DCIT, CENTRAL CIRCLE-2(1), AAYKAR BHAVAN vs. CHIRIPAL INDUSTRIES LIMITED, AHMEDABAD

Brief facts of the case is that the assessee is a Company engaged in the business of manufacturing and processing of textile products. For the Asst. Year 2017-18, assessee filed its Return of Income on 06-11-2017 claiming a loss of Rs. 12,24,01,961/- and book profit u/s. 115JB of the Act of Rs.40,62,81,000/-. The return was taken for limited scrutiny and assessment made disallowing u/s. 80IA of Rs. 4,82,07,712/- and disallowance u/s. 14A r.w. Rule 8D of Rs.60,46,187/-.

Aggrieved against the assessment order, assessee filed an appeal before Ld. CIT(A) who deleted the addition following decision of this Tribunal in assessee’s own case relating to the earlier Asst. Year 2016-17 in ITA No. 292/Ahd/2020 vide order dated 15-07-2022. 3.1. Regarding the second addition namely disallowance u/s. 14A, the Ld. CIT(A) directed to make the disallowance to the extent of dividend income of Rs.670/- received by the assessee and the balance disallowance of Rs.60,46,042/- were directed to be deleted.

Aggrieved against the appellate order, the Revenue is in appeal before us raising the following Grounds of Appeal:

Whether on the facts and in the circumstances of the case the Ld. CIT(A) has erred in law and/or on facts in restricting the disallowance made under section 14A of the I.T. Act of Rs. 60,46,042/- to Rs. 670/-?

. Ld. Sr. D.R. appearing for the Revenue supported the order passed by the assessing officer and pleaded to confirm the disallowances.

Per contra Ld. Senior Counsel Shri S.N. Soparkar appearing for the assessee submitted that the disallowance u/s. 80IA of the Act made by the assessing officer was deleted by Ld. CIT(A) following the order passed by this Tribunal relating to Asst. Year 2014-15 in ITA No. 2582/Ahd/2017 and relating to Asst. Year 2016-17 in ITA No. 292/Ahd/2020 and drawn our attention to the relevant paragraph.

We have given our thoughtful consideration and perused the materials available on record and the case laws relied by the assessee. The facts of the case is that the assessee was carrying on the business of manufacturing and trading of yarn, fabrics and garments. The AO noted that the assessee has claimed deduction of Rs.4,82,07,712/- u/s 80IA of the Act. The assessee had shown activity of power generation and has shown plant and machinery used for such activity at Rs.7,66,75,468/-. The A.O. noted that the power plant was originally installed by the erstwhile concern M/s Shanti Processor Ltd and belonged to period prior to 01.04.2005. I.T.A No. 883/Ahd/2023 & C.O. No. 4-Ahd-2024 A.Y. 2017-18 Page No DCIT Vs. Chiripal Industries Ltd.

1. Before the CIT(A), the assessee submitted that M/s Shanti Processor Ltd was merged with the assessee company with effect from 01.04.2005 and the assessee company fulfilled all the conditions necessary for claiming deduction u/s 80IA of the Act. It had also brought to his notice that the CIT(A) had allowed the claim in the previous assessment years, wherein similar disallowance on same reasoning was made by the AO. It is also seen that the AO had rejected the contention of the assessee by following precedence in earlier years.

Whereas Co-ordinate Bench of this Tribunal in assessee’s own case for the Asst. Year 2014-15 followed the earlier years’ order namely Asst. Years 2010-11 to 2012-13 by observing as follows: 4. During the course of appellate proceedings before us, the ld. counsel at the outset brought to our notice that identical issue on similar facts in the case of assessee itself was decided by the Co-ordinate Bench of the ITAT vide ITA No. 900/Ahd/2016 and ITA No. 1547/Ahd/2016 for the assessment year 2010-11 to 2012-13. The ld. departmental representative could not controvert the same and nothing has brought to our notice suggesting that the decision of Hon’ble ITAT is not applicable. With the assistance of Ld. representatives, we have gone through the aforesaid decision of the Coordinate Bench of the ITAT. Relevant part of the decision is reproduced as under:-