Income Tax Appellate Tribunal - Kolkata
Acit, Circle-10(2), Kolkata, Kolkata vs M/S Eastern Silk Industries Ltd., ... on 26 July, 2019
ITA No. 1739/KOL/2016
Assessment Year: 2011-2012
&
ITA No. 1071/KOL/2017
Assessment Year: 2010-2011
M/s. Eastern Silk Industries Limited
IN THE INCOME TAX APPELLATE TRIBUNAL,
KOLKATA 'A' BENCH, KOLKATA
Before Shri P.M. Jagtap, Vice-President (KZ)
and Shri S.S. Viswanethra Ravi, Judicial Member
I.T .A. No. 1739/KOL/2016
Assessment Year: 2011-2012
&
I.T .A. No. 1071/KOL/2017
Assessment Year: 2010-2011
Assistant Commissioner of Income Tax,.... .............................. Appellant
Circle-10(2 ), Ko lkata,
Aayakar Bhawan, 3 r d Floor,
P-7, Chowringhee Square,
Kolkata-700 069
-Vs.-
M/s. Eas tern Si lk Industries Limi ted,........ ........................... Respondent
19, R.N. Mukherjee Road,
Kolkata-700 001
[PAN: AAACE5807C]
Appearances by:
Shri C.J. Singh, JCIT, Sr. D.R , for the Appel lant
Shri Manish Tiwari, FCA, fo r the Responden t
Date of concluding th e hearing : Ju ne 18, 2019
Date of pronouncing the order : Ju ly 26, 2019
O R D E R
Per Shri P.M. Jagtap, Vice-President (KZ):-
These two appeals filed by the Revenue are directed against two separate orders passed by the ld. Commissioner of Income Tax (Appeals)- 4, Kolkata dated 27.05.2016 and by ld. CIT(Appeals)-15, Kolkata dated 07.03.2017 for assessment years 2011-12 and 2010-11 respectively an d since some of the issues raised therein are common, the same have been 1 ITA No. 1739/KOL/2016 Assessment Year: 2011-2012 & ITA No. 1071/KOL/2017 Assessment Year: 2010-2011 M/s. Eastern Silk Industries Limited heard together and are being disposed of by a single consolidated order for the sake of convenience.
2. First we shall take up the appeal of the Revenue for A.Y. 2011-12 being ITA No. 1739/KOL/2016, which is directed against the order of ld. CIT(Appeals)-4, Kolkata dated 27.05.2016.
3. It is noted that there is a delay of 22 days on the part of the Revenue in filing this appeal before the Tribunal. In this regard, the Revenue has filed an application seeking condonation of the said delay and keeping in view the reasons given therein, we are satisfied that there was a sufficient cause for the delay of 22 days on the part of the Revenue in filing this appeal before the Tribunal. Even the ld. Counsel for the assessee has not raised any objection in this regard. The delay of 22 days in filing this appeal by the Revenue is accordingly condoned and this appeal of the Revenue is being disposed of on merit.
4. Grounds No. 1 to 5 (revised) involve the inter-linked issues relating to the claim of the assessee for deduction under section 35(1)(iv) and section 35(2AB) of the Income Tax Act, 1961 and the same read as under:-
"1. That the Ld. CIT(A) was erred in allowing fresh alternative claim in respect of capital expenditure amounting to Rs.8 ,0 6,080/- on account of const ruction of Laboratory building u/s. 35(1)(iv) of the Income T ax Act.1961 where the same h as been otherwise claimed under the sectio n 35(2AB) o f the Inco me Tax Act .1961 in the ITR.
2. Th at th e Ld. C IT(A) was erred in allowing the claim of weighted deduction of Rs.2,59,90,238/- @ 200% of actual expenditure o n acco unt of Revenue Expenditure where the assessee itself has admitted that it was not eligible for deduct ion @ 200% on such expendit ure.
3. That the Ld. CIT(A) was erred in holding the impugned Revenue expenditure of Rs.2,59,90,23 8/- eligible fo r deduct ion u/s. 35(2AB) of the Income T ax Act.I961 contrary 2 ITA No. 1739/KOL/2016 Assessment Year: 2011-2012 & ITA No. 1071/KOL/2017 Assessment Year: 2010-2011 M/s. Eastern Silk Industries Limited to the merits of the order of Approval in Fo rm No. 3CM issued by th e DSIR.
4. That the Ld. CIT (A) has erred in allowing deductio n u/s. 35(2AB) of the Inco me Tax Act ,1961 ignoring th e ord er of Appro val in Fo rm No. 3CM issued by the DS1R, which speaks volume that the approval of the scheme was only for the purpose of Capital Expenditure on research and development facility.
5. That the Ld. C IT(A) has erred in placing his reliance upon the judgement of the Hon'ble Gujrat High Court in CIT VS. Claris Life Science Ltd.[2010] 326 ITR 251 (Guj.), which speaks about the all owability of deduct ion of Expenditures u/s. 35(2AB) of the Act prio r to the dat e of certificate of the DSIR dissuading fro m the core issue of allowability of the nature of expenditure".
5. The assessee in the present case is a Company, which is engaged in the business of manufacturing, export and import of silk fabrics. The return of income for the year under consideration, i.e. A.Y. 2011-12 was filed by it on 29.09.2011 declaring total income of Rs.50,07,79,683/-. In the said return, weighted deduction at 200% was claimed by the assessee under section 35(2AB) of the Act in respect of capital expenditure of Rs.16,57,628/- and Revenue expenditure of Rs.2,59,90,238/- incurred on scientific research. From the perusal of the relevant details of the said expenditure furnished by the assessee, it was found by the Assessing Officer that the capital expenditure claimed by the assessee was inclusive of the expenditure of Rs.8,06,080/- incurred on construction cost of the Laboratory Building. Keeping in view the specific provisions contained in section 35(2AB), the Assessing Officer disallowed the claim of the assessee for weighted deduction under section 35(2AB) in respect of the said expenditure incurred on construction of Laboratory Building. The Assessing Officer also found from the perusal of Form No. 3CM issued by the Ministry of Science & Technology, Department of Scientific & Industrial Research, Government of India (competent authority) that approval for the purpose of deduction under section 35(2AB) was granted 3 ITA No. 1739/KOL/2016 Assessment Year: 2011-2012 & ITA No. 1071/KOL/2017 Assessment Year: 2010-2011 M/s. Eastern Silk Industries Limited to the assessee only to the extent of expenditure incurred on capital assets for the purpose of research and development facilities, which was other than the expenditure on land and building. He accordingly held that the assessee was not entitled to claim weighted deduction @ 200% in respect of the revenue expenditure of Rs.2,59,90,238/- incurred on scientific research. He accordingly disallowed the claim of the assessee for deduction under section 35(2AB) to the extent of Rs.2,76,02,398/- (Rs.2,59,90,238/- + Rs.16,12,160/-). He also disallowed the alternative claim of the assessee for deduction under section 35(1)(iv) of the Act in respect of capital expenditure of Rs.8,06,080/- incurred on the construction of Laboratory Building on the ground that such claim was not made by the assessee either in the return of income originally filed or by way of filing revised return. To arrive at this conclusion, he relied on the decision of the Hon'ble Supreme Court in the case of Goetze (India) Limited [284 ITR 323].
6. The disallowance made by the Assessing Officer on account of its claim for weighted deduction under section 35(2AB) as well as its alternative claim for deduction under section 35(1)(iv) was challenged by the assessee in the appeal filed before the dl. CIT(Appeals) and after considering the submissions made by the assessee as well as the material available on record, the ld. CIT(Appeals) allowed the alternative claim of the assessee for deduction under section 35(1)(iv) in respect of expenditure of Rs.8,06,080/- incurred by the assessee on the construction of Laboratory Building for the following reasons given in paragraph no. 4.2 of his impugned order:-
"4.2. I have co nsidered the assessment order as well as the submissio ns made by the AR of the appellant. I find that th e appellant's claim for weight ed deduct ion within the meaning of section 35(2AB) of the Act has rightly been denied by AO. In view of the express condition specified in the said pro visio n it self, I however, do not agree with the views expressed by AO to deny the appell ant's alternative 4 ITA No. 1739/KOL/2016 Assessment Year: 2011-2012 & ITA No. 1071/KOL/2017 Assessment Year: 2010-2011 M/s. Eastern Silk Industries Limited claim fo r deduct ion u/s 35(1)(iv) @ 100% on cost of land and building. Respectfully following the decisio n of the Hon'ble ITAT , Cochin Bench in the case of Merchem Lt d. supra, the AO is directed to allow deductio n u/s 35(1 )(iv) on value of land and laborato ry building of Rs.8 ,06,080/-. This ground is accordingly allowed" .
