PR COMMISSIONER OF INCOME TAX KOTA vs. MS TOLARAM SATYADEV AGRA PVT LTD

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 67/2018 Pr. Commissioner Of Income Tax, Kota. ----Appellant Versus M/s Tolaram Satyadev Agro Pvt., Ltd., 40-A, Talwandi, Kota Raj ----Respondent For Appellant(s) : Ms. Parinitoo Jain with Ms. Shiva Goyal For Respondent(s) : HON'BLE MR. JUSTICE K.S.JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYAS Judgment 10/04/2018 By way of this appeal, the appellant has challenged the judgment and order of the Tribunal whereby the Tribunal has dismissed the appeal of the department. Counsel for the appellant has framed following question of law:- “Whether the Tribunal was legally justified in deleting the addition of Rs. 83,336/- made u/s 14A read with Rule 8D following the Board’s Circular 5/2014.” The contention which has been raised is that the Supreme Court decision is not followed. Prima facie, it seems that the same is not referred in the order of the Tribunal. In that view of the matter, the appropriate remedy for the appellant is to approach the Tribunal and the Tribunal is directed to re-consider the same in the review application to be filed by the

(2 of 3) [ITA-67/2018] appellant taking into consideration, the decision of the Supreme Court in case of Godrej & Boyce Manufacturing Company Limited vs. Dy. Commissioner of Income Tax & Ors.;(2017) 394 ITR 449 (SC) wherein it has been held as under:- “24. The object behind the introduction of Section 14A of the Act by the Finance Act of 2001 is clear and unambiguous. The legislature intended to check the claim of allowance of expenditure incurred towards earning exempted income in a situation where an Assessee has both exempted and non-exempted income or includible or non-includible income. While there can be no scintilla of doubt that if the income in question is taxable and, therefore, includible in the total income, the deduction of expenses incurred in relation to such an income must be allowed, such deduction would not be permissible merely on the ground that the tax on the dividend received by the Assessee has been paid by the dividend paying company and not by the recipient Assessee, when Under Section 10(33) of the Act such income by way of dividend is not a part of the total income of the recipient Assessee. A plain reading of Section 14A would go to show that the income must not be includible in the total income of the Assessee. Once the said condition is satisfied, the expenditure incurred in earning the said income cannot be allowed to be deducted. The Section does not contemplate a situation where even though the income is taxable in the hands of the dividend paying company the same to be treated as not includible in the total income of the recipient Assessee, yet, the expenditure incurred to earn that income must be allowed on the basis that no tax on such income has been paid by the Assessee. Such a meaning, if ascribed to Section 14A, would be plainly beyond what the language of Section 14A can be understood to reasonably convey. 27. We do not see how the aforesaid principle of law in K.P. Varghese (supra) can assist the Assessee in the present case. The literal meaning of Section 14A, far from giving rise to any absurdity, appears to be wholly consistent with the scheme of the Act and the object/purpose of levy of tax on income. Therefore, the well entrenched principle of interpretation that where

(3 of 3) [ITA-67/2018] the words of the statute are clear and unambiguous recourse cannot be had to principles of interpretation other than the literal view will apply. In this regard, the view expressed by this Court in Commissioner of Income Tax-III v. Calcutta Knitwears, Ludhiana MANU/SC/0255/2014 : (2014) 6 SCC 444 (para 31) may be usefully noticed below: the language of a taxing statute should ordinarily be read and understood in the sense in which it is harmonious with the object of the statute to effectuate the legislative animation. A taxing statute should be strictly construed; common sense approach, equity, logic, ethics and morality have no role to play. Nothing is to be read in, nothing is to be implied; one can only look fairly at the language used and nothing more and nothing less.” Otherwise also it will be difficult for us to hold that the Tribunal has committed an error. For a substantial question of law unless there is specific findings of the Tribunal on facts relying the judgment sought to be relied upon. In that view of the matter, the appeal is not entertained at this stage. However, it will be open for the appellant to challenge the same as above. The Tribunal will consider the review application preferred by the appellant and the time taken today will be taken into consideration while considering the review application. The appeal stands disposed of. (VIJAY KUMAR VYAS),J (K.S.JHAVERI),J A.Sharma/125