The Dy. CIT., Circle-1(1)(1), Baroda V. Gujarat State Electricity Corporation Ltd., Baroda

MA 79/AHD/2017

• Counselvise Citation: [2018] 124 COUNSELVISE.COM (IT) 7007 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 5 month(s) 29 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 30-08-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2007-2008
• Appeal Filed On: 01-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAURABH SINGH
• Assessee Lawyers: M J SHAH
• Keywords: Depreciation; Revenue expenditure
• Section: 14A; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & MS. MADHUMITA ROY, JUDICIAL MEMBER MA NO.79/AHD/2017 ( IN I.T.A. NO.1873/AHD/2010 ) (ASSESSMENT YEAR : 2007-08) THE DCIT CIRCLE-1(1)(1) VADODARA VS. GUJARAT STATE ELECTRICITY CORP.LTD. SARDAR PATEL VIDYUT BHAVAN RACE COURSE CIRCLE VADODARA [PAN NO .AAACG 6864 F] ( APPLICANT ) .. ( RESPONDENT ) APPL IC ANT BY : SHRI SAURABH SINGH, SR.DR RESPONDENT BY : SHRI M.J. SHAH, AR DATE OF HEARING 15/06/2018 DATE OF PRONOUNCEMENT 30/08/2018 O R D E R PER MS. MADHUMITA ROY - JM: PRESENT MISCELLANEOUS APPLICATION IS DIRECTED AT TH E INSTANCE OF THE REVENUE SEEKING RECALL OF TRIBUNALS ORDER DATED 13.03.2015 IN ITA NO.1873/AHD/2010 FOR ASSESSMENT YEAR 2007-08 WITH THE FOLLOWING SUBMISSI ON: GROUND NO.1 OF THE APPEAL OF THE APPLICANT IN THE ABOVE APPEAL WAS AS FOLLOWS: THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) E RRED IN LAW AND ON FACTS HAS CONFIRMED THE ADDITIONS OF RS.1,13,55,000/- MADE OU T OF THE INTEREST EXPENDITURE CONSIDERING THE SAME AS ATTRIBUTABLE TO EXEMPT DIVI DEND INCOME BY INVOKING THE PROVISIONS OF SECTION 14A OF THE INCOME TAX ACT, 19 61. IN PARA 53, THE TRIBUNAL REPRODUCED THE RELEVANT PA RA OF THE ORDER OF CIT (APPEALS), WHICH WAS IN APPEAL BEFORE THE TRIBUNAL AND OBSERVE D IN PARA 55 THAT THE CIT(APPEALS) IN HIS ORDER FOLLOWED GUJARAT HIGH COURT DECISION F GUJARAT URJA VIKAS NIGAM LIMITED. THE TRIBUNAL COMMITTED AN APPARENT ERROR IN STATING THAT THE CIT(APPEALS) HAD RELIED ON GUJARAT HIGH COURT DECISION BECAUSE THE DECISION, W HICH THE CIT QUOTED WAS OF - 2 - MA NO.79/AHD/2017 (IN ITA NO.1873/AHD/2010) DCIT VS.GUJARAT STATE ELECTRICITY CORP.LTD. ASST.YEAR 2007-08 CIT(APPEALS) AND NOT OF THE HIGH COURT. THE ORDER OF CIT(APPEALS) IN APPEAL NO.CAB- I/348/08-09 IN THE CASE OF GUJARAT URJA VIKAS NIGAM LIMITED FOR ASST. YEAR 2006-07 IS ENCLOSED HEREWITH. IN FACT, THE DECISION OF THE TR IBUNAL IN DCIT VS. GUJARAT URJA VIKAS NIGAM LIMITED IN ITA NO.1820/AHD/2010 WAS AN ORDER ON APPEAL FROM THE ABOVE DECISION OF CIT(APPEALS) IN CAB-I/348/08-09. THERE FORE, THE