Principal Commissioner Of Income Tax I vs. M/S Swastik Coal Corportion Pvt. Ltd.

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ITA/35/2017HC Madhya Pradesh05 December 2017Bench: HON'BLE SHRI JUSTICE P.K. JAISWAL2 pages
For Petitioner: Veena Mandlik
AI SummaryDismissed

What did the High Court hold?

The High Court held that the issue involved in the appeal was already settled by a Division Bench of the same Court in the case of Commissioner of Income Tax vs. Swastik Coal Corporation Pvt. Ltd. (supra). The Court found that no substantial question of law arose from the ITAT's order. Therefore, the appeal filed by the Revenue was dismissed. The reasoning for the dismissal is based on the precedent established in the Swastik Coal Corporation case, implying that the ITAT's decision, which was consistent with that precedent, was considered correct. The operative direction is the dismissal of the appeal. No issues were expressly left undecided.

What were the facts?

This case involves an appeal filed by the Revenue under Section 260A of the Income Tax Act, 1961, against an order dated March 1, 2016, passed by the Income Tax Appellate Tribunal (ITAT), Bench Indore. The appeal pertains to Assessment Year 2010-11. The ITAT had dismissed the Revenue's appeal, having previously restricted the disallowance under Section 14A of the Act. The disallowance was initially Rs. 31,98,441, but was reduced to Rs. 1,00,663. The ITAT's decision was based on the assessee's investment of interest-bearing funds in a partnership firm where profits were exempt, and the application of a 1:30:85 ratio for exempt and taxable income, which the ITAT found was not supported by Section 14A read with Rule 8D.

What were the issues?

1. Whether the Tribunal erred in restricting the disallowance under Section 14A of the Income Tax Act, 1961, from Rs. 31,98,441 to Rs. 1,00,663, despite the assessee having made investments of interest-bearing funds in a partnership firm whose profits were exempt? (Question of law) 2. Whether the Tribunal erred in restricting the disallowance under Section 14A of the Act by applying a ratio of 1:30:85 for exempt income and taxable income, when Section 14A read with Rule 8D does not prescribe such a ratio? (Question of law) Assessee's contentions: The assessee argued that the issue involved in the present appeal is settled by a Division Bench of the High Court in the case of Commissioner of Income Tax Vs. Swastik Coal Corporation Pvt. Ltd. [(2014) 23 ITJ 59(MP)], which upheld a similar order. The assessee further contended that no appeal was filed by the department against the aforesaid decision. Revenue's contentions: The judgment does not record any specific contentions made by the Revenue in this High Court appeal.

Which sections of the Income-tax Act were involved?

Section 14A,Section 260A

AI-generated summary — verify with the full judgment below

High Court of Madhya Pradesh : Bench At Indore ITA No.35/2017 Indore dated : 5/12/2017 Ku. Veena Mandlik, learned counsel for the appellant. Heard on the question of admission. This application under Section 260A of the Income Tax Act, 1961 has been filed against the order dated 1/03/2016, passed by the Income Tax Appellate Tribunal(ITAT), Bench Indore in ITA No.745/Ind/2014 for the Assessment Year 2010-11. The learned Tribunal after appreciating the arguments came to the conclusion that (1) restricting the disallowance rightly made under Section 14A of the Act from Rs.31,98,441/- to Rs.1,00,663/- while assessee has been made investment of interest bearing funds in the partnership firm, profit of which was exempt and; (2) restricting the disallowance under Section 14A of the Act from Rs.31,98,441/- to Rs.1,00,663/- by applying the ratio of 1:30:85 for exempt income and taxable income, whereas provision of Section 14A r.w.r. 8D does not speak about ration between exempt income and taxable income and, dismissed the revenue appeal. Learned counsel for the petitioner submits that in Assessment Year 2009-10 against the order passed by the ITA, the matter went upto this Court and the Division Bench of this Court in the case of Commissioner of Income Tax Vs. Swastik Coal Corporation Pvt. Ltd. [(2014) 23 ITJ 59(MP)] upheld the order. The said decision still holds the field. No appeal against the aforesaid order has been filed by the department. Considering the aforesaid, we are of the view that the

issue involved in the appeal is settled by the Division Bench of this Court in the case of Commissioner of Income Tax vs. Swastik Coal Corporation Pvt. Ltd.(supra). No substantial question of law arises in this appeal. The appeal filed by the appellant has no merit and is, accordingly, dismissed. (P.K. Jaiswal) (Virender Singh) Judge Judge pn Preetha Nair 2017.12.12 15:55:03 +05'30'

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