GUJARAT POWER CORPORATION LIMITED-GPCL,,AHMEDABAD vs. THE DY.COMMISSIONER OF INCOME TAX, GANDHINAGAR , GANDHINAGAR

The assessee is a govt. company promoted by the Government of Gujarat. Assessment u/s. 143(3) of the Act for the year under consideration was finalized on 22nd December, 2017 and total loss of the assessee company was determined at Rs.24,96,06,671/- and book profit u/s. 115JB of Page No 2 Gujarat Power Corporation Ltd. vs. DCIT the Act was assessed at Rs. 10,82,26,7518/-. The remaining facts pertaining to the issues contested in the grounds of appeal are discussed while adjudicating these grounds of appeal follows as under:-

Ground No. 1 (Disallowance u/s. 14A of Rs. 57,07,020/-) 3. During the course of assessment, the Assessing Officer noticed that assessee has received dividend income of Rs. 1,24,45,228/- and it has disallowed an amount of Rs. 1 lacs as expenditure incurred for earning such exempt income. The Assessing Officer has rejected assessee’s suo moto disallowance of Rs. 1 lacs after taking a general view from earlier year’s computed disallowance Rs. 63,52,960/- under section 14A read with Rule 8D of the I.T. Rule, 1962. After reducing the disallowance of Rs. 1 lacs suo moto made by the assessee, the Assessing Officer has made addition of Rs. 62,52,960/- u/s. 14A to the total income of the assessee.

Aggrieved assessee has filed appeal before the ld. CIT(A). Before the ld. CIT(A) the assessee submitted that it has made all the investment in the earlier years out of surplus fund of the company and it has not made any new investment during the year on which exempt income was received. The assessee has also submitted that it has not incurred any interest expenses which were related to investment that yield tax free income. However, the ld. CIT(A) has restricted the disallowance to the extent of Rs. 58,07,020/- on the basis of following the decision of his predecessor for A.Y. 2014-15 after taking correct average value of investment. It was also submitted that there was no expenses incurred for administration, conveyance, salary etc.

During the course of appellate proceedings before us, the ld. counsel at the outset has submitted that identical issue on similar facts has been adjudicated by the Co-ordinate Bench of the ITAT Ahmedabad in the case of assessee itself in its favour vide A.Y. 2014-15 dated 20th Sep, 2019. The Ld. Departmental Representative is fair enough not to controvert this undisputed fact that the issue is covered in favour of the assessee. With the assistance of ld. representatives, we have gone through the decision of ITAT in the case of assessee itself on the issue of disallowance made u/s. 14A adjudicated vide ITA No. 2332/Ahd/2017 as cited above. The relevant part of the decision as cited above of the CO- ordinate bench is produced as under:- “6. We further find that this particular issue has also been dealt with in ITA No. 1928/Ahd/2016 for A.Y. 2012-13. The relevant portion whereof is as follows:- "29. Ground No. 1This ground relates to disallowance u/s 14A r.w.r. 8D to the tune of Rs. 51,61,079/- under normal provision. 30. Upon verification of the Profit and Loss account for A.Y. 2011-12, it was found that the assessee has earned dividend income of Rs.l,71,72,097/- during the year under consideration which was claimed to be exempt u/s 10(34) of the Act in the statement of total income. Further that, the assessee has disallowed suo moto sum of Ks.l,00,00()/- as expenses relating to the earning of such exempt income. The assessee 's case is that investment on which exempt income has been earned were not made from interest bearing funds as there are no borrowings made by the company which is evident from the balance sheet. Ultimately, applying section I4A r.w.r 8D the iota! disallowance has been worked out to Rs.5!,6l,079/- by the Learned AO, addition whereof was in turn confirmed by the learned CIT(A). Hence, the instant appeal. 31. We find that this particular issue as already been dealt with by in in ITA No. 1172/Ahd/20I6 for A.Y. 2011-12 in Revenue's appeal whereby and whereunder such disallowance made by the authorities has been deleted by us relying upon the judgment passed by the Jurisdictional High Court in the matter of PCIT-vs-Shreno Ltd. reported in {20191 102 Taxman.com 129 (Guj). Hence, in the absence of any changed circumstances the same shall apply mutatis mutandis. Hence, the ground of appeal preferred by the assessee is allowed." Since the identical issue has already been considered by the Co-ordinate Bench in favour of the assessee we found no reason to observe otherwise and hence in the absence of any changed circumstances respectfully relying upon the same we delete the addition made by the authorities below.”

During the course of assessment, the Assessing Officer pointed out that assessee has not filed specific clarification with regard to the receipt of interest u/s. 244A as shown in the ITS details. The Assessing Officer further stated that on verification of profit and loss account it was noticed that assessee had not offered the interest amount received u/s. 244A for assessment year 2010-11 and for assessment year 2012-13 of Rs. 27,64,620/- and Rs. 2,36,344/- respectively totaling to Rs. 30,00,964/-. Therefore, the Assessing Officer has added the same to the total income of the assessee.

Aggrieved assessee has filed appeal before the ld. CIT(A). The ld. CIT(A) has rejected the appeal of the assessee.

During the course of appellate proceedings, the ld. counsel has submitted that assessee has neither received any refund for assessment year 2010-11 and 2012-13 nor received any intimation regarding it therefore addition on account of interest u/s. 244A was wrongly made by the Assessing Officer. On the other hand, the ld. Departmental Representative placed reliance on the order of lower authority.

Heard both the sides and perused the material on record. The Assessing Officer has made addition on account of interest received u/s. 244A of the Act for the assessment year 2010-11 and 2012-13 on the basis of detail shown in ITS. The claim of the assessee that it had not received interest, was not verified at the level of lower authorities. Therefore, we are of the view that that it will be appropriate to restore this case to the file of Assessing Officer for deciding afresh after verification and examination of the claim of the assessee that it has neither received any refund for assessment year 2009-10 and 2012-13 nor received any intimation regarding the same. Therefore, this ground of the assessee is allowed for statistical purposes.

This ground of appeal is premature at this stage, therefore, the same stands dismissed.

In the result, the appeal of the assessee is partly allowed for statistical purposes Order pronounced in the open court on 04-05-2021 Sd/- Sd/- (MAHAVIR PRASAD) (AMARJIT SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad : Dated 04/05/2021 Page No 6 Gujarat Power Corporation Ltd. vs. DCIT