The Principal Commissioner Of Income Tax-3, Ludhiana v. Malwa Industries Limited, Ludhiana

IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH ITA-348-2018 (O&M) Date of Decision: 8.5.2019 The Principal Commissioner of Income Tax-3, Ludhiana ....Appellant. Versus Malwa Industries Limited, Ludhiana ...Respondent. CORAM:- HON'BLE MR. JUSTICE AJAY KUMAR MITTAL.HON'BLE MRS. JUSTICE MANJARI NEHRU KAUL.HON'BLE MRS. JUSTICE MANJARI NEHRU KAUL. PRESENT: Mr. Rajesh Katoch, Sr. Standing Counsel with Ms. Pridhi Jaswinder Sandhu, Jr. Standing Counsel for the appellant.Ms. Pridhi Jaswinder Sandhu, Jr. Standing Counsel for the appellant. AJAY KUMAR MITTAL, J. 1.This order shall dispose of a bunch of two appeals bearing ITANos.348 and 349 of 2018 as according to learned counsel for the appellant,identical issues are involved therein. For brevity, the facts are beingextracted from ITA-348-2018. 2.ITA-348-2018 has been preferred by the revenue under Section260A of the Income Tax Act, 1961 (in short “the Act”) against the orderdated 21.12.2017 (Annexure-3) passed by the Income Tax AppellateTribunal, Chandigarh Bench 'B', Chandigarh (hereinafter referred to as “theTribunal”) in ITA No. 429/CHD/2017, for the assessment year 2011-12,claiming the following substantial questions of law:- (i)Whether on the facts and in the circumstances ofthe case, the Hon'ble ITAT erred in law in deletingthe disallowance of bank charges of ` 25,24,786/-paid for processing of the working capital loan?the case, the Hon'ble ITAT erred in law in deletingthe disallowance of bank charges of ` 25,24,786/-paid for processing of the working capital loan? ITA-348-2018 (ii)Whether on the facts and in the circumstances ofthe case, the Hon'ble ITAT erred in law in deletingthe disallowance of ` 2,84,91,705/- made u/s 14Aof the Income Tax Act, 1961 read with Rule 8D ofthe Income Tax Rules?the case, the Hon'ble ITAT erred in law in deletingthe disallowance of ` 2,84,91,705/- made u/s 14Aof the Income Tax Act, 1961 read with Rule 8D ofthe Income Tax Rules? 3.A few essential facts in ITA-348-2018 as narrated therein may be noticed. The assessee was engaged in the business of manufacturing ofDenim Fabrics, Denim Garments and trading in textiles goods. It filed itsreturn for the assessment year 2011-12 on 28.9.2011 declaring total loss of` 27,00,69,713/-. The assessment was completed under Section 143(3) ofthe Act by the Assessing Officer vide order dated 13.3.2014 (Annexure-1)by making the following disallowances:- I.Interest of ` 17,28,206/- on interest free advancesto the subsidiary company;to the subsidiary company; II.Bank charges of ` 25,24,786/- under Section 37(1)of the Act;of the Act; III.Interest of ` 4,61,160/- on investment in CapitalWork in Progress under Section 36(1)(iii) of theAct;Work in Progress under Section 36(1)(iii) of theAct; IV.` 1,85,200/- on account of Wealth Tax debited toP&L Account;P&L Account; V.` 4,04,091/- on account of capitalization ofbuilding repair expenses; and building repair expenses; and VI.` 2,86,58,780/- under Section 14A of the Act readwith Rule 8D of the Income Tax Rules.with Rule 8D of the Income Tax Rules. 4.Feeling aggrieved by the order, Annexure-1, the assessee filedGURBACHAN SINGH2019.05.13 11:02I attest to the accuracy andan appeal before the Commissioner of Income Tax (Appeals) [for brevityintegrity of this document ITA-348-2018-3- “the CIT(A)”]. The CIT(A) vide order dated 30.12.2016 (Annexure-2)partly allowed the appeal and deleted the disallowances mentioned at Sr.Nos. I, II and VI (out of disallowance of ` 2,86,58,780/- under Section 14Aof the Act, deleted the disallowance of ` 2,84,91,705/-) and upheld thedisallowances mentioned at Sr. Nos. III, IV and V. The revenue filed anappeal before the Tribunal challenging the disallowances mentioned at Sr.Nos. II and VI. The Tribunal vide order dated 21.12.2017 (Annexure-3)dismissed the appeal. Hence, the present appeal by the revenue. 5.We have heard learned counsel for the revenue. ITA-348-2018-3- “the CIT(A)”]. The CIT(A) vide order dated 30.12.2016 (Annexure-2)partly allowed the appeal and deleted the disallowances mentioned at Sr.Nos. I, II and VI (out of disallowance of ` 2,86,58,780/- under Section 14Aof the Act, deleted the disallowance of ` 2,84,91,705/-) and upheld thedisallowances mentioned at Sr. Nos. III, IV and V. The revenue filed anappeal before the Tribunal challenging the disallowances mentioned at Sr.Nos. II and VI. The Tribunal vide order dated 21.12.2017 (Annexure-3)dismissed the appeal. Hence, the present appeal by the revenue. 5.We have heard learned counsel for the revenue. 6.It was not disputed by the learned counsel for the revenue thatquestion No. (i) is covered by the judgment of this Court in ITA No. 209 of2015 (The Principal Commissioner of Income Tax-3, Ludhiana v. M/sMalwa Industries Ltd., Ludhiana) decided on 26.8.2015 whereas questionNo. (ii) is covered by the decision of this Court in ITA No. 186 of 2013(Commissioner of Income Tax, Jalandhar-I, Jalandhar v. M/s MaxIndia Limited) decided on 6.9.2016, wherein both the appeals filed by therevenue were dismissed. 7.Accordingly, the present appeals are also dismissed. (AJAY KUMAR MITTAL) JUDGE May 8, 2019 gbs (MANJARI NEHRU KAUL)JUDGE Whether Speaking/ReasonedWhether Reportable Yes/No Yes/No