The Second Question Is With Regard To The Claim For Additionaldepreciation Under Section 32(1)(Iia). The Tribunal Had Taken Note Of Thedecision Of This Court In v. G. S. Atwal & Company In 254Itr 592 For The Proposition That Mining Of Coal Is Pro

OD-13 IN THE HIGH COURT AT CALCUTTASpecial Jurisdiction (Income tax)ORIGINAL SIDE IA No.GA 2 of 2017 (Old No.GA 3519 of 2017) In ITAT 343 of 2017 PRINCIPAL COMMISSIONER OF INCOME TAX, CENTRAL-2, KOLKATAVs.M/S. DHANSAR ENGINEERING CO. PVT. LTD. BEFORE:The Hon'ble JUSTICE T. S. SIVAGNANAM ANDThe Hon’ble JUSTICE HIRANMAY BHATTACHARYYADate : 14[th] December, 2021. Appearance:Mr. P.K. Bhowmik, Adv.Mr. Soumen Bhattacharjee, Adv.…for the appellant.Mr. J.P. Khaitan, Sr., Adv. Ms. Swapna Das, Adv.Mr. Sanjoy Bhowmik, Adv.Mr. Siddharth Das, Adv. …for the respondent. The Court : This appeal by the revenue filed under Section 260A ofthe Income Tax Act (the ‘Act’ in brevity) is directed against the order dated 9[th]November, 2016 passed by the Income Tax Appellate Tribunal, B-Bench,Kolkata (the ‘Tribunal’) in ITA No.920-923/Kol/2013 for the assessment Year2007-08 to 2010-2011 and also ITA 467-468/Kol/2013 for the assessmentyear 2009-10 and 2010-11. The revenue has raised the following substantial questions of law forconsideration: a) Whether in the facts and circumstances of the case the Tribunalwas justified in law in cancelling the assessments framed undersection 153C of the Act for the assessment years 2007-08 to 2009-10 and its purported findings in this regard are arbitrary,unreasonable and perverse ?was justified in law in cancelling the assessments framed undersection 153C of the Act for the assessment years 2007-08 to 2009-10 and its purported findings in this regard are arbitrary,unreasonable and perverse ? b) Whether on the facts and circumstances of the case the Tribunalwas justified in law in holding that the assessee is eligible for theclaim of additional depreciation under section 32(1)(iia) of the Actand allowed the deduction of Rs.6,93,39,027/- for the assessmentyear 2010-11 and its purported findings in this regard arearbitrary, unreasonable and perverse ? was justified in law in holding that the assessee is eligible for theclaim of additional depreciation under section 32(1)(iia) of the Actand allowed the deduction of Rs.6,93,39,027/- for the assessmentyear 2010-11 and its purported findings in this regard arearbitrary, unreasonable and perverse ? c) Whether on the facts and circumstances of the case the Tribunalwas justified in law in deleting the additions of Rs.5,97,332/-made u/s 14A of the Act for the A.Y. 2010-11 on the ground thatthe investments made by the assessee in the group companiesshall not be considered while applying the provisions of Section14A read with rule 8D and its purported findings in this regard arearbitrary, unreasonable and perverse ?was justified in law in deleting the additions of Rs.5,97,332/-made u/s 14A of the Act for the A.Y. 2010-11 on the ground thatthe investments made by the assessee in the group companiesshall not be considered while applying the provisions of Section14A read with rule 8D and its purported findings in this regard arearbitrary, unreasonable and perverse ? We have heard Mr. P. K. Bhowmik, learned standing Counselappearing for the appellant/revenue and Mr. J.P. Khaitan, learned SeniorCounsel appearing for the respondent/assessee. These appeals are directed against the common order passed by theTribunal for the assessment years 2007-08, 2008-09, 2009-10 and 2010-11.Out of the four assessment years, the assessment for the years 2007-08 and 2008-09 are below tax effect. Therefore, this appeal is dismissed in so far asthe assessment years 2007-08 and 2008-09 on the ground of low tax effect. We have heard Mr. P. K. Bhowmik, learned standing Counselappearing for the appellant/revenue and Mr. J.P. Khaitan, learned SeniorCounsel appearing for the respondent/assessee. These appeals are directed against the common order passed by theTribunal for the assessment years 2007-08, 2008-09, 2009-10 and 2010-11.Out of the four assessment years, the assessment for the years 2007-08 and 2008-09 are below tax effect. Therefore, this appeal is dismissed in so far asthe assessment years 2007-08 and 2008-09 on the ground of low tax effect. This leaves us to decide the case of the department for the remainingtwo assessment years, namely, 2009-10 and 2010-11. The first substantialquestion which has been raised before us is with regard to the cancellation ofthe assessment framed under Section 153C of the Act. We have carefullyperused the finding recorded by the Tribunal and the materials which weremade available before the Tribunal. The Tribunal after taking note of thefactual position which was available both before the Assessing Officer and theCommissioner of Income Tax (Appeals) [CIT (A)] held that there is nothing toindicate that the seized documents were disclaimed by NKG in whose casesearch was conducted. Furthermore, the Tribunal pointed out that theAssessing Officer has not referred to any material to indicate that theassessee is the owner of those seized documents. Thus, on facts, the Tribunalheld that the Assessing Officer was not justified in exercising jurisdictionunder section 153C of the Act. Thus, we find that there is no question of lawmuch less substantial question of law arising for consideration on this issue. The second question is with regard to the claim for additionaldepreciation under Section 32(1)(iia). The Tribunal had taken note of thedecision of this Court in the case of CIT Vs. G. S. Atwal & Company in 254ITR 592 for the proposition that mining of coal is production. Applying thesaid decision the Tribunal granted relief to the assessee. This issue has alsobeen settled by the Hon’ble Supreme Court in the case of CIT vs. Sesa GoaLtd. reported in (2004) 271 ITR 331 wherein it was held that extraction and processing of mineral ore amounts to “production” within the meaning ofword under Section 32A(2)(b)(iii) of the Act”. Thus, the finding rendered bythe Tribunal does not call for any interference. The third substantial question of law is with regard to the correctnessof the order passed by the Tribunal deleting the addition made under Section14A for the assessment year 2010-11. The Assessing Officer in his orderdated 29.12.2011 held that the assessee company during the year was havinginvestment of Rs.1,04,00,504/- income which would not form part of thetotal income of the assessee and that the interest has also been paid duringthe year. Accordingly, a sum of Rs.5,97,332/- was disallowed applying Rule8D of the Income Tax Rules. Thus, the finding recorded by the AssessingOfficer is bereft of particulars and devoid of reasons. The CIT(A) before whomthe assessee challenged the said finding while dealing with ground no.(a) hasextensively referred to the submission made by the assessee and has, in fact,extracted the entire contents of the grounds. The particulars furnished by theassessee would show that the investment of Rs.16,67,334/- was made fromthe surplus generated during the financial year 2008-09 ofRs.15,80,41,741/- and, therefore, the assessee’s contention was that theinvestments were made out of loan funds would not arise. The assesseefurther contended that when their own funds have been deployed for theinvestment, there is no income which is not included while computing thetotal income of the assessee and Section 14A would not apply. The assesseealso challenged the finding of the Assessing Officer as being not a speakingorder and criptic. Though such was the contention, the CIT(A) noted that the assessee has furnished the position of its own funds vis-à-vis the totalinvestment but declined relief to the assessee by observing that the assesseehas not shown that the shares were acquired from its own fund withouttaking benefit of loan. When this finding was challenged before the Tribunal,we find that the Tribunal in paragraph 38 of the impugned order hasproceeded on a different footing by making a reference that the investment isin the interest of a strategic investment. Though such a contention has beenraised during the course of argument, the issue itself was whether thisinvestment was from the own funds or borrowed funds. This exercise appearsto have not been done by either the Assessing Officer or the CIT(A) or theTribunal. Therefore, we are of the view that the third issue which arises for onlyone assessment year, namely, 2010-11 requires to be remanded to theAssessing Officer for a fresh decision. In the result, we find that question no.(a) as raised above does not arise for consideration in this appeal as we findthat the entire matter is factual. So far as the substantial question law no.(b) is concerned, the same isanswered against the revenue and so far as the substantial question no.(c) isconcerned, the same is left open and the findings rendered by the Tribunal aswell as the CIT(A) and the Assessing Officer are set aside and the AssessingOfficer is directed to re-examine the issue with regard to the addition underSection 14A after taking note of all the documents that were placed before theAssessing Officer. In the result, the appeal is partly allowed. The connected applicationalso stands disposed of. (T. S. SIVAGNANAM, J.) (HIRANMAY BHATTACHARYYA, J.) S.Das/pa