ITA No. 328/PNJ/2014, CO Nos. 37, 38/PNJ/2014 (Arising Out of ITA Nos. 229, 230/PNJ/2014), ITA No. 329/PNJ/2014 and ITA No. 91/PAN/2016. Case: Zuari Global Limited Vs Deputy Commissioner of Income Tax, Circle - 2 and Ors.. ITAT (Income Tax Appellate Tribunal)
| Case Number | ITA No. 328/PNJ/2014, CO Nos. 37, 38/PNJ/2014 (Arising Out of ITA Nos. 229, 230/PNJ/2014), ITA No. 329/PNJ/2014 and ITA No. 91/PAN/2016 |
| Counsel | For Appellant: Mukund Bakshi, CA and For Respondents: Raviraj Y.V., Ld. DR |
| Judges | P.K. Bansal, Member (A) and George Mathan, Member (J) |
| Issue | Income Tax Act, 1961 - Sections 115JB, 147, 14A, 14A(2), 27(1)(c), 36(1)(iii), 36(i)(iii), 37, 37(1), 37(1)(iii), 41(1), 73 |
| Judgement Date | March 31, 2017 |
| Court | ITAT (Income Tax Appellate Tribunal) |
Order:
George Mathan, Member (J), (ITAT Panaji)
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ITA No. 328/PNJ/2014 is an appeal filed by the Assessee against the Order of the CIT(A) Panaji in appeal No. 272/MRG/11 - 12 dated. 21.04.2014 for the assessment year 2006-07. ITA No. 329/PNJ/14 is an appeal filed by the assessee against the Order of the CIT(A) Panaji in appeal No. ITA No. 95/MRG/13-14 dated 21.04.2014 for the Assessment Year 2010 - 11. C.O. No. 37/PNJ/14 is the cross objection filed by the assessee in the revenue appeal filed in ITA No. 229/PNJ/14 in the order of the learned CIT(A) Panaji in appeal No. ITA No. 96/MRG/13-14 dated 21.04.2014 for the assessment year 2008 - 09. C.O. No. 38/PNJ/14 is the Cross Objection filed by the assessee in the revenue appeal filed in ITA No. 230/PNJ/14 against the Learned CIT(A) Panaji in appeal ITA No. 97/MRG/13-14 dated 21.04.2014 for the assessment year 2009 - 10 and ITA No. 91/PAN/16 is the appeal filed by the assessee against the order of the Assessing Officer in the assessment order dated 17.03.2016 for the assessment year 2011 - 12.
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As issues in the appeals are common and relates to the same assessee these appeals are disposed of by this common order.
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Shri Mukund Bakshi, CA represented on behalf of the Assessee and Shri Raviraj Y.V. represented on behalf of the Revenue.
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ITA No. 328/PNJ/14 for the A.Y. 2006 - 07:- Two grounds have been raised in this appeal. Ground No. 1 is against the reopening of the assessment. At the time of hearing learned Authorized Representative of the assessee submitted that he does not wish to press the Ground No. 1 regarding reopening. Consequently Ground No. 1 of the assessee's appeal stands dismissed as not pressed.
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In regard to Ground No. 2 it was submitted that the issue was against the action of the learned CIT(A) in confirming the action of the Assessing Officer in making the addition of ` 1.95 crores representing the amount of MAT credit entitlement when computing the book profits under Section 115JB. It was submission that the assessee was entitled to the credit of the MAT against the current year's tax liability. The learned Authorized Representative of the assessee drew our attention to Page 75 of the paper book, which is a copy of the Profit & Loss account wherein under the provision for tax the assessee has debited ` 1.95 crores being the MAT credit entitlement against the profits before tax. Thus showing provision for tax at ` 859.54 lakhs. He further drew out attention to the Page 3 of the assessment order wherein the computation of the MAT has been shown. It was submission that in the Profit & Loss the assessee has debited the gross of the current year's tax against the MAT credit entitlements and has shown the net amount in the Profit & Loss account. It was submission that on account of the computation of the 115JB assessee has credited the said net amount of ` 859.54 lakhs which included the MAT credit entitlement of ` 1.95 crores. It was submission that the Assessing Officer had held that this amount of ` 1.95 Crores was not allowable. It was submission that under identical circumstances the coordinate bench of this Tribunal, Ahmedabad bench has held that the calculation as done by the assessee was correct. He drew out attention to the order of the coordinate bench of this tribunal in the case of the JK Paper Limited in ITA No. 2155/AHD/2013 & CO 36/AHD/14 dated 18/10/16 wherein in Para 23 it has been held as follows:-
"It can be seen that provision for current tax is shown at ` 7,41,01,907/- and MAT credit entitlement has been separately shown at ` 6,13,84,689/- it can be further seen that the provision for current tax is shown at gross amount. The net amount comes to ` 1,27,17,218/-, if the MAT credit entitlement is reduced from provision for current tax. If the assessee had shown the net amount of ` 1,27,17,218/- and added back the same for the computation of the book profit, the revenue would have accepted this computation. But for the accounting principles and set guidelines both the amounts were shown separately. Considering these facts in totality, we do not find any logic in making the addition of ` 6,13,84,689/- for computing the book profit; the same has to be deleted. Ground No. 1 is accordingly dismissed."