7. Keeping in view that its alternative claim for deduction under section 35(1)(iv) was allowed by the ld. CIT(Appeals) to the extent of Rs.8,06,080/- being the expenditure incurred on the cost of Laboratory Building, the assessee revised its claim for deduction under section 35(2AB) only in respect of revenue expenditure incurred on scientific research amounting to Rs.2,59,90,238/- and after considering the submissions made by the assessee as well as the material available on record, the ld. CIT(Appeals) allowed the same for the following reasons given in paragraph no. 5.2 and 5.3 of his impugned order:-
"5.2. I have considered the assessment order as well as the written submissio ns o f the appell ant. I find that in the memo of appeal, the appell ant is aggrieved against disallowance of Rs.2 ,76,02,398/-. However, th e appellant revised the amount of disallowance at Rs.2 ,59,90,238/- as per reco nciliat ion shown at item 4. The disallowance of Rs.2,59,90,238/- which is co ntested refers to denial of weight ed deduction @ 200% on Revenue expenditure incurred in respect of two in-house units at Bangalo re Factory of th e appellant . The revenue expenditure on scientific research and development works amounting to Rs.2,59,903/- which is debited in prof it & loss A/c h aving been allowed by AO, the appel lant is aggrieved for weighted deductio n equivalent to ident ical amount which has been rejected.
5.3. I have perused the audit report of the Chart ered Accountant certifying the maintenance of separate account s of Research & Devel opment wo rks th rough two in-house units. The Revenue expenditure incurred under diffe rent heads as certified by Audito r is t abul ated as follows:
Unit-I Unit-II Total
Salary & Rs.29.11 Rs.86 .39 Rs.115.50
Wages (In
lacs)
Materials Rs. 18.61 Rs.94 .35 Rs.
consumable 112.96
stores (In
5
ITA No. 1739/KOL/2016
Assessment Year: 2011-2012
&
ITA No. 1071/KOL/2017
Assessment Year: 2010-2011
M/s. Eastern Silk Industries Limited
Lacs)
Electricity - Rs. 3.23 Rs. 3.23
Other - Rs. 28.21 Rs. 28.21
Expenditure
Total Rs.47 .72 Rs.212.18 Rs.259.90
I have also perused Form 3CM granting appro val of in-house Research & Develo pment facilit y U/s 35(2AB) of the Act w.e.f. 1st April 2009 upto 3 1st March 2012. The said appro val shows date of issue as 28 t h October 2011 and date of applicat ion made as 23 rd March 2011. The AO appears to h ave denied weighted deduction on revenue expendit ure by referring to comments made by DSIR at the close of the said appro val appearing under bracket [ ]. It is clearly manifest ed that the said authorit y granted approval u/s 35(2AB) w.e.f. 1st April 2009 upto 31st March 2012. Once the approval is granted till 31.03.2012 the so-cal led rest riction appearing within bracket may be said as not applicable. I agree with the contentions of the appellant that the pro visio ns cont ained in sect ion 35(2AB) authorizes weighted deduct ion o n " any expenditure" incurred for scientific research and Development on the line of business enumerated therein and subject to approval of prescribed authority. I also agree th at prescribed authority h as the power to grant or reject approval u/s 3 5(2AB). It c annot direct quantum of deduction u/s 35(2AB). I am fo rtified with the decision of Gujarat High Court in the case of Claris life Sciences Ltd. supra wherein it was, inter-alia, held th at once the certificate by the DSIR is issued that wo uld be sufficient to hold that the assessee fulfilled the co nditio ns lai d down in th e aforesaid pro vision. Moreover, a plain reading of th e pro visions cont ained in sect ion 35(2AB) of the Act clearly manifest s as follows:
"Where a co mpany engaged in the business of [bio- technology or in [any business of manufacture o r production of any article o r th ing, not being an article or thing specified in th e list of the Eleve nth Schedule]] incurs any expendit ure o n scientific research (not being expenditure in th e nature of cost of any land o r building) on in-house research and development facility as approved by the prescribed authorit y, then th ere sh all be allowed a deduct ion or [a sum equal to [two] times of the expenditure] so incurred' .
