Punjab-Haryana High Court
Commissioner Of Income Tax vs The Shahbad Coop. Sugar Mill Ltd on 21 February, 2010
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH.
ITA No. 45 of 2010
Date of Decision: February 22, 2010
Commissioner of Income Tax, Karnal
...Appellant
Versus
The Shahbad Coop. Sugar Mill Ltd.
...Respondent
CORAM: HON'BLE MR. JUSTICE M.M. KUMAR
HON'BLE MR. JUSTICE JITENDRA CHAUHAN
Present: Mr. Yogesh Putney, Advocate,
for the Appellant.
1. To be referred to the Reporters or not?
2. Whether the judgment should be reported in
the Digest?
M.M. KUMAR, J.
This is revenue's appeal filed under Section 260A of the Income-tax Act, 1961 (for brevity, 'the Act') against the order dated 23.6.2009, passed by the Income Tax Appellate Tribunal, Chandigarh Bench 'B', Chandigarh (for brevity, 'the Tribunal'), in ITA No. 33/Chd/2009, in respect of assessment year 2005-06.
It has come on record that the Assessing Officer did not allow a sum of Rs. 33,26,892/- out of the total expenditure of Rs. 6,66,75,654/- incurred by way of interest on working capital by invoking the provisions of Section 14A of the Act. The Assessing Officer noted that similar addition was made in respect of the assessment years 2000-01 and 2002-03. The CIT(A) has deleted the addition by noticing that the addition made in the assessment year 2000-01 has since been deleted by the Assessing Officer in the order dated 6.11.2007, passed under Section 143(3) read with Section 254 of the Act, on the basis of the direction issued by the Tribunal on 16.3.2007 in ITA No. 522/Delhi/2004. It is against the aforesaid order that the revenue preferred further appeal before the Tribunal. The Tribunal noticed that the total investment in the shares of three Cooperative ITA No. 45 of 2010 2 Societies, namely, Kaithal Co-operative Sugar Mills, Haryana State Co-operative Bank Ltd. and Haryana State Co-operative Sugar Mills Federation, stands at a sum of Rs. 2,71,58,300/-. Section 14A of the Act has been invoked in respect of the interest income expenditure claimed. The issue is squarely covered by the finding of the Assessing Officer himself recorded in the order dated 6.11.2007 in respect of the assessment year 2000-01 in so far as the investment in the shares of Kaithal Co-operative Sugar Mills is concerned. The aforesaid order has been passed by the Assessing Officer on the direction issued by the Tribunal on 16.3.2007. In respect of that order, the Assessing Officer found that investment in the shares of Kaithal Co-operative Sugar Mills is not out of the borrowed funds and hence no addition under Section 14A of the Act was called for. As a consequence, the addition made even in respect of the assessment year in question i.e. 2005-06 under Section 14A was not called for on account of investment in the shares of Kaithal Co-operative Sugar Mills. Accordingly, the Tribunal found no justification to sustain the addition. The order of the CIT(A) has been affirmed.
The Tribunal in respect of other investments made in the shares of Haryana State Co-operative Bank Ltd. and Haryana State Co-operative Sugar Mills Federation has held that the source of investment in their shares have to be verified. The argument put forward before the Tribunal by the revenue and consented by the assessee was accepted and to that limited extent the matter was restored to the file of the Assessing Officer. A direction has been issued to the Assessing Officer to examine as to whether or not the investments in the aforesaid two concerns have been made out of borrowed funds or not and decide the claim afresh on the basis of his findings on that aspect.
Mr. Yogesh Putney, learned counsel for the appellant has made an attempt to persuade us to admit the appeal on a question of law sought to be raised in para 5 of the memorandum, which state that the Tribunal was not right in accepting the submission of the assessee that the amount borrowed was not diverted in investment in shares. However, we fail to see any such question of ITA No. 45 of 2010 3 law especially when the order in respect of the investments made in the share of Haryana State Co-operative Bank Ltd. and Haryana State Co-operative Sugar Mills Federation, is based on consensus of both the parties. There is, thus, no merit in the appeal, which is accordingly dismissed.
(M.M. KUMAR)
JUDGE
(JITENDRA CHAUHAN)
February 22, 2010 JUDGE
Pkapoor