ASST CIT (OSD) 8(3), MUMBAI vs. TIME TECHNOPLAST LTD, MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL “E” BENCH, MUMBAI BEFORE SHRI RAJENDRA, AM AND SHRI AMARJIT SINGH, JM आयकर अपील सं/ I.T.A. No. 7045/Mum/2014 (निर्धारण वर्ा / Assessment Year: 2010-11) M/s. Time Technoplast Ltd. बिधम/ ACIT, Range-8(3) 102, Todi Complex, 35 Saki Vs. Mumbai Vihar Road, Andheri (E), Mumbai-400072 आयकर अपील सं/ I.T.A. No.7008/Mum/2014 (निर्धारण वर्ा / Assessment Year: 2010-11) ACIT, Range-8(3) बिधम/ M/s. Time Technoplast Ltd. 102, Todi Complex, 35 Saki Vs. Mumbai Vihar Road, Andheri (E), Mumbai-400072 स्थायी लेखा सं./जीआइआर सं./PAN/GIR No. : AAACT2783J (अपीलाथी /Appellant) (प्रत्यथी / Respondent) .. Revenue by: Shri V. Justin (DR) Assessee by: Shri Rakesh Joshi सुनवाई की तारीख / Date of Hearing: 05.10.2017 घोषणा की तारीख /Date of Pronouncement: 02. 01.2018 आदेश / O R D E R PER AMARJIT SINGH, JM: The assessee as well as revenue have filed the above mentioned appeals against the order dated 24.09.2014 passed by the Commissioner of Income Tax (Appeals)-18, Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the A.Y.2010-11.

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ITA. No. 7045/Mum/2014:- 2. The assessee has filed the present appeal against the order dated 24.09.2014 passed by the Commissioner of Income Tax (Appeals)-18, Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the A.Y.2010-11. 3. The assessee has raised the following grounds:- “1. On the fact and circumstances of the case as well as in law, the Ld. CIT(A) has erred in confirming the action of Assessing Officer in disallowing the claim of depreciation by Rs.9,03,914/- without considering the facts & circumstances of the case. 2. The appellant craves leave to add, amend, alter or delete the said ground of appeal.” 4. The brief facts of the case are that the assessee filed its return of income on 08.10.2010 declaring total income to the tune of Rs.24,57,70,037/- after claiming deduction u/s 80-IB (3) of the Act to the tune of Rs.37,31,88,591/-. The return of income was duly processed u/s 143(1) of the I.T. Act 1961 on 04.05.2011. The case was selected for scrutiny and notice u/s 143(2) of the I.T. Act, 1961 was issued on 25.08.2011 which was duly served upon the assessee. Notice u/s 142(1) of the I.T. Act, 1961 was issued to the assessee company on 17.01.2012 & 21.08.2012 which were also served upon the assessee. The assessee claimed the depreciation to the tune of Rs.42,52,38,130/- in respect of with its Daman II Unit and Baddi I Unit. After taking into consideration the depreciation actually

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allowed to the assessee for the A.Ys. 2002-03, 2003-04, 2004-05, 2006-07 and the resultant WDV of the asset as on 01.04.2009 as per the assessment orders for 2006-07, 2007-08, 2008-09, 2009-10 was taken into consideration and the depreciation in connection with the Daman II Unit was found excess to the tune of Rs.3,84,772/- which was disallowed and the depreciation in respect to the Baddi I Unit was found excess of Rs.519,142/-. The total depreciation in excess work out to the tune of Rs.9,03,914/-. The working has been given in para no. 4 of the assessment order which is hereby reproduced below as under:-

Working for Daman II Unit Particulars WDV as on Additions Additions Depreciation Net WDV as 01.04.09 More than less than on 180 days 180 days 31.03.2010 Land 57,43,549 295146 3800 - 6042495 Factory 3777577041 395377 966698 87873 38851243 Building Plant and - Machinery Dies & 32502187 16556806 11771 4785380 11171772 Moulds Plant & 327900089 4813328 61312251 61599322 332426346 Machinery Furniture 1901866 709367 312710 276759 2647184

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Office 541224 857456 117513 218615 1297578 Equipment Computer 1106643 387240 2996250 1795205 2694928 Vehicles 4156054 72849 628872 3600031 Total 411428654 9098892 65793842 69392026 398731577

Working of Depreciation for Baddi I Unit Particulars WDV as on Additions Additions Depreciation Net WDV as 01.04.09 More than less than on 180 days 180 days 31.03.2010 Land 1089469 - - - 1089469 Factory 5160130 - - - 5160130 Building Plant and - - - Machinery Dies & 358253 - - 107476 250777 Moulds Plant & 19990093 - - 2998514 16991579 Machinery Furniture 762422 - - 76242 686180 Office 72099 - - 10815 61284 Equipment Computer 186970 - - 112181 74789 Vehicles - - - - - Total 27619435 - - 3305228 24314208 In view of the above discussion, depreciation of Rs.7,26,97,254/- is hereby allowed as against the assessee’s claim of

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Rs.7,36,01,167/-. Penalty proceedings u/s 271(1)(c) of the I.T. Act, 1961 are hereby initiated for furnishing inaccurate particulars of income/concealment of income. 5. The assessee has shown opening balance of investment to the tune of Rs.1,29,56,22,141/- and closing balance of investment to the tune of Rs.1,49,39,20,326/-. Therefore, the provision of u/s 14A r.w. Rule 8D of the I.T. Rule, 1962 was applied and the expenditure to incur the exempt income was assessed to the tune of Rs.1,93,04,966/-. The total income of the assessee was assessed to the tune of Rs.27,64,60,250/-. The assessee filed an appeal before the CIT(A) who rejected the claim of the Assessee. Therefore, the assessee has filed the present appeal before us. ISSUE NO.1:- 4. Under this issue the assessee has challenged the confirmation of the action of AO in disallowing the claim of depreciation to the tune of Rs.9,03,914/-. However, at the time of arguments, the Ld. Representative of the assessee has admitted that this issue has decided against the assessee in view of the order passed in the assessee’s own case for the A.Y.2007-08 & 2008-09 in ITA. No.8126/M/2010 and 7576/M/2011 dated 02.01.2014. The Hon’ble ITAT Mumbai has decided the matter of controversy on the basis of finding of the decision of the jurisdictional High Court in the case of Plastblends

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India Limited Vs. CIT in appeal No. 1282 of 2007. The relevant finding of para no. 4 is hereby reproduced below as under:-

“4. The ld. Representative of the assessee has been fair enough to admit that the issue, so far the legal position as on today is concerned, is squarely covered by the decision of the Hon’ble Mumbai High Court in the case of Plastblends India Limited Vs. CIT 318 ITR 352(supra) wherein the Hon’ble High Court has held as under: “For all the aforesaid reasons, we hold that the quantum of deduction under section 80-IA is not dependent upon the assessee claiming or not claiming depreciation, because, under section 80-IA the quantum of deduction has to be determined by computing total income from business after deducting all deductions allowable under sections 30 to 43D of the Act. In the result, we answer the question referred to us set out at para 1 above in the affirmative, that is, for the purposes of deduction under Chapter VI-A, the gross total income has to be computed, inter alia, by deducting the deductions allowable under sections 30 to 43D of the Act, including depreciation allowable under section 32 of the Act, even though the assessee has computed the total income under Chapter IV by disclaiming the current depreciation.” This issue is accordingly decided against the assessee and the findings of the CIT(A) on this issue are hereby upheld.” 6. In view of the said decision, we decide this issue in favour of the revenue against the assessee.

ISSUE NO.2 & Additional ground:-

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of law settled in HDFC Bank Ltd. Vs. DCIT (2016) 383 ITR 529 (Bom). The application of fund in the investment is to the tune of Rs.1,49,39,20,326/-. The assessee fund is more than the investment. The case of the assessee is clearly falls within the purview of HDFC Bank Ltd. Vs. DCIT (2016) 383 ITR 529 (Bom). Therefore, in the said circumstances, we set aside the finding of the CIT(A) in question and restored the issue before the AO to decide the matter afresh in view of the decision of the case HDFC Bank Ltd. Vs. DCIT (2016) 383 ITR 529 (Bom). Accordingly, this issue is decided in favour of the assessee against the revenue for statistical purpose.

ITA. No. 7008/Mum/2014:- 6. The revenue has filed the present appeal against the order dated 24.09.2014 passed by the Commissioner of Income Tax (Appeals)-18, Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the A.Y.2010-11.

"Whether on the facts and in the circumstances of the case and in law, the Ld-CIT(A) erred in directing to re-compute the disallowance u/s 14A r.w. Rule 8C by adopting the figure of interest at Rs.8,26,59,276/- in place of Rs. 13,60,17,24 holding that the total interest expenses include the interest of Rs.5,33,57,973/ which was allocated for computing deduction u/s 80IA / 8OIC of the Act placing reliance on ITAT's orders in assessee's own case for AYs 2GG7-QB and 2009-10?" "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in holding that the total interest expenses

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includes the interest of Rs.5,33,57,973/- ignoring that in the order for AYs 2007-08 & 2009-10, the Hon'ble ITAT had confirmed the finding of CIT(A) who had allowed relief after causing verification of the actual utilization of borrowed funds through Assessing Officer vide remand proceedings whereas in the AY 2010-11, the CIT(A) has neither caused any verification nor has provided any opportunity to the Assessing Officer to verify the same?1' "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of R$, 1,04,81,3307- made on account of mismatch of AIR information without appreciating that he had admitted and relit upon fresh evidences which were submitted only during the course of appellate proceedings, without providing an opportunity to the Assessing Officer to examine them and to offer comments thereon?'1 "The appellant prays that the order of the CIT (A) on the above grounds set aside and that of the A*0, be restored." "The appellant craves leave to amend or alter any grounds or add a new ground which may be necessary." 8. The brief facts of the present case are quite similar to the facts of the case as narrated above in ITA. No. 7045/M/2014, therefore, there is no need to repeat the same. However, the figure is different.

ISSUE NO.1 & 2:-

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matter afresh in the light of the case HDFC Bank Ltd. Vs. DCIT (2016) 383 ITR 529 (Bom). However, while deciding these issues the CIT(A) has directed the AO to decide the matter afresh excluding the interest upon the funds allocated u/s 81A of the Act. The said interest was allocated to other taxable income, therefore, the same cannot be considered against the purpose of disallowance u/s 14A. This issue has been decided by CIT(A) on the basis of decision of Pilani Investment (35 CCH 141). In the light of this fact that the matter of controversy has already been remanded before the AO to decide the matter of afresh in the light of law settled in case HDFC Bank Ltd. Vs. DCIT (2016) 383 ITR 529 (Bom). Therefore, accordingly, these issues are decided in favour of the assessee on similar lines. Accordingly, these issues are decided in favour of the assessee against the revenue.

ISSUE NO.3:- 10. Under this issue the revenue has challenged the deletion of addition of Rs.1,0481,330/- made on account of mismatch of AIR information. Before going further, it is necessary to advert the finding of the CIT(A) on record:- “In this regard the appellant submit that it had already offered she said income during the year under consideration We are enclosing herewith the copy of the ledger account of the party reflecting the interest income offered for the year under consideration Hence in vi &w of this amount already disclosed by

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the appellant you are kindly requested to please delete the addition made by the Learned Assessing Officer. During the course of assessment proceedings, (he A.Q. asked for details of interest received from banks on FOR kept as margin money. The appellant submitted details of interest received from bank of Rs. 72J9,039/- and submitted that interest income received to the appellant has been netted off with the interest payment The A O. based on this reply assumed that interest from other parties not offered by She appellant in the return of income accordingly he has added interest received of Rs.1,04,81,330/- from outside parties The A O has arrived at this conclusion without verification of the details of interest paid/received submitted by the appellant Before your honour we reiterate this facts and submit that the appellant has offered entire amount has been receipt of Rs.1,94,65,300/- it the returned income and this entire amount has been netted off with the interest paid, Mads of which a/one; with party ledger already submitted before your honour vide our submission given on 15.09.2014, summary of which is as under:- 1 Interest on term loan 9,32,94,247 2 Interest paid on cc/od 15,54,82,549 a/c to banks 3 Bank commission and 1,21,09,238 charges Total interest paid 26,08,86,034 Less: Interest received on FDR from banks 1 Interest received on 72,79,039 FDR from banks 2 Interest received from 1,04,81,330 outside parties 3 Interest received from 17,04,931 1,94,65,300

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associate concern Net finance cost debited 24,14,20,734 to P&L A/c. Break-up of interest received from banks, outside partieis & associate concern are as under:- A Interest received on FDR from banks 1 Axis bank 337309 2 City bank 1175069 3 Ing Vysya bank ltd. 23646789 4 Bank of Baroda 2239563 5 State bank of India 321645 6 State bank of India 810845 72,79,039 B Interest received from outside parties 1 Sai Jyoti Logistics 514501 Services P. Ltd. 2 Scholler Arca Time 931293 Material Handling Solutions Ltd. 3 Standard Charted Invt 8975331 and Loans India Ltd. 4 Others 60205 1,04,84,330 C Interest received from associate concern 11 Time Masser Industries 1704931 17,04,931

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P. Ltd. Total 1,94,65,300 Thus, it will be clear that the appellant has offered entire interest received in its income and the addition made by the AO is double addition. 4.3. I have considered the submissions of the appellant, order of the A.O. and facts of (he case carefully, it is noticed that as per the AIR information, the assesses has received interest other than interest on securities amounting to Rs, 1,97,60,368/~ The A O has asked the assesses to reconcile this figure with the return of income in response to this. the AR of the appellant has submitted that (he amount of interest received at Rs. 72,79,033/-, thus, the A.G. has added back the balance amount of Rs. 1.04,81,330/-. On the other hand, the AR of the appellant has submitted that the details of interest received from the bank of Rs. 72,79,03s/- was interest income received by the appellant which was netted off with the interest payment. The A.O. has assumed that interest from other parties was not offered by the appellant in the return of income and added back to the interest received of Rs. 1,04,81,330/- . The appellant has offered entire interest received of Rs 1,94- 65,300/-- in the returned income and this entire amount has been netted off with the interest paid. Since the total interest received has already been shown as income, then. There is no question of disallowing any amount and the addition made by the A O. is taxing the same amount twice. From the perusal of the submissions and facts of the case, it is noticed that the AR of the appellant has submitted complete details of interest received from banks on FOR and interest received from outside parties and also interest received from associate concerns along with the copy of audited accounts and annexures. From the perusal of the same. It is noticed that the contention of the appellant is correct that the whole amount of Rs.1,97,60,368/- is declared by the appellant as taxable income. Since it is a mistake apparent from the record, therefore, the addition made by the AO is deleted. Ground of appeal is allowed.”

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Order pronounced in the open court on 02.01.2018.

Sd/- Sd/- (RAJENDRA) (AMARJIT SINGH) लेखा सदस्य / ACCOUNTANT MEMBER न्यधनिक सदस्य/JUDICIAL MEMBER मुंबई Mumbai ददनांक Dated : 02.01. 2018 Vijay आदेश की प्रनिनिनि अग्रेनर्ि/Copy of the Order forwarded to : 1. अपीलाथी / The Appellant 2. प्रत्यथी / The Respondent. आयकर आयुक्त(अपील) / The CIT(A)- 3. 4. आयकर आयुक्त / CIT 5. दवभागीय प्रदतदनदि, आयकर अपीलीय अदिकरण, मुंबई / DR, ITAT, Mumbai 6. गार्ड फाईल / Guard file. आदेशधिुसधर/ BY ORDER, सत्यादपत प्रदत //True Copy// उि/सहधिक िंजीकधर /(Dy./Asstt. Registrar) आिकर अिीिीि अनर्करण, मुंबई / ITAT, Mumbai

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