O/TAXAP/1223/2014 JUDGMENT IN HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 1223 of 2014 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE KS JHAVERI and HONOURABLE MR.JUSTICE K.J.THAKER 1 Whether Reporters of Local Papers may be allowed to see judgment ? 2 To be referred to Reporter or not ? 3 Whether their Lordships wish to see fair copy of judgment ? 4 Whether this case involves substantial question of law as to interpretation of Constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to civil judge? COMMISSIONER OF INCOME TAX AHMEDABAD III Appellant(s) Versus NIRMA LIMITED Opponent(s) Appearance: MR NITIN K MEHTA, ADVOCATE for Appellant(s) No. 1 MR B S SOPARKAR, ADVOCATE for Opponent(s) No. 1 RULE SERVED for Opponent(s) No. 1 CORAM: HONOURABLE MR.JUSTICE KS JHAVERI and Page 1 of 5 O/TAXAP/1223/2014 JUDGMENT HONOURABLE MR.JUSTICE K.J.THAKER Date : 18/12/2014 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) 1. By way of this appeal, Revenue has challenged judgment and order dated 26.2.2014 passed by Income Tax Appellate Tribunal, Ahmedabad Bench in ITA No. 558/Ahd/2005 for AY 2001-02. 2. While admitting this appeal on 5.12.2014, this Court has framed following substantial questions of law: (A) Whether Appellate Tribunal is right in law and on facts in reversing order of CIT(A) confirming disallowance of Soda Ash Project Interest Expenses of Rs.21,70,47,967/ treating same as expenditure of capital nature and rightly disallowed by A.O. Under Section 36(1) (iii) of Act ? (B) Whether Ld. ITAT was justified in not following order of Hon ble Gujarat High Court in case of Atul Intermediates which held that deduction u/s. 80HHC is to be computed on eligible business profit only after reducing therefrom portion of profit on which deduction has already been availed by assessee under section 80IA of Act 3. facts of present case are that Page 2 of 5 O/TAXAP/1223/2014 JUDGMENT return of income filed on 31.10.2001, declaring total income of Rs. 51,76,36,605/-. In return of income, assessee company has claimed deduction under sec. 80IA, 80HHC & 80G of IT Act. adjusted book profit of assessee company was Rs. 266,69,34,380/-. As income tax payable on total income computed as per provisions of IT Act was less than 7.5% of assessee company s book profit, book profit was deemed to be total income of assessee u/s. 115JB. Tax @ 7.5% of Rs. 20,00,20,079/- and surcharge @ 13% of Rs. 2,60,002,610/- was charged on income u/s. 115JB. return was picked up for scrutiny and notice u/s. 143(2) dated 29.8.2002 was served on assessee company on same date. Subsequently, notice u/s. 142(1) dated 11.12.2003, 9.3.2004, 24.3.2004 and 25.3.2004 were served on assessee company. In response to these notices, necessary details are furnished by assessee company. After consider material on record, assessment order came to be passed. Against said order of assessment order, assessee company has preferred appeal before CIT(A), which was partly allowed. Against order of CIT(A), Revenue has preferred appeal before ITAT which was dismissed. Being aggrieved by said order of ITAT, Revenue has preferred present Tax Appeal before this Court. Page 3 of 5 O/TAXAP/1223/2014 JUDGMENT 4. We have heard learned advocates appearing for parties and considered submissions. questions involved in present appeal are now squarely covered by two decisions of this Court. first question no.(A) is governed by decision of this Court in case of Commissioner of Income-Tax v. Nirma Ltd., reported in [2014] 367 ITR 12 (Guj.), more particularly, in para6, this Court has held as under: sole surviving question No. 13, pertains to disallowance of soda ash project interest expenses of Rs. 3.33 crores (rounded off) and lad project interest of Rs. 12.27 crores (rounded off). Assessing Officer, questioned assessee on these expenses and deleted same on two grounds, firstly, that interest was paid by way pre-operative expenditure and, secondly, assessee had capitalized such expenditure. 5. Therefore, question no. (A) is answered in favour of assessee. 6. second question (B) is also governed by decision of this Court in case of Commissioner of Income Tax v. Atul Intermediates, reported in [2014] 45 taxmann.com 275, and therefore, question (B) is decided in favour of Revenue and against assessee. appeal is partly allowed. Page 4 of 5 O/TAXAP/1223/2014 JUDGMENT (K.S.JHAVERI, J.) (K.J.THAKER, J) mandora Page 5 of 5 Commissioner of Income-tax Ahmedabad III v. Nirma Limited