Ita/450/2013 Of The Commissioner Of Income Tax v. M/S Jindal Aluminium Limited

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 8 DAY OF OCTOBER 2020| PRESENT THE HON’BLE MR. JUSTICE ALOK ARADHE AND| THE HON’BLE MR. JUSTICE H.T.NARENDRA PRASAD LT.A. NO.450 OF 2013 BETWEEN: 1.THE COMMISSIONER OF INCOME-TAX C.R. BUILDING, QUEENS ROAD BANGALORE. 2 |THE ASSISTANT COMMISSIONER OF INCOME-TAX.CIRCLE-11(5), RASHTROTHANA BHAVANCIRCLE-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-5600/733 ... RESPONDENT (BY Ms. JINEETHA CHATERJEE, ADV., FORMr. 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 [TA|NO.799/BANG/2012, FOR THE ASSESSMENT YEAR 2008-09,|PRAYING THAT THIS HON'BLE COURT MAY BE PLEASED TO: (1) FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW.STATED THEREIN. (II) ALLOW THE APPEAL AND SET ASIDE THE ORDERPASSED 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. THISLIACOMINGONFOR.HEARING,THISALOK ARADHE J.,DELIVERED THE FOLLOWING: DAY, 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 substantialquestions of law:| (I)Whether on the facts and In thecircumstances and in law the appellate|authorities were correct in holding that|only the profit making power generatingunit of the assessee shoul!d be taken Intoaccount and not tne loss making units incomputing the total income of the|assessee for its eligible business to allow|deduction under Section S8OIA of the Act?circumstances and in law the appellate|authorities were correct in holding that|only the profit making power generatingunit of the assessee shoul!d be taken Intoaccount and not tne loss making units incomputing the total income of the|assessee for its eligible business to allow|deduction under Section S8OIA of the Act? (iI)Whether on the facts and In ethcircumstances an din law the appellate|authorities were correct in holding that|thededuction|underSectionSOLAWINdmMIsswiseinsteadofeligiblebusiness wise, contrary to the provision|of section S8OIA(1) and S80IA(5) anwithout taking in account the fact that|generation of energy is one undertaking|/ enterprise and eth windmills are units|of the same undertaking/enterprise?circumstances an din law the appellate|authorities were correct in holding that|thededuction|underSectionSOLAWINdmMIsswiseinsteadofeligiblebusiness wise, contrary to the provision|of section S8OIA(1) and S80IA(5) anwithout taking in account the fact that|generation of energy is one undertaking|/ enterprise and eth windmills are units|of the same undertaking/enterprise? (iI)Whether on the facts and In thecircumstances 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 continuedin the current year and therefore was|correct in disallowance under Section|14A of the Act?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 continuedin the current year and therefore was|correct in disallowance under Section|14A of the Act? 2 |Facts leading to filing of the appeal brieflystated are that the assessee is a company engaged inthe business of manufacture and sale of aluminumextrusions and generation of wind energy. The assesseefiled its return of tIncome on 25.09.7008 for theAssessment Year JOO8-09 which was assessed underSection 143(3) of the Act on a total income ofRs.69,30,00,030/-. The Assessing Officer by an orderdated 01.10.2010 disallowed tne claim of tne assesseeunder Section 80IA and Section 14A of the Act. Beingaggrieved, the assessee filed an appeal before theCommissioner of Income Tax (Appeals) who by an orderdated 30.03.2012 inter alia held that deduction underSection 8OIA of the Act has to be granted only on profitmakingUnIt. TneCommissioner|ofIncome.Tax(Appeals) restricted the claim of the disallowance underSection 14A of the Act to Rs.14,40,471/- as againstRs.45,01,582/-. Thus, the appeal preferred by theassessee was partly allowed. Being aggrieved, the assessee as well as the revenue filed the appeals beforethe Income Tax Appellate Tribunal (hereinafter referredto as the Tribunal for short), which were decided by acommonorder|dated30.04.7013.TheTribunal|dismissed the appeal of the revenue and remitted theclaim of the assessee for disallowance under Section14A of the Act in respect of Rs.14,40,470/- to theAssessing Officer. In the aforesaid factual background,the revenue is in appeal before US. 3.Learned counsel for the revenue submittedthat Section 80IA(1) of the Act is applicable to eligiblebusiness and all profit making and loss making unitshave to be aggregated and then deduction underSection 80IA has to be computed. It is contended thatSection 80IA(5) is in respect of eligible business and notin respect of each unit. It was also pointed out that thisCOUTTInI.T.A.No.377/2012videdecisiondated07.09.2020 has permitted aggregation and set off underSection 7O of the Act. It is also pointed out that amendment to Section 14A(2) read with Rule 8D of theRules is applicable with effect from Assessment Year2008-09 as has been held by the Supreme Court as wellas by this court. It is also argued that Assessing Officerhasrecorded reasons./satisfactionregardingincorrectness of claim of expenditure of the assesseeunder Section 14A of the Act and therefore, the|mandate contained in the decision in ‘GODREJ &BOYCE MFG. CO. LTD. VS. DEPUTY COMMISSIONEROF INCOME-TAX, RANGE 10(2), MUMBAI’, (2010)328 ITR S81stands. satisfied. Alternatively it isSubmitted that even if the Tribunal was of the opinionthat the satisfaction as required under Section 14A ofthe Act has not been complied with as held by BombayHigh Court in Godrej & Boyce Mfg. Co. Ltd., supra, thematter ought to have been remitted to the AssessingOfficer as was done by Bombay High Court in para 73 ofits decision. Alternatively it is submitted that thejudgment rendered in Godrej] & Boyce Mfg. Co. Ltd., Supra is not applicable as in the aforesaid decision,Bombay High Court dealt with Assessment Year 2002-03i.e., the legal position as it existed prior to amendmentto Section 14A(2) of the Act and therefore, in any case,the aforesaid decision is not applicable to the facts ofthe case. It is also submitted that the object ofintroduction of Section 14A which has been dealt bySupreme Court in|“COMMISSIONER OF INCOME-TAX,MUMBAI VS. WALFORT SHARE & STOCK BROKERS(P.) LTD.’, 326 ITR 1has not been taken Into accountby the Tribunal. It is also urged that the TribunalgrosslyerredIn|consideringtnesurplus|as|ON)01.04.2007 and recording a finding that investment isout of surplus and without taking into consideration thefact that investment was made by the assessee mucnprior to 01.04.2007. 4On the other hand, learned counsel for theassessee has invited the attention of this court to orderdated 14.03.2014 by whicn appeal was admitted by a 4On the other hand, learned counsel for theassessee has invited the attention of this court to orderdated 14.03.2014 by whicn appeal was admitted by a bench of this court. It Is further submitted thatsubstantial questions of law Nos.1 and 2 are identical tothe substantial questions of law, which were involved inI.T.A.No.23/2013 and the aforesaid appeal which waspreferred by the revenue has been dismissed by a benchof this court vide order dated 19.03.2020. #$.IIn thconnection, reliance has also been placed on decisions ofthis court in ‘COMMISSIONER OF INCOME TAX VS,SWARNAGIRIWIREINSULATIONS(P.) LTD,(2013)213TAXMAN218anddecisionIn|GCOMMISSIONER OF INCOME TAX AND ANOTHER|VS. MICROLABS LTD.’, (2016) 383 ITR 490(KARN). It is also urged that there is no question ofmaking any disallowance of expenditure under Section14A as the assessee was already having it sown surplusfund and the Commissioner of Income Tax (Appeals) aswell as the Tribunal have allowed the claim underSection 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 theTribunal has remitted the matter to the AssessingOfficer to examine the claim under Section 14A of theAct in respect of Rs.14,40,471/-. In support ofaforesaid submissions, reliance has been placed ondecision of Supreme Court in.‘PR. COMMISSIONER OFINCOMETAX-rIyVS,SINTEX|INDUSTRIESLIMITED’, (2018) 255 TAXMAN 0177 (SC),and|‘MAXOPP INVESTMENT LTD VS. COMMISSIONEROF INCOME TAX, NEW DELHI, CIVIL APPEALNOS,.104-109 OF 2015. 5.|We have considered the submissions madeby learned counsel for the parties and have perused therecord. The order dated 14.03.2014 by which the appealwas admitted reads as under: Mr.K.V.ARavind, learned counsel forthe revenue submits that the substantial|questions of law raised in the present appealand in I.7.A.No.23/2013 are identical. He|submits that I.7T.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 substantialquestionsoflawdSralsedIn|thememorandum of appeal. 6.|I.T.A.No.23/2013 was decided by this courtvide order dated 19.03.2020, which reads as under: Mr.K.V.Aravind, learned counsel for therevenue. Smt.Jinitha Chatterjee, learned counselfor the respondent. Appeal is admitted for hearing. Withconsent of the learned counsel! for theparties, the same is heard finally. 2. This appeal under Section 260-A ofthe Income Tax Act, 1961 (hereinafter|referred to as the Act’, for short) wnicn has|been filed by the revenue, was admitted by a Bench of this Court by order dated|03.06.2013 on the _ following’ substantiquestions of law:| "7. Whether the Tribunal wes|correct in holding that only the| profit making power generating|unit of the assessee should be|taken [nto account and not the|loss making units in computing|the total income of the assessee|for its eligible business to allow|deduction u/s 801A of the Act? 2. Whether the Tribunal was|COrrectIn|holdingthat|thededuction u/s 80IA windmill wise|instead of eligible business wise,|contraryiontheProvisionofsection 80IA(1) and 80IA(5) andwithout taking in account the fact|that generation of energy Is one|undertaking/enterprise and the|windmills are units of the same|undertaking/enterprise? ~ 3. When the matter was taken uptoday, learned counsel for tne respondent|submitted that the [issue [Involved |[n thappeal is squarely covered by an order dated2/.05.7011DaSSe€dIn.theCea’SofCOMMISSTONER OF INCOME TAX AND| ANOTHER|Vs,SWARNAGIRI|WIRE|INSULATIONS P. LTD. (2012) 349 ITR245 (KAR) 4. In view of the aforesaid submission,learned counsel! for the revenue was unableto dispute the aforesaid legal proposition. — 5. Therefore, the substantial questions|of law are answered against the revenue. In tne result, the appeal is dismissed. J |Thus, from conjoint reading of order dated14.03.2014 and judgment dated 19.03.2020 passed inI.T.A.No.23/2013, it is evident that substantial question 3. When the matter was taken uptoday, learned counsel for tne respondent|submitted that the [issue [Involved |[n thappeal is squarely covered by an order dated2/.05.7011DaSSe€dIn.theCea’SofCOMMISSTONER OF INCOME TAX AND| ANOTHER|Vs,SWARNAGIRI|WIRE|INSULATIONS P. LTD. (2012) 349 ITR245 (KAR) 4. In view of the aforesaid submission,learned counsel! for the revenue was unableto dispute the aforesaid legal proposition. — 5. Therefore, the substantial questions|of law are answered against the revenue. In tne result, the appeal is dismissed. J |Thus, from conjoint reading of order dated14.03.2014 and judgment dated 19.03.2020 passed inI.T.A.No.23/2013, it is evident that substantial question of law Nos.1 and 2 are tidentical and have beenanswered against the revenue by placing reliance ondecisionofthis.courtIn|SWARNAGIRIWHLREINSULATIONS (P.) LTD., Supra. The aforesaid positionwas not disputed by learned counsel for the revenue.Therefore, the inevitable conclusion is that substantialquestions of law Nos.1 and 2 framed in this appeal are already covered by a decision of this court rendered inI.T.A.No.23/2013 and therefore, the same are answeredagainst the revenue and in favour of the assessee. 8.|We may take note of the well settled legalprinciples before proceeding to deal with the thirdsubstantial question of law. It is the cardinal principle oflaw that tribunal is fact finding authority and a decisionon facts on the tribunal can be gone into by the HighCourt only if a question has been referred to it, whichsays the finding of the tribunal is perverse.[SEE:“SUDARSHAN SILKS & SAREES VS. CIT’, 300 ITR205 SCC @ 211|and‘MANGALORE GANESH BEEDT|WORKS VS. CIT’, 378 ITR 640 (SC) @ 648|. A threejudge bench of the Supreme Court in‘SANTOSHHAZARI VS. PURSHOTTAM TIWARI’, (2001) 3 SCC179while 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 by8:5'9,of fact and it must be necessary to decide that|question of law for a just and proper decision of thecase. It has been held that entirely a new point raisedfor the first time before the High Court is not a questioninvolved in a case unless, it goes to the root of thematter. In.‘HEROVINOTH(MINOR)VS,SESHAMMAL’, (2006) 5 SCC 545while dealing withthe scope of Section 260A of the Act, it was held thatthis court will not interfere with findings of the court,unless the courts have ignored material evidence oracted on no evidence or have drawn wrong inferencesfrom proved facts by applying the law erroneously or thedecision is based on no evidence. The aforesaiddecisions were referred to with approval inVIJAYKUMAR TALWARVS. CIT, (2011) 1 SCC 673|SUDP.aas well as In “UNION OF INDIA V. IBRAHIM UDDIN,,(2012) 8 SCC 148167‘MANGALORE GANESH|BEEDI WORKS VS. CIT’, (2016) 2 SCC 556. 9 |Now we may advert to the third substantialquestion of law. The Commissioner of Income Tax(Appeals) as well as the Tribunal has recorded a findingthat the assessee has invested a sum of Rs.26,61,011/-from its own capital and the claim of the assessee for anamount of Rs.14,40,4/71/- under Section 14A of the Acthas been remitted to the Assessing Officer to decide theclaim in accordance with law. The aforesaid concurrentfindings of fact recorded by the Tribunal by no stretch ofimagination can be said to be either perverse or basedon no evidence. No element of perversity has beenbrought to our notice, therefore, it is not necessary forus to answer the aforesaid substantial question of law. In view of preceding analysis, the substantial|questions of law framed by this court are answered infavour of assessee and against the revenue. �6�9/3�'3,549!�B3�7:�6:9�;067�16?�<3'09�06�9/0,� 122314!�9/3�,1<3�;104,�167�0,�/3'3>?�70,<0,,37�� �����������������������,,