TMI Blog2020 (10) TMI 507X X X X Extracts X X X X X X X X Extracts X X X X ..... ber Appellant by: Shri V. P. Kothari, A.R Respondent by: Shri Padma Ram Mirdha, D.R ORDER PER AMARJIT SINGH, JM The assessee has filed the present appeal against the order dated 18.06.2018 passed by the CIT(A)-28, Mumbai, relating to the assessment year 2013-14. The assessee has raised the following grounds of the appeal: 1. The learned Commissioner of Income Tax has erred in law and on facts in dismissing the appeal on technical ground stating that appeal is not maintainable without considering the facts that the working given to the learned Assessing Officer under Rule 8D r.w.s 14A was without prejudice and claiming that there was no expenditure incurred by the appellant. 2. The learned Commissioner of Income Tax has erred in law and on facts in confirming the disallowance of ₹ 1,95,953/- under Rule 8D r.w.s 14A of the Income Tax Act, 1961 without properly considering the facts and circumstances of the case that the appellant has not incurred any expenditure for earning such income. 3. Your appellants craves, leave to add, alter and / or amend the above grounds of appeal. 2. Brief facts of the case are that the assessee filed it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In our opinion the very basis on which the revenue had sought to contend or argue their case that the shareholder funds to the tune of over ₹ 172 crores was utilised for the purpose of fixed assets in terms of the balance sheet as on 31st March, 1999, is fallacious. Firstly, we are not concerned with the balance sheet as of 31-3-1999. What would be relevant would be balance sheet as on 31-3-2000. Apart from that, the learned counsel has been unable to point out to us from the balance sheet that the balance sheet as on 31-3-1999 showed that the shareholders funds were utilized for the purpose of fixed assets. To our mind the profit and loss account and the balance sheet would not show whether shareholders funds have been utilised for investments. The argument has to be rejected on this count also. 9. Apart from that we have noted earlier that both in the order of the CIT (Appeals) as also the Appellate Tribunal, a clear finding is recorded that the assessee had interest-free funds of its own which had been generated in the course of the year commencing from 1-4-1999. Apart from that in terms of the balance sheet there was a further availability of ₹ 398.19 crores ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were more than the investment in the tax free securities. The ITAT therefore held that there was no basis for deeming that the Assessee had used the borrowed funds for investment in tax free securities. On this factual aspect, the ITAT did not find any merit in the contention raised by the Revenue and therefore, accordingly answered the question in favour of the Assessee. On going through the order of the CIT (Appeals) dated 28th March 2005 as well as the impugned order, we do not find that the CIT (Appeals) or the ITAT erred in holding in favour of the Assessee. In this regard, the submission of Mr Mistry, the learned Senior Counsel appearing on behalf of the Assessee, that this issue is squarely covered by a judgment of this Court in the case of CIT v. Reliance Utilities Power Ltd. [2009] 313 ITR 340/178 Taxman 135 (Bom.) is well founded. The facts of that case were that the Assessee viz. M/s Reliance Utilities and Power Ltd. had invested certain amounts in Reliance Gas Ltd. and Reliance Strategic Investments Ltd. It was the case of the Assessee that they themselves were in the business of generation of power and they had earned regular business income therefrom. The investment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to claim the deductions. The Supreme Court noted that the argument had considerable force, but considering the fact that the contention had not been advanced earlier it did not require to be answered. It then noted that in Woolcombers of India Ltd.'s case [1982] 134 ITR 219 the Calcutta High Court had come to the conclusion that the profits were sufficient to meet the advance tax liability and the profits were deposited in the over draft account of the assessee and in such a case it should be presumed that the taxes were paid out of the profits of the year and not out of the overdraft account for the running of the business. It noted that to raise the presumption, there was sufficient material and the assessee had urged the contention before the High Court. The principle, therefore, would be that if there were funds available both interest-free and over draft and/or loans taken, then a presumption would arise that investments would be out of the interest-free funds generated or available with the company if the interest-free funds were sufficient to meet the investment. In this case this presumption is established considering the finding of fact both by the Commissioner of Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m us. 6. On the basis of said decision we are of the view that there should be no disallowance in view of the provision under Sec. 8D(2)(ii). Accordingly, we delete the addition and decided the issue in favour of the assessee. Further we notice that the investment to the tune of ₹ 65,05,859.23 is liable to be taken into consideration for the purpose of assessing the expenditure in view of the provision under Rule 8D (2)(iii) of the Rule and accordingly the expenditure has been assessed to the tune of ₹ 32,529-30. Undoubtedly, those income which yielded exempt income is liable to be taken into consideration while application of provisions under Rule 8D(2)(iii) of the Rule Accordingly, we set aside the calculation did by the A.O as well as confirmed by the CIT(A) and restore the issue before the A.O to re-assess the expenditure to earn exempt income in view of the provision under Sec. 14A r.w. Rule 8D(2)(iii) of the Act. Reasons for delay in pronouncement of order 6.1 Before parting, we would like to enumerate the circumstances which have led to delay in pronouncement of this order. The hearing of the matter was concluded on 07/02/2020 and in terms of Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re also alive to the fact that rule 34(5) of the Income Tax Appellate Tribunal Rules 1963, which deals with pronouncement of orders, provides as follows: (5)The pronouncement may be in any of the following manners: - (a) The Bench may pronounce the order immediately upon the conclusion of the hearing. (b) In case where the order is not pronounced immediately on the conclusion of the hearing, the Bench shall give a date for pronouncement. (c) In a case where no date of pronouncement is given by the Bench, every endeavour shall be made by the Bench to pronounce the order within 60 days from the date on which the hearing of the case was concluded but, where it is not practicable so to do on the ground of exceptional and extraordinary circumstances of the case, the Bench shall fix a future day for pronouncement of the order, and such date shall not ordinarily (emphasis supplied by us now) be a day beyond a further period of 30 days and due notice of the day so fixed shall be given on the notice board. 8. Quite clearly, ordinarily the order on an appeal should be pronounced by the bench within no more than 90 days from the date of concluding the hearing. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r dated 6.5.2020 read with order dated 23.3.2020, extended the limitation to exclude not only this lockdown period but also a few more days prior to, and after, the lockdown by observing that In case the limitation has expired after 15.03.2020 then the period from 15.03.2020 till the date on which the lockdown is lifted in the jurisdictional area where the dispute lies or where the cause of action arises shall be extended for a period of 15 days after the lifting of lockdown . Hon ble Bombay High Court, in an order dated 15th April 2020, has, besides extending the validity of all interim orders, has also observed that, It is also clarified that while calculating time for disposal of matters made time-bound by this Court, the period for which the order dated 26th March 2020 continues to operate shall be added and time shall stand extended accordingly , and also observed that arrangement continued by an order dated 26th March 2020 till 30th April 2020 shall continue further till 15th June 2020 . It has been an unprecedented situation not only in India but all over the world. Government of India has, vide notification dated 19th February 2020, taken the stand that, the coronavirus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered view, even without the words ordinarily , in the light of the above analysis of the legal position, the period during which lockout was in force is to excluded for the purpose of time limits set out in rule 34(5) of the Appellate Tribunal Rules, 1963. Viewed thus, the exception, to 90-day time-limit for pronouncement of orders, inherent in rule 34(5)(c), with respect to the pronouncement of orders within ninety days, clearly comes into play in the present case. Of course, there is no, and there cannot be any, bar on the discretion of the benches to refix the matters for clarifications because of considerable time lag between the point of time when the hearing is concluded and the point of time when the order thereon is being finalized, but then, in our considered view, no such exercise was required to be carried out on the facts of this case. Driving strength from the ratio of aforesaid decision, we exclude the period of lockdown while computing the limitation provided under Rule 34(5) and proceed with pronouncement of the order. 7. Accordingly, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 24.08.2020 - - T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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