The Commissioner of Income-tax, Bangalore / The Assistant Commissioner of Income-tax Circle-11(5), Bangalore v. Jundal Aluminium Limited
[Citation -2020-LL-1008-24]

Citation 2020-LL-1008-24
Appellant Name The Commissioner of Income-tax, Bangalore / The Assistant Commissioner of Income-tax Circle-11(5), Bangalore
Respondent Name Jundal Aluminium Limited
Court HIGH COURT OF KARNATAKA
Relevant Act Income-tax
Date of Order 08/10/2020
Assessment Year 2008-09
Judgment View Judgment
Keyword Tags substantial question of law • disallowance of expenditure • claim of expenditure • generation of energy • eligible business • surplus fund • satisfaction
Bot Summary: The Assessing Officer by an order dated 01.10.2010 disallowed the claim of the assessee under Section 80IA and Section 14A of the Act. Being aggrieved, the assessee filed an appeal before the Commissioner of Income Tax who by an order dated 30.03.2012 inter alia held that deduction under Section 80IA of the Act has to be granted only on profit making unit. The Tribunal dismissed the appeal of the revenue and remitted the claim of the assessee for disallowance under Section 14A of the Act in respect of Rs.14,40,470/- to the Assessing Officer. Learned counsel for the revenue submitted that Section 80IA(1) of the Act is applicable to eligible business and all profit making and loss making units have to be aggregated and then deduction under Section 80IA has to be computed. A three judge bench of the Supreme Court in SANTOSH HAZARI VS. PURSHOTTAM TIWARI , 3 SCC 179 while dealing with the expression to be a question of law involving in the case held that to be a question of law involving in the case , there must be first a foundation for it laid in pleadings and the questions 14 emerged from sustainable findings of fact arrived at by courts of fact and it must be necessary to decide that question of law for a just and proper decision of the case. In HERO VINOTH VS. SESHAMMAL , 5 SCC 545 while dealing with the scope of Section 260A of the Act, it was held that this court will not interfere with findings of the court, unless the courts have ignored material evidence or acted on no evidence or have drawn wrong inferences from proved facts by applying the law erroneously or the decision is based on no evidence. The Commissioner of Income Tax as well as the Tribunal has recorded a finding that the assessee has invested a sum of Rs.26,61,011/- from its own capital and the claim of the assessee for an amount of Rs.14,40,471/- under Section 14A of the Act has been remitted to the Assessing Officer to decide the claim in accordance with law.


1 IN HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS 8TH DAY OF OCTOBER 2020 PRESENT HON BLE MR. JUSTICE ALOK ARADHE AND HON BLE MR. JUSTICE H.T.NARENDRA PRASAD I.T.A. NO.450 OF 2013 BETWEEN: 1. COMMISSIONER OF INCOME-TAX C.R. BUILDING, QUEENS ROAD BANGALORE. 2. ASSISTANT COMMISSIONER OF INCOME-TAX CIRCLE-11(5), RASHTROTHANA BHAVAN NRUPATHUNGA ROAD, BANGALORE. ... APPELLANTS (BY Mr. K.V. ARAVIND, ADV.,) AND: M/S. JUNDAL ALUMINIUM LIMITED JINDAL NAGAR, TUMKUR ROAD BANGALORE-560073. ... RESPONDENT (BY Ms. JINEETHA CHATERJEE, ADV., FOR Mr. S. PARTHASARATHI, ADV.,) --- THIS ITA IS FILED UNDER SECTION 260-A OF I.T. ACT, 1961 ARISING OUT OF ORDER DATED 30.04.2013 PASSED IN ITA NO.799/BANG/2012, FOR ASSESSMENT YEAR 2008-09, PRAYING THAT THIS HON BLE COURT MAY BE PLEASED TO: (I) FORMULATE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN. 2 (II) ALLOW APPEAL AND SET ASIDE ORDER PASSED BY ITAT, BANGALORE IN ITA NO.799/BANG/2012 DATED 30.4.2013 CONFIRMING ORDER OF APPELLATE COMMISSIONER AND CONFIRM ORDER PASSED BY ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-11(5), BANGALORE. THIS ITA COMING ON FOR HEARING, THIS DAY, ALOK ARADHE J., DELIVERED FOLLOWING: JUDGMENT This appeal under Section 260A of Income Tax Act, 1961 (hereinafter referred to as Act for short) has been preferred by revenue. subject matter of appeal pertains to Assessment year 2008-09. appeal was admitted by bench of this Court vide order dated 14.03.2014 on following substantial questions of law: (i) Whether on facts and in circumstances and in law appellate authorities were correct in holding that only profit making power generating unit of assessee should be taken into account and not loss making units in computing total income of assessee for its eligible business to allow deduction under Section 80IA of Act? 3 (ii) Whether on facts and in eth circumstances din law appellate authorities were correct in holding that deduction under Section 80IA windmiss wise instead of eligible business wise, contrary to provision of section 80IA(1) and 80IA(5) and without taking in account fact that generation of energy is one undertaking / enterprise and eth windmills are units of same undertaking/enterprise? (iii) Whether on facts and in circumstances and in law Tribunal was correct in holding that Assessing Officer has not satisfied himself in invoking Section 14A of Act without properly appreciating fact that, Assessing Officer has clearly held that company had availed working capital loan in earlier years which continued in current year and therefore was correct in disallowance under Section 14A of Act? 4 2. Facts leading to filing of appeal briefly stated are that assessee is company engaged in business of manufacture and sale of aluminum extrusions and generation of wind energy. assessee filed its return of income on 25.09.2008 for Assessment Year 2008-09 which was assessed under Section 143(3) of Act on total income of Rs.69,30,00,030/-. Assessing Officer by order dated 01.10.2010 disallowed claim of assessee under Section 80IA and Section 14A of Act. Being aggrieved, assessee filed appeal before Commissioner of Income Tax (Appeals) who by order dated 30.03.2012 inter alia held that deduction under Section 80IA of Act has to be granted only on profit making unit. Commissioner of Income Tax (Appeals) restricted claim of disallowance under Section 14A of Act to Rs.14,40,471/- as against Rs.45,01,582/-. Thus, appeal preferred by assessee was partly allowed. Being aggrieved, 5 assessee as well as revenue filed appeals before Income Tax Appellate Tribunal (hereinafter referred to as 'the Tribunal' for short), which were decided by common order dated 30.04.2013. Tribunal dismissed appeal of revenue and remitted claim of assessee for disallowance under Section 14A of Act in respect of Rs.14,40,470/- to Assessing Officer. In aforesaid factual background, revenue is in appeal before us. 3. Learned counsel for revenue submitted that Section 80IA(1) of Act is applicable to eligible business and all profit making and loss making units have to be aggregated and then deduction under Section 80IA has to be computed. It is contended that Section 80IA(5) is in respect of eligible business and not in respect of each unit. It was also pointed out that this court in I.T.A.No.377/2012 vide decision dated 07.09.2020 has permitted aggregation and set off under Section 70 of Act. It is also pointed out that 6 amendment to Section 14A(2) read with Rule 8D of Rules is applicable with effect from Assessment Year 2008-09 as has been held by Supreme Court as well as by this court. It is also argued that Assessing Officer has recorded reasons / satisfaction regarding incorrectness of claim of expenditure of assessee under Section 14A of Act and therefore, mandate contained in decision in GODREJ & BOYCE MFG. CO. LTD. VS. DEPUTY COMMISSIONER OF INCOME-TAX, RANGE 10(2), MUMBAI , (2010) 328 ITR 81 stands satisfied. Alternatively it is submitted that even if Tribunal was of opinion that satisfaction as required under Section 14A of Act has not been complied with as held by Bombay High Court in Godrej & Boyce Mfg. Co. Ltd., supra, matter ought to have been remitted to Assessing Officer as was done by Bombay High Court in para 73 of its decision. Alternatively it is submitted that judgment rendered in Godrej & Boyce Mfg. Co. Ltd., 7 supra is not applicable as in aforesaid decision, Bombay High Court dealt with Assessment Year 2002-03 i.e., legal position as it existed prior to amendment to Section 14A(2) of Act and therefore, in any case, aforesaid decision is not applicable to facts of case. It is also submitted that object of introduction of Section 14A which has been dealt by Supreme Court in COMMISSIONER OF INCOME-TAX, MUMBAI VS. WALFORT SHARE & STOCK BROKERS (P.) LTD. , 326 ITR 1 has not been taken into account by Tribunal. It is also urged that Tribunal grossly erred in considering surplus as on 01.04.2007 and recording finding that investment is out of surplus and without taking into consideration fact that investment was made by assessee much prior to 01.04.2007. 4. On other hand, learned counsel for assessee has invited attention of this court to order dated 14.03.2014 by which appeal was admitted by 8 bench of this court. It is further submitted that substantial questions of law Nos.1 and 2 are identical to substantial questions of law, which were involved in I.T.A.No.23/2013 and aforesaid appeal which was preferred by revenue has been dismissed by bench of this court vide order dated 19.03.2020. In this connection, reliance has also been placed on decisions of this court in COMMISSIONER OF INCOME TAX VS. SWARNAGIRI WIRE INSULATIONS (P.) LTD , (2013) 213 TAXMAN 218 and decision in COMMISSIONER OF INCOME TAX AND ANOTHER VS. MICROLABS LTD. , (2016) 383 ITR 490 (KARN). It is also urged that there is no question of making any disallowance of expenditure under Section 14A as assessee was already having it sown surplus fund and Commissioner of Income Tax (Appeals) as well as Tribunal have allowed claim under Section 14A of Act to extent of Rs.26,61,011/- only after being satisfied that aforesaid amount was 9 invested from assessee s owned capital and Tribunal has remitted matter to Assessing Officer to examine claim under Section 14A of Act in respect of Rs.14,40,471/-. In support of aforesaid submissions, reliance has been placed on decision of Supreme Court in PR. COMMISSIONER OF INCOME TAX-IV VS. SINTEX INDUSTRIES LIMITED , (2018) 255 TAXMAN 0177 (SC), and MAXOPP INVESTMENT LTD VS. COMMISSIONER OF INCOME TAX, NEW DELHI, CIVIL APPEAL NOS.104-109 OF 2015. 5. We have considered submissions made by learned counsel for parties and have perused record. order dated 14.03.2014 by which appeal was admitted reads as under: Mr.K.V.ARavind, learned counsel for revenue submits that substantial questions of law raised in present appeal and in I.T.A.No.23/2013 are identical. He submits that I.T.A.No.23/2013 has already 10 been admitted by this court. assessee in both appeals is same. Hence, we admit this appeal to consider substantial questions of law as raised in memorandum of appeal. 6. I.T.A.No.23/2013 was decided by this court vide order dated 19.03.2020, which reads as under: Mr.K.V.Aravind, learned counsel for revenue. Smt.Jinitha Chatterjee, learned counsel for respondent. Appeal is admitted for hearing. With consent of learned counsel for parties, same is heard finally. 2. This appeal under Section 260-A of Income Tax Act, 1961 (hereinafter referred to as Act , for short) which has been filed by revenue, was admitted by Bench of this Court by order dated 03.06.2013 on following substantial questions of law: 1. Whether Tribunal was correct in holding that only 11 profit making power generating unit of assessee should be taken into account and not loss making units in computing total income of assessee for its eligible business to allow deduction u/s 80IA of Act? 2. Whether Tribunal was correct in holding that deduction u/s 80IA windmill wise instead of eligible business wise, contrary to provision of section 80IA(1) and 80IA(5) and without taking in account fact that generation of energy is one undertaking/enterprise and windmills are units of same undertaking/enterprise? 3. When matter was taken up today, learned counsel for respondent submitted that issue involved in this appeal is squarely covered by order dated 27.05.2011 passed in case of COMMISSIONER OF INCOME TAX AND 12 ANOTHER Vs. SWARNAGIRI WIRE INSULATIONS P. LTD. (2012) 349 ITR 245 (KAR). 4. In view of aforesaid submission, learned counsel for revenue was unable to dispute aforesaid legal proposition. 5. Therefore, substantial questions of law are answered against revenue. In result, appeal is dismissed. 7. Thus, from conjoint reading of order dated 14.03.2014 and judgment dated 19.03.2020 passed in I.T.A.No.23/2013, it is evident that substantial question of law Nos.1 and 2 are identical and have been answered against revenue by placing reliance on decision of this court in SWARNAGIRI WIRE INSULATIONS (P.) LTD., supra. aforesaid position was not disputed by learned counsel for revenue. Therefore, inevitable conclusion is that substantial questions of law Nos.1 and 2 framed in this appeal are 13 already covered by decision of this court rendered in I.T.A.No.23/2013 and therefore, same are answered against revenue and in favour of assessee. 8. We may take note of well settled legal principles before proceeding to deal with third substantial question of law. It is cardinal principle of law that tribunal is fact finding authority and decision on facts on tribunal can be gone into by High Court only if question has been referred to it, which says finding of tribunal is perverse. [SEE: SUDARSHAN SILKS & SAREES VS. CIT , 300 ITR 205 SCC @ 211 and MANGALORE GANESH BEEDI WORKS VS. CIT , 378 ITR 640 (SC) @ 648]. three judge bench of Supreme Court in SANTOSH HAZARI VS. PURSHOTTAM TIWARI , (2001) 3 SCC 179 while dealing with expression to be question of law involving in case held that to be question of law involving in case , there must be first foundation for it laid in pleadings and questions 14 emerged from sustainable findings of fact arrived at by courts of fact and it must be necessary to decide that question of law for just and proper decision of case. It has been held that entirely new point raised for first time before High Court is not question involved in case unless, it goes to root of matter. In HERO VINOTH (MINOR) VS. SESHAMMAL , (2006) 5 SCC 545 while dealing with scope of Section 260A of Act, it was held that this court will not interfere with findings of court, unless courts have ignored material evidence or acted on no evidence or have drawn wrong inferences from proved facts by applying law erroneously or decision is based on no evidence. aforesaid decisions were referred to with approval in VIJAY KUMAR TALWAR VS. CIT, (2011) 1 SCC 673 supra as well as in UNION OF INDIA V. IBRAHIM UDDIN , (2012) 8 SCC 148 and MANGALORE GANESH BEEDI WORKS VS. CIT , (2016) 2 SCC 556. 15 9. Now we may advert to third substantial question of law. Commissioner of Income Tax (Appeals) as well as Tribunal has recorded finding that assessee has invested sum of Rs.26,61,011/- from its own capital and claim of assessee for amount of Rs.14,40,471/- under Section 14A of Act has been remitted to Assessing Officer to decide claim in accordance with law. aforesaid concurrent findings of fact recorded by Tribunal by no stretch of imagination can be said to be either perverse or based on no evidence. No element of perversity has been brought to our notice, therefore, it is not necessary for us to answer aforesaid substantial question of law. In view of preceding analysis, substantial questions of law framed by this court are answered in favour of assessee and against revenue. 16 In result, we do not find any merit in this appeal, same fails and is hereby dismissed. Sd/- JUDGE Sd/- JUDGE ss Commissioner of Income-tax, Bangalore / Assistant Commissioner of Income-tax Circle-11(5), Bangalore v. Jundal Aluminium Limited
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