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

IN THE HIGH COURT OF GUJARAT AT AHMEDABADR/TAX APPEAL NO. 458 of 2022 ==========================================================THE PRINCIPAL COMMISSIONER OF INCOME TAX, VADODARA 1 VersusGUJARAT 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 : 23/08/2022 ORAL ORDER (PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA) 1. This appeal is preferred under section 260Aof the Income Tax Act, 1961 [for short ‘theAct, 1961’] by the revenue feeling aggrievedby the order dated 28.02.2022 passed by theIncome Tax Appellate Tribunal, “D” Bench,Ahmedabad [for short ‘the Tribunal’] in ITANo. 495/Ahd/2012 for A.Y. 2008-09. 2. The Tribunal passed a common order dated 28.02.2022 for A.Ys. 2003-04, 2006-07, 2007-08 and 2008-09 in case of the assessee-Gujarat Industries Power Company Limited inappeals and cross-objections filed before it.So far as present appeal is concerned, thefollowing substantial questions of law are proposed: “(a)Whether on the facts and in thecircumstances of the case and in law,the Hon’ble ITAT is justified indeleting the addition of Rs. 41,11,595/-made on account of disallowance u/s 14Aof the I.T. Act, without appreciatingthe fact that as per the provisions ofSub-section(3) of section 14A of theI.T. Act, the provisions of Sub-section(2) shall also apply in relationto a case where an assessee claims thatno expenditure has been incurred by himin relation to income which does notform part of total income and in theinstant case the assessee claimed thatno expenditure has been incurred forearning the exempt income of Rs.59,84,386/-andaccordinglytheprovisions of Section 14A(2) of the I.T.Act is applicable in the case of theassessee for the A.Y. 2008-2009? (b) Whether on the facts and in thecircumstances of the case and in law, the Hon’ble ITAT is justified indeleting the addition of Rs. 2,86,314/-made on account of disallowance of claimof depreciation on Managing Director’sresidence, without appreciating the factthat as per the Income Tax Rules thebuildings which are used mainly forresidential purpose except hotels andboarding houses are eligible fordepreciation @ 5% only whereas theassessee has claimed depreciation @ 10%on the Managing Director’s residence?” 3. The Assessing Officer, while passing theassessment order under section 143(3) of theassessment order under section 143(3) of the Act, 1961, made disallowance of Rs.41,11,595/- under section 14A of the Act,41,11,595/- under section 14A of the Act, 1961 as determined as per Rule 8D(2) of theIncome Tax Rules, 1962 [for short ‘the Rules,1962]. 4. The Assessing Officer also disalloweddepreciation of Rs. 2,86,314/- claimed bythe assessee on Managing Director'sdepreciation of Rs. 2,86,314/- claimed bythe assessee on Managing Director's residence. 5. Being aggrieved by the order passed by the 3. The Assessing Officer, while passing theassessment order under section 143(3) of theassessment order under section 143(3) of the Act, 1961, made disallowance of Rs.41,11,595/- under section 14A of the Act,41,11,595/- under section 14A of the Act, 1961 as determined as per Rule 8D(2) of theIncome Tax Rules, 1962 [for short ‘the Rules,1962]. 4. The Assessing Officer also disalloweddepreciation of Rs. 2,86,314/- claimed bythe assessee on Managing Director'sdepreciation of Rs. 2,86,314/- claimed bythe assessee on Managing Director's residence. 5. Being aggrieved by the order passed by the Assessing Officer, the assessee preferred anappeal before the CIT (Appeals), whoconfirmed the additions. The assesseetherefore preferred ITA No. 495/AHD/2012before the Tribunal. The Tribunal passed acommon order for the assessment years 2003-04, 2006-07, 2007-08 and 2008-09 in case ofthe assessee. The Tribunal deleted theaddition made under section 14A of the Act,1961 considering the fact for the assessmentyear 2006-07. The Tribunal also deleted thedisallowance of depreciation considering thematerial placed before it and recording thefact that the building was used for official-cum-residential purpose by the ManagingDirector with all office facilities andtherefore, the assessee was entitled todepreciation @ 10% and directed the AssessingOfficer to allow the same. 6. In view of our order of passed in Tax Appeal No. 349 of 2022 with regard to theissue of disallowance under section 14A ofthe Act, 1961 and considering the finding offact given by the Tribunal with regard to useof the building for office-cum-residentialpurpose by the Managing Director, we do notfind any infirmity in the impugned order ofthe Tribunal as no question of law much lessany substantial question of law proposed orotherwise arises therefrom. 7. The appeal is accordingly dismissed. (N.V.ANJARIA, J) RAGHUNATH R NAIR (BHARGAV D. KARIA, J)