I am, therefore, of the considered opinion t hat the appellant is entitled to weight ed deductio n in respect of revenue expenditure of Rs.2,5 9,90,238/- as debited in Profit & Loss A/c 6 ITA No. 1739/KOL/2016 Assessment Year: 2011-2012 & ITA No. 1071/KOL/2017 Assessment Year: 2010-2011 M/s. Eastern Silk Industries Limited and further certified by the auditor showing break-up of such revenue expenditure under each of two units. The AO is direct ed to act accordingly in the matt er" .
8. We have heard the arguments of both the sides and also perused the relevant material available on record. As regards the issue involved in Ground No. 1, it is observed that the alternative claim of the assessee for deduction under section 35(1)(iv) of the Act in respect of capital expenditure of Rs.8,06,080/- incurred on construction of the Laboratory Building was disallowed by the Assessing Officer on the ground that the said claim was not made by the assessee either in the return of income originally filed or by way of filing revised return. For this conclusion, he derived support from the decision of the Hon'ble Supreme Court in the case of Goetze (India) Limited (supra). As clarified by the Hon'ble Supreme Court in the decision rendered in the case of Goetze (India) Limited (supra) itself, the appellate authority like the CIT(Appeals) can entertain any new claim of the assessee, such as the claim for deduction under section 35(1)(iv) even when the same was not made by the assessee in the return of income originally filed or by way of filing revised return. The ld. CIT(Appeals), in our opinion, therefore, was fully justified in entertaining the claim of the assessee for deduction under section 35(1)(iv) of the Act and allowing the same on merit by following the decision of the Coordinate Bench of this Tribunal at Cochin in the case of ACIT -vs.- Merchem Limited [46 Taxmann.com 185]. At the time of hearing before us, even the ld. D.R. has not raised any contention to dispute this position. We, therefore, uphold the impugned order of the ld. CIT(Appeals) allowing alternative claim of the assessee for deduction under section 35(1)(iv) and dismiss Ground No. 1 of the Revenue's appeal.7 ITA No. 1739/KOL/2016
Assessment Year: 2011-2012 & ITA No. 1071/KOL/2017 Assessment Year: 2010-2011 M/s. Eastern Silk Industries Limited
9. As regards the common issue raised in Grounds No. 2 to 5 of the Revenue's appeal relating to the deletion by the ld. CIT(Appeals) of the disallowance made by the Assessing Officer on account of assessee's claim for weighted deduction under section 35(2AB), the ld. D.R. has invited our attention to the copy of approval given in Form No. 3CM by the competent authority for in-house research and development facilities of the assessee to point out that the said approval was given for the period 1 s t April, 2009 to 28 t h March, 2011 only for the purpose of capital expenditure incurred on research and development facilities. He has contended that the assessee-company as per the said approval thus was not entitled to claim weighted deduction in respect of revenue expenditure incurred on research and development facilities and this vital aspect was overlooked by the ld. CIT(Appeals) while allowing the claim of the assesese for weighted deduction even in respect of revenue expenditure. The ld. Counsel for the assessee, on the other hand, has contended that the role of the competent authority is only to approve the in-house research and development facility and once such approval is given in From No. 3CM in respect of in-house research and development facility, the assessee becomes eligible for weighted deduction on revenue expenditure as well as the capital expenditure incurred in respect of such research and development facility excluding only the capital expenditure incurred on land and building. He has contended that the conditions stipulated by the competent authority in From No. 3CM that the approval was only for the purpose of capital expenditure on research and development facilities thus was beyond their jurisdiction and the Assessing Officer was not justified in relying on the same to disallow the claim of the assessee for weighted deduction under section 35(2AB) in respect of revenue expenditure incurred on the in-house research and development facility, which was duly approved by the competent authority. In support of this contention, he relied on the decision of the 8 ITA No. 1739/KOL/2016 Assessment Year: 2011-2012 & ITA No. 1071/KOL/2017 Assessment Year: 2010-2011 M/s. Eastern Silk Industries Limited Hon'ble Delhi High Court in the case of CIT -vs.- Sandan Vikas (India) Limited (335 ITR 117).
10. After considering the rival submissions and perusing the relevant material available on record, we find that this issue relating to the assessee's claim for weighted deduction under section 35(2AB) of the Act is squarely covered in favour of the assessee by the decision of the Hon'ble Delhi High Court in the case of Sandan Vikas (India) Limited (supra), wherein it was held as under:-
"What is to be seen is th at th e assessee was indulging in research and development activity and had incurred the expenditure thereupo n. Once a certificate by th e DS IR is issued th at would be sufficient to hold that the assessee fulfils the conditions l aid down in the afo resaid pro visions.
The lower authorities are reading mo re th an wh at is pro vided by l aw. A plain and simple reading of the Act pro vides that on approval of the research and develo pment facility, expenditure so incurred is eligible for w eighted deduct ion The Tribunal has considered the submissio ns made on beh alf of the assessee and took the view that section speaks of:
(i) Development of facilit y;
(ii) Incurring of expenditure by the assessee for
develo pment of such facility;
(iii) Appro val of the facility by the prescribed
authority, which is DSIR; and
(iv) Allowance of weighted deduction on the
expenditure so incurred by the assessee.
A pl ain reading clearly manifests that the assessee has to develo p facilit y, which presuppo ses incurring expendit ure in th is beh alf, application to th e prescribed autho rity, who after following proper procedure will approve the f acilit y of otherwise and the assessee will be entitled to weight ed deduct ion of any and all expenditure so incurred. A plain and harmo nious reading of rule and Form clearly suggest s that once facilit y is approved, the entire expenditure so incurred on development of research and development 9 ITA No. 1739/KOL/2016 Assessment Year: 2011-2012 & ITA No. 1071/KOL/2017 Assessment Year: 2010-2011 M/s. Eastern Silk Industries Limited facility h as to be allowed fo r weighted deduct ion as pro vided by section 35(2AB). The legislative intention behind th e above enactment is to boost t he research and develo pment facility in India and to encourage the develo pment of the facility by pro viding deduction of weighted expenditure is very clear t hat the entire expenditure incurred by th e assessee on development of facility, if approved, has to be allowed for the purpose of weighted deduction.
We are in full agreement with the reasoning given b y the Tribunal and we are of the view that th ere is no scope fo r any other int erpretat ion and since the approval is grant ed during the previous year relevant to th e assessment year in question, we are of th e view that the assessee is entitled to claim the weighted deduction in respect of the enti re expenditure incurred under section 35(2AB) of the Act by the assessee" .
11. In our opinion, the ratio of the decision of the Hon'ble Delhi High Court in the case of Sandan Vikas (India) Limited (supra) is squarely applicable to the facts of the present case and respectfully following the same, we uphold the impugned order of the ld. CIT(Appeals) allowing the claim of the assessee for weighted deduction under section 35(2AB) in respect of revenue expenditure incurred on in-house research and development facility, which was duly approved by the competent authority. Grounds No. 2 to 5 of the Revenue's appeal are accordingly dismissed.
12. In Ground No. 6, the Revenue has challenged the action of the ld. CIT(Appeals) in deleting the disallowance of Rs.4,19,614/- made by the Assessing Officer under section 14A of the Act read with Rule 8D of the Income Tax Rules, 1962.
13. During the year under consideration, the assessee-company had earned dividend income of Rs.1,850/-, which was claimed to be exempt from tax. The disallowance of Rs.1,02,481/- was also offered by the 10 ITA No. 1739/KOL/2016 Assessment Year: 2011-2012 & ITA No. 1071/KOL/2017 Assessment Year: 2010-2011 M/s. Eastern Silk Industries Limited assessee under section 14A on account of expenditure incurred in relation to the earning of the said exempt income. The Assessing Officer applied Rule 8D to work out the expenditure incurred by the assesese in relation to the exempt income at Rs.5,22,095/- and made a further disallowance of Rs.4,19,614/- under section 14A. On appeal, the ld. CIT(Appeals) deleted the said disallowance made by the Assessing Officer under section 14A by applying Rule 8D for the following reasons given in paragraph no. 6.2 of his impugned order:-
"6.2. I have gone th rough the contentions of the A R of the appellant and various judicial decisio ns relied upon in this regard. It is a fact th at dividend income earned an d claimed as deductio n was to t he extent of Rs.1,850/- only. It is also a fact on reco rd that t he appellant offered disallowance u/s 14A at Rs.1,02,481/- in its ret urn. Keeping in view the judicial decision th at applicatio n of Rule 80(2) is not automatic but subjected to satisfaction as well as the decisio n of the Delhi High Court in ITA No. 117/2015, the AO is directed to rest rict disallowance to Rs.1,02,481/- as offered in the ret urn. The balance disallowance of Rs.4 ,19,614/- i.e. (5,2 2,095 - 1 ,02,481) is deleted".
