THE COMMISSIONER OF INCOME TAX, PANAJI. vs. SALGAOCAR MINING INDUSTRIES PVT. LTD.,

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TXA/69/2015HC BombayHCBM05000928201502 May 2016Author: F. M. REIS,HON'BLE KUM. JUSTICE NUTAN D. SARDESSAI3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that for the second issue concerning dry-docking expenses, it could not re-appreciate the finding of fact that the expenditure was revenue expenditure, as the Revenue did not dispute this for the previous assessment year and there was no perversity in the finding. Therefore, the second substantial question of law did not arise. Regarding the first issue concerning Section 14A, the Court found that the ITAT had noted that the Revenue was unable to point out that the calculations made by the CIT(A) were incorrect. The CIT(A) had restricted the disallowance to Rs. 5,10,283/- after finding that the assessee had not paid interest on investments related to dividend income. The ITAT found the CIT(A)'s action justified. Since the Revenue could not point out any fault in the ITAT's conclusion, the first substantial question of law also did not arise. Consequently, there were no substantial questions of law arising in the appeal.

What were the facts?

The Revenue, Commissioner of Income Tax, Panaji, filed an appeal challenging an order of the Income Tax Appellate Tribunal (ITAT). The ITAT had deleted additions made by the Assessing Officer (AO) of Rs. 10,94,885/- under Section 14A read with Rule 8D of the Income Tax Act. The appeal also challenged the deletion of additions of Rs. 48,60,08,180/- related to capital expenditure on major dry-docking expenses for ships, which extend their life. The High Court noted that for a similar expenditure in the previous assessment year (2008-2009), the authorities had treated it as revenue expenditure. The Revenue did not dispute this for the previous year.

What were the issues?

1. Whether the High Court can re-appreciate findings of fact regarding expenditure being revenue expenditure, when the Revenue does not dispute this for a similar expenditure in the previous assessment year, under Section 260A of the Income-tax Act? (Question of law and fact, concerning Section 260A). 2. Whether the ITAT was justified in deleting the addition of Rs. 10,94,885/- made by the AO under Section 14A read with Rule 8D, when the Revenue could not point out any error in the calculations of the Commissioner of Income Tax (Appeals) (CIT(A))? Assessee's Contentions: - The expenditure on dry-docking was revenue expenditure, not capital expenditure. The ITAT's finding on this could not be re-appreciated under Section 260A without perversity. - The AO's addition of Rs. 10,94,885/- under Section 14A was incorrect. The CIT(A) had restricted the disallowance to Rs. 5,10,283/- after finding that the assessee had not paid interest on acquiring investments related to dividend income. The ITAT upheld the CIT(A)'s action. Revenue's Contentions: - The expenditure on dry-docking was capital in nature. - The additions made under Section 14A were justified.

Which sections of the Income-tax Act were involved?

Section 14A,Section 260A

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF BOMBAY AT GOA TAX APPEAL NO. 69 OF 2015 THE COMMISSIONER OF INCOME TAX, PANAJI. ... Appellant Versus SALGAOCAR MINING INDUSTRIES PVT. LTD., ... Respondent Ms. Asha A. Desai, Advocate for the appellant. Shri P. J. Pardiwalla, Senior Advocate with Advocate Shri Ashwin D. Bhobe for the respondent. Coram:- F. M. REIS & NUTAN D. SARDESSAI, JJ. Date:- 2nd May, 2016 P.C. Heard Ms. Asha Desai, learned Advocate appearing for the appellant-Revenu and Shri P. J. Pardiwalla, learned Senior Advocate appearing for the respondent.

2.

The above appeal filed by the appellant/Revenue challenging the order of the learned Income Tax Appellate Tribunal (ITAT), deleting the additions made by the Assessing Officer of Rs.10,94,885/- under Section 14 A, read with Rule 8D of the Income Tax Act. The challenge is also to the deletion of the additions of Rs.48,60,08,180/-relating to capital expenditure incurred on major dry-docking expenses for ships which substantially extend the life of the ships by taking into consideration the Judgment reported in (SC) 293 ITR 2011 in the case of Commissioner of Income-tax vs.

2 TXA/69/2015 Saravana Spinning Mill Pvt. Ltd..

3.

During the course of hearing of the above appeal, it was not disputed by the learned Counsel appearing for the appellant that as far as similar expenditure referred to in the second contention, for the assessment year 2008-2009 which is the previous assessment Mining Industries Pvt. Ltd.) for the assessment year 2008-2009, we find that the finding of fact arrived at by the authorities below to the effect that such expenditure is revenue expenditure cannot be re-appreciated in the present appeal under Section 260A of the Income-tax Act, as there is no perversity in such findings. Hence, the second substantial question law would not arise in the present appeal.

4.

As far as the first proposed substantial question of law is concerned, we find on perusal of the order passed by the ITAT that there is a categorical finding therein that the Revenue-Appellant herein was unable to point out that the calculations carried out by the Commissioner of Income Tax (A) towards deduction in terms of Section 14A, read with Section 8D of the said Act are incorrect. Shri Pardiwalla, learned Senior Advocate appearing for the respondent pointed out that the dis-allowance of Rs.10,94,885/-

3 TXA/69/2015 was the addition by the A.O. of the interest which was not expenditure incurred in connection with the subject dividend on shares which were allotted in a family settlement in respect of the company known as "Tungabhadra Minerals Private Limited". The learned Tribunal has noted that the DR could not bring any evidence before the learned Tribunal to show that the calculations of the learned CIT(A) are not as per Rules. Therefore, the learned Tribunal had no other alternative than to endorse the action by the CIT(A). In fact, the CIT(A) held that the Assessee had not paid any interest on acquiring investments and consequently, the learned CIT(A) has restricted this disallowance to Rs.5,10,283/-. The learned Tribunal, as such, found that the CIT(A) is justified in such action and consequently, held that there was no fault committed by the CIT(A) while coming to such conclusion. As such, we find that there is no substantial question of law, on this count, which arise in the present appeal. No fault has been pointed out by the learned Counsel appearing for the appellant-Revenue to such conclusion. Therefore, the substantial question of law, as proposed by the appellant-Revenue would not arise in the present appeal.

5.

Hence, there are no substantial questions of law which arise in the present appeal. The appeal stands, accordingly, dismissed. NUTAN D. SARDESSAI, J. F. M. REIS, J. mukund

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