DCIT, JAIPUR vs. M/S OM METALS INFRA PROJECTS LTD., JAIPUR

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR Jh fot; iky jko] U;kf;d lnL; ,oa Jh Hkkxpan] ys[kk lnL; ds le{k BEFORE: SHRI VIJAY PAL RAO, JM & SHRI BHAGCHAND, AM vk;dj vihy la-@ITA No. 1133/JP/2016 fu/kZkj.k o"kZ@Assessment Year : 2013-14 cuke The DCIT, M/s Om Metal Infraproject Ltd., Vs. Circile-2, Om Tower, M.I. Road, Church Road, Jaipur. Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAACO8245J vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri B.B. Maheshwari (C.A.) jktLo dh vksj ls@ Revenue by : Shri Vrindera Mehta (CIT) lquokbZ dh rkjh[k@ Date of Hearing : 14/11/2017 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 16/11/2017 vkns'k@ ORDER

PER: VIJAY PAL RAO, J.M.

This appeal by the Revenue is directed against the order of dated 18.10.2016 of CIT (A)-I, Jaipur for A.Y. 2013-14. The Revenue has raised the following grounds are as under:- “1. Whether on the facts and in the circumstances of the case and in law the ld. CIT(A) has erred in deleting the addition of Rs. 15,03,442/- on employee’s contribution to PF which was deposited beyond the prescribed time limit provided in the respective Acts. 2. Whether on the facts and in the circumstances of the case and in law the ld. CIT(A) has erred in deleting the entire addition of

ITA No.1133/JP/2016 DCIT Vs. M/s Om Metal Infraproject Ltd, Jaipur.

Rs. 2,80,75,585/- made by the AO under section 14A of the I.T. Act, 1961 r.w. clauses (ii) & (iii) of Rule 8D which was in consonance with CBDT Circular 5/2014 dated 11.02.2014. 3. Whether on the facts and in the circumstances of the case and in law the ld. CIT(A) has erred by relying upon the decision of Hon’ble Rajasthan High Court in the cases of CIT Vs. JVVNL {2014} 99 DTR 131 (Raj.) and CIT V/s SBBJ on the very same issue whereas, the department has filed SLP against these orders. The appellant craves the indulgence to modify, alter, and add any other ground of appeal given above.”

respect of the employee’s contribution to PF which was deleted by the

ld. CIT(A).

relevant material on record. The Assessing Officer disallowed a sum of

Rs. 15,03,442/- on account of the contribution PF and ESI on the

ground that the assessee has not deposited the employee’s contribution

within stipulated time prescribed in respective Acts. The ld. CIT(A)

noted that the amount has been deposited by the assessee before the

due date of filing the return of income and therefore the matter is

covered by the decision of Hon’ble Jurisdiction High Court in case of CIT

vs. SBBJ 236 ITR 17 as well as in assessee’s own case for the A.Y.

ITA No.1133/JP/2016 DCIT Vs. M/s Om Metal Infraproject Ltd, Jaipur.

2011-12 has decided this issue in favour of the assessee vide order dated 22nd August, 2017 in ITA No. 202/2017 in para 4.2 is as under:-

“4.2 The issue No. 2, the same is now covered by the decision of this court in CIT Vs. State Bank of Bikaner & Jaipur 92014) 363 ITR ITR 70 against which SLP is preferred therefore, in view of the earlier decision taken by this court, the issue is answered in favour of the assessee subject to SLP pending before the Supreme Court.” Hence, we find that this issue is covered by the decision of Hon’ble

jurisdiction High Court in case of CIT vs. SBBJ (supra) as well as the

decision in assessee’s own case (supra). Accordingly we do not find any

error or illegality in the impugned orders of the ld. CIT(A) qua this

issue.

r.w. Rule 8D which was deleted by the ld. CIT(A).

relevant material on record. The Assessing Officer made the

disallowance on account of interest expenditure u/s 14A r.w. Rule 8D.

The assessee challenged the action of the AO before the ld. CIT(A) and

contended that the assessee’s own fund are sufficient to make this

investments resulting exempt income. The ld. CIT(A) deleted the

ITA No.1133/JP/2016 DCIT Vs. M/s Om Metal Infraproject Ltd, Jaipur.

addition made by the AO by following the decisions of this Tribunal in

assessee’s own case for the assessment years 2009-10 to 2012-13

dated 28.10.2014, 22.12.2014 & 04.01.2016. The ld. CIT(A) also

deleted the addition on account of indirect administrative expenses

being 0.5% of the average investment. We find that these issues were

considered by this Tribunal in assessee’s own case and thereafter the

Hon’ble Jurisdiction High Court in assessee’s own case decided this

issue in ITA No. 202/2017 vide order dated 22nd August, 2017 in para

4.3 is as under:-

“4.3 The issue No. 3 is regarding 14A. Now the issue is governed by the decision of Supreme Court the case of Godrej & Boyce Manufacturing Company Limited vs. Deputy Commissioner of Income Tax, Mumbai & Anr. reported in 394 ITR 449 wherein it has been held as under:- “36. Section 14A as originally enacted by the Finance Act of 2001 with effect from 1.4.1962 is in the same form and language as currently appearing in Sub-section (1) of Section 14A of the Act. Sections 14A (2) and (3) of the Act were introduced by the Finance Act of 2006 with effect from 1.4.2007. The finding of the Bombay High Court in the impugned order that Sub-sections (2) and (3) of Section 14A is retrospective has been challenged by the Revenue in another appeal which is presently pending before this Court. The said question, therefore, need not and cannot be gone into. Nevertheless, irrespective of the aforesaid question, what cannot be denied is that the requirement for attracting the provisions of Section 14A(1) of the Act is proof of the fact that the expenditure sought to be disallowed/deducted had actually been incurred in earning the dividend income. Insofar as the Appellant-Assessee is concerned, the issues stand concluded in its favour in respect of the Assessment Years 1998-1999, 1999-2000 and 2001-2002. Earlier to the introduction of Sub- sections (2) and (3) of Section 14A of the Act, such a determination was required to be made by the Assessing Officer in his best judgment. In all the aforesaid assessment years referred to above it was held that the Revenue had failed to establish any nexus between the expenditure disallowed and the earning of the 4

