Pr. Commissioner Of Income Tax, Kota v. M/S. Mittal Pigments Pvt. Ltd., A

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 70/2018 Pr. Commissioner Of Income Tax, Kota ----Appellant Versus M/s. Mittal Pigments Pvt. Ltd., A-203, I.p.i.a. Road No. 5, Kota ----Respondent For Appellant(s) : Ms. Parinitoo Jain with Ms. Shiva GoyalFor Respondent(s): HON'BLE MR. JUSTICE K.S.JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYAS 10/04/2018 Judgment By way of this appeal, the appellant has challenged thejudgment and order of the Tribunal whereby the Tribunal hasdismissed the appeal of the department. Counsel for the appellant has framed following question oflaw:- “Whether the Tribunal was legally justified indeleting the addition of Rs. 17,388/- made u/s 14Aread with Rule 8D following the Board’s Circular5/2014.” The contention which has been raised is that the SupremeCourt decision is not followed. Prima facie, it seems that the sameis not referred in the order of the Tribunal. In that view of the matter, the appropriate remedy for theappellant is to approach the Tribunal and the Tribunal is directedto re-consider the same in the review application to be filed by the appellanttaking into consideration, the decision of theSupreme Court in case of Godrej & Boyce ManufacturingCompany Limited vs. Dy. Commissioner of Income Tax &Ors.;(2017) 394 ITR 449 (SC) wherein it has been held as under:- “24. The object behind the introduction ofSection 14A of the Act by the Finance Act of 2001is clear and unambiguous. The legislatureintended to check the claim of allowance ofexpenditure incurred towards earning exemptedincome in a situation where an Assessee has bothexempted and non-exempted income orincludible or non-includible income. While therecan be no scintilla of doubt that if the income inquestion is taxable and, therefore, includible inthe total income, the deduction of expensesincurred in relation to such an income must beallowed, such deduction would not be permissiblemerely on the ground that the tax on thedividend received by the Assessee has been paidby the dividend paying company and not by therecipient Assessee, when Under Section 10(33)of the Act such income by way of dividend is nota part of the total income of the recipientAssessee. A plain reading of Section 14A wouldgo to show that the income must not beincludible in the total income of the Assessee.Once the said condition is satisfied, theexpenditure incurred in earning the said incomecannot be allowed to be deducted. The Sectiondoes not contemplate a situation where eventhough the income is taxable in the hands of thedividend paying company the same to be treatedas not includible in the total income of therecipient Assessee, yet, the expenditure incurredto earn that income must be allowed on the basisthat no tax on such income has been paid by theAssessee. Such a meaning, if ascribed to Section14A, would be plainly beyond what the languageof Section 14A can be understood to reasonablyconvey. 27. We do not see how the aforesaid principle oflaw in K.P. Varghese (supra) can assist theAssessee in the present case. The literal meaningof Section 14A, far from giving rise to anyabsurdity, appears to be wholly consistent withthe scheme of the Act and the object/purpose oflevy of tax on income. Therefore, the wellentrenched principle of interpretation that where the words of the statute are clear andunambiguous recourse cannot be had toprinciples of interpretation other than the literalview will apply. In this regard, the viewexpressed by this Court in Commissioner ofIncome Tax-III v. Calcutta Knitwears, LudhianaMANU/SC/0255/2014 : (2014) 6 SCC 444 (para31) may be usefully noticed below: 27. We do not see how the aforesaid principle oflaw in K.P. Varghese (supra) can assist theAssessee in the present case. The literal meaningof Section 14A, far from giving rise to anyabsurdity, appears to be wholly consistent withthe scheme of the Act and the object/purpose oflevy of tax on income. Therefore, the wellentrenched principle of interpretation that where the words of the statute are clear andunambiguous recourse cannot be had toprinciples of interpretation other than the literalview will apply. In this regard, the viewexpressed by this Court in Commissioner ofIncome Tax-III v. Calcutta Knitwears, LudhianaMANU/SC/0255/2014 : (2014) 6 SCC 444 (para31) may be usefully noticed below: the language of a taxing statute should ordinarilybe read and understood in the sense in which itis harmonious with the object of the statute toeffectuate the legislative animation. A taxingstatute should be strictly construed; commonsense approach, equity, logic, ethics and moralityhave no role to play. Nothing is to be read in,nothing is to be implied; one can only look fairlyat the language used and nothing more andnothing less.” Otherwise also it will be difficult for us to hold that the Tribunal has committed an error. For a substantial question of lawunless there is specific findings of the Tribunal on facts relying thejudgment sought to be relied upon. In that view of the matter, the appeal is not entertained atthis stage. However, it will be open for the appellant to challengethe same as above. The Tribunal will consider the reviewapplication preferred by the appellant and the time taken todaywill be taken into consideration while considering the reviewapplication. The appeal stands disposed of. (VIJAY KUMAR VYAS),J (K.S.JHAVERI),J A.Sharma/126