Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, DELHI BENCH: ‘F’ NEW DELHI
Before: SHRI N. K. BILLAIYA & MS SUCHITRA KAMBLE
1 ITA No. 1267/Del/2015
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: ‘F’ NEW DELHI
BEFORE SHRI N. K. BILLAIYA, ACCOUNTANT MEMBER AND MS SUCHITRA KAMBLE, JUDICIAL MEMBER
I.T.A. No.1267/Del/2015 (A.Y 2010-11)
(THROUGH VIDEO CONFERENCING)
DCIT Vs PTC India Financial Services Circle-19(2), Ltd.2nd Floor, NBCC Tower, New Delhi 15 Bhikaji Cama Place New Delhi AAECP0501C (APPELLANT) (RESPONDENT)
Appellant by Smt. Sushma Singh, CIT(DR) Respondent by Sh. Salil Kapoor, Adv and Sh. Sumit Lal Chandani, Adv Date of Hearing 21.01.2021 Date of Pronouncement 19 .02.2021
ORDER PER SUCHITRA KAMBLE, JM This appeal is filed by the Revenue against order dated 29/12/2014 passed by CIT(A)-7, New Delhi For Assessment Year 2010-11.
The grounds of appeal are as under:- “1. In the facts and circumstances of the case, the Ld.CIT(A) has erred in deleting the additions of Rs. 4,24,88,156/- made by the A.O u/s 14A in accordance with Rule 8D of the Income Tax Rule. 2. In the facts and circumstances of the case, the Ld.CIT(A) has erred in deleting the additions of Rs. 17,39,69,513/- made by AO by disallowing depreciation claimed on Wind Mills by admitting fresh evidence in violation of Rule 46(3) of the IT Rules.
2 ITA No. 1267/Del/2015
In the facts and circumstances of the case, the Ld.CIT(A) has erred in deleting the addition of Rs. 27,83,426/- made u/s 36(1) (iii) by holding that the appellant had borrowed funds which was used for business purposes and was paying interest on these funds.”
The assessee company is a listed public company incorporated under the Companies Act, 1956 and is registered with the Reserve Bank of India (‘RBI’) as a Non Banking Financial Company (‘NBFC’). The assessee company is promoted by PTC India Limited and currently, 60% of the share capital of the assessee company is held by PTC India Limited. The assessee company is engaged in the business of making principal investments in, and providing financing solutions for, companies with projects across the energy value chain. During the previous year relevant to the assessment year under consideration, the assessee company filed its return of income on 15 October 2010. The assessee company had declared a total income of Rs.14,48,95,236 under normal provision of the Act and book profit of Rs. 32,21,91,829 in the Return of Income. The case was selected for scrutiny assessment and thereafter the Assessing Officer vide assessment order dated 12th March 2013, issued under section 143(3) of the Act, assessed the total income at Rs. 39,26,69,458 by making following additions/disallowances:
S. Particulars of addition/disallowance Amount (Rs.) No. 1 Additional Disallowance u/s 14A of the 47,488,156 Act 2 Disallowance u/s 32 of the Act. 193,969,533/- 3 Disallowance u/s 35 D of the Act. 3,533,107/- 4 Disallowance u/s 36(1) (iii) of the Act. 2,783,426/- 247,774,222/-
Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) allowed the appeal of the assessee on the legal issue as well as on the merits.
