Iv)Service Charges Paid To The Birla Management Corporation Ltd. Withoutconsidering And Recording The Decision Of The Tribunal In The Case Ofpunjab Breweries Lt v. Viii)Interest On Borrowed Fund Under Section 36(1)(Iii) Of The Act Withou

IN THE HIGH COURT AT CALCUTTASPECIAL JURISDICTION (INCOME TAX)ORIGINAL SIDE ITA/96/2007 COMMISSIONER OF INCOME TAX, KOLKATA-III, KOLKATAVS.INDIAN ALUMINIUM CO. LTD. ITA/173/2007INDIAN ALUMINIUM CO. LTD.VS.COMMISSIONER OF INCOME TAX, KOLKATA-III, KOLKATA BEFORE :THE HON’BLE JUSTICE T.S. SIVAGNANAMAndTHE HON’BLE JUSTICE HIRANMAY BHATTACHARYYADate : 5[th] January, 2023 Appearance :Mr. Om Narain Rai, Adv.…for the revenue. Mr. J.P. Khaitan, Sr. Adv.Ms. Arati Agarwal, Adv.Ms. Rosy Banerjee, Adv.Mr. Binayak Gupta, Adv.…for the assessee The Court : These appeals filed by the revenue as well as the assesseeunder section 260A of the Income tax Act, 1961 (the Act) are directed against theorder dated October 20, 2006, passed by the Income Tax Appellate Tribunal `A’Bench, Kolkata (Tribunal) in ITA 1221/Kol./2006 and ITA 1045/Kol./2006, forthe assessment year 2002-03. The appeal being ITA 173 of 2007 was admitted on 7[th] May, 2008 on the following substantial questions of law :- “Whether on the facts and in the circumstances of the case the learned Tribunalwas justified in law in not allowing : (i)the claim of the assessee for full relief under section 80IB of the Act, (ii)amount paid to Bengal Club Ltd. by way of contribution withoutconsidering the decision of jurisdictional High Court reported in 267 ITR121 delivered in similar facts and circumstances,considering the decision of jurisdictional High Court reported in 267 ITR121 delivered in similar facts and circumstances, (iii) the expenditure incurred by the assessee for repairing and replacement ofold parts of plant and machinery,old parts of plant and machinery, (iv)service charges paid to the Birla Management Corporation Ltd. withoutconsidering and recording the decision of the Tribunal in the case ofPunjab Breweries Ltd. vs. ACIT reported in 100 Taxman 278 and thejudgment delivered in the case of Eicher Motors Ltd. reported in 82 TTJ61,considering and recording the decision of the Tribunal in the case ofPunjab Breweries Ltd. vs. ACIT reported in 100 Taxman 278 and thejudgment delivered in the case of Eicher Motors Ltd. reported in 82 TTJ61, (v)a sum of Rs. 51,86,256/- incurred by the appellant on communitydevelopment without considering the decision of the Madras High Courtreported in 266 ITR 170 and the decision of the Karnataka High Courtreported in 166 ITR 866 and the Tribunal’s decision reported in 96 ITD186,development without considering the decision of the Madras High Courtreported in 266 ITR 170 and the decision of the Karnataka High Courtreported in 166 ITR 866 and the Tribunal’s decision reported in 96 ITD186, (vi)The contribution made towards person scheme under Section 43B of theAct before filing of the return by the appellant without considering thejudgments reported in 284 ITR 619, 100 ITD 199(2004) 1 SOT 210,Act before filing of the return by the appellant without considering thejudgments reported in 284 ITR 619, 100 ITD 199(2004) 1 SOT 210, (vii)A part of interest on borrowed funds without considering the decision ofjurisdictional High Court reported in 134 ITR 816 approved by theSupreme Court in 224 ITR 627 andjurisdictional High Court reported in 134 ITR 816 approved by theSupreme Court in 224 ITR 627 and (viii)Interest on borrowed fund under section 36(1)(iii) of the Act withoutconsidering the Supreme Court ruling reported in 288 ITR1(SC).considering the Supreme Court ruling reported in 288 ITR1(SC). 2.Whether on the facts and in the circumstances of the case learnedTribunal was justified in law in making the addition of Rs.22,93,311/- inTribunal was justified in law in making the addition of Rs.22,93,311/- in (vii)A part of interest on borrowed funds without considering the decision ofjurisdictional High Court reported in 134 ITR 816 approved by theSupreme Court in 224 ITR 627 andjurisdictional High Court reported in 134 ITR 816 approved by theSupreme Court in 224 ITR 627 and (viii)Interest on borrowed fund under section 36(1)(iii) of the Act withoutconsidering the Supreme Court ruling reported in 288 ITR1(SC).considering the Supreme Court ruling reported in 288 ITR1(SC). 