ACIT, Central Circle-2(1), Kolkata, Kolkata V. M/s Amricon Agrovat Pvt. Ltd., Kolkata

ITSSA 132/KOL/2016

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 3680 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 2 month(s) 3 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 09-02-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 06-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MD USMAN
• Assessee Lawyers: D S DAMLE
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA B BENCH, KOLKATA [BEFORE SRI J. SUDHAKAR REDDY, HONBLE A CCOUNTANT M EMBER & SRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER ] I.T (SS) A. NO. 1 32 /KOL/201 6 ASSESSMENT YEAR: 20 11 - 12 I.T (SS) A. NO. 1 33 /KOL/201 6 ASSESSMENT YEAR: 20 12 - 13 A.C.I.T., CC - 2 ,(1), KOLKATA. ...... ... APPELLANT AYAKAR BHAWAN POORVA 110, SHANTIPALLY 3 RD FLOOR KOLKATA 700 107 M/S. AMRICON AGROVAT PVT. LTD. ... APPELLANT 158, LENIN SARANI KOLKATA 700 013 [ P AN : AADCA 1610 Q ] APPEARANCES BY: SHRI D.S. DAMLE, FCA , APPEAR ED ON BEHALF OF THE ASSESSEE. MD. USMAN , CIT ,D/R , APPEARING ON BEHALF OF THE REVENUE. DATE OF HEARING : JANUARY 11 TH , 201 8 DATE OF PRONOUNCEMENT : FEBRUARY 9 , 201 8 O R D E R PER J. SUDHAKAR REDDY : - BOTH THESE APPEALS ARE FILED BY THE REVENUE DIRECTED AGAINST SEPARATE BUT IDENTICAL ORDER S OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 20 , KOLKATA , (HEREINAFTER THE LD. CIT (A)), PASSED U/S 250 OF THE INCOME TAX ACT, 1961 (THE ACT), DT. 2 7 / 09 /201 6. 2. AS THE ISSUES ARISING IN BOTH THESE APPEALS ARE COMMON, THEY ARE HEARD TOGETHER AND DISPOSED OFF BY WAY OF THIS COMMON ORDER. 3. GROUND NO. 1 TO 4, IN BOTH THESE APPEALS ARE ON THE ISSUE AS TO WHETHER THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 80 - IB(V) OF THE ACT. THE C BENCH OF THE 2 .T(SS)A. NO. 132/KOL/2016 ASSESSMENT YEAR: 2011 - 12 I.T(SS)A. NO. 133/KOL/2016 ASSESSMENT YEAR: 2012 - 13 M/S. AMRICON AGROVAT PVT. LTD TRIBUNAL IN THE CASE OF ACIT VS. M/S. AMRICON AGROVAT P. LTD. IT(SS)A. NO. 131/KOL/2016, ASSESSMENT YEAR 2010 - 11, O RDER DT. 05/04/2017 AT PARA 14 HELD AS FOLLOWS: - 14. WE HAVE GIVEN A CAREFUL CONSIDERATION TO THE RIVAL SUBMISSIONS. IN THE CASE O F AMRIT FEEDS (SUPRA), THE TRIBUNAL CONSIDERED THE DECISION RENDERED IN THE CASE OF VENKA TES WARA FEEDS (SUPRA) AND HELD THAT THE ASSESSEE IN THAT CASE HALL CLAIMED DEDUCTION UNDER SECTION 80LB ON THE ACTIVITY OF MERELY CONVERTING POULTRY MASH FEED INTO PELLET FEED AND THEREFORE THAT BENCH HAS HELD THAT THERE - WAS NO CHANGE IN THE BASIC COMPONENT OR NE W OR DIFFERENT ARTICLE CAME INTO EXISTENCE. AS SUCH, CONVERSION WAS PROCESSING ACTIVITY NOT MANUFACTURING. THE TRIBUNAL HELD THAT THE: EASE OF THE ASSESSEE A M RIT F EEDS (SUPRA) WAS ENTIRELY DIFFERENT. THE ASSESSEE'S ELIGIBLE UNDERTAKING ITSELF WAS INDEPENDE NTLY CARRYING OUT THE COMPLETE; ACTIVITY I.E. FROM MIXING, GRINDING TILL THE P E LL E TISATION. THE RAW MATERIALS ONCE CONSUMED COULD NOT BE RECONVERTED INTO THE SAM E POSITION. ITS UTILITY GETS CHANGED. THE PRIME RAW MATERIALS SUCH AS, MAIZE, SOYA OIL, RICE BR AN, ETC. CAN NO MORE BE REGARDED TO BE THE RICE BRAN, SOYA OIL, MAIZE. WE AR E OF THE VIEW THA T THE ISSUE IN THE REVENUE'S APPEAL IS SQUARELY COVERED AGAINST THE REVENUE BY THE DECISION OR THE COORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEE'S OWN CASE FOR THE EARLIER YEARS WHICH WAS BASED ON THE DECISION RENDERED IN THE CASE OR AMRIT FEEDS (SUPRA). RESPECTFULLY FOLLOWING THE DECISION OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE THE FINDING OF THE LD. CIT(A) ON THIS ISSUE STANDS CONFIRMED AN D THE GROUNDS OF APPEAL RAISED BY THE REVENUE IN ALL THE APPEALS ON THIS ISSUE ARE DISMISSED. 4. THE LD. CIT(A) HAS FOLLOWED THIS DECISION OF THE JURISDICTIONAL BENCH OF THE TRIBUNAL OF THE ITAT AND ALLOWED THE CLAIM OF THE ASSESSEE. WE SEE NO INFIRMITY IN THE SAME. ACCORDINGLY GROUND NO. 1 TO 4 OF THE REVENUE ARE DISMISSED. 3 .T(SS)A. NO. 132/KOL/2016 ASSESSMENT YEAR: 2011 - 12 I.T(SS)A. NO. 133/KOL/2016 ASSESSMENT YEAR: 2012 - 13 M/S. AMRICON AGROVAT PVT. LTD 5. GROUND NO. 5 & 6, IN BOTH THE APPEALS ARE ON THE ISSUE WHETHER THE GROSS INTEREST OR NET INTEREST SHOULD BE CONSIDERED FOR THE PURPOSE OF COMPUTING DEDUCTION U/S 80 - IB(V) OF THE A CT. 6. THE LD. CIT(A) HAS FOLLOWED THE DECISION OF THE KOLKATA BENCH OF THE TRIBUNAL IN THE CASE OF DCIT - VS . - BMW INDUSTRIES LIMITED ( ITA NO . 2115/KOL/2007 DATED 29.02.2008 AS WELL AS THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. WARREN TEAL LTD. 374 ITR 6 , AND ADJUDICATED THE ISSUE IN FAVOUR OF THE ASSESSEE. 6.1. THE C BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. MS. AMRIT FEEDS LTD. KOLKATA. IT(SS)A NO. 129/KOL/2016, ORDER DT. 05.04.2017 , AT PARA 18, HELD AS FOLLOWS: - 18. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND ARE OF THE VIEW THAT THE INTEREST INCOME AND THE INTEREST EXPENSES HAD A DIRECT NEXUS AND THEREFORE NETTING OF INTEREST INCOME AGAINST THE INTEREST EXPENSES HAD TO BE ALLOWED. SINCE THE INTEREST EXPENSE WAS MUCH MORE THAT THE INTEREST INCOME NO INTEREST INCOME CAN BE EXCLUDED FROM THE PROFITS ON WHICH DEDUCTION U/S 80 IB(5) OF THE ACT OUGHT TO BE ALLOWED. WE THEREFORE UPHOLD THE ORDER OF THE CIT(A) ON THIS ISSUE AND DISMISS GROUND NOS. (IV) AND (VI) RAISED B Y THE REVENUE. 6.2. CONSISTENT WITH THE VIEW TAKEN THEREIN WE UPHOLD THE ORDER OF THE LD. CIT(A) AND DISMISS THIS GROUND NOS. 5 & 6 OF THE REVENUE. 7. THE OTHER ISSUE IS REGARDING THE DISALLOWANCE U/S 14A RW RULE 8D. 7.1. THE ASSESSEES CASE IS THAT RULE 8D CAN BE APPLIED ONLY WITH REFERENCE TO COST OF INVESTMENT WHICH ACTUALLY YIELDED EXEMPT INCOME DURING THE RELEVANT YEAR. THE ITAT DELHI SPECIAL BENCH IN THE CASE OF ACIT VS. VIREET INVESTMENT PVT LTD, ITA NO. 502/ DEL/201 2 , HELD THAT - ONLY THOSE INVESTMENTS ARE TO BE CONSIDERED FOR COMPUTING THE AVERAGE VALUE OF INVESTMENT WHICH YIELDED EXEMPT INCOME DURING THE YEAR 4 .T(SS)A. NO. 132/KOL/2016 ASSESSMENT YEAR: 2011 - 12 I.T(SS)A. NO. 133/KOL/2016 ASSESSMENT YEAR: 2012 - 13 M/S. AMRICON AGROVAT PVT. LTD 7.2. RESPECTFULLY FOLLOWING THE SAME, WE UPHOLD THE ORDER OF THE LD. CIT(A) AND DISMISS THIS GROUND OF THE REVENUE. 8. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. KOLKATA, THE 9 T H DAY OF FEBRU ARY , 201 8 . S D / - S D / - [ S.S. VISWANETHRA RAVI ] [ J. SUDHAKAR REDDY ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : . 0 9 . 0 2 .201 8 {SC SPS} COPY OF THE ORDER FORWARDED TO: 1. A.C.I.T., CC - 2,(1), KOLKATA AYAKAR BHAWAN POORVA 110, SHANTIPALLY 3 RD FLOOR KOLKATA 700 107 2. M/S. AMRICON AGROVAT PVT. LTD 158, LENIN SARANI KOLKATA 700 013 3. CIT(A) - 4. CIT - , 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVATE SECRETARY HEAD OF OFFICE/ D.D.O. ITAT, KOLKATA BENCHES