ITA No.1133/JP/2016 DCIT Vs. M/s Om Metal Infraproject Ltd, Jaipur.

dividend income in question. In the appeals arising out of the assessments made for some of the assessment year the aforesaid question was specifically looked into from the standpoint of the requirements of the provisions of Sub-section (2) and (3) of Section 14A of the Act which had by then been brought into force. It is on such consdierqation that findings have been recorded that the expenditure in question bore no relation to the earning of the dividend income and hence the Assessee was entitled to the benefit of full exemption claimed on account of dividend income.

We are aware of the fact that strictly speaking res judicata does not apply to income tax proceedings. Again, each assessment year being a unit, what is decided in one 5

ITA No.1133/JP/2016 DCIT Vs. M/s Om Metal Infraproject Ltd, Jaipur.

year may not apply in the following year but where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent years.”

It is pertinent to note that even the Hon’ble Supreme Court in case of

Godreg and Boyee Managing Company Limited Vs. DCIT 394 ITR 449

which has been reproduced by the Hon’ble jurisdiction High Court in

assessee own case has observed that the res judicata does not apply

to income tax proceedings however, where a fundamental aspect

permeating through the different assessment years then consistency of

the position taken by the parties to be maintained. The issue of

incurring any expenditure in respect of the income not forming part of

the total income is a factual aspect has to be examined independently

in each assessment particularly when there is variation in the nature of

expenditure as well as the change in the investment made by the

assessee. We find that neither the Assessing Officer nor the ld. CIT(A)

has examined the relevant facts for adjudicating this issue of

disallowance of u/s 14A r.w.r 8D. Neither the nature of expenditure nor

the fresh investment during the year has been specifically examined

and considered by the authorities below. However, the assessee has

made a fresh investment during the year as it is apparent from the 6

ITA No.1133/JP/2016 DCIT Vs. M/s Om Metal Infraproject Ltd, Jaipur.

opening balance as on 01.04.2012 and closing balance on 31.03.2013.

Then sources of additional fund required for investment during the year

has to be examined by considering the assessee’s own interest free

fund as well as the borrowings by the assessee which could be used for

investment. Further, there is a movement in the investment portfolio of

the assessee during the year under consideration then it is necessary

that the assessee took the decision of selling as well as fresh

investment. The assessee is a company and therefore the decision of

making the investment of huge amount is taken at the highest level of

the management and thus it cannot be accepted that there is no

expenditure incurred by the assessee for earning the exempt income

from the investment made during the year. All these relevant aspects

are required to be verified and examined for the purpose of

ascertaining the fact whether the assessee has incurred the

expenditure for earning the income as well as quantum of expenditure

which can be attributable for earning the exempt income claimed by

the assessee against the taxable income. Thus the decisions of the

earlier years in assessee’s own case can be applied only on the principal

that when the assessee’s own fund is sufficient then no disallowance

can be made on account of interest expenditure u/s 14A. Similarly if the

ITA No.1133/JP/2016 DCIT Vs. M/s Om Metal Infraproject Ltd, Jaipur.

assessee has not incurred any expenditure on account of

administrative expenditure which can be allocated to the exempt

income then in the absence of finding of the AO to identify a particular

expenditure which could be allocated for earning the exempt income

no disallowance is called for. However, this principal can be applied only

when the relevant facts are brought on record and to be considered for

ascertaining the facts of incurring the expenditure in respect of earning

the exempt income. Neither the Revenue nor the assessee has filed any

material on record before us to give a conclusive finding on the

availability of the assessee’s own fund to meet the requirements of the

fresh investment made by the assessee during the year as well as the

expenditure claimed by the assessee which can be attributable to

earning the exempt income. Since, there is fresh investment during the

year to the tune of more than Rs. 14 crores, therefore, the decision for

the earlier years cannot be applied without considering the relevant

facts. Hence, in the facts and circumstances of the case and in the

interest of justice we set aside this issue to the record of the Assessing

Officer for fresh adjudication in light of the above observation. Needless

to say the assessee be given an opportunity of hearing before passing

the fresh order.

ITA No.1133/JP/2016 DCIT Vs. M/s Om Metal Infraproject Ltd, Jaipur. In the result, the appeal of the Revenue is partly allowed for statistical purposes.

Order pronounced in the open court on 16/11/2017

Sd/- Sd/- ¼Hkkxpan ½ ¼fot; iky jko½ (Bhagchand) (Vijay Pal Rao) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member

Tk;iqj@Jaipur fnukad@Dated:- 16/11/2017. *Santosh. आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. vihykFkhZ@The Appellant- The DCIT, Circle-2, Jaipur. 2. izR;FkhZ@ The Respondent- M/s Om Metal Infraproject Ltd., Om Tower, M.I. Road, Church Road, Jaipur 3. vk;dj vk;qDr@ CIT 4. vk;dj vk;qDr@ CIT(A) 5. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत. 6. xkMZ QkbZy@ Guard File {ITA No. 1133/JP/2016} vkns'kkuqlkj@ By order,

सहायक पंजीकार@Aेेज. त्महपेजतंत