CONSEQUENTIAL APPARENT ERROR WAS COMMITTED BY THE TRIBUNAL WHEN IT STATED IN PARA 57 THAT THE A.R. COULD NOT POINT OUT ANY SPECIFIC ERROR IN THE ORDER OF CIT(AP PEALS), WHICH WAS PURPORTEDLY PASSED FOLLOWING THE DECISION OF JURISDICTIONAL HIGH COURT . IN THE CIRCUMSTANCES, PARA 55 WOULD BE REQUIRED TO BE RECTIFIED AND LIKEWISE, PARA 57 A ND THE HONBLE TRIBUNAL MAY KINDLY BE PLEASE TO REFER THE ISSUE BACK TO THE ASSESSING OFF ICER FOLLOWING THE ABOVE DECISION OF GUJARAT URJA VIKAS NIGAM LIMITED IN ITA NO.1820/AHD /2010 DATED 30.09.2013. 3. THE DISPOSAL OF GROUND NO.4 ON ENHANCEMENT OF B OOK PROFIT ON ACCOUNT OF DISALLOWANCE MADE U/S.14A AS DISPOSED OFF BY PARA 6 9 OF THE ORDER DISMISSING THE GROUND OF THE ASSESSEE WOULD ALSO REQUIRED TO BE CONSEQUEN TLY RECTIFIED BY SENDING THE DECISION THEREOF BACK TO THE ASSESSING OFFICER. 2. WE FIND FROM THE RECORDS THAT THE ORDER DATED 17 .11.2015 THE CO-ORDINATE BENCH CONSIDERED ANOTHER APPLICATION BEING MA NO.34/AHD/2 015 FOR AY 2007-08 FOR RECTIFICATION OF THE ORDER DATED 13.03.2015 AND THE SAID ORDER WAS RECALLED WITH A DIRECTION UPON THE REGISTRY TO ISSUE NOTICE FOR HEA RING ON THE LIMITED ASPECT. 3. WE ALSO EXPRESS FROM THE RECORDS THAT THE MATTER THEREAFTER BEEN DECIDED BY THE COORDINATE BENCH OF THIS TRIBUNAL BY AND UNDER ORDE R DATED 05/04/2016 WITH THE FOLLOWING OBSERVATION: 3. THE FIRST ISSUE IS WITH REGARD TO THE ADDITION OF RS.1,13,55,000/- MADE OUT OF THE INTEREST EXPENDITURE. THE LD. AUTHORIZED REPRESENTATIVE POI NTED OUT THAT SIMILAR ISSUE AROSE BEFORE THIS TRIBUNAL IN ASSESSMENT YEAR 2006-07 IN ITA NO.1820/ AHD/2010, WHEREIN VIDE PARAGRAPH 6.4 OF THE SAID ORDER, THE ISSUE WAS RESTORED TO THE FILE OF THE ASSESSING OFFICER, BY OBSERVING AS UNDER:- 6.4 DUE TO THE DECISION OF THE HONBLE BOMBAY HIG H COURT, IT IS LEGALLY CORRECT TO REFER THIS ISSUE BACK TO THE STAGE OF THE AO TO BE DECIDE D DE NOVO AS PER THE GUIDELINES OF THE HONBLE COURT. THE OUTCOME OF THE ABOVE DISCUSSION IS THAT THE ADDITIONAL GROUND RAISED BY THE REVENUE MAY BE TREATED AS ALLOWED BUT ONLY FOR STATISTICAL PURPOSES. 3.1 FACTS BEING SIMILAR, FOLLOWING THE SAME REASONI NG, WE RESTORE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH THE SIMILAR DIRECTIONS. A CCORDINGLY, THIS GROUND OF APPEAL RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICALLY PURPOSES. - 3 - MA NO.79/AHD/2017 (IN ITA NO.1873/AHD/2010) DCIT VS.GUJARAT STATE ELECTRICITY CORP.LTD. ASST.YEAR 2007-08 4. NEXT ISSUE IS WITH REGARD TO THE CONFIRMATION OF DISALLOWANCE OUT OF EXTRA ORDINARY ITEMS TO THE EXTENT OF RS.25,21,000/-. THE ASSESSING OF FICER NOTICED