Gujarat State Fertilizers & Chemicals Ltd., Vadodara V. The Dy. CIT, Central Circle-1(1)(1), Vadodara

MA 57/AHD/2023

AI Insights

The case involves Gujarat State Fertilizers & Chemicals Limited (the assessee) appealing against the disallowance of certain administrative and interest expenses under Section 14A read with Rule 8D of the Income Tax Act, 1961, for the Assessment Year 2011-12. The Deputy Commissioner of Income Tax, Central Circle-1(1)(1), Vadodara (the respondent), had initially disallowed these expenses, which was partially overturned by the CIT(A). Both parties appealed to the Tribunal. The Tribunal's decision on 24.03.2023 was contested by the assessee through these Miscellaneous Applications, leading to the current judgment.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 129893 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 month(s) 3 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 22-08-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 10-08-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 18-06-2023
• Other Referred Cases: ACIT vs. Saurashtra Kutch Stock Exchange Limited [2008] 173 Taxman 322 (SC)
• Laws Referred To: Section 14A, Rule 8D
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Set aside
• Section: 14A

Judgement Text

M.A. Nos.55, 56 & 57/Ahd/2023 (In ITA Nos.547/Ahd/2016, 624/Ahd/2016 & CO No.58/Ahd/2016) A.Ys. 2011-12 for all Page 1 of 4 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “A” BENCH, AHMEDABAD BEFORE Ms. SUCHITRA KAMBLE, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER MA Nos.55, 56 & 57/Ahd/2023 (In ITA Nos.547/Ahd/2016, 624/Ahd/2016 & C.O. No.58/Ahd/2016 respectively) Assessment Years: 2011-12, 2011-12 & 2011-12 Gujarat State Fertilizers & Chemicals Limited, P.O. Fertilizer Nagar, Vadodara – 391 750. [PAN – AAACG 7996 C] Vs. Dy. Commissioner of Income Tax, Central Circle-1(1)(1), Vadodara. (Appellant) (Respondent) Assessee by Shri Yogesh Shah, AR Revenue by Shri Sanjay Kumar, Sr. DR Da te o f He a r in g 11.08.2023 Da te o f P ro n o u n ce m e n t 23.08.2023 O R D E R PER SUCHITRA KAMBLE, JUDICIAL MEMBER : These three Miscellaneous Applications are filed by the assessee in respect of order dated 24.03.2023 passed by the Tribunal. 2. The Ld. AR submitted that during the year under consideration, the Revenue computed an amount of Rs.1,82,91,360/- as well as Rs.2,11,88,774/- as interest and administrative expenses disallowable under Section 14A read with Rule 8D. The assessee filed appeal on both the aforesaid issues before the CIT(A) and the CIT(A) provided relief in respect of disallowance of interest expenditure, however, confirmed the disallowance in respect of administrative expenditure. The assessee as well as the Revenue filed appeal before the Tribunal. The Ld. AR submitted that at the time of argument/hearing, the assessee submitted that the assessee itself has disallowed Rs.60,276/- and though there is a strong case to argue on the ground that no satisfaction has been recorded for not accepting disallowance made by the assessee, in view of the fact that in the earlier years the Tribunal as well as the Hon’ble High M.A. Nos.55, 56 & 57/Ahd/2023 (In ITA Nos.547/Ahd/2016, 624/Ahd/2016 & CO No.58/Ahd/2016) A.Ys. 2011-12 for all Page 2 of 4 Court for A.Ys. 2008-09 to 2010-11 has confirmed the administrative expenditure, it was thus disallowed under Section 14A only to the tune of Rs.10,00,000/-, Rs.15,00,000/- & Rs.15,00,000/- respectively. The assessee accepted the order since the facts in A.Y. 2011-12 i.e. the year under consideration are quite similar to the facts of the preceding assessment years, total disallowance be confirmed to the extent of Rs.15,00,000/-. At the time of hearing, the ld. AR submitted orders of the Tribunal as well as Hon’ble High Court. The Ld. AR submitted that in respect of ground no.1 of Revenue’s appeal with regard to disallowance of interest expenditure under Section 14A of the Act, the CIT(A) has relied upon its predecessor’s order for A.Y. 2010-11 and deleted the said disallowance. The Tribunal for A.Y. 2010-11 had confirmed the order of the CIT(A) and the Hon’ble High Court has dismissed the Tax Appeal filed by the Revenue. Thus, the Ld. AR submitted that ground no.1 of Revenue’s appeal in respect of interest expenditure under Section 14A of the Act ought to be dismissed considerate the order of the Hon’ble High Court in assessee’s own case for the preceding Assessment Year. The Ld. AR submitted that while passing the order dated 24.03.2023, the Tribunal did not consider the orders of the Tribunal as well as the Hon’ble High Court and set aside to the file of the Assessing Officer to verify if the current liabilities and provisions should be reduced from the opening and closing stock of the current assets which was required to be considered only if ground no.1 of the appeal filed by the Revenue is allowed. The Ld. AR submitted that ground no.1 of Revenue’s appeal is covered by the order of the Tribunal and Hon’ble High Court in assessee’s own case in the past years. Hence, there was no need to set aside the issue to the file of the Assessing Officer for verification of the facts which was taken in the Cross Objection being the alternate contention against the Revenue’s appeal. As regards to ground no.2 in assessee’s appeal and ground no.1 in Revenue’s appeal have not been disposed off, rather the assessee’s only Cross Objections have been disposed off vide paragraph no.9 of the order which were required to be adjudicated only when the appeal filed by the Revenue is admitted/accepted. Thus, the Ld. AR submitted that there is mistake apparent from record and requested to rectify the order dated 24.03.2023 with direction to Assessing Officer to confirm the disallowance of administrative expenses under Section 14A of the Act to the tune of Rs.15,00,000/- and dismiss the appeal of the Revenue. In view of the above, Cross Objection of the assessee would become infructuous. M.A. Nos.55, 56 & 57/Ahd/2023 (In ITA Nos.547/Ahd/2016, 624/Ahd/2016 & CO No.58/Ahd/2016) A.Ys. 2011-12 for all Page 3 of 4 3. The Ld. DR relied upon the order of the Tribunal and submitted that the assessee at this juncture is seeking review and the same should not be entertained. 4. We have heard both the parties and perused all the relevant material available on record. The contention of the assessee/Ld. AR that the Assessing Officer has to confirm the disallowance of administrative expenses under Section 14A to the tune of Rs.15,00,000/- and dismiss the appeal of the Revenue thereby contending that in earlier Assessment Year i.e. A.Y. 2010-11 the Hon’ble High Court has deleted the disallowance made by the Assessing Officer under Section 14A thereby observing that in a case where assessee was having sufficient funds available with it, more than amount invested for earning the dividend, the disallowance ain respect of interest expenditure under Section 14A of the Act read with Rule 8D of the Rules is not permissible. From the perusal of paragraph no.9 of the order dated 24.03.2023 the contentions of the Ld. AR that no satisfaction was recorded has been taken into account and after taking cognisance of the same, the Tribunal has come to the conclusion that the Assessing Officer has looked into the aspect of element of administrative expenses and directed the Assessing Officer to take 0.5% thereby invoking the said Rule i.e. Rule 8D. The contentions of the Ld. AR that current liabilities and provisions should not be reduced from the opening and closing stock of current assets should have been taken into account by the Assessing Officer. As an impact, simplicitor directing the Assessing Officer to confirm the disallowance and administrative expenses under Section 14A to the tune of Rs.15 lakhs will not be appropriate in the present Assessment Year and, therefore, the Revenue’s appeal has been partly allowed for statistical purpose with direction to the Assessing Officer to take all the element into account as well as administrative expenses which has been incurred by the assessee should be taken into account while allowing the same in the actual amount of administrative expenses and not on the superficial basis. At the time of hearing, the Ld. AR relied upon the decision of Hon’ble Apex Court in case of ACIT vs. Saurashtra Kutch Stock Exchange Limited [2008] 173 Taxman 322 (SC), but in the present case the same it will not be applicable as the earlier decisions of Hon’ble High Court in Assessee’s own case has been considered and each assessment year has to be looked independently on factual aspects especially expenses and interest earned. Therefore, there is no need to interfere with the order dated 24.03.2023 and there is no need to rectify the same. M.A. Nos.55, 56 & 57/Ahd/2023 (In ITA Nos.547/Ahd/2016, 624/Ahd/2016 & CO No.58/Ahd/2016) A.Ys. 2011-12 for all Page 4 of 4 5. In the result, the present Miscellaneous Application filed by the assessee does not sustain. Thus, Miscellaneous Application No.55/Ahd/2023 for Assessment Year 2011-12 is dismissed. 6. As regards to M.A. No.56/Ahd/2023 for A.Y. 2011-12 in respect of appeal filed by the assessee and M.A. No.57/Ahd/2023 in respect of Cross Objection filed by the assessee for A.Y. 2011-12 are on the same issue which has bearing of the directions given in respect of Revenue’s appeal being ITA No.547/Ahd/2016 and, therefore, these Miscellaneous Applications are also dismissed. 7. In the result, all the three Miscellaneous Applications are dismissed. Order pronounced in the open Court on this 23 rd August, 2023. Sd/- Sd/- (WASEEM AHMED) (SUCHITRA KAMBLE) Accountant Member Judicial Member Ahmedabad, the 23 rd day of August, 2023 PBN/* Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY TRUE COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad