Income Tax Appellate Tribunal - Jaipur
Saurabh Agrotech (P) Ltd., Alwar vs Acit, Alwar on 10 March, 2017
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IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR
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BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YADAV, AM
vk;dj vihy la-@ ITA No. 779/JP/16
fu/kZkj.k o"kZ@Assessment Year : 2012-13
Saurabh Agrotech (P) Ltd. C/o cuke The Asstt. Commissioner of
M/s K.L. Datta & Co., CA. Vs. Income Tax, Circle-1, Alwar
Vashitha Plaza,2, Manu Mar,
Alwar
LFkk;h ys[kk la-@thvkbZvkj la-@PAN No. AADCS 4522 P
vihykFkhZ@Appellant izR;FkhZ@Respondent
vk;dj vihy la-@ ITA No. 855/JP/16
fu/kZkj.k o"kZ@Assessment Year : 2012-13
The Asstt. Commissioner of cuke Saurabh Agrotech (P) Ltd. C/o
Income Tax, Circle-1, Alwar Vs. M/s K.L. Datta & Co., CA.
Vashitha Plaza,2, Manu Mar,
Alwar
LFkk;h ys[kk la-@thvkbZvkj la-@PAN No. AADCS 4522 P
vihykFkhZ@Appellant izR;FkhZ@Respondent
fu/kZkfjrh dh vksj ls@ Assessee by :Shri P.C. Parwal, CA
jktLo dh vksj ls@ Revenue by : Shri R.A. Verma (Addl.CIT)
lquokbZ dh rkjh[k@ Date of Hearing : 09.03.2017
?kks"k.kk dh rkjh[k@ Date of Pronouncement : 10/03/2017.
vkns'k@ ORDER
PER SHRI VIKRAM SINGH YADAV, A.M.
These are two cross appeals filed by the assessee and the Revenue against the order of ld. CIT(A), Alwar dated 11.07.2016 for Assessment year 2012-13. The grounds of appeal are as follows:
ITA No. 779/JP/16 M/s Saurabh Agrotech (P) Ltd, AlwarVs. The ACIT, Circle-1, Alwar In ITA No. 779/JP/16 (Assessee):
(1) That the ld. AO has erred in law as well as on the facts and circumstances of the case in making a disallowance of Rs. 28,34,071 by applying the provision of section 14A and rule 8D of the Income Tax Rules, 1962.
In ITA No. 855/JP/16 (Revenue):
(1) Whether on the facts and in the circumstances of the case, the CIT(A) was right in deleting the addition of Rs. 26,29,074 made by the AO after disallowing deduction u/s 80-IA on wind mill.
(2) Whether on the facts and in the circumstances of the case, the CIT(A) was right in deleting the addition of Rs.20,41,040/- made by the AO after disallowing interest expenses on interest free advances provided to Dhruv Enclave.
2. Regarding the disallowance of Rs. 28,34,071/- u/s 14A of the Act read with Rule 8D of the IT Rules, 1962, the ld. AR submitted that the issue of disallowance u/s 14A of the Act r.w.r. 8D of the IT Rules came up before the Hon'ble ITAT, Jaipur Bench in assessee's own case for A.Y. 2009-10 to 2011-12. Wherein the Hon'ble ITAT vide order dated 18.10.2016 has held as under:
"In light of provisions of section 14A and the above proposition in law, in the instance case, the assessee has claimed that it has not incurred any expenditure by way of payment of interest for making investment in the shares. It was submitted that the paid-up capital and reserve and surplus far exceed the investment in shares. In fact, the investment in shares were made in various years and in each of those years, the interest-free fund available is much more than the investment in shares. As on 31.03.2009, the interest-free fund available with the assessee is around 2.5 times of the investment made in shares. It was submitted that it cannot be presumed that borrowed funds has been utilized for making investment in shares and in the absence of any 2 ITA No. 779/JP/16 M/s Saurabh Agrotech (P) Ltd, Alwar Vs. The ACIT, Circle-1, Alwar proximate relation of borrowed funds with investment in shares, no part of the interest expenditure can be disallowed u/s 14A r.w.r. 8D(2)(ii). However, the AO has not return a finding that he is not satisfied with the correctness of the said claim of the assesee in respect of expenditure not having been incurred in relation to the exempt income. In absence of AO recording his satisfaction with correctness of the claim of the assessee, we are of the view that invocation of Rule 8D simplicator would not be in accordance with the provisions of Section 14A of the Act. Similar view has been taken by the Coordinate Bench in the earlier years. In light of the these discussions and following the earlier year decisions of the Coordinate Bench, we set-aside and the restore the matter to the file of the AO to examine the matter a fresh and after recording his satisfaction vis-a-vis the claim of the assessee, recompute the disallowance, if any, in accordance with law. The assessee's ground is thus allowed for statistical purposes."
3. The ld AR further submitted that from the above decision of the Hon'ble ITAT, it can be noted that the Hon'ble ITAT has set aside the matter to the file of the AO to recompute the disallowance, if any, after recording his satisfaction vis-a-vis the claim of the assessee. It was submitted that in the year under consideration no fresh investment in the shares has been made by the assessee. The investment in the shares were made in earlier years and in those years, the interest free fund available was much more than the investment in shares. As on 31.03.2012, the interest free fund available with the assessee is Rs. 14.36 crores whereas investment in shares is Rs. 5.44 crores which is around 2.64 times of the investment made in shares. Thus, no borrowed funds have been utilized for making investment in shares. The asessee has also not received any dividend income and thus no disallowance 3 ITA No. 779/JP/16 M/s Saurabh Agrotech (P) Ltd, Alwar Vs. The ACIT, Circle-1, Alwar u/s 14A can be made in view of the decision of Delhi High Court in case of Cheminvest Ltd. vs. ITO 378 ITR 0033 order dated 02.09.2015.
4. We have heard the rival contentions and perused the material available on record. The ld CIT(A) has relied on his predecessor's order for AY 2010-11 and AY 2011-12 and has upheld the disallowance under Section 14A. For AY 2011- 12 and other years, this Bench in its decision dated 18.10.2016 has set-aside the matter to the file of the AO. For the subject year, there is again a lack of finding on the part of AO in terms of the reasons and his non-satisfaction for accepting the claim of the assessee that no expenditure has been incurred during the year, there is thus no sufficient material which is available on record to dispose of the issue on merit. Therefore, following our earlier decision, the subject matter is also set-aside to the file of the AO with the same findings and directions as contained in our decision dated 18.10.2016 referred supra. The assessee's ground is thus allowed for statistical purposes.
5. Now coming to the Revenue's appeal. The Revenue has challenged the action of the ld CIT(A) in allowing the assessee's claim of deduction under section 80IA for Rs 26,29,074/-in respect of windmill. The ld. AR submitted that the issue is covered in favour of the assessee by the decision of Hon'ble ITAT Jaipur Bench in assessee's own case for A.Y. 2009-10 to A.Y. 2011-12 order dated 18.10.2016 which reads as under:
"(4.1) At the outset, it was submitted by the ld AR that the issue is covered by the decision of Hon'ble ITAT order dated. 18.10.2012 in assessee's own case for A.Y. 07-08 and AY 08-09. The ld DR relied on the order of AO.4 ITA No. 779/JP/16 M/s Saurabh Agrotech (P) Ltd, Alwar
Vs. The ACIT, Circle-1, Alwar (4.2) The relevant findings of the ITAT order dated. 18.10.2012 are reproduced as under:
"(34) After considering the order of assessing Officer and Ld. CIT(A), we find that ld. CIT(A) has discussed the issue in detail. The ld. CIT(A) has noted the AO has placed reliance on the order in case of Gold mine's case which has been considered by the Hon'ble Madras High Court on subsequent decision of same High Court in case of Velayuthaswamy Spinning Mills Pvt. Ltd. 231 CTR 368 (Mad.) by which the issue has been decided in favour of the assessee. It is further seen that provisions of section 80IA became applicable for assessment year 2007-08 and assessee has opted to claim deduction u/s 80IA with effect from 2007-08 through the production was commenced from assessment year 2003-04.
It has been provided that under the provisions of section 80IA, the assessee is eligible to claim it in 10 Years out of 15 years of its choice. The initial assessment has been taken as 2007-08 and from assessment year the assessee is eligible for claiming deduction u/s 80IA for 10 years. The decision of Hon'ble Rajasthan High Court in case of Mewar Oil & General Mills Ltd. 271 ITR 311 (Raj.) was also taken into consideration and in view of these facts, the ld. CIT(A) held that assessee was correct in claiming the deduction u/s 80IA from assessment year 2007-08. Finding of CIT(A) has been reproduced somewhere above in this order which is self explanatory. Therefore, we see no reason to interfere with the finding of ld. CIT(A). Accordingly we confirm the order of ld. CIT(A) in this regard also."
5 ITA No. 779/JP/16 M/s Saurabh Agrotech (P) Ltd, AlwarVs. The ACIT, Circle-1, Alwar
6. In view of above, respectfully following the Coordinate Bench decision referred supra, we confirm the order of the ld CIT(A). The Revenue's ground no 1 is thus dismissed.
7. In ground No.2 of Revenue's appeal, the Revenue has challenged the action of ld CIT(A) regarding the deletion of addition of Rs. 20,41,000/- made by the AO after disallowing interest expenses on interest free advances provided to Dhruv Enclave. The ld. AR submitted that the issue is covered in favour of the assessee by the decision of Hon'ble ITAT Jaipur Bench in assessee's own case for A.Y. 2009-10 to A.Y. 2011-12 order dated 18.10.2016 wherein the relevant findings are as under:
"(5.1) The relevant findings of the ITAT order dated. 18.10.2012 are reproduced as under:
"(5.3) After considering the orders of AO and Ld. CIT(A) we find no infirmity in the finding of ld. CIT(A). The ld. CIT(A) has considered the issue by taking into consideration the details of borrowed funds and details of advances on which no interest was paid or charged. It has been observed by the ld. CIT(A) that assessee was having both kinds of funds i.e. interest bearing as well as non- interest bearing funds and they are pooled together. The ld. CIT(A) has also noted that assessee is having the non-interest bearing funds sufficient enough to cover up the loan and advances given to M/s Dhruv Enclave Pvt. Ltd. Reliance has been placed on the decision of Reliance Utilities & Power limited, 178 Taxman 135 (Bom.) wherein it is held that there are funds available both interest free and over draft and/or loans are taken, then a presumption would rise that investment would be out of interest free funds generated or available with the company, if the interest free funds are sufficient to meet the investment, then no disallowance could be made. Similar view has been expressed in case of CIT vs. Hotel Savera, 239 ITR 795 (Mad.) and in case or Visen Industries Ltd. 136 ITD 309 (Mum.)(TM). Following these decisions and in view of the reasoning given by ld. CIT(A) which is reproduced somewhere above in this order, we see no reason to interfere with the finding of ld. CIT()A). It is 6 ITA No. 779/JP/16 M/s Saurabh Agrotech (P) Ltd, Alwar Vs. The ACIT, Circle-1, Alwar also a matter of fact that the finding of Ld. CIT(A) remained uncontroverted. Accordingly, we confirm the finding of Ld. CIT(A) on this issue also."
8. In view of above, respectfully following the Coordinate Bench decision referred supra, we confirm the order of the ld CIT(A). The Revenue's ground no. 2 is dismissed.
In the result, appeal of the assessee is allowed for statistical purposes and the appeal of the Revenue is dismissed.
Order pronounced in the open court on 10/03/2017.
Sd/- Sd/-
(KUL BHARAT) (VIKRAM SINGH YADAV)
U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member
Jaipur
Dated:- 10/03/2017
vkns'k dh izfrfyfi vxzfs "kr@Copy of the order forwarded to:
1. vihykFkhZ@The Appellant- M/s Sourabh Agrotech (P) Ltd., Alwar
2. izR;FkhZ@ The Respondent- The ACIT, Circle-1, Alwar
3. vk;dj vk;qDr@ CIT Alwar
4. vk;dj vk;qDr¼vihy½@The CIT(A) Alwar
5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur
6. xkMZ QkbZy@ Guard File (ITA No. 779/JP/2016 & 855/JP/16) vkns'kkuqlkj@ By order, lgk;d iathdkj@ Assistant. Registrar.7 ITA No. 779/JP/16 M/s Saurabh Agrotech (P) Ltd, Alwar
Vs. The ACIT, Circle-1, Alwar 8