Pr. Commissioner Of Income Tax (Central), Gurgaon v. M/S Ind Swift Laboratories Limited

ITA No.180 of 2017 (O&M) -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No.180 of 2017 (O&M)Assessment Year : 2006-07 Decided on : 29.10.2018 Pr. Commissioner of Income Tax (Central), Gurgaon ....... Appellant Versus M/s Ind Swift Laboratories Limited ...... Respondent CORAM : HON'BLE MR. JUSTICE AJAY KUMAR MITTAL, JUDGEHON'BLE MR. JUSTICE AVNEESH JHINGAN, JUDGEPresent :Mr. Vivek Sethi, Senior Standing Counselfor the appellant-revenue. Mr.Rohit Sood, Advocatefor the respondent. * * * AVNEESH JHINGAN, J. The revenue has filed the present appeal under Section 260A ofIncome Tax Act, 1961 (for brevity, 'the Act') against the order of IncomeTax Appellate Tribunal, Chandigarh (hereinafter referred to as 'Tribunal')passed in ITA No.745/Chd/2012 dated 28.08.2004 for the assessment year2006-07. 2.Appellant claims following substantial questions of law arise forconsideration in the present appeal:- i) Whether on the facts and circumstances of the case, theHon'ble ITAT was justified in restricting thedisallowance made u/s 14A from `31,55,004/- toHon'ble ITAT was justified in restricting thedisallowance made u/s 14A from `31,55,004/- to ITA No.180 of 2017 (O&M) -2- ` 2 lakhs without any sound and valid reason? ii)Whether on the facts and circumstances of the case, theHon'ble ITAT was justified in rejecting the method forcalculation of disallowance u/s 14A provided in Rule 8Djust because the said Rule was inserted from 23.04.2008even if it was a logical method?Hon'ble ITAT was justified in rejecting the method forcalculation of disallowance u/s 14A provided in Rule 8Djust because the said Rule was inserted from 23.04.2008even if it was a logical method? iii)Whether on the facts and circumstances of the case, theHon'ble ITAT was justified in rejecting the method forcalculation of disallowance u/s 14A provided in Rule 8Djust because the said Rule was inserted from 23.04.2008,when this was the prescribed method available in thestatute when the disallowance was made?Hon'ble ITAT was justified in rejecting the method forcalculation of disallowance u/s 14A provided in Rule 8Djust because the said Rule was inserted from 23.04.2008,when this was the prescribed method available in thestatute when the disallowance was made? iv)Whether on the facts and in the circumstances of the case,the Tribunal was right in law in computing book profitsu/s 115JB of the I.T.Act, 1961 in view of explanation (1)(f) to Section 115JB of the I.T.Act, 1961 ?the Tribunal was right in law in computing book profitsu/s 115JB of the I.T.Act, 1961 in view of explanation (1)(f) to Section 115JB of the I.T.Act, 1961 ? 3. The brief facts necessary for adjudication of the appeal are that for assessment year 2006-07, the assessee-company filed a return declaringloss of `28,03,95,438/-. The return was revised on 31.10.2007 and thebusiness loss of `37,60,87,896/- was shown. The return was further revisedtwice and ultimately a loss of `37,43,05,752/- was declared and tax was paidunder Section 115 JB of the Act. The return was processed under Section143 (1) of the Act on 14.11.2007. The case was selected for scrutiny. Noticeunder Section 143(2) of the Act was issued on 24.10.2007. The assessmentwas finalised vide order dated 30.12.2008. During the assessmentproceedings apart from other issues, the Assessing Officer noticed that -ITA No.180 of 2017 (O&M) 3- assessee had invested a sum of `7,39,85,179/- in shares of other companies.The Assessing Officer invoked the provisions of Section 14A of the Act readwith Rule 8D of the Income Tax Rules, 1962 (in short, 'the Rules'). The AOapplied Rule 8D of the Rules and worked out the disallowance of expensesunder Section 14A of the Act at `31,55,004/-. -ITA No.180 of 2017 (O&M) 3- assessee had invested a sum of `7,39,85,179/- in shares of other companies.The Assessing Officer invoked the provisions of Section 14A of the Act readwith Rule 8D of the Income Tax Rules, 1962 (in short, 'the Rules'). The AOapplied Rule 8D of the Rules and worked out the disallowance of expensesunder Section 14A of the Act at `31,55,004/-. 4.Against the said order, the assessee-company filed an appealbefore the Commissioner of Income Tax (Appeals), Chandigarh (for brevity,'(CIT(A)'). The Appellate Authority vide order dated 03.04.2012 sustainedthe disallowance of expenses under Section 14A of the Act. Dissatisfied, theassessee-company preferred further appeal before the Tribunal. The issue ofdisallowance under Section 14A of the Act was allowed by the tribunal videorder dated 28.08.2014. Tribunal relied upon its decision in the case of M/sIndo Swift Ltd. in ITA No.511/Chd/2009 wherein the Tribunal had followedthe decision of the Bombay High Court in the case ofGodrej Boyce Mfg.Company Pvt. Ltd. vs. Deputy CIT and another, 2010 (328) ITR 81.However, the Tribunal restricted the disallowance to `2 lakhs. Hence thepresent appeal. 5.In ITA No.212 of 2017, similar issue came up for considerationbefore this Court where the appeal of the revenue was dismissed in respectof similar questions No.1 to 3 as in the present appeal. 6.The question No.4 is consequential to the disallowance madeunder Section 14A of the Act. The assessing Officer while computing thebook profit under Section 115JB of the Act added back the disallowanceworked under Section 14A of the Act to the net profit shown in the profitand loss amount and computed the profit for the year. Since thedisallowance of expenses under Section 14A of the Act has already been set ITA No.180 of 2017 (O&M) -4- aside, the question No.4 claimed in the appeal no longer survives. 7.No interference is called for in the order passed by the Tribunal. No substantial question of law arises. 8.Consequently, the appeal is dismissed. (AJAY KUMAR MITTAL) JUDGE (AVNEESH JHINGAN) JUDGE October 29, 2018anjuWhether speaking/reasoned: YesWhether reportable :Yes