2.Whether on the facts and in the circumstances of the case learnedTribunal was justified in law in making the addition of Rs.22,93,311/- inTribunal was justified in law in making the addition of Rs.22,93,311/- in respect of unutilized MODVAT credit for the relevant previous year withouteven considering that the treatment for accounting of MODVAT creditapplied by the appellant was in accordance with the approved method ofaccounting duly approved by the ICAI and has been regularly followed bythe appellant and also has been accepted by the revenue and without evenconsidering the decision reported in 261 ITR 275 (SC) and the decision ofthe Delhi Bench of the Tribunal in the case of DCIT vs. HCL InfosystemsLtd.?” The appeal being ITA 96 of 2007 was admitted on 8[th] March, 2007 on thefollowing substantial question of law :- “1. Whether on the facts and circumstances of the case, the Ld. Tribunalwas justified in law regarding reduction of disallowance under section14A of the Income-tax Act to Rs.50 lakhs instead of Rs.20,74,80,418/-and for reduction of disallowance under section 14A to 20 lacs insteadof Rs.8,08,62,345/- without observing the facts and findings of theAssessing officer and as such the same is perverse or not?”was justified in law regarding reduction of disallowance under section14A of the Income-tax Act to Rs.50 lakhs instead of Rs.20,74,80,418/-and for reduction of disallowance under section 14A to 20 lacs insteadof Rs.8,08,62,345/- without observing the facts and findings of theAssessing officer and as such the same is perverse or not?” Since the revenue as well as the assessee are aggrieved by the orderpassed by the Tribunal, these appeals were heard together and are disposed ofby this common judgment and order. We have heard Mr. Om Narain Rai, learned standing counsel appearing forthe revenue and Mr. J.P. Khaitan, learned senior counsel assisted by Ms. ArtiAgarwal, learned advocate appearing for the assessee. Before we embark upon and exercise to decide the substantial questions oflaw, our attention was drawn by the learned advocates appearing for the partiesthe manner in which the learned Tribunal had disposed of the appeal. The orderpassed by the Tribunal runs into 24 pages. Thus, one gets an impression that it is a very detailed and reasoned order passed by the Tribunal. However, on aclosure scrutiny we find that the Tribunal has abrogated its responsibility in itsentirety which is heavily cast upon the learned Tribunal being the last fact-finding authority in the hierarchy of authorities. By way of illustration we canpoint out that in paragraph 11 of the order passed by the Tribunal, the findingsrendered by the Commissioner of Income Tax (Appeals) [CIT(A)] has beenadopted by the Tribunal verbatim as its own findings and so much so, even thedirections given by the CIT(A) to the Assessing Officer has been copied verbatim. is a very detailed and reasoned order passed by the Tribunal. However, on aclosure scrutiny we find that the Tribunal has abrogated its responsibility in itsentirety which is heavily cast upon the learned Tribunal being the last fact-finding authority in the hierarchy of authorities. By way of illustration we canpoint out that in paragraph 11 of the order passed by the Tribunal, the findingsrendered by the Commissioner of Income Tax (Appeals) [CIT(A)] has beenadopted by the Tribunal verbatim as its own findings and so much so, even thedirections given by the CIT(A) to the Assessing Officer has been copied verbatim. Further, we find that though the learned Tribunal has recorded that it hadheard the submissions of the learned authorised representative of the assesseeas well as the department representative, the submissions made by theauthorised representative have not been noted or recorded. The learnedTribunal has stated that the authorised representative has given detailedsubmission on behalf of the assessee which are all contained in detail in theorder of the CIT(A) and, therefore, need not be repeated again. It is seen that allthe grounds which have been canvassed before the Tribunal have been dealtwith in the very same fashion. Further, we note from paragraph 55 of theimpugned order that the Tribunal has verbatim extracted the grounds raised bythe parties and in paragraph 60 the Tribunal has held as follows: “We have examined the rival submissions. We find no infirmity in theorder of the CIT(A) which is confirmed. The appeal of the assessee isdismissed on the 10th ground.” In a similar fashion the other grounds have also been dealt with as couldbe seen from paragraph 73 to 79. Thus, it is clear that the order passed by theTribunal is without any application of mind and suffers from utter perversity. Infact, the order of the learned Tribunal is a classical example of as to how an order should not be drafted. We are informed that though the assessee had fileda miscellaneous application with a prayer to decide all issues by passing areasoned order, such application was dismissed by the learned Tribunal on theground that it would tantamount to review. Thus, we are fully satisfied that the order of the Tribunal has to be setaside in its entirety. In the result, the appeals filed by the revenue(ITA/96/2007) as well as the assessee (ITA/173/2007) are allowed and the orderpassed by the Tribunal is set aside and remanded to the Tribunal for freshconsideration. Consequently, the substantial questions of law which were admitted areleft open. We make it clear that the learned Tribunal shall decide all grounds whichare canvassed before it by the assessee as well as the revenue. (T.S. SIVAGNANAM, J.) (HIRANMAY BHATTACHARYYA, J.) SN/S.Pal/s.das/As