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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 8TH DAY OF OCTOBER 2020
PRESENT
THE HON’BLE MR. JUSTICE ALOK ARADHE
AND
THE HON’BLE MR. JUSTICE H.T.NARENDRA PRASAD
I.T.A. NO.450 OF 2013 BETWEEN:
THE COMMISSIONER OF INCOME-TAX
C.R. BUILDING, QUEENS ROAD
BANGALORE.
THE ASSISTANT COMMISSIONER OF INCOME-TAX
CIRCLE-11(5), RASHTROTHANA BHAVAN
NRUPATHUNGA ROAD, BANGALORE. ... APPELLANTS (BY Mr. K.V. ARAVIND, ADV.,)
AND:
M/S. JUNDAL ALUMINIUM LIMITED JINDAL NAGAR, TUMKUR ROAD BANGALORE-560073. ... RESPONDENT (BY Ms. JINEETHA CHATERJEE, ADV., FOR Mr. S. PARTHASARATHI, ADV.,) - - -
THIS ITA IS FILED UNDER SECTION 260-A OF I.T. ACT, 1961 ARISING OUT OF ORDER DATED 30.04.2013 PASSED IN ITA NO.799/BANG/2012, FOR THE ASSESSMENT YEAR 2008-09, PRAYING THAT THIS HON’BLE COURT MAY BE PLEASED TO: (I) FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN.
(II) ALLOW THE APPEAL AND SET ASIDE THE ORDER PASSED BY THE ITAT, BANGALORE IN ITA NO.799/BANG/2012 DATED 30.4.2013 CONFIRMING THE ORDER OF THE APPELLATE COMMISSIONER AND CONFIRM THE ORDER PASSED BY THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-11(5), BANGALORE.
THIS ITA COMING ON FOR HEARING, THIS DAY, ALOK ARADHE J., DELIVERED THE FOLLOWING:
JUDGMENT
This appeal under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as the Act for short) has been preferred by the revenue. The subject matter of the appeal pertains to the Assessment year 2008-09. The appeal was admitted by a bench of this Court vide order dated 14.03.2014 on the following substantial questions of law: (i) Whether on the facts and in the circumstances and in law the appellate authorities were correct in holding that only the profit making power generating unit of the assessee should be taken into account and not the loss making units in computing the total income of the assessee for its eligible business to allow deduction under Section 80IA of the Act?
(ii) Whether on the facts and in eth circumstances an din law the appellate authorities were correct in holding that the deduction under Section 80IA windmiss wise instead of eligible business wise, contrary to the provision of section 80IA(1) and 80IA(5) and without taking in account the fact that generation of energy is one undertaking / enterprise and eth windmills are units of the same undertaking/enterprise?
(iii) Whether on the facts and in the circumstances and in law the Tribunal was correct in holding that the Assessing Officer has not satisfied himself in invoking Section 14A of the Act without properly appreciating the fact that, the Assessing Officer has clearly held that company had availed working capital loan in the earlier years which continued in the current year and therefore was correct in disallowance under Section 14A of the Act?
Facts leading to filing of the appeal briefly stated are that the assessee is a company engaged in the business of manufacture and sale of aluminum extrusions and generation of wind energy. The assessee filed its return of income on 25.09.2008 for the Assessment Year 2008-09 which was assessed under Section 143(3) of the Act on a total income of Rs.69,30,00,030/-. The Assessing Officer by an order dated 01.10.2010 disallowed the claim of the assessee under Section 80IA and Section 14A of the Act. Being aggrieved, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) who by an order dated 30.03.2012 inter alia held that deduction under Section 80IA of the Act has to be granted only on profit making unit. The Commissioner of Income Tax (Appeals) restricted the claim of the disallowance under Section 14A of the Act to Rs.14,40,471/- as against Rs.45,01,582/-. Thus, the appeal preferred by the assessee was partly allowed. Being aggrieved, the
assessee as well as the revenue filed the appeals before the Income Tax Appellate Tribunal (hereinafter referred to as 'the Tribunal' for short), which were decided by a common order dated 30.04.2013. The Tribunal dismissed the appeal of the revenue and remitted the claim of the assessee for disallowance under Section 14A of the Act in respect of Rs.14,40,470/- to the Assessing Officer. In the aforesaid factual background, the revenue is in appeal before us.
Learned counsel for the revenue submitted that Section 80IA(1) of the Act is applicable to eligible business and all profit making and loss making units have to be aggregated and then deduction under Section 80IA has to be computed. It is contended that Section 80IA(5) is in respect of eligible business and not in respect of each unit. It was also pointed out that this court in I.T.A.No.377/2012 vide decision dated 07.09.2020 has permitted aggregation and set off under Section 70 of the Act. It is also pointed out that
amendment to Section 14A(2) read with Rule 8D of the Rules is applicable with effect from Assessment Year 2008-09 as has been held by the Supreme Court as well as by this court. It is also argued that Assessing Officer has recorded reasons / satisfaction regarding incorrectness of claim of expenditure of the assessee under Section 14A of the Act and therefore, the mandate contained in the decision in ‘GODREJ & BOYCE MFG. CO. LTD. VS. DEPUTY COMMISSIONER OF INCOME-TAX, RANGE 10(2), MUMBAI’, (2010) 328 ITR 81 stands satisfied. Alternatively it is submitted that even if the Tribunal was of the opinion that the satisfaction as required under Section 14A of the Act has not been complied with as held by Bombay High Court in Godrej & Boyce Mfg. Co. Ltd., supra, the matter ought to have been remitted to the Assessing Officer as was done by Bombay High Court in para 73 of its decision. Alternatively it is submitted that the judgment rendered in Godrej & Boyce Mfg. Co. Ltd.,
supra is not applicable as in the aforesaid decision, Bombay High Court dealt with Assessment Year 2002-03 i.e., the legal position as it existed prior to amendment to Section 14A(2) of the Act and therefore, in any case, the aforesaid decision is not applicable to the facts of the case. It is also submitted that the object of introduction of Section 14A which has been dealt by Supreme Court in ‘COMMISSIONER OF INCOME-TAX, MUMBAI VS. WALFORT SHARE & STOCK BROKERS (P.) LTD.’, 326 ITR 1 has not been taken into account by the Tribunal. It is also urged that the Tribunal grossly erred in considering the surplus as on 01.04.2007 and recording a finding that investment is out of surplus and without taking into consideration the fact that investment was made by the assessee much prior to 01.04.2007.
On the other hand, learned counsel for the assessee has invited the attention of this court to order dated 14.03.2014 by which appeal was admitted by a
bench of this court. It is further submitted that substantial questions of law Nos.1 and 2 are identical to the substantial questions of law, which were involved in I.T.A.No.23/2013 and the aforesaid appeal which was preferred by the revenue has been dismissed by a bench of this court vide order dated 19.03.2020. In this connection, reliance has also been placed on decisions of this court in ‘COMMISSIONER OF INCOME TAX VS. SWARNAGIRI WIRE INSULATIONS (P.) LTD’, (2013) 213 TAXMAN 218 and decision in ‘COMMISSIONER OF INCOME TAX AND ANOTHER VS. MICROLABS LTD.’, (2016) 383 ITR 490 (KARN). It is also urged that there is no question of making any disallowance of expenditure under Section 14A as the assessee was already having it sown surplus fund and the Commissioner of Income Tax (Appeals) as well as the Tribunal have allowed the claim under Section 14A of the Act to the extent of Rs.26,61,011/- only after being satisfied that the aforesaid amount was
invested from the assessee’s owned capital and the Tribunal has remitted the matter to the Assessing Officer to examine the claim under Section 14A of the Act in respect of Rs.14,40,471/-. In support of aforesaid submissions, reliance has been placed on decision of Supreme Court in ‘PR. COMMISSIONER OF INCOME TAX-IV VS. SINTEX INDUSTRIES LIMITED’, (2018) 255 TAXMAN 0177 (SC), and ‘MAXOPP INVESTMENT LTD VS. COMMISSIONER OF INCOME TAX, NEW DELHI, CIVIL APPEAL NOS.104-109 OF 2015.
We have considered the submissions made by learned counsel for the parties and have perused the record. The order dated 14.03.2014 by which the appeal was admitted reads as under: Mr.K.V.ARavind, learned counsel for the revenue submits that the substantial questions of law raised in the present appeal and in I.T.A.No.23/2013 are identical. He submits that I.T.A.No.23/2013 has already
been admitted by this court. The assessee in both the appeals is same. Hence, we admit this appeal to consider the substantial questions of law as raised in the memorandum of appeal.
I.T.A.No.23/2013 was decided by this court vide order dated 19.03.2020, which reads as under: Mr.K.V.Aravind, learned counsel for the revenue. Smt.Jinitha Chatterjee, learned counsel for the respondent. Appeal is admitted for hearing. With consent of the learned counsel for the parties, the same is heard finally.
This appeal under Section 260-A of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’, for short) which has been filed by the revenue, was admitted by a Bench of this Court by order dated 03.06.2013 on the following substantial questions of law: “1. Whether the Tribunal was correct in holding that only the
profit making power generating unit of the assessee should be taken into account and not the loss making units in computing the total income of the assessee for its eligible business to allow deduction u/s 80IA of the Act?
Whether the Tribunal was correct in holding that the deduction u/s 80IA windmill wise instead of eligible business wise, contrary to the provision of section 80IA(1) and 80IA(5) and without taking in account the fact that generation of energy is one undertaking/enterprise and the windmills are units of the same undertaking/enterprise? ”
When the matter was taken up today, learned counsel for the respondent submitted that the issue involved in this appeal is squarely covered by an order dated 27.05.2011 passed in the case of COMMISSIONER OF INCOME TAX AND
ANOTHER Vs. SWARNAGIRI WIRE INSULATIONS P. LTD. (2012) 349 ITR 245 (KAR).
In view of the aforesaid submission, learned counsel for the revenue was unable to dispute the aforesaid legal proposition.
Therefore, the substantial questions of law are answered against the revenue.
In the result, the appeal is dismissed.
Thus, from conjoint reading of order dated 14.03.2014 and judgment dated 19.03.2020 passed in I.T.A.No.23/2013, it is evident that substantial question of law Nos.1 and 2 are identical and have been answered against the revenue by placing reliance on decision of this court in SWARNAGIRI
WIRE INSULATIONS (P.) LTD., supra. The aforesaid position was not disputed by learned counsel for the revenue. Therefore, the inevitable conclusion is that substantial questions of law Nos.1 and 2 framed in this appeal are
already covered by a decision of this court rendered in I.T.A.No.23/2013 and therefore, the same are answered against the revenue and in favour of the assessee.
We may take note of the well settled legal principles before proceeding to deal with the third substantial question of law. It is the cardinal principle of law that tribunal is fact finding authority and a decision on facts on the tribunal can be gone into by the High Court only if a question has been referred to it, which says the finding of the tribunal is perverse. [SEE: ‘SUDARSHAN SILKS & SAREES VS. CIT’, 300 ITR 205 SCC @ 211 and ‘MANGALORE GANESH BEEDI WORKS VS. CIT’, 378 ITR 640 (SC) @ 648]. A three judge bench of the Supreme Court in ‘SANTOSH HAZARI VS. PURSHOTTAM TIWARI’, (2001) 3 SCC 179 while dealing with the expression ‘to be a question of law involving in the case’ held that ‘to be a question of law involving in the case’, there must be first a foundation for it laid in pleadings and the questions
emerged from sustainable findings of fact arrived at by courts of fact and it must be necessary to decide that question of law for a just and proper decision of the case. It has been held that entirely a new point raised for the first time before the High Court is not a question involved in a case unless, it goes to the root of the matter. In ‘HERO VINOTH (MINOR) VS. SESHAMMAL’, (2006) 5 SCC 545 while dealing with the scope of Section 260A of the Act, it was held that this court will not interfere with findings of the court, unless the courts have ignored material evidence or acted on no evidence or have drawn wrong inferences from proved facts by applying the law erroneously or the decision is based on no evidence. The aforesaid decisions were referred to with approval in VIJAY KUMAR TALWAR VS. CIT, (2011) 1 SCC 673 supra as well as in ‘UNION OF INDIA V. IBRAHIM UDDIN’, (2012) 8 SCC 148 and ‘MANGALORE GANESH BEEDI WORKS VS. CIT’, (2016) 2 SCC 556.
Now we may advert to the third substantial question of law. The Commissioner of Income Tax (Appeals) as well as the Tribunal has recorded a finding that the assessee has invested a sum of Rs.26,61,011/- from its own capital and the claim of the assessee for an amount of Rs.14,40,471/- under Section 14A of the Act has been remitted to the Assessing Officer to decide the claim in accordance with law. The aforesaid concurrent findings of fact recorded by the Tribunal by no stretch of imagination can be said to be either perverse or based on no evidence. No element of perversity has been brought to our notice, therefore, it is not necessary for us to answer the aforesaid substantial question of law.
In view of preceding analysis, the substantial questions of law framed by this court are answered in favour of assessee and against the revenue.
In the result, we do not find any merit in this appeal, the same fails and is hereby dismissed.
Sd/- JUDGE
Sd/- JUDGE ss