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

ITA 5524/DEL/2018

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 9663 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2015-2016
• Appeal Filed On: 23-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Rule 8D
• Section: 143(3); 142(1); 14A; 143(2)

Judgement Text

Page | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “E”: NEW DELHI BEFORE SHRI N. K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI ANUBHAV SHARMA, JUDICIAL MEMBER ITA No. 5524/Del/2018 (Assessment Year: 2015-16) JCIT, Special Range-6, New Delhi Vs. National Textile Corporation Ltd, Scope Complex Core-IV, 7, Institutional, Lodhi Road, New Delhi (Appellant) (Respondent) PAN: AAACN2847D Assessee by : Shri Ved Jain, Adv Ms. Supriya Mehta, CA Revenue by: Ms. Rinku Singh, Cit DR Shri Jeetender Chand, Sr. DR Date of Hearing 21/09/2022 Date of pronouncement 29/09/2022 O R D E R PER ANUBHAV SHARMA, J. M.: 1. The present appeal is preferred by the revenue against the order dated 15.06.2018 of Ld. Commissioner of Income Tax (Appeals)-37, New Delhi (hereinafter referred as First Appellate Authority in short Ld. „FAA‟) in appeal No. 37/10152/2017-18 before it against the order dated 20.12.2017 passed u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred as „the Act‟) by the ld. AO, Additional CIT, Special Range-6, New Delhi (hereinafter referred as the Ld. AO). 2. The brief facts of the case as put up by assessee are that it is a Public Sector Undertaking formed with the sole object of reviving sick Page | 2 textile mills mainly to safeguard the interest of labourers employed by them and also having huge b/d unabsorbed losses of Rs 1,545.08 Crores during the current A.Y. 2015-16. Further it is also not liable to pay taxes as per BIFR mandate. It filed its E- Return as on 29th Sep 2015 declaring total losses of Rs 229.89 Crores. The case was selected for scrutiny & statutory notice u/s 143(2) was duly served on Appellant with in statutorily time & later on notice u/s 142(1) along with detailed questioner was also issued to assessee. Assessee replied to all the asked questions in questioner from time to time. Ld. A.O made following additions by:- a. Disallowance of Rs 33,22,982/- u/s 14 A read with Rule 8D. b. Disallowance of prior period expenses of Rs 2,23,09,000/- Assessee made detailed submissions for no further disallowance u/s 14 A read with Rule 8D of Rs 33,22,982/- as follows:- a. The assessee has himself disallowed Rs 9,42,336/- as per applicable Clause (2) and sub clause (ii) of Rule 8D under the I-Tax Rules 1962 r/w sec 14A b. The Assessee made detailed submission that no disallowance vide clause (2) sub clause (ii) of Rule 8D is applicable on the Assessee on the following basis :- i. Interest expenses have been exclusively used for earning taxable income only. ii. All investments in subsidiary companies are Non Cash Investments and no bank funds were ever used. The non cash investments mainly consist of investments in the form of Land and Buildings, Factory etc only. c. The similar disallowances made in the earlier A.Y. 2008-09, 2009-10, 2010-11 & A.Y. 2014-15 were duly Page | 3 deleted by CIT (A). Further IT AT also dismissed the departments appeal against this disallowance for the A.Y. 2009-10. d. Assessee also asked for reduction of taxable income by Rs 9,42,336/- being wrong disallowance made by him based on stated case laws. 3. Assessee made detailed submissions for no further Prior Period Expenses disallowance of Rs 2,23,09,000/-as follows:- a. The Assessee has himself disallowed Rs 49,31,02,928/- as per law. b. The Assessee is disallowing Net Prior Period Expenses (Prior Period Expenses- Prior Period Income) since inception 01/04/1968 (Last 45 years). c. The changing from Net to Gross Prior Period Expenses shall have no effect on tax liability over a period as these are self-adjustable. d. These are CURRENT YEAR expenses only but reported as prior period in compliance of Accounting Standards-5 of ICAI & Companies Act 2013 only. This fact was duly proved also as per stated judicial findings. e. The similar disallowances made in the earlier assessment years were duly struck down also as follows:- A.Y. Order Details 2014-15 CIT (A)-6 order dated 29.04.2017 2012-13 CIT (A)-33 order dated 27.01.2017 2011-12 CIT (A)-38 order dated 03.04.2017 2009-10 1. CIT (A) order dated 31.01.2013 2. ITAT order dated 19.11.2014 2008-09 CIT (A) order dated 08.08.2011 2007-08 CIT (A)-38 order dated 27.01.2017 4. The Ld. CIT(A) followed the previous years findings of CIT (A)/ITAT and allowed the appeal. 5. Now before this Tribunal the revenue has raised the following grounds of appeal:- Page | 4 “1. That on the facts and circumstances of the case and in law, the order dated 20th Dec 2017 passed by Ld Addl CIT Range-6, (hereinafter called A.O.) is bad in law and against the circumstances of the case. 2. That the disallowance of Rs 33.22.982/- by A.O. u/s 14 A read with rule 8D of the I-Tax act 1961 is incorrect in law and on the facts of the case & prayed for deletion. 3. That non granting of asked relief against self disallowance of Rs 9.42.336/- u/s 14 A read with rule 8D of the I-Tax act 1961 is incorrect in law and on the facts of the case & prayed for granting asked relief. 4. That the disallowance of Rs 2.23.09.000/- by A.O. as prior Period Expenses is incorrect in law and on the facts of the case & prayed for deletion. 6. Heard and perused the record. 7. In regard to the issue in ground No. 1 it can be observed that the ld CIT(A) has taken into consideration the determination of issue in favour of the Assessee in the previous AYs 2008-09, 2009-10, 2010-11 and 2014-15 from the Tribunal. The Assessee had given a tabulated information with regard to details of interest expenditure which have been reproduced by the ld CIT(A) in para No. 4.2 of its order. 8. The ld DR could not substantiate argument as to why inspite of a suo moto disallowance being made by the Assessee without justifying anything to differ, the AO made a disallowance while the interest expenditure was incurred to earn taxable income only. At the same time the Assessee‟s own fund as on 31.03.2015 were Rs. 145173.31 and investment of Rs. 1957.39 lacs. No intervention required in the findings of the ld CIT(A) which based on correct interpretation and reliance of law. The ground is No. 1 decided against the revenue. 9. Ground No. 2: In regard to this ground the ld DR could not submit anything to show that how there is any difference of facts or law in regard to the issue when the same has been decided in Page | 5 Assessee‟s own case by the order of Tribunal in preceding years. The AO made addition relying on the orders for preceding years and the ld CIT(A) had deleted the addition relying on the decision of the tribunal in Assessee‟s own case for Assessment Year 2009-10. Thus, there is no substance in the ground. The same is decided against the revenue. 10. Consequently, the appeal of the revenue is dismissed. Order pronounced in the open court on 29/09/2022. -Sd/- -Sd/- (N. K. BILLAIYA) (ANUBHAV SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 29/09/2022 A K Keot Copy forwarded to 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi