THE PRINCIPAL COMMISSIONER OF INCOME TAX-1 vs. CLP INDIA PVT LTD

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TAXAP/280/2020HC GujaratGJHC24038100202005 October 2020Bench: HONOURABLE THE CHIEF JUSTICE MR. JUSTICE VIKRAM NATH,HONOURABLE MR. JUSTICE J.B.PARDIWALA2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the question proposed by the Revenue was no longer res integra. This means the issue had already been decided by various judicial pronouncements and was settled law. The Court referred to several precedents, including decisions from the Gujarat High Court in the case of Commissioner of Income Tax, Vadodara-II vs. Vision Finstock Limited and Pr. Commissioner of Income Tax, Vadodara-I vs. Gujarat Fluorochemicals Limited, as well as a Supreme Court decision in Commissioner of Income Tax-II vs. Vision Finstock Limited, and a Punjab & Haryana High Court decision in Commissioner of Income Tax-I vs. Majestic Auto Limited. Based on these precedents, the High Court found no merit in the Revenue's appeal. The disallowance made under Section 14A read with Rule 8D was restricted to the extent of exempt income, which was Rs.50,000/-. The operative direction was that both appeals filed by the Revenue fail and are dismissed.

What were the facts?

The Revenue, Principal Commissioner of Income Tax-1, filed two tax appeals under Section 260A of the Income Tax Act, 1961, against the orders of the Income Tax Appellate Tribunal (ITAT), Ahmedabad 'B' Bench. These orders, dated January 30, 2020, pertained to ITA No.1186/Ahd/2018 and ITA No.1163/Ahd/2018 for Assessment Year 2013-14. The appeals were filed by the Revenue against the assessee, CLP India Pvt Ltd. The core of the dispute involved a disallowance made under Section 14A read with Rule 8D.

What were the issues?

1. Whether the Appellate Tribunal has erred in law and on facts in restricting the disallowance of Rs.17,02,77,850/- made under Section 14A read with Rule 8D to the extent of Rs.50,000/- being the exempt income? Assessee's contentions: The judgment does not record any specific contentions made by the assessee. However, the ITAT's decision, which the Revenue is challenging, restricted the disallowance to Rs.50,000/-. This implies the assessee likely argued for a lower disallowance or that the ITAT's approach was correct. Revenue's contentions: The Revenue contended that the ITAT erred in restricting the disallowance of Rs.17,02,77,850/- made under Section 14A read with Rule 8D to Rs.50,000/-, which was the amount of exempt income. The Revenue likely argued for a higher disallowance based on the provisions of Section 14A and Rule 8D.

Which sections of the Income-tax Act were involved?

Section 14A,Section 260A

AI-generated summary — verify with the full judgment below

C/TAXAP/280/2020                                                                                                 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO.  280 of 2020 With R/TAX APPEAL NO. 281 of 2020 ========================================================== THE PRINCIPAL COMMISSIONER OF INCOME TAX­1 Versus CLP INDIA PVT LTD ========================================================== Appearance: MRS MAUNA M BHATT(174) for the Appellant(s) No. 1 for the Opponent(s) No. 1 ========================================================== CORAM: HONOURABLE THE CHIEF JUSTICE MR. VIKRAM NATH and HONOURABLE MR. JUSTICE J.B.PARDIWALA

Date : 05/10/2020

COMMON ORAL ORDER (PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA) 1. As the question proposed by the Revenue in both the captioned appeals is the same and the assessee is also the same, those were taken up for hearing analogously and are being disposed of by this common order. 2. These tax appeals under Section 260A of the Income Tax Act, 1961 (for short “the Act, 1961”) is at the instance of the Revenue and is directed against the orders passed by the Income Tax Appellate Tribunal, Ahmedabad 'B' Bench dated 30th January, 2020 in the ITA No.1186/Ahd/2018 and ITA No.1163/Ahd/2018 respectively for the A.Y.2013-14 3. The Revenue has proposed the following question for the consideration of this Court; Page  1 of  2

C/TAXAP/280/2020                                                                                                 ORDER “Whether the Appellate Tribunal has erred in law and on facts in restricting the disallowance of Rs.17,02,77,850/- made u/s.14A r.w. Rule 8D to the extent of Rs.50,000/- being the exempt income?” 4. The question proposed by the Revenue is no longer res integra in view of the following precedents; “1) A decision of this Court in the case of Commissioner of Income Tax, Vadodara- II vs. Vision Finstock Limited, Tax Appeal No.486 of 2017; 2) A decision of the Supreme Court in the case of Commissioner of Income Tax-II vs. Vision Finstock Limited, S.L.P (Civil) Diary No.13152 of 2018 (SC); 3) A decision of the Punjab & Haryana High Court in the case of Commissioner of Income Tax-I vs. Majestic Auto Limited, 178 Taxman 148; 4) A decision of this Court in the case of Pr. Commissioner of Income Tax, Vadodara-I vs. Gujarat Fluorochemicals Limited, Tax Appeal No.11 of 2019. 5. In the result, both the appeals fail and are hereby dismissed. (VIKRAM NATH, CJ) (J. B. PARDIWALA, J) Vahid Page  2 of  2

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