PRINCIPAL COMMISSIONER OF INCOME TAX 3 vs. P G FOILS LTD

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TAXAP/259/2018HC GujaratGJHC24019037201802 April 2018Author: HONOURABLE MR. JUSTICE AKIL KURESHI,HONOURABLE MR. JUSTICE B.N. KARIA2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that no question of law arises concerning the first issue. It noted that the Commissioner of Income Tax (Appeals) accepted the applicability of Section 14A but held that only net interest expenditure, not gross, should be added. The Tribunal confirmed this view. The High Court referred to its own decision in Principal Commissioner of Income Tax-3 v. Nirma Credit and Capital Pvt. Ltd. (Tax Appeal No. 409 of 2017), which took a similar view. Consequently, the Court found no substantial question of law on this point. Regarding the second issue, the CIT(A) and Tribunal observed that it became inconsequential in view of the relief granted under Section 14A. The Court did not provide separate reasoning for this issue but implicitly accepted the lower authorities' approach. The appeal was dismissed.

What were the facts?

The Revenue is in appeal against the Income Tax Appellate Tribunal's order dated September 13, 2017. The appeal concerns two issues: the deletion of an addition of Rs. 53,80,484 under Section 14A read with Rule 8D, and the deletion of an addition of Rs. 30,15,144 under Section 80IA. The Commissioner of Income Tax (Appeals) had held that only net interest expenditure, not gross, was to be added under Section 14A, a view confirmed by the Tribunal. Regarding Section 80IA, the lower authorities found the issue consequential to the relief granted under Section 14A.

What were the issues?

1. Whether the Appellate Tribunal was right in law and on facts in upholding the decision of the CIT(A) and thereby deleting the addition of Rs. 53,80,484 under Section 14A read with Rule 8D of the Act? 2. Whether the Appellate Tribunal was right in law and on facts in upholding the decision of the CIT(A) and thereby deleting the addition of Rs. 30,15,144 under Section 80IA of the Act? Assessee's Contention: Not recorded in the judgment. Revenue's Contention: The Revenue is challenging the deletion of additions made by the Assessing Officer. For the first issue, the Revenue likely disputes the CIT(A)'s and Tribunal's interpretation of Section 14A regarding the calculation of disallowable expenditure, specifically the exclusion of gross interest expenditure. For the second issue, the Revenue likely argues that the deduction under Section 80IA should not have been deleted, irrespective of the Section 14A issue.

Which sections of the Income-tax Act were involved?

Section 14A,Section 80IA

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
C/TAXAP/259/2018 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 259 of 2018 ========================================================== PRINCIPAL COMMISSIONER OF INCOME TAX 3 Versus P G FOILS LTD ========================================================== Appearance: MRS MAUNA M BHATT(174) for the PETITIONER(s) No. 1 for the RESPONDENT(s) No. 1 ========================================================== CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI and HONOURABLE MR.JUSTICE B.N. KARIA Date : 02/04/2018

ORAL ORDER (PER : HONOURABLE MR.JUSTICE AKIL KURESHI)

1.

Revenue is in appeal against the judgment of the Income   Tax   Appellate   Tribunal   dated   13.09.2017 raising following questions for our consideration: “[A] Whether the Appellate Tribunal was right in law and on facts in upholding the decision of   the   CIT(A)   and   thereby   deleting   the addition of Rs.53,80,484/­ u/s.14A r.w. rule 8D of the Act? [B] Whether the Appellate Tribunal was right in law and on facts in upholding the decision of   the   CIT(A)   and   thereby   deleting   the addition   of   Rs.30,15,144/­   u/s.80IA   of   the Act?”

2.

First question pertains to deletion of Rs.53.80 lakhs   made   by   the   Commissioner   of   Income   Tax (Appeals)   and   the   Tribunal   which   was   added   by   the C/TAXAP/259/2018 ORDER Assessing Officer under section 14A of the Income Tax Act,   1961   ('the   Act'   for   short).     Commissioner   of Income Tax (Appeals) though accepted that section 14A would be applicable, held that it would only be the net   of   the   interest   expenditure   and   not   the   gross which would be added.  Tribunal confirmed this view. This Court in case of Principal Commissioner of Income Tax­3 v. Nirma Credit and Capital Pvt. Ltd. passed in Tax Appeal No.409 of 2017 has taken a similar view. No question of law arises.

3.

Second question pertains to deduction of section 80IA of the Act. Commissioner of Income Tax (Appeals) and the Tribunal observed that in view of the relief in connection with the disallowance under section 14A of the Act, this issue has become inconsequential.

4.

In the result, Tax Appeal is dismissed. (AKIL KURESHI, J) (B.N. KARIA, J) ANKIT SHAH

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