The Principal Commissioner Of Income Tax, Vadodara 1 v. Gujarat Industries Power Company Ltd

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 348 of 2022 ========================================================== THE PRINCIPAL COMMISSIONER OF INCOME TAX, VADODARA 1 Versus GUJARAT INDUSTRIES POWER COMPANY LTD. ========================================================== Appearance: MR.VARUN K.PATEL(3802) for the Appellant(s) No. 1 for the Opponent(s) No. 1 ========================================================== CORAM:HONOURABLE MR. JUSTICE N.V.ANJARIAandHONOURABLE MR. JUSTICE BHARGAV D. KARIA Date : 01/08/2022 ORAL ORDER (PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA) 1. This appeal is preferred under section 260A of the Income TaxAct, 1961 [for short ‘the Act, 1961’] by the revenue feelingaggrieved by the order dated 28.02.2022 passed by the Income Tax Appellate Tribunal, “D” Bench, Ahmedabad [for short‘the Tribunal’] in ITA No. 644/Ahd/2010 for A.Y. 2007-08. 2. The Tribunal passed a common order dated 28.02.2022 forA.Ys. 2003-04, 2006-07, 2007-08 and 2008-09 in case of theassessee-Gujarat Industries Power Company Limited in appeals and cross-objections filed before it. So far as present appeal is concerned, the following substantial questions of laware proposed: “(a)Whether on the facts and in thecircumstances of the case and in law, the Hon’bleITAT is justified in deleting the addition of Rs.43,44,517/- made on account of disallowance u/s. 14Aof the I.T.Act, without appreciating the fact that as perthe provisions of sub-section (3) of Section 14A of theI.T.Act the provisions of sub-section (2) shall alsoapply in relation to a case where an assessee claimsthat no expenditure has been incurred by him inrelation to income which does not form part of totalincome and in the instant case the assessee claimedthat no expenditure has been incurred for earning theexempt income of Rs. 1,37,42,786/- and accordinglythe provisions of section 14A(2) of the I.T. Act isapplicable in the case of the assessee for the A.Y.2007-08? (b) Whether on the facts and in the circumstances ofthe case and in law, the Hon’ble ITAT is justified indeleting the addition of Rs. 3,18,126/- made onaccount of disallowance of claim of depreciation onManaging Director’s residence, without appreciatingthe fact that as per the Income Tax Rules the buildingswhich are used mainly for residential purpose excepthotels and boarding houses are eligible fordepreciation @ 5% only whereas the assessee hasclaimed depreciation @ 10% on the ManagingDirector’s residence?” 3. The Assessing Officer, while passing the assessment orderunder section 143(3) of the Act, 1961, made disallowance ofRs. 43,44,517/- under section 14A of the Act, 1961 asdetermined as per Rule 8D(2) of the Income Tax Rules, 1962[for short ‘the Rules, 1962] as under:under section 143(3) of the Act, 1961, made disallowance ofRs. 43,44,517/- under section 14A of the Act, 1961 asdetermined as per Rule 8D(2) of the Income Tax Rules, 1962[for short ‘the Rules, 1962] as under: 4. The Assessing Officer also disallowed depreciation ofRs. 3,18,126/- claimed by the assessee on Managing Director'sRs. 3,18,126/- claimed by the assessee on Managing Director's residence. 5. Being aggrieved by the order passed by the Assessing Officer,the assessee preferred an appeal before the CIT (Appeals),who confirmed the additions. The assessee therefore preferred 4. The Assessing Officer also disallowed depreciation ofRs. 3,18,126/- claimed by the assessee on Managing Director'sRs. 3,18,126/- claimed by the assessee on Managing Director's residence. 5. Being aggrieved by the order passed by the Assessing Officer,the assessee preferred an appeal before the CIT (Appeals),who confirmed the additions. The assessee therefore preferred ITA No. 644/AHD/2010 before the Tribunal. The Tribunalpassed a common order for the assessment years 2003-04,2006-07, 2007-08 and 2008-09 in case of the assessee. TheTribunal deleted the addition made under section 14A of theAct, 1961 considering the fact for the assessment year 2006-07. The Tribunal also deleted the disallowance of depreciationconsidering the material placed before it and recording the factthat the building was used for official-cum-residential purposeby the Managing Director with all office facilities andtherefore, the assessee was entitled to depreciation @ 10% anddirected the Assessing Officer to allow the same. 6. In view of our order of even date passed in Tax Appeal No.349 of 2022 with regard to the issue of disallowance undersection 14A of the Act, 1961 and considering the finding offact given by the Tribunal with regard to use of the buildingfor office-cum-residential purpose by the Managing Director,we do not find any infirmity in the impugned order of theTribunal as no question of law much less any substantial question of law proposed or otherwise arises therefrom. Theappeal is accordingly dismissed. (N.V.ANJARIA, J) JYOTI V. JANI (BHARGAV D. KARIA, J)