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In reply the learned Departmental Representative vehemently supported the order of the Assessing Officer and CIT(A). It was submitted that assessee had withdrawn the said ground before the CIT(A).
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We have considered the rival submissions. It is noticed that the learned CIT(A) has recorded that the issues in the appeal has been withdrawn before the CIT(A). However when this issue was decided by the Tribunal in its order dated 07.07.15 the same was challenged by the assessee before the Hon'ble Bombay High Court in Tax Appeal No. 79 to 82/2015 and by an order dated 16.02.2016 the Hon'ble High Court has set aside the Tribunal order and has directed the Tribunal to hear the appeals fresh after hearing the parties in accordance with the law. Consequently as it is noticed that the withdrawal before the learned CIT(A) is categorically conditional, and as it is noticed that as per the law the claim as made by the assessee is justifiable, the issues are being decided on merits.
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A perusal of the profit and loss account and computation of under Section 115JB clearly shows that the assessee is adding back the net amount debited to the profit and loss account. The same is what is expected of the assessee under the provisions of section 115JB. This view also finds support from the decision of the coordinate bench of this Tribunal, Ahmedabad bench in the case the JK Paper limited referred (supra). In the circumstances the addition as made by the Assessing Officer and as confirmed by the CIT (A) stands allowed. In the result Ground No. 2 of the Appeal stands allowed.
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In the result appeal of the Assessee is partly allowed.
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C.O. No. 37/PNJ/2014:- In the Cross Objection the assessee has raised five grounds. Ground No. 1 was against the reopening of the assessment under Section 147 of the Act. At the time of the hearing the learned Authorized Representative of the assessee did not desire to press the said ground and consequently the same stands dismissed as withdrawn.
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In regard to the Ground No. 2 it is submitted by the learned Authorized Representative of the assessee that the issue was against the action of the learned CIT(A) in confirming the disallowance made by the Assessing Officer by invoking the provision of Section 14A of the Act. It was submission by the learned Authorized Representative of the assessee that for the purpose of the making disallowance under Section 14A read with Rule 8D, satisfaction is liable to be recorded regarding the incurrence of the expenditure as has been held by the coordinate bench of this Tribunal in the case of Sesa Goa Ltd. reported in 38 Taxman.com 34 (Panaji) as also Mumbai benches in the case of Shapoorji Pallonji and company limited reported in 79 taxman.com 39 Mumbai.
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The learned Authorized Representative of the assessee drew our attention to the assessment order, Para 2 to submit that no such satisfaction has been recorded. It was further submission that the assessee also had substantial noninterest bearing funds to an extent of ` 844.45 crores whereas the total investment in the shares was only ` 337.68 crores and even the calculation of the disallowance as made by the Assessing Officer itself was erroneous in so far as the Assessing Officer has taken the total of the investment as having generated exempt income and not the value of the investments which has generated the exempt income. It was submission that even assuming that, disallowance is to be calculated it is to be made taking into consideration the investments which has generated the exempt income. It was submission that as no satisfaction itself has been recorded the disallowance as made by the Assessing Officer was liable to be deleted. It was also submission that as the assessee had substantial own funds in excess of the investment, no disallowances is liable to be made in view of the decision of the Hon'ble Bombay High Court in the case of HDFC Bank Limited reported in 366 ITR 505 as also the decision of the Hon'ble Bombay High Court in SBI - DHFL Limited reported in 376 ITR 296. In reply learned Departmental Representative vehemently supported the order of the Assessing Officer and the learned CIT(A).
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We have considered the rival submission. A perusal of the assessment order clearly shows that the Assessing Officer has not recorded the satisfaction under section 14A(2) regarding the incurrence of expenditure. In the circumstances respectfully following the decision of the coordinate bench of this Tribunal in the case of the Sesa Goa Ltd. referred (supra) wherein it has been held as follows:-
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We have also gone through the decision relied upon by the learned DR also. The decision of CITICORP Finance (India) Ltd. (supra) is no more relevant, in view of the decision of the Hon'ble Mumbai High Court in the case of Godrej & Boyce Mfg. Co. Ltd...
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