Gujarat State Financial Services Ltd., Ahmedabad V. The Jt.CIT.,Range-4, Ahmedabad

MA 202/AHD/2013

• Counselvise Citation: [2014] 124 COUNSELVISE.COM (IT) 1554 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 24 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 21-03-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 27-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K C MATHEWS
• Assessee Lawyers: SANJAY R SHAHAR
• Keywords: Depreciation; Opportunity of being heard; Rule of consistency; Bad and doubtful debts
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD , , , , BEFORE SHRI D. K. TYAGI , JUDICIAL MEMBER AND .., SHRI T.R. MEENA, ACCOUNTANT MEMBER !.. , ' # $ # $ # $ # $ M.A. NO S . 202, 203 & 204 /AHD/ 201 3 (IN ITA NOS. 1129/AHD/2009, 153/AHD/2010 & 293/AHD/2010 RES.) ASSESSMENT YEARS : 2005-06, 2006-07 & 2006-07 RES.) GUJARAT STATE FINANCIAL SERVICES LTD. WING B, 3 RD FLOOR, KHANIJ BHAVAN, 132 FT RING ROAD, NEAR UNIVERSITY GROUND, VASTRAPUR, AHMADABAD 380 052 V/S . THE JT. COMMISSIONER OF INCOME TAX, AHMADABAD, RANGE-4, AHMEDABAD PAN NO. AAACG5581B (APPELLANT) .. (RESPONDENT) %& ' ( / BY APPELLANT SHRI SANJAY R SHAH, A.R. )%& ' ( /BY RESPONDENT SHRI K. C. MATHEWS, SR. D.R. *+, ' -' /DATE OF HEARING 07.03.2014 ./0 ' -' /DATE OF PRONOUNCEMENT 21.03.2014 O R D E R PER : SHRI T. R. MEENA, ACCOUNTANT MEMBER THESE THREE M.A. ARE FILED BY THE ASSESSEE SEEKING AMENDMENT IN TRIBUNALS ORDER DATED 28.12.2012 IN RESPECT OF ASS ESSEE AND REVENUES M.A. NO.202, 203 & 204/AHD/13 IN ITA NOS. 1129/AHD/ 2009, 153/AHD/2010 & 293/AHD/2010 RES., A.Y. 05-06 & 06-0 7 PAGE 2 APPEAL IN ITA NO. 1129/AHD/2009, 153/AHD/2010 & 293 /AHD/2010 FOR A.Y. 2005-06 & 2006-07 RESPECTIVELY. FIRST WE TAKE M.A. NOS. 202 & 203/AHD/2013 FOR A.Y. 05-06 & 06-07 2. THE ASSESSEE SUBMITTED THAT HE RAISED GROUND NO. 3 & 3.1 IN RESPECT OF DISALLOWANCE OF INTEREST PAID ON BORROWINGS ALLEGED LY MADE FOR THE PURPOSE OF INVESTMENT IN TAX FREE INCOME YIELDING SECURITIES C ONFIRMED BY CIT(A) U/S. 14A OF THE ACT AND REDUCTION BY CIT(A) OF GROSS BLOCK O F ASSET OUT OF OWN FUNDS FOR DETERMINING OWN FUNDS AVAILABLE FOR INVESTMENT IN T AX FREE SECURITIES RESPECTIVELY. THE SAID GROUNDS HAD BEEN DECIDED BY THE HONBLE ITAT AT PARA 6 (PAGE 9 TO 12) OF THE ORDER, BUT THERE WAS A MIST AKE APPARENT ON RECORD AS FAR AS THE REPRODUCTION OF THE RELEVANT EXTRACTS