ORIENT PAPER & INDUSTRIES LIMITED,KOLKATA vs. DCIT, CIRCLE - 6, KOLKATA, KOLKATA

We have heard the arguments of both the sides and also perused the relevant material available on record. As submitted by the ld. Representatives of both the sides, a similar issue as involved in Ground No. 1 relating to the transactions on account of interest under section 14A read with Rule 8D of the Income Tax Rules was also involved in the case of Hindustan Motors Limited in the identical facts and circumstances and the same has already been decided by this Tribunal vide its order dated 20.11.2015 passed in ITA No. 171/KOL/2012. A copy of the said order is also placed on record before us and perusal of the same shows that a similar issue has been decided by the Tribunal in favour of the assessee vide paragraph nos. 10 & 11 of its order, which read as under:- “10. We have considered the rival submissions and also perused the relevant material available on record. It is observed that the investment in shares on which the exempt dividend income is earned by the assessee during the year under consideration was actually made in the earlier years and in the assessment completed for assessment year 2006-07 under section 143(3), no disallowance on account of interest was made by the Assessing Officer under section 14A after recording a finding that the borrowed funds were entirely utilized by the assessee for the purpose of business and the same were not used for making any investment in shares. Even in the assessment completed for A.Y. 2007-08 under section 143(3), no disallowance under section 14A on account of interest was made by the Assessing Officer thereby accepting that the investment in shares was made by the assessee out of its own funds and there was no utilization of interest bearing borrowed funds for making such investment. As pointed out by the ld. Counsel for the assesese from the relevant documentary evidence, the investment made in shares by the assessee- company in the earlier years has continued substantially in the year under consideration and there being no fresh investment made by the assessee in shares, it follows that investment in shares is entirely made by the assessee out of its own funds and there was no utilization of borrowed funds for making such

As regards the issue involved in Ground No. 2 relating to the dispute as regards the stage at which MAT credit is to be allowed, the ld. Representatives of both the sides have agreed that the same is covered against the assessee and in favour of the Revenue by the decision of the Tribunal rendered in the case of Hindustan Motors Limited vide its order dated 20.11.2015 (supra), wherein a similar issue has been decided against the assessee by the Tribunal for the following reasons given in paragraph 13 of its order :- “13. As regards the issue involved in Ground No. 3 relating to the assessee’s claim for allowing MAT credit against tax before levy of surcharge and education cess, the ld. Counsel for the assessee at the time of hearing before us has relied, inter alia, on the decision of the Hon’ble Allahabad High Court in the case of CIT –vs.- Vacment India reported in 369 ITR 304, wherein it was held by relying on the entries made in relevant form ITR-6 providing the method of computation of tax liability that the ‘tax payable’ is to be arrived at after deducting credit on account of minimum alternate tax from ‘gross tax payable’ and on this amount of ‘tax payable’, surcharge and cess are to be computed. However, as held by the Hon’ble Supreme Court in the case of CIT –vs.- Tulsyan NEC Limited reported in 330 ITR 226 in the context of calculation of interest under section 234A, 234B and 234C, it is immaterial that relevant form prescribed under the Income Tax Rules provided for set off of the MAT credit balance against the amount of tax plus interest. It was held that this method of working given in the relevant form was directly contrary to a plain reading of section 115JAA(4) and a form prescribed under the Rules, in any case, can never have any effect on the interpretation or operation of the parent statute. It is also interesting to note that in the relevant working as given on page no. 235 of the report and approved by the Hon’ble

As the issue involved in the present case is similar to the issue involved in the case of Hindustan Motors Limited (supra), we respectfully follow the decision of the Tribunal rendered in the said case and uphold the impugned order of the ld. CIT(Appeals) on this issue. Ground No. 2 of the assessee’s appeal is accordingly dismissed.

During the course of appellate proceedings before the Tribunal, the assessee has raised the following ground as additional ground with an application seeking admission thereof:- “For that the sum of Rs.10.36 crores realized on sale of 1,07,353 Units of CERS are capital receipt not liable to tax and the same sum be deleted from the assessed income”.

We have heard the arguments of both the sides on the application of the assessee for admission of the above additional ground. The ld. Counsel for the assessee has contended that although the amount in question received as compensation by the assessee by way of Carbon Credit in respect of its Cement Division was offered to tax in the return of income and the issue relating to its exemption being capital receipt was not raised either before the Assessing Officer or before the ld. CIT(Appeals), the same is being raised before the Tribunal for the first time by way of an additional ground on the basis of various judicial pronouncements coming to the notice of the assessee afterwards, wherein the similar receipt has been held to be a capital receipt not chargeable to tax. He has contended that the issue raised in the additional ground is purely a legal one and since all the material facts relevant to decide the same are already on the record, the same is deserved to be admitted.

While objecting to the admission of additional ground filed by the assessee, the ld. D.R. in support of the Revenue’s case has relied on the decision of the Hon’ble Supreme Court in the case of CIT –vs.- Stepwell Industries Limited & Others reported in 228 ITR 171 and pointed out that the decision of the Tribunal in the said case to allow certain claim made by the assessee for the first time before the Tribunal was not upheld by the Hon’ble Apex Court. It is, however, observed that new claim made by the assessee for the first time before the Tribunal in the said case was allowed by it and since the same was allowed by the Tribunal on assumption of certain facts without verification of the relevant details or particulars, the action of the Tribunal was not upheld by the Hon’ble Supreme Court. The power of the Tribunal to entertain the new claim raised for the first time before it was not under challenged in the said case and as is evident from the question referred to the Hon’ble Supreme Court, the decision of the Tribunal allowing the claim of the assessee for weighted deduction under section 35B of the Act, was challenged on merit. On the other hand, in the case of CIT –vs.- Pruthvi Brokers & Shareholders Pvt. Ltd. reported in 349 ITR 336 (Bom.), the issue specifically raised before the Hon’ble Bombay High Court was regarding the power of the appellate authorities to entertain and consider new claim not made in the return and it was held by the Hon’ble Bombay High Court that the appellate authorities have power to consider claim not made in the return of income. It is also observed that in the case of Ultra

In the result, the appeal of the assessee is partly allowed.