Dy. Commissioner of Income Tax-6, Kanpur V. M/s M.K.U Pvt. Ltd., Kanpur

ITA 608/LKW/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4423 (ITAT-LUCKNOW)
• Duration Of Justice: 8 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-05-2016
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 19-05-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 07-09-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P K KAPOOR
• Keywords: Depreciation; Earning of tax free income; Unabsorbed depreciation
• Section: 14A; 10B

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI A.K.GARODIA, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ITA NO.608/LKW/2015 ASSESSMENT YEAR 2011-12 M/S M.K.U. PVT. LTD, 13, GANDHI GRAM, KANPUR PAN AACCM 6302 Q VS DCIT-6, KANPUR CO NO.45/LKW/2015 (IN ITA NO.608/LKW/2015) DCIT-6, KANPUR VS M/S M.K.U. PVT. LTD, 13, GANDHI GRAM, KANPUR PAN AACCM 6302 Q (RESPONDENT) (APPELLANT) SHRI ANAND KUMAR AGARWAL, CIT DR APPELLANT BY SHRI P.K. KAPOOR, CA RESPONDENT BY 19/05/2016 DATE OF HEARING 20/05/2016 DATE OF PRONOUNCEMENT O R D E R PER MAHAVIR PRASAD, JM. THIS APPEAL IS FILED BY THE REVENUE AND THE CROSS O BJECTION IS FILED BY THE ASSESSEE. SINCE, THE APPEAL AND THE CO WERE HEA RD TOGETHER, THESE ARE BEING DISPOSED OF THROUGH THIS CONSOLIDATED ORDER. 2 ITA NO.608/LKW/2015 2. THIS APPEAL IS PREFERRED BY THE REVENUE ON THE F OLLOWING GROUNDS: 1. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS E RRED IN LAW AND ON FACTS IN ALLOWING THE RELIEF RS.5,86,91,110/ - ON ACCOUNT OF EXEMPTION CLAIMED U/S 10B WITHOUT APPRECIATING T HE FACT THAT ASSESSEE IS NOT ENTITLED TO CLAIM EXEMPTION U/ S 10B AS PER PROVISION OF SECTION 10B(7A). 2. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ER RED IN LAW AND ON FACTS IN ALLOWING THE RELIEF RS.46,59,765/- ON ACCOUNT OF DISALLOWANCE MADE U/S 14A WITHOUT APPRECIATING T HE FACT THAT THE ASSESSEE FAILED TO PROOF BEFORE THE AO THA T THE INVESTMENT IN THE COMPANIES WAS MADE OUT OF RESERVE AND SURPLUS FUND, HENCE INVOKING THE PROVISION OF SECTI ON 14A READ WITH RULE 8D DISALLOWED THE INTEREST AMOUNT IS JUSTIFIED. 3. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ER RED IN LAW AND ON FACTS IN ALLOWING THE RELIEF RS.55,54,550/- ON ACCOUNT OF CARRY FORWARD OF SHORT TERM CAPITAL LOSS TO NEXT YEAR WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAS NOT CLA IM SAID LOSS IN RETURN OF INCOME FILED U/S 133. 4. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ER RED IN LAW AND ON FACTS IN ALLOWING THE RELIEF RS.2,60,71,027/ - ON ACCOUNT OF UNABSORBED DEPRECIATION OF ASSESSMENT YEAR AS TH ERE IS NO UNABSORBED DEPRECIATION CARRIED FORWARD TO THE NEXT YEAR IN THE ASSESSEE'S EARLIER YEARS CASES. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PRIVATE LTD. COMPANY. THE RETURN OF INCOME WAS FILED ON 30.09.2011, DECLARING THE INCOME AT RS. NIL AND BOOK PROFIT AT RS. 52024121.00. THE RETURN WAS PROC ESSED U/S 143(1) OF THE INCOME TAX ACT, 1961. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE FILED VARIOUS DETAILS AS REQUIRED BY THE AO. HOWEVER, THE ASSESSI NG OFFICER COMPLETED THE 3 ASSESSMENT ON AN INCOME OF RS.58694110.00 AFTER DEN YING THE CLAIM OF DEDUCTION U/S 10B LIKE LAST YEAR AND ALSO MADE CERTAIN DISALL OWANCES U/S 14A, SET OFF SHORT TERM CAPITAL LOSS AGAINST LONG TERM CAPITAL GAIN. 5. BEING AGGRIEVED FROM THE ADDITIONS & DISALLOWA NCES MADE IN THE ASSESSMENT ORDER, THE ASSESSEE HAS FILED AN APPEAL BEFORE THE CIT(A) HAS TAKEN VARIOUS GROUNDS. THE CIT(A) HAS PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 6. WE HAVE GONE THROUGH THE RELEVANT RECORDS AND VO LUMINOUS PAPER BOOK FILED BY THE ASSESSEE. WE FIND THAT THE CIT(A) HAS RIGHTLY ALLOWED THE RELIEF OF RS.5,86,91,110/- ON ACCOUNT OF EXEMPTION CLAIMED U/ S 10B AND CIT(A) HAS ALSO RIGHTLY GAVE RELIEF OF RS.46,59,765/- U/S 14A. 7. SO FAR AS GROUND NO.3 IS CONCERNED, LD. AR OF TH E ASSESSEE DOES NOT WISH TO CONTEST THE SAME, THEREFORE, THE GROUND NO.3 IS ALLOWED IN FAVOUR OF DEPARTMENT. 8. REGARDING GROUND NO.4 IS CONCERNED, ALLOWING THE RELIEF OF RS.2,60,71,027/- ON ACCOUNT OF UNABSORBED DEPRECIATION OF LAST YEARS , THE CIT(A) HAS ALLOWED THE RELIEF AS PER LAW IN FAVOUR OF THE DEPARTMENT. CO NO.45/LKW/2015 9. SO FAR AS THE CROSS OBJECTION OF THE ASSESSEE IS CONCERNED, THIS CO IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE J UDGMENT OF THE HONBLE DELHI HIGH COURT RENDERED IN THE CASE OF CHEMINVEST LTD. VS. CIT IN ITA NO. 749 OF 2014 IN WHICH IT HAS BEEN HELD THAT THE EXPRESSION DOES NOT FORM PART OF THE TOTAL INCOME IN SECTION 14A OF THE ENVISAGES THAT THERE SHOULD BE AN ACTUAL RECEIPT OF INCOME, WHICH IS NOT INCLUDIBLE IN THE TOTAL INCOME , DURING THE RELEVANT PREVIOUS YEAR FOR THE PURPOSE OF DISALLOWING ANY EXPENDITURE INCURRED IN RELATION TO THE 4 SAID INCOME. IN OTHER WORDS, SECTION 14A WILL NOT A PPLY IF NO EXEMPT INCOME IS RECEIVED OR RECEIVABLE DURING THE RELEVANT PREVIOUS YEAR. HE HAS SUBMITTED THAT COPY OF THIS JUDGMENT IS AVAILABLE ON PAGES 65 TO 7 8 OF THE PAPER BOOK. 10. IN THE RESULT, CO OF THE ASSESSEE IS ALLOWED. 11. IN THE COMBINED RESULT, APPEAL OF THE REVENUE I S PARTLY ALLOWED AND CO OF THE ASSESSEE IS ALLOWED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/- SD/- (A.K. GARODIA ) (MAHAVIR PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 20/05/2016 AKS COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. REG ISTRAR