THAT THE ASSESSEE HAD INCLUDED IN ITS INCOME UNDER THE HEAD 'EXTRA-ORDINARY ITEMS' AN AMOUNT OF RS. 861.09 LACS. WHILE EXAMINING THE DETAILS THEREOF, IT WAS FOUND BY THE ASSESSING OFFICER THAT THE INCOME HAD BEEN REDUCED BY RS.295.13 LACS, BEING 'LOSS DUE TO FLOOD, CYCLONE, FIRE'. IN THE ABSENCE OF DETAILS AND EXPLANATION ABOUT THE NATURE OF THIS LOSS, THE SUM OF RS.295.13 LACS WAS ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. 4.1 MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY, WHEREIN VARIOUS CONTENTIONS WERE RAISED ON BEHALF OF THE ASSESSEE AND HAVING CO NSIDERED THE SUBMISSIONS, THE CIT(A) OBSERVED THAT THE AMOUNT WRITTEN OFF CONSISTED OF N UMEROUS ITEMS OF SMALL SPARES AND IN THE BUSINESS SIZE OF THE ASSESSEE, KEEPING TRACK OF SMA LL CONSUMABLE SPARES AND STORES WITH PERFECT ACCURACY WAS NOT ALWAYS POSSIBLE. THE CIT(A) ALSO OBSERVED THAT, AT THE TIME OF ANNUAL STOCK TAKING, SOME ITEMS WERE FOUND TO BE IN EXCESS OF TH E NUMBER/QUANTITY RECORDED IN THE STOCK REGISTER; WHEREAS CERTAIN OTHER ITEMS WERE FOUND TO BE SHORT IN NUMBER/QUANTITY AND THE NET EFFECT WAS SHORTAGE OF RS.82.93 LAKHS. AS COMPARED TO THE TURNOVER, SUCH LOSS IS LESS THAN 1/10 TH OF 1%. THE ASSESSEE HAD ACCOUNTED FOR BOTH GAINS A S WELL AS LOSS IN RESPECT OF STORES IN A CONSISTENT MANNER; THEREFORE, THE CIT(A) HELD THAT DISALLOWANCE OF THIS AMOUNT WAS NOT JUSTIFIED AND THE SAME WAS DELETED. 4.2 REGARDING OTHER SUNDRY DEBITS AMOUNTING TO RS.2 5.21 LAKHS, THE ASSESSEES EXPLANATION BEFORE THE CIT(A) WAS THAT IT WAS ON ACCOUNT OF DEF ERRED REVENUE EXPENDITURE WRITTEN OFF DURING THE YEAR. THE EXPENDITURE RELATED TO RESTORATION OF COAL HANDLING PLANT AT SIKKA, JAMNAGAR DISTRICT. THE AMOUNT WRITTEN OFF REPRESENTED 1/15 TH OF THE EXPENDITURE INCURRED ON RESTORATION OF THE COAL HANDLING PLANT. THE CIT(A) OBSERVED THAT T HE ASSESSEE HAS NOT CLAIMED THE ENTIRE EXPENDITURE IN ONE YEAR AND THEREFORE, TREATED THE SAME WAS CAPITAL IN NATURE. HE ACCORDINGLY UPHELD THE ORDER OF THE ASSESSING OFFICER IN DISALL OWING THE WRITE OFF THIS AMOUNT. THESE REASONED FINDINGS OF THE CIT(A) NEED NO INTERFERENC E FROM OUR SIDE; WE UPHOLD THE SAME. THUS, THIS GROUND OF THE ASSESSEE IS DISMISSED. 5. NEXT ISSUE IS WITH REGARD TO THE NON-ADJUDICATIO N OF GROUND BY CIT(A) RELATING TO REDUCTION OF AMOUNT OF CAPITAL GAINS AMOUNTING TO R S.31,37,78,000/- FROM THE TOTAL COST OF THE FIXED ASSETS AND ALLOWING DEPRECIATION AFTER SUCH R EDUCTION BY INVOKING THE PROVISIONS OF SECTION 43(1) OF THE I.T. ACT. IT WAS POINTED THAT THIS GR OUND HAS NOT BEEN ADJUDICATED BY CIT(A). LD. DEPARTMENTAL REPRESENTATIVE DID NOT DISPUTE THE SAM E. SO IN THE INTEREST OF JUSTICE, WE RESTORE BACK THIS ISSUE TO THE FILE OF THE CIT(A) WITH THE DIRECTION TO DECIDE THE ISSUE AS PER LAW AND FACTS, AFTER PROVIDING DUE OPPORTUNITY OF HEARING TO BOTH THE SIDES. 