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Income Tax Appellate Tribunal, Hyderabad ‘A ‘ Bench, Hyderabad
Before: Shri R.K. Panda, Vice- & Shri Laliet Kumar
per the written submission which has not been verified by either of the lower authorities, therefore, he has no objection if the matter is restored to the file of the Assessing Officer with a direction to verify all the details and pass appropriate order.
We have heard the rival arguments made by both the sides, perused the orders of the AO and the learned CIT (A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us by both sides. The only dispute in the impugned appeal is regarding the claim of deduction u/s 80IA(4) of the Act. We find the Tribunal in the order dated 31.01.2013 had restored the issue to the file of the Assessing Officer with a direction to the assessee to produce the details substantiating that it has actually developed the industrial park during the relevant A.Y under consideration for claiming deduction u/s 80IA(4) of the Act by bringing on record contemporaneous documents like electricity connection, water connection, copies of the approval of fire safety certificate from the competent authority along with complying the conditions laid down by the Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, Government of India. We find before the Assessing Officer the assessee filed certain documents which according to the Assessing Officer are not sufficient enough to conclude that the assessee company has complied with the conditions laid down by the Industrial Policy and Promotion, Ministry of Commerce, Govt. of India and that the assessee failed to prove that the Industrial Park was operational during the relevant A.Y. We find the learned CIT (A) upheld the action of the Assessing Officer, the reasons of which have already been reproduced in the preceding paragraphs. It is the submission of the learned Counsel for the assessee that as Page 14 of 21
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against the proposed number of industrial units mentioned at 42, the same was reduced to 5 units. However, the assessee has constructed 20 independent units i.e. 10 units in north block and 10 units in south blocks. Thus, the assessee has constructed more than the required number of units. It is also his submission that during the immediately preceding A.Y, the assessee has effected sales amounting to Rs.7,35,37,424/- and during the year under consideration, the sale effected amounted to Rs.42,00,71,669/-. According to the learned Counsel for the assessee M/s. Satyam Computers (P) Ltd was in possession of all the units by taking on lease from the assessee and other owners. It is also his submission that the Industrial Park was kept ready in all aspects and was operational during the year under consideration. It is also his submission that the occupancy certificate has been issued by the Municipal Corporation, Seri Lingampally on 29.11.2005 which also shows that the assessee kept ready all the Units for occupation.
Since according to the learned Counsel for the assessee all the 20 units have been occupied by Satyam Computers (P) Ltd which are owned by the assessee as well as 10 other persons, therefore, we find force in the argument of the learned Counsel for the assessee that it cannot simply be considered as a single unit. As per the submission of the learned Counsel for the assessee property tax was paid by different persons for different units. Further, in absence of any water connection given by the Hyderabad Metro Water Supply & Sewerage Board, the assessee has supplied water through tankers for which the learned Counsel for the assessee has filed details of the water supply bills, copies of which are placed at Page 211 to 221 of the Paper Book. Since all the details were not properly gone Page 15 of 21
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through by either of the lower authorities, therefore, considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the Assessing Officer with a direction to grant one last opportunity to the assessee to produce all the relevant details and decide the issue as per the fact and law. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.
ITA 205/Hyd/2016 – A.Y 2011-12 17. The grounds raised by the assessee are as under: “1. The order of the learned CIT (A) is erroneous both on facts and in law. 2. The learned CIT (A) erred in confirming the action of the Assessing Officer in rejecting the claim for deduction u/s 80IA of Rs.14,60,715/-. 3. The learned CIT (A) erred in confirming the action of the Assessing Officer in disallowing expenditure of Rs.61,17,749/- by applying the provisions of section 14A of the I.T. Act. 4. The learned CIT (A) ought to have accepted the explanation submitted and deleted the additions made by the Assessing Officer. 5. Any other ground that may be urged at the time of hearing”. 18. Grounds 1, 4 & 5 being general in nature are dismissed.
Ground of appeal No. 2 relates to the denial of claim of deduction u/s 80IA amounting to Rs.14,60,715/-.
19.1 After hearing both the sides, we find the above ground is identical to the ground of appeal in ITA No.204/Hyd/2016. We have already decided the issue and the matter has been restored Page 16 of 21
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to the file of the Assessing Officer for fresh adjudication with certain directions. Accordingly, this ground is restored to the file of the Assessing Officer for fresh adjudication in the light of the directions given in ITA No.204/Hyd/2016.
Ground 3 relates to the disallowance of Rs. 61,17,749/- under the provisions of section 14A of the Act.
Facts of the case, in brief, are that the Assessing Officer during the course of assessement proceedings noted that the assessee has made investment in equity shares of M/s. Meenakshi Power Ltd and M/s. Meenakshi Ventures and Holdings India Pvt. Ltd, income derived from which is exempt from tax. According to the Assessing Officer, the investment at 31.3.2010 and 31.3.2021 were reported by the assessee at Rs.4,67,00,000/- and Rs.8,27,00,000/- respectively. The interest paid during the year is Rs.2,15,32,472/-. He therefore, asked the assessee to explain as to why the provisions of section 14A should not be applied. It was explained by the assessee that the total investment made as on 31.3.2011 were 8,27,00,000/- out of which an amount of Rs.3,60,00,000/- was invested during the relevant financial year. The total shareholders fund for the previous year 2010-11 is Rs.8.92 crores which is more than the total investment made and that the assessee has not diverted any interest bearing funds for investment the income of which is exempt and therefore, provisions of section 14A are not applicable. It was further submitted that unsecured loans of Rs.2.51 crores was applied for the purpose of reduction of credits and have not been diverted to investments.
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21.1 However, the Assessing Officer was not satisfied with the arguments advanced by the assessee invoking the provisions of section 14A r.w. rule 8D he disallowed an amount of Rs.61,17,749/-.
In appeal, the learned CIT (A) sustained the addition made by the Assessing Officer.
Aggrieved with such order of the learned CIT (A) the assessee is in appeal before the Tribunal.
The learned Counsel for the assessee referring to the decision of the Hon'ble Supreme Court in the case of South Indian Bank Ltd v. CIT (2021) 438 ITR 1 submitted that the Hon'ble Supreme Court in the said decision has held that where interest free own funds available with the assessee-banks exceeded their investments in tax-free securities, investments would be presumed to be made out of assessee’s own funds and proportionate disallowance was not warranted u/s 14A on the ground that separate accounts were not maintained by the assessee for investments and other expenditure incurred for earning tax-free income.
Referring to the decision of the Coordinate Bench of the Tribunal in the case of NCC Infra vs. ACIT in ITA No.144/Hyd/2022 and the decision of the Mumbai Bench of the Tribunal in the case of Mukand Engineers Ltd vs. ACIT in ITA No.1246/Mum/2023 dated 17.8.2023 he submitted that in
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absence of any exempt income, no addition can be made. He submitted that in the instant case also there is no finding that the assessee has earned any exempt income. Therefore, in absence of any exempt income, no addition can be made u/s 14A r.w. rule 8D. 26. The learned DR, on the other hand, submitted that the plea of the assessee that it has not received any dividend income was never raised before either of the lower authorities. Therefore, he has no objection if the matter is restored to the file of the Assessing Officer for fresh adjudication of the issue in the light of the decision of the Coordinate Benches cited (Supra). 27. We have heard the rival arguments and perused the material available on record. We find the Assessing Officer applying the provisions of section 14A r.w.rule 8D made addition of Rs.61,17,749/- on the ground that the total investment made by the assessee as at the end of the year 31.3.2011 is Rs.8,27,00,000/- out of which an amount of Rs. Rs.3,60,00,000/- was invested during the relevant financial year and the assessee has paid interest amounting to Rs. 2,15,32,472/-. We find the learned CIT(A) upheld the action of the Assessing Officer. It is the submission of the learned Counsel for the assessee that since the assessee has not received any dividend income during the year, therefore, no addition can be made u/s 14A r.w. rule 8D in the light of various decisions of the Coordinate Benches of the Tribunal. We find the order of the Assessing Officer and the CIT (A) is silent on the issue as to what is the dividend income received by the assessee during the relevant A.Y. The Coordinate Bench of the Tribunal in the case of NCC Infrastructure Holdings Ltd vs. ACIT (Supra) relying on various decisions has held that no disallowance u/s 14A of the Act can be made if the assessee has Page 19 of 21
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not earned any exempt income during the year under consideration. Since these facts are not coming out from the order of either of the lower authorities as no such plea was taken before them, therefore, considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the Assessing Officer with a direction to give an opportunity to the assessee to substantiate that it has not received any dividend income during the relevant year from the investments made. The Assessing Officer shall decide the issue afresh as per fact and law after giving due opportunity of being heard to the assessee. The ground raised by the assessee is accordingly allowed for statistical purposes. ITA 842/Hyd/2017 – A.Y 2012-13
The grounds raised by the assessee are as under: “1. The order of the learned CIT (A) is erroneous to the extent it is prejudicial to the appellant. 2. The learned CIT (A) erred in confirming the action of the Assessing Officer in rejecting the claim for deduction u/s 80IA(4)(iii) of the I.T. Act of Rs.17,56,454/-. 3. Any other ground that may be urged at the time of hearing”.
After hearing both the sides, we find the above ground (Ground No.2) is identical to the grounds raised by the assessee in ITA No.204/Hyd/2016 for the A.Y 2006-07. We have already decided the issue and the ground raised by the assessee has been allowed for statistical purposes. Following similar reasonings, this ground raised by the assessee is also allowed for statistical purposes.
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In the result, all the three appeals filed by the assessee are allowed for statistical purposes.
Order pronounced in the Open Court on 19th December, 2023. Sd/- Sd/- (LALIET KUMAR) (R.K. PANDA) JUDICIAL MEMBER VICE-PRESIDENT
Hyderabad, dated 19th December, 2023. Vinodan/sps Copy to: S.No Addresses 1 M/s. SDE Engineers (P) Ltd, Plot No.119, Meenakshi, Road No.10, Jubilee Hills, Hyderabad 500033 2 Dy.CIT, Circle 3(1) Hyderabad and Income Tax Officer Ward 3(1) Hyderabad 3 Pr. CIT – 3, Hyderabad 4 DR, ITAT Hyderabad Benches 5 Guard File By Order
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