14. We have heard the arguments of both the sides on this issue and also perused the relevant material available on record. Keeping in view all the facts of the case including especially the fact that the disallowance of Rs.1,02,481/- offered by the assessee under section 14A was much more than the exempt income in the form of dividend of Rs.1,850/- only earned by the assessee during the year under consideration, we are of the view that the further disallowance of Rs.4,19,614/- made by the Assessing Officer under section 14A by applying Rule 8D was not sustainable and the ld. CIT(Appeals) was fully justified in deleting the same. We accordingly uphold the impugned order of the ld. CIT(Appeals) on this issue and dismiss Ground No. 6 of the Revenue's appeal.
15. As regards the issue raised in Ground No. 7 relating to the deletion by the ld. CIT(Appeals) of the disallowance made by the Assessing Officer 11 ITA No. 1739/KOL/2016 Assessment Year: 2011-2012 & ITA No. 1071/KOL/2017 Assessment Year: 2010-2011 M/s. Eastern Silk Industries Limited on account of belated payment of employees' contribution to P.F and ESI amounting to Rs.2,31,562/-, we find that this issue is squarely covered in favour of the assessee by the decision of the Hon'ble Calcutta High Court in the case of CIT -vs.- Vijay Shree Limited (ITA No. 245 of 2011), wherein it was held that the due date of deposit should be considered as due date of filing of return under section 139(1) of the Income Tax Act, 1961. Since the payments in question towards employees' contribution to P.F. and ESI were made by the assessee before the due date of filing of its return of income under section 139(1) of the Act, we respectfully follow the decision of the Hon'ble Jurisdictional High Court in the case of Vijay Shree Limited (supra) and uphold the impugned order of the ld. CIT(Appeals) deleting the disallowance made by the Assessing Officer on account of belated payment of employees' contribution to P.F. and ESI. Ground No. 7 of the Revenue's appeal is accordingly dismissed.
16. The issue involved in Ground No. 8 of the Revenue's appeal for A.Y. 2011-12 relates to the deletion by the ld. CIT(Appeals) of the disallowance of Rs.1,54,645/- made by the Assessing Officer on account of Club expenses.
17. In the profit & loss account filed along with its return of income, a sum of Rs.1,93,010/- was debited by the assessee on account of expenditure incurred at Clubs. In the computation of total income, the said expenditure to the extent of Rs.38,365/- was disallowed by the assessee-company itself. According to the Assessing Officer, the entire expenditure incurred at Clubs by the assessee was of personal nature and the same was not allowable as business expenditure. He accordingly made a disallowance of Rs.1,54,645/- on this issue. On appeal, the ld. CIT(Appeals) deleted the said disallowance made by the Assessing Officer by relying on the decision of the Hon'ble Madras High Court in the case of 12 ITA No. 1739/KOL/2016 Assessment Year: 2011-2012 & ITA No. 1071/KOL/2017 Assessment Year: 2010-2011 M/s. Eastern Silk Industries Limited CIT -vs.- Sundaran & Industries [158 CTR 437] and the decision of the Mumbai Bench of this Tribunal in the case of Pritam Hotels Pvt. Limited - vs.- ITO [17 TTJ 550]. The ld. CIT(Appeals) held that business expediency of the expenditure incurred at Clubs was established by the assessee and the claim of the assessee was not rebutted by the Assessing Officer with any tenable or cogent material.
18. We have heard the arguments of both the sides on this issue and also perused the relevant material available on record. As rightly held by the ld. CIT(Appeals), the nexus of the expenditure incurred at Clubs with its business was established by the assessee and in the absence of any tenable or cogent material to rebut or controvert the same, the disallowance made by the Assessing Officer on account of Club expenses was not tenable. Judicial pronouncements relied upon by the ld. CIT(Appeals) also support the case of the assessee on this issue. We, therefore, find no justifiable reason to interfere with the impugned order of the ld. CIT(Appals) giving relief to the assessee on this issue and upholding the same, we dismiss Ground No. 8 of the Revenue's appeal for A.Y. 2011-12.
19. Now we shall take up the Revenue's appeal for A.Y. 2010-11 being ITA No. 1071/KOL/2017, which is directed against the order of the ld. CIT(Appeals)-15, Kolkata dated 07.03.2017.
20. As regards Ground No. 1, it is observed that the issue involved therein relating to the deletion by the ld.CIT(Appeals) of the disallowance made by the Assessing Officer on account of assessee's claim for weighted deduction under section 35(2AB) is similar to the one involved in Grounds No. 2 to 5 of the Revenue's appeal for A.Y. 2011-12, which has already been decided by us. Following our conclusion drawn in A.Y. 2011- 13 ITA No. 1739/KOL/2016 Assessment Year: 2011-2012 & ITA No. 1071/KOL/2017 Assessment Year: 2010-2011 M/s. Eastern Silk Industries Limited 12, we uphold the impugned order of the ld. CIT(Appeals) allowing the claim of the assessee for deduction under section 35(2AB) of the Act. Ground No. 1 of the Revenue's appeal for A.Y. 2010-11 is accordingly dismissed.
21. The common issue raised in Grounds No. 2 & 3 relates to the deletion by the ld. CIT(Appeals) of the addition of Rs.10,19,224/- made by the Assessing Officer by disallowing the claim of the assessee for short-term capital loss by applying the provisions of sections 94(7) and 94(8).
22. In the computation of total income, capital gain arising from the sale of investment amounting to Rs.11,27,822/- was claimed to be exempt by the assessee. The relevant details in respect of such capital gain only to the extent of Rs.1,08,599/- were furnished by the assessee and in the absence of the relevant details in respect of the balance capital gain of Rs.10,19,224/-, the Assessing Officer held that the claim of the assessee was not established. He accordingly treated the said amount of Rs.10,19,224/- as income of the assessee chargeable to tax under the head "income from other sources". Before the ld. CIT(Appeals), it was submitted by the assessee that it had incurred capital loss of Rs.10,19,224/- and the same was set off against the capital gain arising on the sale of securities. It was contended that the assessee thus had not suppressed any capital gain of Rs.10,19,224/- and the addition made by the Assessing Officer by treating the said amount as chargeable to tax under the head "income from other sources" was not justified. The ld. CIT(Appeals) found merit in this contention raised on behalf of the assessee and deleted the addition made by the Assessing Officer on this issue.
23. We have heard the arguments of both the sides and also perused the relevant material available on record. Although the ld. D.R. has submitted 14 ITA No. 1739/KOL/2016 Assessment Year: 2011-2012 & ITA No. 1071/KOL/2017 Assessment Year: 2010-2011 M/s. Eastern Silk Industries Limited that an altogether new claim was made by the assessee before the ld. CIT(Appeals) and the same was accepted by the ld. CIT(Appeals) without giving the Assessing Officer an opportunity to verify the same, we find that the impugned addition was made by the Assessing Officer without giving any sound or cogent reason and the amount of capital gain was treated by him as income from other sources on the basis of mere conjectures and surmises. On the other hand, the relevant facts pertaining to this issue were properly explained by the assessee before the ld. CIT(Appeals) and after having satisfied with the claim of the assessee, relief was allowed by the ld. CIT(Appeals) to the assessee on this issue. We, therefore, find no justifiable reason to interfere with the impugned order of the ld. CIT(Appeals) giving relief to the assessee on this issue and upholding the same, we dismiss Grounds No. 2 & 3 of the Revenue's appeal for A.Y. 2010-11.
24. In the result, both the appeals of the Revenue are dismissed.
Order pronounced in the open Court on July 26, 2019.
Sd/- Sd/-
(S.S. Viswanethra Ravi) (P.M. Jagtap)
Judicial Member Vice-President (KZ)
Kolkata, the 26 t h day of July, 2019
Cop ie s t o : (1) As s i s t an t Co mm is s ion er of In c o m e T ax,
Circ l e -1 0 (2 ), K ol k at a,
Aay ak a r Bh a w an , 3 r d Fl o or,
P- 7 , Ch ow rin gh e e S qu ar e, Kol k a t a-7 0 0 0 6 9
(2 ) M/s . E as t ern S il k In du s tr i es L im it e d,
1 9 , R. N . Mu k h erj e e R o a d, K ol k at a -7 0 0 0 0 1
(3) Co m m is s io n er o f I nc o m e T a x ( App e a ls ) -4, K ol k a ta ,
(4) Co m m is s io n er o f I nc o m e T a x - , Ko l ka t a
(5) T he D e p a rt m en t a l R ep r es e nt a t i ve
(6) G ua r d F i le
B y or d er
A s s is t a nt R e g is t ra r,
I n co m e T a x App e l la t e T ri b u na l,
Ko l ka t a Be nc he s , Ko l kata
Laha/Sr. P.S.
15