Income Tax Appellate Tribunal - Chennai
J.K.Fenner (India) Limited, Madurai vs Acit Corporate Circle 1, Madurai on 12 March, 2018
आयकर अपील य अ धकरण, 'सी' यायपीठ, चे नई।
IN THE INCOME TAX APPELLATE TRIBUNAL 'C' BENCH: CHENNAI ी जॉज माथन, या यक सद य एवं ी एस जयरामन, लेखा सद य के सम% BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER आयकर अपील सं./ITA Nos.1059 to 1063/Chny/2016 & ITA Nos.947 & 1846/Chny/2017 नधारण वष /Assessment Years: 2008-09 to 2012-13 & 2013-14 to 2014-15 M/s.J.K.Fenner (India) Ltd., Vs. The JCIT /The ACIT, (Formerly known as M/s.Fenner Corporate Range-1/ (India) Ltd.), No.3, Corporate Circle-1, Madurai. Madurai Melakkal Road, Kochadari, Madurai-625 016.
[PAN: AAACJ 7230 N] (अपीलाथ'/Appellant) (()यथ'/Respondent) आयकर अपील सं./ITA Nos.1076 to 1078, 1272/Chny/2016 & ITA Nos.967 & 1883/Chny/2017 नधारण वष /Assessment Years: 2008-09 to 2010-11, 2012-13 & 2013-14 to 2014-15 The ACIT, Vs. M/s.J.K.Fenner (India) Ltd., Corporate Circle-1, (Formerly known as Madurai. M/s.Fenner (India) Ltd.), No.3, Madurai Melakkal Road, Kochadari, Madurai-625 016.
[PAN: AAACJ 7230 N] (अपीलाथ'/Appellant) (()यथ'/Respondent) Assessee by : Mr.R.Vijayaraghavan, Adv. & Mr.Saroj Kumar Parida, Adv.
Department by : Mr.Sailendra Mamidi, CIT
सुनवाई क+ तार ख/Date of Hearing : 12.03.2018
घोषणा क+ तार ख /
: 12.03.2018
Date of Pronouncement
ITA Nos.1059 to 1063/Chny/2016
ITA Nos.947 & 1846/Chny/2017
ITA Nos.1076 to 1078, 1272/Chny/2016
ITA Nos.967 & 1883/Chny/2017
:- 2 -:
आदे श / O R D E R
PER BENCH:
ITA No.1076/Chny/2016 is an appeal filed by the Revenue & ITA
No.1059/Chny/2016 is an appeal filed by the assessee against the Order of Commissioner of Income Tax (Appeals)-1, Madurai, in ITA No.0054/2012-13 dated 29.01.2016 for the AY 2008-09.
2. ITA No.1077/Chny/2016 is an appeal filed by the Revenue & ITA No.1060/Chny/2016 is an appeal filed by the assessee against the Order of Commissioner of Income Tax (Appeals)-1, Madurai, in ITA No.0066/2012-13 dated 29.01.2016 for the AY 2009-10.
3. ITA No.1078/Chny/2016 is an appeal filed by the Revenue & ITA No.1061/Chny/2016 is an appeal filed by the assessee against the Order of Commissioner of Income Tax (Appeals)-1, Madurai, in ITA No.0008/2013-14 dated 29.01.2016 for the AY 2010-11.
4. ITA No.1062/Chny/2016 is an appeal filed by the assessee against the Order of Commissioner of Income Tax (Appeals)-1, Madurai, in ITA No.0075/2014-15 dated 29.01.2016 for the AY 2011-12.
5. ITA No.1272/Chny/2016 is an appeal filed by the Revenue & ITA No.1063/Chny/2016 is an appeal filed by the assessee against the Order ITA Nos.1059 to 1063/Chny/2016 ITA Nos.947 & 1846/Chny/2017 ITA Nos.1076 to 1078, 1272/Chny/2016 ITA Nos.967 & 1883/Chny/2017 :- 3 -:
of Commissioner of Income Tax (Appeals)-1, Madurai, in ITA No.0052/2015-16 dated 25.02.2016 for the AY 2012-13.
6. ITA No.947/Chny/2017 is an appeal filed by the assessee & ITA No.967/Chny/2017 is an appeal filed by the Revenue against the Order of Commissioner of Income Tax (Appeals)-1, Madurai, in ITA No.0092/2016- 17 dated 27.01.2017 for the AY 2013-14.
7. ITA No.1846/Chny/2017 is an appeal filed by the assessee & ITA No.1883/Chny/2017 is an appeal filed by the Revenue against the Order of Commissioner of Income Tax (Appeals)-1, Madurai, in ITA No.0207/2016-17 dated 25.05.2017 for the AY 2014-15.
8. Shri Sailendra Mamidi, CIT, represented on behalf of the Revenue and Shri R.Vijayaraghavan, Adv. & Shri Saroj Kumar Parida, Adv., represented on behalf of the assessee.
9. As all the appeals are related to the same assessee and have common issues they are disposed off by this common order.
10. The Ld.AR submitted a chart explaining the issues in the above appeals filed by the assessee and the Revenue.
ITA Nos.1059 to 1063/Chny/2016 ITA Nos.947 & 1846/Chny/2017 ITA Nos.1076 to 1078, 1272/Chny/2016 ITA Nos.967 & 1883/Chny/2017 :- 4 -:
11. It was submitted by the Ld.DR that all the appeals consists of basically four issues. Consequently, the appeals are disposed off by disposing all the issues specifically and consequently, relating the same to the relevant appeals.
12. It was a submission that the first issue was in regard to the disallowance u/s.14A. It was a submission that the AO had invoked the provisions of Sec.14A and by applying the Rule 8D disallowed, the expenditure in relation to the exempt income, being the dividend income, received by the assessee. At the time of hearing, it was fairly agreed by both the sides that the issue was settled by the decision of the Hon'ble Delhi High Court in the case of M/s.Joint Investments Pvt. Ltd., reported in 372 ITR 694, wherein it has been held that the disallowance u/s.14A of the Act cannot exceed the tax exempt income. It was further submitted by the Ld.AR that the AO had also considered the disallowance u/s.14A when computing the book profits u/s.115J of the Act. It was a submission that the same was not permissible in view of the decision the Hon'ble Delhi Special Bench in the case of M/s.Vireet Investment Pvt. Ltd. reported in 165 ITD 0027, wherein, it has been held that when computation of the book profits u/s.115JB is to be made, it is to be made without resorting to the computation as contemplated u/s.14A r.w.r.8D of the Act. It was further submitted by the Ld.AR that for the AY 2011-12, the disallowance computed u/s.14A r.w.r.8D was lower than the exempt ITA Nos.1059 to 1063/Chny/2016 ITA Nos.947 & 1846/Chny/2017 ITA Nos.1076 to 1078, 1272/Chny/2016 ITA Nos.967 & 1883/Chny/2017 :- 5 -:
income earned. It was a submission that no disallowance was called for, for the same AY 2011-12.
13. In reply, the Ld.DR vehemently supported the order of the AO.
14. We have considered the rival submissions.
15. Coming to the issue of Sec.14A r.w.r.8D, as it is noticed that the issue is squarely covered by the decision of the Hon'ble Delhi High Court in the case of M/s.Joint Investments Pvt. Ltd., referred to supra, the AO is directed to restrict the disallowance u/s.14A to the exempt income earned in line with the decision of the Hon'ble Delhi High Court in the case of M/s.Joint Investments Pvt. Ltd., referred to supra. For the AY 2011-12, as it is noticed that the disallowance u/s.14A as computed is lower than the exempt income earned, the disallowance as confirmed by the Ld.CIT(A) stands upheld. In regard to the computation of the book profits u/s.115J, as it is noticed that the issue is squarely covered by the decision of the Hon'ble Delhi Special Bench in the case of M/s.Vireet Investment Pvt. Ltd., the AO is directed not to include the disallowance u/s.14A when computing the book profits u/s.115J.
16. The next issue involved in these appeals are in respect of the hire charges paid by the assessee company in respect of chartered flight in ITA Nos.1059 to 1063/Chny/2016 ITA Nos.947 & 1846/Chny/2017 ITA Nos.1076 to 1078, 1272/Chny/2016 ITA Nos.967 & 1883/Chny/2017 :- 6 -:
respect of the travel of the Managing Director of the assessee company. It was submitted by the Ld.DR that the details of the said expenditure were not produced. It was a submission that though some details have been verified by the Ld.CIT(A), the same had not been properly produced before the AO. It was a submission that the Revenue has no objection, if the issue is restored to the file of the AO for re-adjudication and verification. It was a submission that this issue relates to the AY 2013-14 & 2014-15 only.
17. In reply, the Ld.AR vehemently supported the order of the Ld.CIT(A).
18. We have considered the rival submissions.
19. A perusal of the Assessment Order shows that the Ld.CIT(A) has arrived at a conclusion that the expenditure is allowable expenditure and that the details were produced before the AO. However, a perusal of the Assessment Order as also the details show that the details in respect of the expenditure incurred for hiring of the Chartered flight was produced before the AO only on the last day of the assessment. This being so, in the interest of natural justice, this issue is restored to the file of the AO for re-adjudication after granting the assessee adequate opportunity to substantiate its case.
ITA Nos.1059 to 1063/Chny/2016 ITA Nos.947 & 1846/Chny/2017 ITA Nos.1076 to 1078, 1272/Chny/2016 ITA Nos.967 & 1883/Chny/2017 :- 7 -:
20. The next issue is in regard to the expenditure incurred in respect of the expansion of the assessee's business. It was a submission that the assessee had incurred certain expenditure during the AY 2008-09 on the expansion by setting up of a new unit at Sriperumpudur. The AO had treated the said expenditure as a capital expenditure. It was a submission that the assessee was already engaged in the manufacture of oil seals and the Sriperumbudur unit was set up for expanding the existing products by setting up of an additional unit for manufacture of oil seals along with the in-house R&D centre. It was submitted by the Ld.DR that the order of the AO was liable to be upheld.
21. In reply, the Ld.AR vehemently supported the order of the Ld.CIT(A). It was a submission that the issue was now squarely covered by the principles laid down by the Hon'ble Jurisdictional High Court in the case of Rane (Madras Ltd.) reported in 293 ITR 459 Madras as also the decision of the Hon'ble Jurisdictional High Court in the case of Sakthi Sugars Ltd., reported in 339 ITR 400, wherein, it has been held that the expenditure incurred in respect of the extension of the existing unit was liable to be treated as a Revenue expenditure.
22. We have considered the rival submissions.
ITA Nos.1059 to 1063/Chny/2016 ITA Nos.947 & 1846/Chny/2017 ITA Nos.1076 to 1078, 1272/Chny/2016 ITA Nos.967 & 1883/Chny/2017 :- 8 -:
23. As it is noticed that the issue is covered by the principles laid down by the Hon'ble Jurisdictional High Court in the case of Rane (Madras Ltd.) as also Sakthi Sugars Ltd., referred to supra, and as it is noticed that the Ld.CIT(A) has followed the decision the Hon'ble Jurisdictional High Court in the above two cases, we find no reason to interfere with the findings of the Ld.CIT(A) on this issue. Consequently, the same stands confirmed.
The AO is directed to allow the expenditure as Revenue expenditure.
24. The next issue in dispute is in regard to the carry forward of the unabsorbed depreciation relating to the AY 1997-98. It was a submission that the AO had on the ground that 08 years limitation in respect of the carry forward of the depreciation had expired, had not permitted the assessee the benefit of carry forward. It was a submission that on appeal the Ld.CIT(A) had allowed the assessee's claim of carry forward of the unabsorbed depreciation relating to the AY 1997-98.
25. In reply, the Ld.AR submitted that by virtue of the provisions of Sec.32(2) of the Finance Act as on 01.04.2002, the unabsorbed depreciation of the earlier years would have to be considered as current year depreciation. Also in view of the decision of the Hon'ble Gujarat High Court in the case of Gujarat Themis Biosyn Ltd reported in 105 DTR 72 (Gujarat) as also the decision in the case of General Motors reported in 354 ITR 344 (Gujarat). It was submitted by the Ld.AR that there was no ITA Nos.1059 to 1063/Chny/2016 ITA Nos.947 & 1846/Chny/2017 ITA Nos.1076 to 1078, 1272/Chny/2016 ITA Nos.967 & 1883/Chny/2017 :- 9 -:
portion of unabsorbed business losses and it was only unabsorbed depreciation which was under dispute in respect of the carry forward.
26. He vehemently supported the order of the Ld.CIT(A).
27. We have considered the rival submissions.
28. As it is noticed that the issue under appeal is squarely covered by the principles laid down by the Hon'ble Gujarat High Court in the case of Gujarat Themis Biosyn Ltd., referred to supra, as also the decision of the General Motors, referred to supra, and as it is noticed that the Ld.CIT(A) has followed the principles laid down by the Hon'ble Gujarat High Court in the above decisions in respect of the carry forward of the unabsorbed depreciation by treating the same as depreciation for the current year, we find no reason to interfere in the findings of the Ld.CIT(A) on this issue.
Consequently, the order of the Ld.CIT(A) on this issue stands confirmed.
29. ITA No.1076/Chny/2016 - Revenue's appeal: Ground Nos.1 & 5 are general in nature. Ground Nos.2.1 to 2.4 are partly allowed. Ground Nos.3.1 to 3.3 & Ground Nos.4.1 & 4.2 are dismissed. In the result, the Revenue's appeal in ITA No.1076/Chny/2016 is partly allowed.
30. ITA No.1059/Chny/2016 - Assessee's appeal: Ground Nos.1 & 4 are general in nature. Ground Nos.2 to 2.10 are partly allowed. Ground No.3 ITA Nos.1059 to 1063/Chny/2016 ITA Nos.947 & 1846/Chny/2017 ITA Nos.1076 to 1078, 1272/Chny/2016 ITA Nos.967 & 1883/Chny/2017 :- 10 -:
is allowed. In the result, the assessee's appeal in ITA No.1059/Chny/2016 is partly allowed.
31. ITA No.1077/Chny/2016 - Revenue's appeal: Ground Nos.1 & 4 are general in nature. Ground Nos.2.1 to 2.4 are partly allowed. Ground Nos.3.1 to 3.3 are dismissed. In the result, the Revenue's appeal in ITA No.1077/Chny/2016 is partly allowed.
32. ITA No.1060/Chny/2016 - Assessee's appeal: Ground Nos.1 & 4 are general in nature. Ground Nos.2 to 2.7 are partly allowed. Ground No.3 is allowed. In the result, the Assessee's appeal in ITA No.1060/Chny/2016 is partly allowed.
33. ITA No.1078/Chny/2016 - Revenue's appeal: Ground Nos.1 & 4 are general in nature. Ground Nos.2.1 to 2.4 are partly allowed. Ground Nos.3.1 to 3.3 are dismissed. In the result, the Revenue's appeal in ITA No.1078/Chny/2016 is partly allowed.
34. ITA No.1061/Chny/2016 - Assessee's appeal: Ground Nos.1 & 4 are general in nature. Ground Nos.2 to 2.7 are partly allowed. Ground No.3 is allowed. In the result, the Assessee's appeal in ITA No.1061/Chny/2016 is partly allowed.
ITA Nos.1059 to 1063/Chny/2016 ITA Nos.947 & 1846/Chny/2017 ITA Nos.1076 to 1078, 1272/Chny/2016 ITA Nos.967 & 1883/Chny/2017 :- 11 -:
35. ITA No.1062/Chny/2016 - Assessee's appeal: Ground Nos.1 & 3 are general in nature. Ground Nos.2 to 2.7 are dismissed. In the result, the Assessee's appeal in ITA No.1062/Chny/2016 is dismissed.
36. ITA No.1272/Chny/2016 - Revenue's appeal: Ground Nos.1 & 4 are general in nature. Ground Nos.2 & 3 are partly allowed. In the result, the Revenue's appeal in ITA No.1272/Chny/2016 is partly allowed.
37. ITA No.1063/Chny/2016 - Assessee's appeal: Ground Nos.1 & 4 are general in nature. Ground Nos.2 to 2.7 are partly allowed. Ground No.3 is dismissed. In the result, the Assessee's appeal in ITA No.1063/Chny/2016 is partly allowed.
38. ITA No.947/Chny/2017 - Assessee's appeal: Ground Nos.1 & 4 are general in nature. Ground Nos.2 to 2.7 are partly allowed. Ground No.3 is allowed. In the result, the Assessee's appeal in ITA No.947/Chny/2017 is partly allowed.
39. ITA No.967/Chny/2017 - Revenue's appeal: Ground Nos.1 & 4 are general in nature. Ground Nos.2.1 to 2.3 are partly allowed. Ground Nos.3.1 & 3.2 are partly allowed for statistical purposes. In the result, the Revenue's appeal in ITA No.967/Chny/2017 is partly allowed for statistical purposes.
ITA Nos.1059 to 1063/Chny/2016 ITA Nos.947 & 1846/Chny/2017 ITA Nos.1076 to 1078, 1272/Chny/2016 ITA Nos.967 & 1883/Chny/2017 :- 12 -:
40. ITA No.1883/Chny/2017 - Revenue's appeal: Ground Nos.1 & 4 are general in nature. Ground Nos.2.1 to 2.3 are partly allowed. Ground Nos.3.1 & 3.2 are partly allowed for statistical purposes. In the result, the Revenue's appeal in ITA No.1883/Chny/2017 is partly allowed for statistical purposes.
41. ITA No.1846/Chny/2017 - Assessee's appeal: Ground Nos.1 & 3 are general in nature. Ground Nos.2 to 2.8 are partly allowed. Ground No.2.9 is allowed. In the result, the Assessee's appeal in ITA No.1846/Chny/2017 is partly allowed.
Order pronounced in the Open Court on March 12, 2018, at Chennai.
Sd/- Sd/-
(एस जयरामन) (जॉज माथन)
(S. JAYARAMAN) (GEORGE MATHAN)
लेखा सद य/ACCOUNTANT MEMBER या यक सद य/JUDICIAL MEMBER
चे नई/Chennai,
0दनांक/Dated: March 12, 2018.
TLN
आदे श क+ ( त1ल2प अ3े2षत/Copy to:
1. अपीलाथ'/Appellant 4. आयकर आय4
ु त/CIT
2. ()यथ'/Respondent 5. 2वभागीय ( त न ध/DR
3. आयकर आय4
ु त (अपील)/CIT(A) 6. गाड फाईल/GF