6. NEXT ISSUE IS AGAINST IN CONFIRMING THE ENHANC EMENT OF BOOK PROFIT COMPUTED U/S 115JB OF THE ACT BY RS.1,13,55,000/- ON ACCOUNT OF DISALL OWANCE MADE U/S 14A OF THE ACT. SIMILAR ISSUE AROSE IN AY 2006-07 IN ITA NO.1820/AHD/2010, WHEREI N ITAT VIDE PARAGRAPH 22 DECIDED THE ISSUE, BY OBSERVING AS UNDER:- - 4 - MA NO.79/AHD/2017 (IN ITA NO.1873/AHD/2010) DCIT VS.GUJARAT STATE ELECTRICITY CORP.LTD. ASST.YEAR 2007-08 22. THIS GROUND IS CONSEQUENTIAL IN NATURE. WE HAV E ALREADY RESTORED GROUND NO. 2 FOR DE NOVO ADJUDICATION. THE OUTCOME OF THE INVESTIGAT ION SHALL BE APPLIED WHILE COMPUTING THE BOOK-PROFIT U/S 115JB OF THE IT ACT. THEREFORE , WE ARE NOT APPROVING THE VIEW OF LD. CIT(A) AND RESTORING THIS GROUND, AS WELL, TO AO FO R AFRESH ADJUDICATION. THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSE ONLY. 6.1 NOTHING CONTRARY WAS BROUGHT TO OUR KNOWLEDGE O N BEHALF OF THE REVENUE. FACTS BEING SIMILAR, SO FOLLOWING THE SAME REASONING, WE RESTOR E THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH SIMILAR DIRECTIONS. 7. AS A RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 3.1. THUS, THE INSTANT RECTIFICATION APPLICATION PL ACED BEFORE US BY IS OF NO VALUE. WE THEREFORE FIND IT FIT TO DISPOSE OF THE SAME BY OBS ERVING THAT THE ORDER PASSED BY THE COORDINATE BENCH ON 05/04/2016 WILL HOLD THE FIELD AND NO FURTHER ORDER NEED BE PASSED IN THIS ASPECT. 4. IN THE RESULT, MISCELLANEOUS APPLICATION FILED B Y THE REVENUE IS DISMISSED AS INFRUCTUOUS. THIS ORDER PRONOUNCED IN OPEN COURT ON 30/ 08 /2018 SD/- SD/- ( PRADIP KUMAR KEDIA ) ( MS. MADHUMITA ROY ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 30/ 08 /2018 .., . ../ T.C. NAIR, SR. PS - 5 - MA NO.79/AHD/2017 (IN ITA NO.1873/AHD/2010) DCIT VS.GUJARAT STATE ELECTRICITY CORP.LTD. ASST.YEAR 2007-08 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPLICANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A)-I, BARODA 5. !'# , $ , / DR, ITAT, AHMEDABAD 6. #() *+ / GUARD FILE. / BY ORDER, ! //TRUE COPY// / ( DY./ASSTT.REGISTRAR) !, / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 16.8.18 (DICTATION-PAD 4- PAGES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 16.8.18 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.30.8.18 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 30.8.18 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER