOK PROFIT U/S,1153B WITHOUT APPRECIATING THE FACT THAT AS PER EXPLANATION 1(F) TO SECTION 115JB(2) PROVIDE S FOR DISALLOWANCE OF EXPENDITURE RELATABLE TO ANY INCOME TO WHICH SECTION 10 (OTHER PROVISIONS CONTAINED IN CLAUSE (38) THEREOF OR SECTION 11 OF SECTION 12 IS APPLICABLE AND THE AO RIGHTLY ADDED THE SAME WHILE COMPUTING BOOK PROFIT U/S.115 J B OF THE ACT.' 5. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION OF RS. 24,19,265/ - MADE BY THE AO ON ACCOUNT OF ADDITIONAL DEPRECIATION WITHOUT APPRECIATING THE FACT THAT DURING THE COURSE OF SURVEY THERE WAS INTER - UNI T TRANSFER OF PRE - USED PLANT AND MACHINERY IN THESE UNITS WHICH WAS ADMITTED BY THE MANAGING DIRECTOR OF THE COMPANY. FURTHER, ASSESSEE FAILED TO PROVE THE ACTUAL PURCHASE OF PLANT AND MACHINERY AND A.O. CORRECTLY DISALLOWED THE SAME. 6. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE A.O. BE RESTORED. APROPOS GROUND RELATING TO DEDUCTION U/S. 80IC OF THE ACT : 3. ON THIS ISSUE, THE A.O. REFERRED TO THE SURVEY CONDUCTED U/S. 133A AND INFORMATION RECEIVED FR OM THE DY. DIT IN CONNECTION WITH THE INTER - UNIT TRANSFER OF PRE - USED PLANT AND MACHINERY. HE PROCEEDED TO DISALLOW DEDUCTION U/S. 80IC BY OBSERVING AS UNDER: 5. D ISALLOWANCE OF DEDUCTION U/S.80I C: I N THIS CASE SURVEY U/S. 133A OF THE I.T. ACT WAS CONDUCTED BY THE INVESTIGATION WING, UNIT 2(1), MUMBAI ON 03.01.2015. INFORMATION WAS RECEIVED FROM THE DY.DIT (INV) UNIT 2(1), MUMBAI IN RELATION TO THE A.Y.2008 - 09 THAT DURING THE SURVEY, IT WAS FOUND THAT THERE IS INTER - UNIT TRANSFER OF PRE - USED PLANT A ND MACHINERY. THE VALUE OF PRE - USED PLANT AND MACHINERY AT PANT NAGAR UNIT I & II WAS FOUND TO BE MORE THAN 20% OF THE TOTAL VALUE OF PLANT AND MACHINERY. HENCE, IT WAS ESTABLISHED THAT ASSESSEE COMPANY HAS VIOLATED THE CONDITIONS SPECIFIED IN SECTION 801C OF THE ACT, IN RESPECT OF THESE UNITS. ON PERUSAL OF THE RECORDS, IT IS SEEN THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE COMPANY HAS CLAIMED DEDUCTION U/S.801C IN RELATION TO ITS UNIT I & UNIT II, LOCATED IN PANT NAGAR. DRAWING INFERENCE FROM TH E INFORMATION RECEIVED FROM THE INVESTIGATION WING AND ON VERIFICATION OF THE CLAIM OF THE ASSESSEE COMPANY IN REGARDS TO THE DEDUCTION U/S.801C FOR THE AFORESAID UNITS, IT IS HELD THAT THE SAME IS NOT ALLOWABLE. IN VIEW OF THE AFORESAID FACTS, THE DEDUCTI ON U/S.801C OF THE ACT IN RESPECT TO THESE UNITS CLAIMED AT RS,3,78,78,883 AND RS.1,65,98,760 ARE DISALLOWED. ACCORDINGLY, DEDUCTION U/S.801C, CLAIMED AT RS.5,44,77,643/ - IN RELATION TO THE PANT NAGAR UNIT I & II ARE DISALLOWED. PENALTY PROCEEDINGS U/S 271 (1)(C) OF THE INCOME - TAX ACT, 1961, ARE INITIATED SEPARATELY FOR THE DEFAULT COMMITTED WITHIN THE MEANING OF THAT SECTION. 4. BEFORE THE LD. CIT(A), THE ASSESSEE INTER ALIA SUBMITTED THAT THE BENEFIT GRANTED UNDER THIS SECTION CANNOT BE WITHDRAWN UNLESS T HE BENEFIT IS WITHDRAWN IN THE FIRST YEAR. 3 ITA NO. 4930/MUM/2017 FURTHERMORE, THE LD. CIT(A) ALSO REFERRED TO THE LIST OF THE MACHINERY/PLANT PURCHASED BY THE ASSESSEE COMPANY AND PROCEEDED TO PASS THE FOLLOWING ORDER: 2. THE APPELLANT HAS SUBMITTED AT THE OUTSET THAT ONCE A BENEFIT OF DEDUCTION WAS EXTENDED IN RESPECT OF A PROVISION FOR A PARTICULAR NUMBER OF YEARS THEN UNLESS THE BENEFIT IS WITHDRAWN FOR THE FIRST YEAR IT CANNOT BE WITHDRAWN FOR SUBSEQUENT YEARS. THE REFO RE, ONCE A BENEFIT OF SECTION 80 I C WAS EXTENDED TO THE RESPONDENT ASSESSEE FOR THE EARLIER ASSESSMENT YEAR IN RESPECT OF ITS CLAIM FOR EXEMPTION UNDER SECTION 8 IC OF THE ACT AND THE NOT HAVING BEEN WITHDRAWN FOR THOSE YEARS IT CANNOT BE DENIED IN THE SUBSEQUENT ASSESSMENT YEARS. THE APPELLANT FURTHER SUBMITTED THAT IT HAD BEEN CLAIMING DEDUCTION U/S. 80IC FOR PANT NAGAR 1 UNIT FROM AY 2007 - 08 ONWARDS AND HAD BEEN CLAIMING DEDUCTION U/S. 80IC FOR PANT NAGAR 2 UNIT FROM AY 2009 - 10 ONWARDS. THUS, ACCORDIN G TO THE APPELLANT NO DISALLOWANCE U/S. 80 IC COULD BE MADE UNLESS THE DEDUCTION FOR THESE UNITS WAS FIRST DISALLOWED IN THE INITIAL ASSESSMENT YEARS. FOR THIS PURPOSE, THE APPELLANT PLACED RELIANCE ON THE FOLLOWING JUDICIAL PRECEDENTS OF THE HON'BLE BOMBA Y HC: CITY. PAUL BROS. [1995] 216 ITR 548 (BOM.) DIRECT INFORMATION (P.) LTD. V. ITO [2011] 203 TAXMAN 70 (BOM.) CIT VS. WESTERN OUTDOOR INTERACTIVE PVT. LTD. [TS - 614 - HC - 2012 (BOM)] 1.3. RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY THE JURISDICTIONAL HIGH COURT IN THE CASE LAWS MENTIONED ABOVE, I AM INCLINED TO ACCEPT THE ASSESSEE'S CONTENTION THAT THE DEDUCTION U/S. 801C OF THE ACT COULD NOT HAVE BEEN DISALLOWED UNLESS THE DISALLOWA NCE WAS MADE IN THE FIRST YEAR IN WHICH SUCH DEDUCTION HAS BEEN CLAIMED. HOWEVER, ON GOING THROUGH THE FACTS OF THE CASE AND THE ASSESSEE'S SUBMISSION, IT IS OBSERVED THAT THE DEDUCTION FOR 'PANT NAGAR UNIT 2' FOR AY 09 - 10 HAS ALSO BEEN DISALLOWED BY THE A O . THE APPELLANT'S CONTENTION IN THIS REGARD THAT THE APPELLANT IS IN APPEAL AND HENCE SAME CANNOT BE DISALLOWED IN THE CURRENT ASSESSMENT IS NOT ACCEPTABLE. THUS, THE ADDITION MADE BY AO FOR PANT NAGAR UNIT 1 IS DELETED AND THE ADDITION MADE FOR PANT NAGA R UNIT 2 IS UPHELD ON THIS GROUND. 1.4. FURTHER, THE APPELLANT ALSO SUBMITTED THAT THE COMPLETE LIST OF MACHINERY/ PLANT PURCHASED BY THE ASSESSEE COMPANY FROM VARIOUS PARTIES FOR PANT NAGAR UNITS HAD BEEN SUBMITTED BY IT TO THE AU. THE SUPPORTING BILLS AND OTHER CHALLANS HAD ALSO BEEN FILED WITH THE AU DURING THE ASSESSMENT PROCEEDINGS. THE APPELLANT SUBMITTED THAT A PERUSAL OF THESE DOCUMENTARY EVIDENCES CLEARLY SHOWED THAT THE ASSESSEE HAD NOT VIOLATED THE PROVISIONS OF SECTION 801C OF THE INCOME TAX ACT. THE APPELLA NT FURTHER SUBMITTED THAT THE AO HAD NOT GIVEN ANY ADVERSE FINDINGS AGAINST THE EVIDENCES PRODUCED BY THE ASSESSEE AND DEDUCTION U/S. 801C WAS DISALLOWED BY THE AO MERELY ON THE BASIS OF A STATEMENT RECORDED U/S. 133(A) OF THE INCOME TAX ACT OF MR. ANIL JAN, M.D. OF THE COMPANY. WITH REGARDS TO THIS STATEMENT, THE APPELLANT SUBMITTED THAT THE STATEMENT WAS NOT AN INCRIMINATING STATEMENT AND IT ONLY STATED THAT THE ASSESSEE WOULD W ITHDRAW THE CLAIM OF DEDUCTION U/S. 801C OF THE INCOME TAX ACT, IF THE SAME WAS AGAINST THE RULES AND REGULATIONS OF THE INCOME TAX PROVISIONS. HOWEVER, SINCE ON EXAMINATION OF FACTS IT ECAME EVIDENT THAT NO PROVISIONS OF INCOME TAX ACT HAD BEEN VIOLATED B Y THE ASSESSEE, THE CLAIM OF DEDUCTION U/S. 80 I C WAS NOT WITHDRAWN BY IT. WITHOUT PREJUDICE TO THE ABOVE , THE APPELLANT ALSO SUBMITTED THAT NO ADDITION COULD HAVE BEEN MADE BY THE A O MERELY RELYING ON THE STATEMENT RECORDED U/S. 80IC OF THE A CT, UN LESS ANY DOCUMENTARY EVIDENCES HAVE BEEN FOUND TO SUBSTANTIATE THE SAME. 4 ITA NO. 4930/MUM/2017 5. AGAINST THE ABOVE ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. AT THE OUTSET, WE NOTE THAT THE REVENUES GROUND IS MISPLACED THAT THE LD. CIT(A) HAS DELETED THE ADDITION IN RELATION TO DEDUCTION U/S. 80 - IC FOR BOTH THE UNITS, NAMELY PANT NAGAR UNIT 1 AND PANT NAGAR UNIT 2. AS PER THE GROUNDS OF APPEAL, THE REVENUE HAS URGED THAT THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.5,44,77,643/ - IN RESPECT OF BOTH THE UNITS. WE NOTE THAT THE A.O. HAS MADE THE ADDITIONS AS UNDER: FOR PANT NAGAR UNIT 1 RS.3,78,78,883/ - FOR PANT NAGAR UNIT 2 RS.1,65,98,760/ - TOTAL RS.5,44,77,643/ - 7. A PERUSAL OF THE LD. CIT(A)S ORDER SHOWS THAT HE HAS HELD THAT THE ADDITION MADE BY THE A.O. FOR PANT NAGAR UNIT 1 IS DELETED AND THE ADDITION MADE FOR PANT NAGAR UNIT 2 IS UPHELD. THIS IS OBSERVED IN PARA 1.3 OF THE LD. CIT(A)S ORD ER , AS REPRODUCED ABOVE . 8. THEREAFTER, IN PARA 1.4, THE LD. C IT(A) HAS SIMPLY NOTED THE SUBMISSIONS OF THE ASSESSEE AS UNDER: 1.4. FURTHER, THE APPELLANT ALSO SUBMITTED THAT THE COMPLETE LIST OF MACHINERY/ PLANT PURCHASED BY THE ASSESSEE COMPANY FROM VARIOUS PARTIES_JBR PANT NAGAR UNITS HAD BEEN SUBMITTED BY IT TO THE AO. THE SUPPORTING BILLS AND OTHER CHALLANS HAD ALSO BEEN FILE D WITH THE AO DURING THE ASSESSMENT PROCEEDINGS. THE APPELLANT SUBMITTED THAT A PERUSAL OF THESE DOCUMENTARY EVIDENCES CLEARLY SHOWED THAT THE ASSESSEE HAD NOT VIOLATED THE PROVISIONS OF SECTION 80IC OF THE INCOME TAX ACT. THE APPELLANT FURTHER SUBMITTED T HAT THE AO HAD NOT GIVEN ANY ADVERSE FINDINGS AGAINST THE EVIDENCES PRODUCED BY THE ASSESSEE AND DEDUCTION U/S. 80IC WAS DISALLOWED BY THE AO MERELY ON THE BASIS OF A STATEMENT RECORDED U/S. 133(A) OF THE INCOME TAX ACT OF MR. ANIL JAIN, M.D. OF THE COMPAN Y. WITH REGARDS TO THIS STATEMENT, THE APPELLANT SUBMITTED THAT THE STATEMENT WAS NOT AN INCRIMINATING STATEMENT AND IT ONLY STATED THAT THE ASSESSEE WOULD WITHDRAW THE CLAIM OF DEDUCTION U/S. 80IC OF THE INCOME TAX ACT, IF THE SAME WAS AGAINST THE RULES A ND REGULATIONS OF THE INCOME TAX PROVISIONS. HOWEVER, SINCE ON EXAMINATION OF FACTS IT CAME EVIDENT THAT NO PROVISIONS OF INCOME TAX ACT HAD BEEN VIOLATED BY THE ASSESSEE , THE CLAIM OF DEDUCTION U/S. 80IC WAS NOT WITHDRAWN BY IT. WITHOUT PREJUD ICE TO THE A BOVE, THE 5 ITA NO. 4930/MUM/2017 APPELLANT ALSO SUBMITTED THAT NO ADDITION COULD HAVE BEEN M ADE BY THE AO MERELY RELYING ON THE STATEMENT RECORDED U/S. 80IC OF THE ACT, UN LESS ANY DOCUMENTARY EVIDENCES HAVE BEEN FOUND TO SUBSTANTIATE THE SAME. THEREAFTER, HE HAS NOT RECORDED ANY FINDING. 9. FROM THE ABOVE, IT IS APPARENT THAT THE LD. CIT(A) HAS PASSED A LACONIC AND CONFUSING ORDER. IT SEEMS HE HAS ONLY DELETED THE ADDITION FOR PANT NAGAR UNIT NO.1 AND ADDITION FOR PANT NAGAR UNIT NO.2 HAS BEEN UPHELD. 10. WE FURTHER NOTE THAT THE LD. CIT(A) HAS NOTED THAT THE ASSESSEE HAS GIVEN THE COMPLETE LIST OF MACHINERY AND PLANT TO THE A.O. AND HE HAS FURTHER NOTED THE SUBMISSIONS OF THE ASSESSEE WITHOUT GIVING ANY FINDING OF HIS OWN. IT IS OBSERVED THAT THERE IS NO MENTION OF LIST OF MACHINERY IN THE ORDER OF THE A.O. MOREOVER, THE LD. CIT(A) HAS SIMPLY NOTED THE SUBMISSIONS OF THE ASSESSEE, WITH OUT GIVING ANY CONCLUSION THEREON. 11. IN THESE CIRCUMSTANCES, IN OUR CONSIDERED OPINION, THE ISSUE NEEDS TO BE REMITTED TO THE FILE OF THE A.O. THE A.O. IS DIRECTED TO CONSIDER THE ISSUE AFRESH IN LIGHT OF THE EVIDENCE S NOTED BY THE LD. CIT(A). NEEDLESS TO ADD, THE ASSESSEE SHOULD BE GRANTED ADEQUATE OPPORTUNITY OF BEING HEARD. APROPOS ISSUE RELATING TO DISALLOWANCE U/S. 14A: 1 2 . ON THIS ISSUE, THE A.O. NOTED THAT THE ASSESSEE HAS EARNED CONSIDERABLE EXEMPT INCOME AMOUNTING TO RS .5 , 84 , 22 , 832/ - . HE WAS OF THE OPINION THAT THE ASSESSEE SHOULD HAVE MADE THE DISALLOWANCE U/S.14A. HOWEVER, THE ASSESSEE RESPON DED THAT IT HAS NOT INCURRED ANY EXPENDITURE IN RELATION TO ITS EXEMPT INCOME. THE A.O. REJECTED THIS CONTENTION AND HE PROCEEDED TO MAKE THE DISALLOWANCE U/S. 14A R/W RULE 8D AMOUNTING TO RS.3 , 9 4,83,174/ - . 6 ITA NO. 4930/MUM/2017 1 3 . UPON THE ASSESSEES APPEAL, THE LD. CIT(A) NO TED THE ASSESSEES SUBMISSION. THEREAFTER, HE GRANTED RELIEF TO THE ASSESSEE HOLDING THAT THE DIVIDEND FROM FOREIGN COMPANIES WERE LIABLE TO TAX IN INDIA. HENCE, NO DISALLOWANCE SHOULD BE MADE IN THIS CONNECTION. FURTHERMORE, HE OBSERVED THAT THE ASSESSEE S OWN FUNDS WERE MORE THAN THE INVESTMENT IN THE EXEMPT INVESTMENT. ACCORDINGLY, HE DELETED THE DISALLOWANCE. THE LD. CIT(A) HELD AS UNDER: 2.1 I HAVE GONE THROUGH THE FACTS OF THE CASE AND THE SUBMISSION MADE BY THE ASSESSEE IN THIS REGARD. THE A.O., WHI LE APPLYING THE PROVISIONS OF SECTION 14A HAS FAILED TO APPRECIATE THAT THE ASSESSEE HAD MADE INVESTMENTS IN VARIOUS FOREIGN AND DOMESTIC SUBSIDIARY COMPANIES. THE APPELLANT HAS RIGHTLY CONTENDED THAT DIVIDENDS EARNED FROM FOREIGN COMPANIES ARE LIABLE TO T AX IN INDIA AS PER PROVISIONS OF INCOME TAX ACT, 1961 AND HENCE SUCH INVESTMENTS CANNOT BE COVERED BY PROVISIONS OF SECTION 14A OF THE ACT. 2.2 FURTHER, IT IS ALSO OBSERVED THAT THE ASSESSEES OWN FUNDS ARE MORE THAN THE TOTAL INVESTMENTS IN EXEMPT ASSETS . ONCE AGAIN, RESPECTFULLY FOLLOWING THE DECISION OF THE HON'BLE BOMBAY HIGH COURT DECISION IN THE CASE OF HDFC BANK, I HEREBY HOLD THAT THE ADDITION ON ACCOUNT OF 14A R.W.R. 8D IS BAD IN LAW AND DESERVES TO BE DELETED. 14. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE FIND THAT THE ASSESSEE BEFORE THE LD. CIT(A) HAS INTER ALIA CONTENDED THAT THE INVESTMENTS WERE STRATEGIC IN NATURE. WE FIND THAT THIS PLAN K IS NO MORE SUSTAINABLE IN VIEW OF THE HON'BLE APEX COURT DECISION IN THE CASE OF MAXOPP INVESTMENT LTD. VS. CIT [2018] 402 ITR 640 (SC) . WE FURTHER NOTE THAT THE LD. CIT(A) HAS GRANTED RELIEF TO THE ASSESSEE ON THE GROUND THAT THE ASSESSEES OWN FUNDS ARE MORE THAN THE TOTAL INVESTMENTS IN THE EXEMPT ASSETS. WE FIND THAT FOR THIS CONCLUSION, THE LD. CIT(A) HAS NOT REFERRED TO ANY FACTS AND FIGURES. WE NOTE THAT BEFORE THE A.O. THERE WAS NO SUCH SUBMISSIONS ALSO. HENCE, DE HORS ANY EXAMINATION OF THE FACTS AND FIGURES , AS TO WHETHER THE ASSESSEE HAS SUFFICIENT OW N FUNDS TO MAKE THE SE INVESTMENTS , THE DELETION OF ADDITION IS NOT SUSTAINABLE. 7 ITA NO. 4930/MUM/2017 IN THESE CIRCUMSTANCES, IN OUR CONSIDERED OPINION, THIS ISSUE NEEDS TO BE CONSIDERED AFRESH , AFTER MAKING THE FACTUAL EXAMINATION OF THE ASSESSEES FINANCIAL STATEMENT . HENCE, WE REMIT THIS ISSUE TO THE FILE OF THE A.O. TO CONSIDER THE ISSUE AFRESH. THE A.O. SHALL ALSO KEEP IN MIND THAT ON INVESTMENTS ON WHICH NO EXEMPT INCOME HAS BEEN EARNED, THE SAME SHALL NOT BE CONSIDERED FOR COMPUTATION OF THE AVERAGE VALUE OF THE INVESTMENT IN LIGHT OF THE ITAT SPECIAL BENCH DECISION IN THE CASE OF ACIT V. VIREET INVESTMENTS PRIVATE LIMITED [165 ITD 27]. NEEDLESS TO ADD, THE ASSESSEE SHOULD BE GRANTED ADEQUATE OPPORTUNITY OF BEING HEARD. APROPOS GROUND RELATING TO ADDITION U/S.115JB: 15. THIS ISSUE RELATES TO DISALLOWANCE U/S. 115JB WITH REFERENCE TO EXPENDITURE INCURRED FOR EARNING EXEMPT INCOME. THE ITAT SPECIAL BENCH IN THE CASE OF ACIT V. VIREET INVESTMENTS PRIVATE LIMITED (SUPRA) HAD HELD THAT FOR THE PURPOSE OF SECTION 115JB DISALLOWANCE SHOULD BE MADE IN ACCORDANCE WITH CLAUSE (F) OF SECTION 115 JB AND NOT WITH REFERENCE TO SECTION 14A. ACCORDINGLY, WE REMIT THIS ISSUE ALSO TO THE FILE OF THE A.O. WITH THE DIRECTIONS AS ABOVE. APROPOS GROUND RELATING TO ADDITION AL DEPRECIATION: 16. ON THIS ISSUE, THE A.O. MADE THE DISALLOWANCE BY HOLDING AS UNDER: DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE COMPANY HAS CLAIMED ADDITIONAL DEPRECIATION OF RS.L 18579439/ - , WHICH INCLUDES DEPRECIATION CLAIMED ON PLANT AND MACHINERY OF PANT NAGAR U NIT I FIT II OF RS.647611 AND RS.1771654 RESPECTIVELY. DURING THE COURSE OF SURVEY ACTION U/S.133A CONDUCTED ON 03.01.2015, IT WAS FOUND THAT THERE WAS INTER - UNIT TRANSFER OF PRE - USED PLANT AND MACHINERY IN THESE UNITS. SINCE THE ACTUAL PURCHASE OF PLANT A ND MACHINERY IS NOT PROVEN BY THE ASSESSEE COMPANY, THE CLAIM OF ADDITIONAL DEPRECIATION OF RS.24,19,265/ - IS DISALLOWED. PENALTY PROCEEDING U/S.271(L)(C) OF THE I.T ACT, 1961 ARE INITIATED SEPARATELY FOR THE DEFAULT COMMITTED BY THE ASSESSEE WITHIN THE ME ANING OF THAT SECTION. 17. UPON THE ASSESSEES APPEAL, THE LD. CIT(A) NOTED THE SUBMISSIONS OF THE ASSESSEE AND HELD AS UNDER: 8 ITA NO. 4930/MUM/2017 4.1. I HAVE GONE THROUGH THE SUBMISSION OF THE APPELLANT AND THE ASSESSMENT ORDER. ON A CAREFUL PERUSAL OF THE SAME, I FIND MERI T IN THE ASSESSEE'S CONTENTION THAT THE AO HAS FAILED TO PASS A VALID SPEAKING ORDER. THE REASONS GIVEN BY THE AO FOR MAKING THIS ADDITION ARE NOT CLEAR. BESIDES, THE ASSESSEE HAD FILED COMPLETE DETAILS OF THE NEW PURCHASES MADE DURING THE YEAR ALONGWITH V ARIOUS SUPPORTING DOCUMENTS. HOWEVER, THE AO HAS REJECTED THE EVIDENCES FILED BEFORE HIM TO PROVE THE GENUINENESS OF THESE PURCHASES WITHOUT GIVING ANY EXPLANATION FOR THE SAME, 4.2. THUS, IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, 1 BELIEVE IT IS FAIR TO DELETE THE ADDITION MADE BY THE AO IN THIS REGARD. THIS GROUND OF APPEAL IS THUS HEREBY ALLOWED. 18. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE FIND THAT THE ASSESSEE HAD SUBMITTED THAT IT HAS GIVEN ALL THE DETAILS TO THE A.O. AND THE COPY OF THE DETAILS WAS ALSO GIVEN TO THE LD. CIT(A). WE NOTE THAT THERE IS NO MENTION IN THE ASSESSMENT ORDER REGARDING ANY DETAILS SUBMITTED BY THE ASSESSEE. THE LD. CIT(A) HAS NOT EXAMINED THE VERACITY OF THE SAME, ALTHOUGH HE HAS CO - TERMIN US POWER WITH THAT OF THE A.O. H E HAS DELETED THE ADDITION ONLY ON THE GROUND THAT THE A.O. HAS REJECTED THE EVIDENCES WITHOUT GIVING ANY FINDING OF HIS OWN THAT THESE DULY PROVE THE CASE OF THE ASSESSEE. 19. WE FIND THAT IT IS IRONICAL THAT THE LD. CIT( A) HAS MENTIONED THAT THE A.O. HAS NOT PASSED THE SPEAKING ORDER. WE FIND THAT IT IS THE ORDER OF THE LD. C IT(A) HIMSELF WHICH ITSELF SUFFERS FROM THIS INFIRMITY THROUGHOUT T H E APPELLATE ORDER. 20. IN OUR CONSIDERED OPINION, THE ISSUE NEEDS TO BE REMITTED TO THE FILE OF THE A.O. TO GIVE A FINDING ON THE EVIDENCES AS NOTED BY THE LD. CIT(A). NEEDLESS TO ADD, THE ASSESSEE SHOULD BE GRANTED ADEQUATE OPPORTUNITY OF BEING HEARD. 21. IN THE RESULT, THIS APPEAL BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 0 6 . 0 2 . 2 0 1 9 S D / - S D / - ( RAM LAL NEGI ) (SHAMIM YAHYA) JUDICIAL MEMBER AC COUNTANT MEMBER MUMBAI ; DATED : 0 6 . 0 2 . 2 0 1 9 9 ITA NO. 4930/MUM/2017 ROSHANI , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT - CONCERNED 5. DR, ITAT, MUMBAI 6. GUARD FILE BY ORDER, (DY./ASSTT. REGISTRAR) ITAT, MUMBAI