3 ITA No. 1267/Del/2015
The Ld. DR submitted that Section 14A of the Act was inserted into the Income Tax Act, 1961 vide Finance Act, 2001 with retrospective Application from 1/4/1962. It provides for disallowance of expenditure in relation to income not includible in total income. Over a period of time various High Courts and the Hon’ble Apex Courts have decided this issue. The Ld. DR relied upon the Circular No. 5 of 2014 dated 11th February, 2014 issued by CBDT. The Ld. DR further submitted that the main purpose for which the investment into shares is made by the assessee may not be relating as Section 14A applies irrespective of whether share are held to gain control or as stock-in-trade. Expenditure which is in relation to earning dividends can be disallowed u/s 14A and Rule 8D as held in Apex Court’s decision in case of Maxopp Investment Ltd. (2018) 91 Taxman.com 154 order dated 12/2/2018. The Ld. DR further submitted that Rule 8 is prospective in nature and could not have been made applicable in respect of Assessment Years 2007 when this Rule was inserted. The Ld. DR has given a written submission thereby giving the various aspect of Section 14A and the various decisions such as:-
� CIT v. Walfort Share & Stock Brokers (P.) Ltd. [2010] 192 Taxman 211/326 ITR 1 (SC), � CIT v. Walfort Share & Stock Brokers (P.) Ltd. (supra) stands followed in Godrej & Boyce Mfg. Co. Ltd. v. Dy. CIT [2017] 81 taxmann.com 111 (SC) � CIT v. Rajendra Prasad Moody [1978] 115 ITR 519 (SC). � Maxopp Investment Ltd. reported in [2018] 91 taxmann.com 154 held vide order dated 12.02.2018 Hon’ble Supreme Court � Indiabulls Financial Services Ltd. Vs DCIT[2016] 76 taxmann.com 268 (Delhi) � Punjab Tractors Ltd Vs CIT[2017-TIOL-353-HC-P&H-IT]
As regards Ground No. 2, the Ld. DR submitted that the CIT(A) erred in deleting the addition in respect of disallowance of depreciation claimed a wind
4 ITA No. 1267/Del/2015
mills by admitting fresh evidence in violation of Rules 46(3) of the Income Tax Rules.
As regards Ground No. 3, the Ld. DR submitted that the CIT(A) erred in deleting the addition of Rs. 27,83,426/- made u/s 36(1)(3) by holding that the assessee had borrowed funds which was used for business purposes and was paying interest on these funds.
The Ld. AR in all the grounds which were contested by the Department relied upon the findings of the CIT(A).
We have heard both the parties and perused the material available on record. As regards Ground No. 1 of the Revenue’s appeal, the assessee made a suo moto disallowance of Rs. 16,05,000/-. The investments were out of assessee’s own funds and no borrowed funds were used to acquire investments. There was no interest expenditure which could be directly or indirectly attributable to the exempt income. The CIT(A) further observed that the investments were strategic investment as per the assessee and the same should be excluded for calculating disallowance under Rule 8D. As per Rule 8D(2)(i), the assessee made disallowance of Rs. 16,05,000/- under the head strategic investment and has taken 20% of employee cost and 5% of administrative cost. Thus, the findings given by the CIT (A) is just and proper. Therefore, Ground No. 1 is dismissed. As regards Ground No. 2, the details were submitted by the assessee during the assessment proceedings as per the reply/submissions dated 11.12.2012 which is mentioned on page 1 of the Assessment Order itself. There was no new evidence brought on record by the assessee and after the verification of the evidence the CIT(A) has rightly deleted the addition. In fact, the Assessing Officer has totally ignored the reply dated 11.12.2012 submitted by the Assessee. Thus, CIT(A) has given a categorical finding that the assets were owned by the assessee and were put to use for the purposes of its business during the year. Hence, there is no need to interfere
5 ITA No. 1267/Del/2015
with the detailed findings of the CIT(A). Hence, Ground No. 2 is dismissed. As regards Ground No.3, the assessee had borrowed funds which was used for business purposes and was paying interest on these funds and this fact was not controverted through any of the documents on the record by the Assessing Officer as well as by the Revenue at the time of hearing before us. Hence, the findings given by the CIT(A) is proper and there is no need to interfere with the findings of the CIT(A). Ground No. 3 is dismissed.
In result, the appeal of the Revenue is dismissed. Order pronounced in the Open Court on this 19th Day of February, 2021
Sd/- Sd/- (N. K. BILLAIYA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 19/02/2021 R. Naheed *