OF THE DECISION OF ITAT IN ASSESSEES OWN CASE FOR A.Y. 01-02 (ITA NO. 403/A/2 005), RELYING UPON WHICH THE DECISION OF ITAT IN ITA NO. 1129/AHD/2009 FOR A .Y. 05-06 HAD BEEN RENDERED AND THAT PARA 6 OF THE AFORESAID DECISION IN ASSESSEES OWN CASE HAD BEEN WRONGLY REPRODUCED INSTEAD OF PARA 4 OF TH E AFORESAID DECISION WHICH DEALS WITH THE ISSUE IN RESPECT OF WHICH GROU ND NO.3 & 3.1 OF ITA NO. 1129/AHD/2009 HAD BEEN PREFERRED. 3. THIS BENCH HAD DECIDED ASSESSEES ITA NOS. 1129/ AHD/09 & 153/AHD/10 AND REVENUES ITA NOS. 1557/AHD/09 & 293 /AHD/10 FOR A.Y. 05- 06 & 06-07 ON 28.12.2012. THERE WAS A MISTAKE IN REPRODUCING PARAGRAPH NO.6 IN STEAD OF PARAGRAPH NO.4 OF THE DECISION IN ASSESSEES OWN CASE IN ITA M.A. NO.202, 203 & 204/AHD/13 IN ITA NOS. 1129/AHD/ 2009, 153/AHD/2010 & 293/AHD/2010 RES., A.Y. 05-06 & 06-0 7 PAGE 3 NO. 403/AHD/2005 FOR A.Y. 2001-02 ON PAGE NO.10 TO 12 OF THE ORDER WHICH IS REPRODUCED AS UNDER: 6. WE HAVE HEARD LEARNED DR AND LEARNED AR. WE NO TICED THAT THE ASSESSEE ENTERED INTO FIVE LEASE TRANSACTI ONS WITH GSRTC. THEY ARE FIRST TRANSACTION WAS IN FINANCIAL YEAR 1993-94 WHEN, DEPRECIATION WAS CLAIMED AT RS.59,97,155/-. THE SE COND LEASE TRANSACTION WAS ALSO ENTERED INTO IN A.Y. 1994-95 W HEREIN DEPRECIATION OF RS.40,18,720/- WAS CLAIMED AND ALLO WED. THE THIRD LEASE TRANSACTION WAS ENTERED INTO IN F.Y. 1996-97 ON WHICH THE DEPRECIATION APPROX. OF RS.2,00,06,325/- WAS CLAIME D. FORTH TRANSACTION TOOK PLACE IN A.Y. 1998-99 IN WHICH DEP RECIATION OF RS.4,01,38,576/- WAS CLAIMED AND ALLOWED. FIFTH A LSO TOOK PLACE IN A.Y. 1998-99 IN WHICH THE DEPRECIATION OF RS.7,99,4 2,946/- WAS CLAIMED. IT IS STATED BY THE LEARNED AR OF THE ASS ESSEE THAT NO FRESH LEASE TRANSACTION HAS TAKEN PLACE THIS YEAR A ND DEPRECIATION IN RESPECT OF OLD LEASE TRANSACTIONS HAS ONLY BEEN CLAIMED THIS YEAR. THEREFORE, FOLLOWING THE PRINCIPLE OF CONSISTENCY, AS PROPOUNDED IN CIT VS. H.P. COTTON TEXTILE MILLS LTD. 311 ITR 436, CIT VS. MALBOROUGH POLYCHEM PVT. LTD., 309 ITR 43; CIT VS. MOONLIGHT BUILDERS AND DEVELOPERS 307 ITR 197 AND ACIT VS. GE NDALAL HAZARILAL & CO. 263 ITR 679 WHEREIN IT IS HELD THAT EVEN THOUGH IN INCOME-TAX PROCEEDINGS PRINCIPLE OF RES-JUDICATA IS NOT APPLICABLE, BUT CONSISTENCY HAS TO BE MAINTAINED UNLESS THERE I S MANIFEST DISTINGUISHABLE FACTS. IN EARLIER YEARS, CLAIM OF DEPRECIATION WAS ACCEPTED BY THE REVENUE WHICH HAS NOW BECOME FINAL, THE REVENUE CANNOT DISALLOW THE PRESENT CLAIM, UNLESS FACTS AND CIRCUMSTANCES ARE DISTINGUISHABLE. THEREFORE, THE REVENUE IS REQ UIRED TO MAINTAIN A JUDICIAL CONSISTENCY BETWEEN ITSELF AND TAXPAYERS . AS A RESULT, WE DO NOT FIND ANY MERIT IN THE CLAIM OF THE REVENUE A ND THIS GROUND OF THE REVENUE IS DISMISSED. IN VIEW OF THE ABOVE WE SET ASIDE THIS ISSUE TO THE FILE OF ASSESSING OFFICER TO DECIDE IN TERMS OF TRIBUNALS DECISION O F ASSESSEES OWN CASE M.A. NO.202, 203 & 204/AHD/13 IN ITA NOS. 1129/AHD/ 2009, 153/AHD/2010 & 293/AHD/2010 RES., A.Y. 05-06 & 06-0 7 PAGE 4 (SUPRA) FOR ASSESSMENT YEAR 2001-02 AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THIS G ROUND OF ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES FOR BOTH ASSESSMENT YEARS. 4. WE HAVE HEARD BOTH THE SIDES AND GONE THROUGH TH E ABOVE ORDER. THE THIRD GROUND OF ASSESSEE IN BOTH ASSESSMENT YEARS I .E. 05-06 & 06-07 ARE AGAINST CONFIRMING THE DISALLOWANCE U/S.14A OF THE IT ACT IN RESPECT OF INTEREST PAID ON BORROWINGS MADE FOR INVESTMENTS IN TAX FREE SECURITIES OF RS.4.47 CRORES FOR A.Y. 05-06 & RS. 5.22 CRORES IN A.Y. 06- 07. THE LD. CIT(A) PARTLY CONFIRMED THE ADDITION IN A.Y. 05-06 & HE RELIED UP ON THE ORDER OF SPECIAL BENCH ITO VS. DAGA CAPITAL MANAGEMENT PVT. LTD. 312 ITR (AT) 01 AND A.O. WAS DIRECTED TO APPLY RULE 8D FOR DISALLOWANCE U/S. 14A IN A.Y. 06-07. THE ASSESSEE AND REVENUE WERE IN APPEAL BEFORE US. THE REFORE, THE PARAGRAPH NO.4 WHICH DEALS WITH THIS ISSUE, IS REPRODUCED AS UNDER: 4. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED MAT ERIAL ON RECORD AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHOR ITIES. WE ARE OF THE CONSIDERED VIEW THAT THE AUTHORITIES CONCERNED HAVE NOT CORRECTLY APPRECIATED THE FACTS AND BROUGHT RELEVANT MATERIAL ON RECORD FOR MAKING PROPORTIONATE DISALLOWANCE. IT HAS TO BE SHOWN THA T INTEREST HAS BEEN PAID ON FUNDS WHICH WERE INVESTED IN TAX FREE SECURITIES . IF IT IS UNABLE TO PROVE SO, THEN FOLLOWING THE DECISION OF SPECIAL BENCH IT O VS. DAGA CAPITAL MANAGEMENT PVT. LTD. 312 ITR (AT) 01, A PROPORTIONA TE DISALLOWANCE OF INTEREST PAYMENT IS REQUIRED. ACCORDINGLY, WE REST ORE THIS ISSUE TO THE FILE OF AO FOR DECIDING THE ISSUE AFRESH AFTER GIVING AS SESSEE REASONABLE OPPORTUNITY OF BEING HEARD. 5. IN THE RESULT, BOTH THE M.A. OF ASSESSEEE ARE AL LOWED. M.A. NO.202, 203 & 204/AHD/13 IN ITA NOS. 1129/AHD/ 2009, 153/AHD/2010 & 293/AHD/2010 RES., A.Y. 05-06 & 06-0 7 PAGE 5 NOW WE TAKE M.A. NO. 204/AHD/2013 6. THE ASSESSEE SUBMITTED THAT IN REVENUES APPEAL ITA NO. 293/AHD/2010, GROUND NO.1 IS AGAINST DELETION OF AD DITION OF RS.28,22,430/- BEING BAD DEBTS WHICH HAD BEEN WRITTEN OFF IN EARLI ER YEARS. THIS ORDER WAS DISPOSED OFF VIDE PARA 12 (PAGE 15 & 16 OF THE ITAT S ORDER). AS APPARENT FROM REPRODUCTION OF PARA 12, THE ITAT HAS ALLOWED BAD DEBT IN A.Y. 2005-06 TO THE EXTENT OF RS.13,22,18,530/- AFTER EXCLUDING THEREFROM BAD DEBTS RECOVERED IN A.Y. 2006-07. FURTHER, THE ITAT HAS D IRECTED THE AO TO EXCLUDE THE AMOUNT RECOVERED IN AY 2006-07 FROM INCOME FOR A.Y. 2006-07 SINCE IT HAS NOT BEEN ALLOWED IN A.Y. 2005-06 IN THE LAWS TW O LINE OF PARA 12 OF THE CONSOLIDATED ORDER. HOWEVER, THE ITAT HAS ERRONEOU SLY CONSIDERED GROUND NO.1 OF THE REVENUES APPEAL AS ALLOWED. THE ASSES SEE SUBMITTED THAT SINCE THE AFORESAID ADDITION OF RS.28,22,430/- FOR A.Y. 0 6-07 WAS NOT CONFIRMED, THE GROUND OF THE REVENUE BEING GROUND NO.1 WAS REQUIRE D TO BE DISMISSED. 7. THIS BENCH HAD DECIDED IN ASSESSEES ITA NOS. 11 29/AHD/09 & 153/AHD/10 AND REVENUES ITA NOS. 1557/AHD/09 & 293 /AHD/10 FOR A.Y. 05- 06 & 06-07 ON 28.12.2012. THERE WAS A MISTAKE IN PARAGRAPH NO.12, WHICH IS REPRODUCED AS UNDER: .. AND GROUND NO.1 OF THE REVENUE FOR A.Y. 06-07 IS A LLOWED. 8. WE HAVE HEARD BOTH THE SIDES AND GONE THROUGH TH E ABOVE ORDER. THE GROUND OF APPEAL WAS AGAINST THE DELETION OF RS.28, 22,430/- BEING BAD DEBTS RECOVERED IN A.Y. 06-07 OUT OF THOSE WRITTEN OFF IN A.Y. 05-06. THE LD. CIT(A) M.A. NO.202, 203 & 204/AHD/13 IN ITA NOS. 1129/AHD/ 2009, 153/AHD/2010 & 293/AHD/2010 RES., A.Y. 05-06 & 06-0 7 PAGE 6 CONFIRMED THE ADDITION. THE REVENUE WAS IN APPEAL BEFORE US. THEREFORE, THIS IS TO BE READ AS : AND GROUND NO.1 OF THE REVENUE FOR A.Y. 06-07 IS DI SMISSED . 9. IN THE RESULT, ASSESSEES ALL THREE M.A. ARE ALL OWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 21.03.2014 SD/- SD/- (D. K. TYAGI) (T.R. MEEN A) JUDICIAL MEMBER ACCOUNTANT MEMBER TRUE COPY S.K.SINHA 1 1 1 1 ' '' ' )-2 )-2 )-2 )-2 320- 320- 320- 320- / COPY OF ORDER FORWARDED TO:- 1. %& / APPELLANT 2. )%& / RESPONDENT 3. - *7 / CONCERNED CIT 4. *7- / CIT (A) 5. 2; )-+ , , / DR, ITAT, AHMEDABAD 6. = >? / GUARD FILE. BY ORDER/ 1 , @/ B , $