DCIT, JAIPUR vs. OM METALS INFRA PROJECTS LTD., JAIPUR

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR Jh dqy Hkkjr] U;kf;d lnL; ,oa Jh foØe flag ;kno] ys[kk lnL; ds le{k BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YADAV, AM vk;dj vihy la-@ITA No. 301/JP/2016 fu/kZkj.k o"kZ@Assessment Year : 2009-10 cuke D.C.I.T, M/s Om Metals Infra Projects Ltd., Vs. Circle-2, Om Tower, Church Road, Jaipur. M.I. Road, Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAACO 8245 J vihykFkhZ@Appellant izR;FkhZ@Respondent vk;dj vihy la-@ITA No. 302/JP/2016 fu/kZkj.k o"kZ@Assessment Year : 2010-11

cuke D.C.I.T, M/s Om Metals Infra Projects Ltd., Vs. Circle-2, Om Tower, Church Road, Jaipur. M.I. Road, Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAACO 8245 J izR;k{ksid@Objector izR;FkhZ@Respondent vk;dj vihy la-@ITA No. 303/JP/2016 fu/kZkj.k o"kZ@Assessment Year : 2012-13 cuke D.C.I.T, M/s Om Metals Infra Projects Ltd., Vs. Circle-2, Om Tower, Church Road, Jaipur. M.I. Road, Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAACO 8245 J vihykFkhZ@Appellant izR;FkhZ@Respondent jktLo dh vksj ls@ Revenue by : G.R. Parik (JCIT) fu/kZkfjrh dh vksj ls@ Assessee by : Shri B.V. Maheshwari (CA) lquokbZ dh rkjh[k@ Date of Hearing : 19/01/2017

ITA No.301, 302 & 303/JP/2016 2 D.C.I.T Vs. Om Metals Infra Projects Ltd. mn?kks"k.kk dh rkjh[k@ Date of Pronouncement : 24/01/2017 vkns'k@ ORDER

PER: VIKRAM SINGH YADAV, A.M.

These are three appeals filed by the Revenue against the orders of

Ld. CIT(A)-1, Jaipur of even date 04/01/2016 for A.Y. 2009-10, 2010-11

& 2012-13 respectively. Since common issues are involved, all the

appeals were heard together and disposed off by this common order.

The grounds of appeal taken by the revenue are as under:-

Grounds of revenue’s appeal in ITA No. 301/JP/2016.

“(1) Whether on the facts and in the circumstances of the case and in law the ld. CIT(A) has erred in deleting the disallowance of Rs.1,44,82,686/- made by AO under the provisions of section 14A r.w. rule 8D of the I.T. Rules.” “(2) Whether on the facts and in the circumstances of the case and in law the ld. CIT(A) has erred in deleting the disallowance of Rs.2,71,194/- made by the AO on delayed payment of employee contribution of ESI and PF.” Grounds of revenue’s appeal in ITA No. 302/JP/2016. “(1) Whether on the facts and in the circumstances of the case and in law the ld. CIT(A) has erred in deleting the disallowance of Rs.1,44,207/- made by AO on delayed payment of employee contribution of ESI and PF.” “(2) Whether on the facts and in the circumstances of the case in law the ld. CIT (A) has erred in deleting the disallowance of Rs.39,80,602/- made by the AO under the provisions of section 14A r.w. rule 8D of the I.T. Rules.”

ITA No.301, 302 & 303/JP/2016 3 D.C.I.T Vs. Om Metals Infra Projects Ltd.

Grounds of revenue’s appeal in ITA No. 303/JP/2016.

“(1.) Whether on the facts and in the circumstances of the case in law the ld. CIT(A) has erred in deleting the addition made by way of disallowing deduction u/s 801A(4) of the Act.” “(2.) Whether on the facts and in the circumstances of the case and in law the ld. CIT(A) has erred in deleting the disallowance of Rs.5,35,708/- made by the AO on delayed payment of employee contribution of ESI and PF.” “(3). Whether on the facts and in the circumstances of the case and in law the ld. CIT(A) has erred in deleting the disallowance of Rs.2,53,22,418/- made by the AO under the provisions of section 14A r.w. rule 8D of the I.T. Rules.”

covered in favour of the assessee by the assessee’s own cases passed

by the Coordinate Bench in the earlier years. The ld. DR relied on the

order of the Assessing Officer and submitted that though the issues are

covered in favour of the assessee by the decisions of the Coordinate

Bench in respect of earlier years, at the same time, the department is in

further appeal against the said orders. On query from the Bench, it was

submitted that no stay has been granted by the Hon’ble Rajasthan High

Court against the said earlier orders passed by the coordinate benches in

ITA No.301, 302 & 303/JP/2016 4 D.C.I.T Vs. Om Metals Infra Projects Ltd.

assessee’s own case against which the department has filed further

appeals before the Hon’ble Rajasthan High Court.

Act, the ground which is common in all the three years, the Coordinate

bench in ITA No.230/JP/2015 & 916/JP/2014 dated 4.02.2016 has

decided the matter in favour of the assessee. The relevant findings are

contained as under:-

5.1 We have heard the rival contentions, judicial pronouncements and material available on record. Following facts clearly emerge from the record:-

(i) It is admitted by ld. AO himself that the investments in assets from which exempt income is earned i.e. JV equity and mutual funds were made by the assessee out of its own capital and reserves.

(ii) Assessee’s explanation that in AY 2008-09, interest expenditure amounting to rs.3,26,05,191/- was incurred as under:-

(a) Term loan used for particular assets Rs.2,35,26,803/- (b) Working capital used for business Rs. 90,78,388/- Rs.3,26,05,191/-

(iii) Ld. AO invoked sub-rule (2) without demonstrating why the assessee’s explanation was unreasonable and unsatisfactory. On one hand, it is admitted that impugned

ITA No.301, 302 & 303/JP/2016 5 D.C.I.T Vs. Om Metals Infra Projects Ltd.

investments are not out of borrowed funds and they were out of assessee’s own resources. On the other hand, a self contradictory stand is adopted by AO in the guise of mechanical rule and these interest free own funds are included as borrowed funds. This is impermissible and clearly manifests a self contradictory approach.

(iv) Ld. AO has failed to correlate proximity of any nexus between the exempt income with expenditure incurred in this behalf by an objective analysis and cogent reasons. Since there is no correlation no basis exists for method of any apportionment of expenses, as held by Supreme Court in Walfort case (supra).

(v) Apropos administrative or other expenses there is even no whisper from ld. AO that assessee had to incur any such expenditure for investment in JV or acquisition of mutual funds.

(vi) Hon’ble Delhi High Court in Taikisha (supra) held that to proceed further for disallowance u/s 14A r.w. rule 8D the determination amount is derived after examination of the accounts and rejection if assessee’s claim or explanation. We find that ld. AO rather accepts that the impugned investments in JV equity and mutual funds is out of own funds of assessee, nevertheless AO proceeds for disallowance in this behalf. The second aspect is there appears to be non scrutiny of the relevant aspects and propositions of the ld. AO.

(vii) Ld. CIT(A) has considered the issues, relevant facts, assessee’s explanation and judicial precedents in right perspectives and by detailed findings dislodged the AO’s observations and findings. The orders of ld. CIT(A) suffer from no inconsistency and deserve to be upheld.

ITA No.301, 302 & 303/JP/2016 6 D.C.I.T Vs. Om Metals Infra Projects Ltd.

5.2 In view of the facts, circumstances, contentions and our observations mentioned above & respectfully following the judgments in the case of Taikisha, Joint Investments, Regent Automobiles and Hon’ble Supreme Court in the case of Walfort shares and stock brokers (supra) we find no inconsistency or infirmity in the impugned orders passed by ld. CIT(A), which are upheld.”

towards ESI & PF, the ground which is common in all the three years,

the Coordinate Bench in decision referred (supra) has held as under:-

“4.1 Apropos the second ground raised in AY 2011-12 in respect of contribution of Employees PF, it is not disputed that the payments are made by the assessee within the due date prescribed for filing the return. The issue in question is squarely covered by Hon’ble Rajasthan High Court judgment in the case of CIT V. SBBJ (2014) 263 ITR 17, which has been relied by ld. CIT(A). Respectfully following Hon’ble Rajasthan High Court judgment this ground is dismissed.”

ITA No.301, 302 & 303/JP/2016 7 D.C.I.T Vs. Om Metals Infra Projects Ltd.

“19.1 In view of all these facts and circumstances and in view of the various judicial pronouncements discussed above, we are of the considered view that assessee is a developer and eligible for deduction under Section 80IA(4) even after Explanation added in Section 80IA(4) by Finance Act, 2007 and amended by Finance Act, 2009 with retrospective effect from 1.4.2000. Accordingly we allow this ground of the assessee and direct the department to allow the deduction under Section 80IA(4) to the assessee.”

material available on record including the orders passed by the

Coordinate Benches in earlier years. Admittedly, there are no changes in

the facts and circumstances of the case nor is there any change in the

legal position. No contrary authority has been brought to the notice of

the Bench other than what have been considered by the Coordinate

Benches in earlier years. Further, the decisions of the Coordinate

Benches against which the Revenue is in further appeal before the

Hon’ble Rajasthan High Court has not been stayed by the Hon’ble

Rajasthan High Court. Hence, we see no reason to deviate from the

decision taken by the Coordinate Benches in earlier years which has

been passed after taking into consideration the detail arguments of both

the parties as well as legal pronouncements available on the subject.

ITA No.301, 302 & 303/JP/2016 8 D.C.I.T Vs. Om Metals Infra Projects Ltd. 7. In the result, all the grounds taken by the Revenue in all the three years are dismissed. Hence, the appeal filed by the Revenue for all the three years are dismissed.

Order pronounced in the open court on 24/01/2017.

Sd/- Sd/- ¼dqy Hkkjr ½ ¼foØe flag ;kno½ (Kul Bharat) (Vikram Singh Yadav) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 24/01/2017. *Sanjeev*. आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. vihykFkhZ@The Appellant- The D.C.I.T, Circle-2, Jaipur. 2. izR;FkhZ@ The Respondent- M/s Om Metals Infra Projects. Ltd., Om Tower, Church Road, M.I. 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.301, 302 & 303/JP/2016}

vkns'kkuqlkj@ By order,

सहायक पंजीकार@Aेेज. त्महपेजतंत