CENTURY ENKA LIMITED,PUNE vs. DCIT, CIRCLE-6(1), KOLKATA, KOLKATA

The assessee’s first substantive ground challenges correctness of both the lower authorities action invoking sec. 14A r.w.s. Rule 8D disallowance of ₹6,31,301/- in relation to its exempt income of Century Enka Ltd. Vs. DCIT, Cir-6(1) Kol. Page 2 ₹16,44,994/-. We find that the Assessing Officer had arrived at the impugned disallowance under Rule 8D(2)(ii) in respect of proportionate interest expenditure as affirmed in the lower appellate proceedings. It emerges from the case file that assessee’s own funds / shareholders funds comprising of share capital as well reserved and surplus read figures of ₹653.83 crores as against therefore investment of ₹3.19 crores. It has attached its financial statements’ extracts relevant to the impugned assessment year as annexure A-3 during the course of hearing. The Revenue fails to dispute correctness thereof. Coupled with this, we find that this tribunal co-ordinate bench’s decision in assessee’s own case decided on 18.05.2016 holds that the relevant presumption in such an instance is that of utilization of non- interest bearing fund is taxpayer’s investment only as per hon'ble Bombay high court’s landmark decision in CIT vs. Reliance Utilities & Power Ltd. 313 ITR 340 (Bom). We therefore adopt judicial consistency to delete the impugned disallowance of ₹6,31,301/-. The assessee succeeds in its first substantive ground.

Next comes assessee’s second substantive ground that the above sec. 14A disallowance ought not to have been included in MAT computation under sec.115JB of the Act. The same is rendered infructuous as the very foundation of the sec. 14A r.w.s 8D disallowance no more survives as per our foregoing discussion. The assessee succeeds in its instant second substantive ground as well.

This leaves us with assessee’s third and last grievance seeking additional MAT credit of ₹2,27,793/- pertaining to assessment year 2012-13 as against MAT credit of ₹1,13,591/- only allowed in assessment order. Both the learned representatives are unanimous that Century Enka Ltd. Vs. DCIT, Cir-6(1) Kol. Page 3 this last issue requires factual verification at the Assessing Officer’s end. We therefore restore assessee’s instant grievance to the Assessing Officer for factual verification as per law.