ACIT, Ludhiana V. M/s Nahar Capital & Financial Services Ltd., Ludhiana

ITA 870/CHANDI/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77090 (ITAT-CHANDIGARH)
• Duration Of Justice: 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-06-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 28-05-2014
• Assessment Year: 2010-2011
• Appeal Filed On: 29-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: JAI KARAN SINGH
• Section: 143(3); 14A; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A, CHANDIGARH BEFORE SHRI T.R.SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.870 /CHD/2013 ASSESSMENT YEAR : 2010-11 THE A.C.I.T., VS. M/S NAHAR CAPITAL & FINANCIAL SERVICES LTD., CIRCLE VII, 375, IND. AEA A, LUDHIANA. LUDHIANA. PAN: AACCN2866Q (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AKHILESH GUPTA, DR RESPONDENT BY : SHRI JAIKARAN SINGH DATE OF HEARING : 28.05.2014 DATE OF PRONOUNCEMENT : 06.06.2014 O R D E R PER SUSHMA CHOWLA, J.M. : THE APPEAL FILED BY THE REVENUE IS AGAINST THE ORD ER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-II, LUDHIANA DA TED 28.06.2013 AGAINST THE ORDER PASSED UNDER SECTION 143(3) OF IN COME TAX ACT, 1961 (IN SHORT THE ACT). 2. THE REVENUE HAS RAISED FOLLOWING REVISED GROUNDS OF APPEAL : 1) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF CA SE THE CIT(A) HAS ERRED IN FOLLOWING THE DECISION OF THE HON'BLE ITAT, CHANDIG ARH IN ASSESSEE'S OWN CASE FOR THE A.Y. 2008-09 WHERE THE ITAT FOLLOWED THE DE CISION IN THE CASE OF DCIT VS. IND, SWIFT (ORDER DATED 27.07.2012 IN ITA NO. 1 120/CHD/2011) WHICH IS BEFORE THE INSERTION OF RULE 8D. 2) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE CIT(A) HAS ERRED IN NOT CONSIDERING THE FACT THAT AFTER INSERTION OF RULE 8D W.E.F. A.Y. 2008-09 THERE IS NO NOTIONAL DISALLOWANCE WHEREAS IN THE CA SE OF DCIT VS. IND SWIFT LTD. THERE WAS A FINDING OF NOTIONAL DISALLOWANCE. 3) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE DECISION OF THE AO IS IN CONSONANCE WITH THE DECISION OF THE HON'BLE D ELHI HIGH COURT IN THE CASE OF CIT VS. GOETZE (INDIA) LTD DATED 09.12.2013 IN I TA NO. 1179/2010. 2 4) THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND AN Y GROUND OF APPEAL BEFORE IT IS FINALLY DISPOSED OFF. 3. THE LEARNED A.R. FOR THE ASSESSEE AT THE OUTSET POINTED OUT THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE O RDER OF THE TRIBUNAL RELATING TO ASSESSMENT YEARS 2008-09 AND 2009-10. 4. THE LEARNED D.R. FOR THE REVENUE PLACED RELIANCE ON THE ORDER OF THE ASSESSING OFFICER. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISING IN THE PRESENT APPEAL IS IN RELATION TO COMPUTATION OF BOOK PROFITS UNDER SECTION 115JB. THE ASSESSING OFFICE R WHILE COMPUTING THE BOOK PROFITS HAD ADDED BACK DISALLOWANCE WORKED OUT UNDER SECTION 14A OF THE ACT TO THE NET PROFITS OF THE BUSINESS. THE PLEA OF THE ASSESSEE IN THIS REGARD WAS THAT THE ASSESSEE ITSEL F HAD DISALLOWED SUM OF RS.42,37,722/- ON ACCOUNT OF DISALLOWANCE UNDER SEC TION 14A OF THE ACT UNDER REGULAR PROVISIONS AND RS.32,86,397/- UNDER S ECTION 115JB PROVISION IN ITS RETURN OF INCOME ON PROPORTIONATE BASIS. THE ASSESSING OFFICER RECOMPUTED THE BOOK PROFITS UNDER SECTION 1 15JB OF THE ACT AND THE CIT (APPEALS) DELETED THE SAME AGAINST WHICH TH E REVENUE IS IN APPEAL. 6. WE FIND THAT SIMILAR ISSUE OF COMPUTATION OF BOO K PROFITS UNDER SECTION 115JB OF THE ACT IN VIEW OF READJUSTMENT ON ACCOUNT OF DISALLOWANCE UNDER SECTION 14A OF THE ACT AROSE BEF ORE THE TRIBUNAL IN ASSESSEES OWN CASE RELATING TO ASSESSMENT YEAR 200 8-09. THE TRIBUNAL IN ITA NO.1120/CHD/2011 VIDE ORDER DATED 27.7.2012 IN TURN RELYING ON AN EARLIER DECISION OF THE CHANDIGARH BENCH OF THE TRIBUNAL IN DCIT VS. IND SWIFT LTD. IN ITA NO.729/CHD/2009 RELATING TO A SSESSMENT YEAR 2006-07 DATE OF ORDER 30.11.2009 HELD AS UNDER: 3 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ONLY ISSUE ARISING IN THE PRESENT APPEAL IS IN RESPECT OF COMPUTATION OF BOOK PROFITS UNDER SECTION 115JB OF THE ACT. TH E ASSESSING OFFICER WHILE COMPUTING THE SAID BOOK PROFITS HAD ADDED BAC K THE DISALLOWANCE WORKED OUT UNDER SECTION 14A OF THE ACT OF THE NET PROFITS OF THE BUSINESS AND COMPUTED THE TAX LIABILITY OF THE ASSESSEE COMP ANY THEREAFTER. WE FIND THAT THE ISSUE IN THE PRESENT CASE IS COVERED BY THE ORDER OF THE CHANDIGARH BENCH OF THE TRIBUNAL IN DCIT VS. IND-SW IFT LTD. (SUPRA) WHERE VIDE ORDER DATED 30.11.2009 VIDE PARA 8 IT WA S HELD AS UNDER: 8. THE GROUND 1(IV) RAISED BY THE REVENUE IS AGAIN ST THE COMPUTATION OF BOOK PROFITS U/S 115 JB OF THE ACT. THE ASSESSING OFFICER WHILE COMPUTING THE BOOK PROFIT U/S 115 JB OF THE ACT HAD ADDED BACK THE DISALLOWANCE WORKED U/S 14A OF THE I .T. ACT TO THE NET PROFIT SHOWN IN THE PROFIT AND LOSS ACCOUNT AND COMPUTED THE PROFITS FOR THE YEAR. THE CIT (A) REWORKED THE BOO K PROFITS BY EXCLUDING THE SAID NOTIONAL DISALLOWANCE U/S 115 JB OF THE ACT, IN TURN FOLLOWING THE RATIO LAID DOWN BY THE APEX COUR T IN APOLLO TYRES LTD. 255 ITR 273 (SC). WE ARE IN CONFORMITY WITH THE ORDER OF CIT(A). THE ADJUSTMENTS, IF ANY, TO BE MA DE TO THE PROFIT SHOWN IN THE PROFIT AND LOSS ACCOUNT, ARE PROVIDED IN THE SECTION 115 JB OF THE ACT ITSELF. THERE IS NO PROVISION IN THE ACT TO MAKE ADJUSTMENT ON ACCOUNT OF NOTIONAL DISALLOWANCE WORK ED OUT UNDER SECTION 14A OF THE ACT. THE HON'BLE SUPREME COURT IN APOLLO TYRES LTD. (SUPRA) HELD THAT THE PROFITS OF THE BUSINESS ARE NOT TO BE DISTURBED FOR COMPUTING THE BOOK PROFITS EXCEPT IN THE CIRCUMSTANCES PROVIDED UNDER THE SAID ACT. WE CONF IRM THE ORDER OF CIT IN THIS REGARD AND DISMISS THE GROUND NO.1(IV) RAISED BY THE REVENUE. 6. THE ISSUE ARISING IN THE PRESENT APPEAL IS IDENT ICAL TO THE ISSUE BEFORE THE CHANDIGARH BENCH OF THE TRIBUNAL IN DCIT VS. IND-SWIFT LTD. (SUPRA) AND FOLLOWING THE SAME WE DIRECT THE ASSESS ING OFFICER TO ADOPT THE BOOK PROFITS AS PER THE PROFIT & LOSS ACCOUNT A ND DO NOT MAKE ADDITION ON ACCOUNT OF DISALLOWANCE WORKED OUT UNDE R SECTION 14A OF THE ACT, AS SUCH DISALLOWANCE IS COMPUTED UNDER THE NOR MAL PROVISION OF THE ACT, WHICH ARE NOT APPLICABLE FOR DETERMINING BOOK PROFITS UNDER SECTION 115JB OF THE ACT. 4 7. SIMILAR ISSUE WAS AROSE IN ASSESSMENT YEAR 2009- 10 IN ASSESSEES OWN CASE IN ITA NO.1353/CHD/2012 ORDER DATED 16.4 .2013. FOLLOWING THE PARITY OF REASONING AND ISSUE BEING IDENTICAL W E FIND NO MERIT IN THE AFORESAID ADDITION MADE BY THE ASSESSING OFFICER AN D UPHOLDING THE ORDER OF THE CIT (APPEALS) WE DISMISS THE GROUNDS O F APPEAL RAISED BY THE REVENUE. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 6 TH DAY OF MAY, 2014. SD/- SD/- (T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 6 TH MAY, 2014 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH