TMI Blog2013 (12) TMI 902X X X X Extracts X X X X X X X X Extracts X X X X ..... ee - The disallowance made by the Assessing Officer and sustained by the learned CIT(A) was not justified - Decided in favour of assessee. Depreciation on WEG installed - Held that:- Following assessee's own case for earlier A.Y. 2008-09 - The assessee was eligible for depreciation under section 32 of the Act on the wind mills - The issue was restored for fresh adjudication. Interest on FDR - Held that:- The assessee pledged the FDR as security for export oriented units (EOU) - The FDRs were pledged for commercial expediency of the assessee - Following CIT Vs. Jagdish Prasad M. Joshi [2008 (11) TMI 326 - BOMBAY HIGH COURT] - It is to be considered as business income and eligible for deduction under section 10B of the Act - Decided in favour of assessee. - ITA No.426/Jodh/2012, ITA No.418/Jodh/2012 - - - Dated:- 21-10-2013 - Shri Hari Om Maratha And Shri N. K. Saini,JJ. For the Petitioner : Shri U. C. Jain Shri Rajendra Jain For the Respondent : Shri N.A. Joshi- D.R. ORDER Per N. K. Saini, A.M These cross appeals by the department and the assessee are directed against the order dated 04/10/2012 of ld. CIT (A), Jodhpur. First we will deal with the depart ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,246/-. 4. Being aggrieved, the assessee carried the matter to the learned CIT(A) and submitted that the Unit-I purchased the raw-material, domestic as well as imported and paid Excise Duty, VAT, Import Duty on such purchases and manufactured the finished goods from those raw- materials, which was mainly fiber glass, resin and chemicals which almost comprised of 80% of the total consumption of the raw-materials. Whereas the Unit-II (EOU) purchased its raw-material on which Excise Duty, VAT, Custom Duty were exempted as those were used in the manufacturing of goods exported out of India. It was explained that the assessee maintained separate books of accounts such as purchase book, sales book, stock register, cash book, ledger, excise register etc. for both the concerns, there was no change in the method of accounting and trading results for all the earlier years had been accepted under section 143(3) of the I.T. Act, 1961 (hereinafter referred to as "Act", in short). It was contended that the Assessing Officer must have expressed the dissatisfaction about the correctness or completeness of the account and must have noted that such system was not regularly followed by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer for his remand report and the Assessing Officer stated that reply of the assessee was general in nature and did not give any specific reason for low GP. 5. Learned CIT(A) after considering the submissions of the assessee and the comments of the Assessing Officer, deleted the addition by observing in para 3.4 to 3.4.2 of the impugned order, which are reproduced verbatim as under:- "3.4. I have considered the submission of the appellant and order of the Assessing Officer and I find that the Assessing Officer has not rejected the books of account nor mentioned any specific defects in the maintenance of the books of account. The Assessing Officer before applying the G.P. rate of preceding year of unit - I compared the results of both the concerns. In this regard, it is to be noted that both the units are different in the sense that one is non export oriented and other export oriented. So it is not good idea to compare results of both the concerns. As far as trading result is concerned, I find that in unit - I sales has been gone Rs. 901.15 (AY 2008-09) lacs to Rs.727.53 lacs (AY 09-10) whereas in unit II sales were Rs. 865.42 which has been down to Rs. 271 .09 (AY 09-10) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order dated 23/12/2011. 7. In his rival submissions, learned counsel for the assessee strongly supported the impugned order passed by the learned CIT(A) and reiterated the submissions made before the authorities below. It was further stated that the Assessing Officer failed to record any single instance supporting his baseless presumption that the assessee is debiting maximum of purchases and manufacturing expenses to the EOU Unit. It was stated that the Assessing Officer did not point out any defect in the record maintained in regular course of business, therefore, the learned CIT(A) rightly deleted the addition made by the Assessing Officer. Reliance was placed on the following case laws:- 1. ITO Vs. Prakash Chand [100 TTJ (Jd) 639] 2. Ganesh Foundary Vs. ACIT [78 TTJ (Jodhpur) 736] 3. CIT Vs. Smt. Poonam Rani [326 ITR 223 (Del)] 4. Aluminium Industries (P) Ltd. Vs. CIT [80 Taxman 184 (Gau)] 5. Karnataka Plastic Industries Vs. ITO [13 TTJ (Bang) 317] 6. ETCO Engineering Co. Vs. ITO [27 TTJ (Hyd) 350]. 8. We have considered the submissions of both the parties and carefully gone through the material available on record. In the present case, it is an admitted fact th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, even though as per direction given to Ld. AO in the light of decision of Hon'ble ITAT Jodhpur Bench in the case of M/s. Shrinath Gun Chemicals in ITA No. 527/Ju/2009, the entire claim of depreciation amounting to Rs. 27,24,662/- is allowable as such the ground of appeal raised may kindly be directed to allowed in entirety. 3. That on the facts circumstances of the case, the Ld. CIT(A) ought to have directed to allow deprecation on the amount which has been disallowed in the preceding years by recalculating the depreciation on WDV and thus erred in dismissing the ground of appeal No.4 raised before him. 4. That on the facts in the circumstances of the case, the Ld. CIT(A) erred in upholding the finding of the Ld. AO that the interest earned on FDR by the assessee is not a business income and as such is not eligible for exemption u/s 10B and thereby erred in upholding the addition of Rs. 8,63,024/- 5. That the petitioner may kindly be permitted to raise any additional and/or alternative ground at or before the hearing of the appeal. 6. The petitioner prays for justice relief." 12. Ground No.2 was not pressed as such the same is dismissed as not pressed. While gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d or debit incurred or in respect of any credit facility which had been utilized. It was stated that the partners capital was not borrowed or debit incurred for a firm, hence, the interest on partner's capital was out of the purview of the interest. Therefore, the question of disallowance under section 14A of the Act did not arise. 16. Learned CIT(A) after considering the submissions of the assessee observed that the provisions of section 14A were applicable where the claim of the assessee was in respect of the expenditure incurred for the income which does not form part of total income. He further observed that the assessee had invested Rs. 3,55,83,000/- in mutual funds, income of which, did not form part of total income and that the assessee claimed interest paid on borrowings in the profit loss account for which no satisfactory explanation had been provided. Learned CIT(A) affirmed the disallowance made by the Assessing Officer. Reliance was placed on the following case-laws:- 1. Pradee Kar Vs. ACIT 319 ITR 416 (Kar.) 2. CIT Vs. Smt. Ramachandran 339 ITR 296 (Ker.) Now, the assessee is in appeal. 17. Learned counsel for the assessee reiterated the submissions made be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) 911] 3. CIT Vs. Glenmark Pharmaceutical Ltd. [85 DTR (Bom) 169] 4. CIT Vs. Reliance Utilities Power Ltd. [313 ITR 340 (Bom)] 5. CIT Vs. Bharti Televenture Ltd. [331 ITR 502 (Deleted)] 6. Sunil Goel Vs. ACIT [118 TTJ (Deleted) 415] 7. DCIT Vs. U.K. Paints (India) Ltd. [4 ITR (Trib) 455 (Del)] 8. CIT Vs. South India Corporation (Agencies) Ltd. [290 ITR 217 (Mad)] 9. CIT Vs. Tin Box Co [260 ITR 637 (Del)] 10. Shri Bhagwan Kumar Tapariay Vs. ACIT [ITA No. 188/Jodh/2012 dated 29/08/2013] 18. It was also stated that on similar facts, no disallowance under section 14A had been made in the earlier assessment years i.e. A.Ys. 2007-08 2008-09, copies of which are placed at page 147 to 151 90-92 of the assessee's paper book respectively. 19. In his rival submissions, learned D.R. strongly supported the orders of the authorities below and reiterated the observations made therein. 20. We have considered the submissions of both the parties and carefully gone through the material available on the record. In the present case, it is an admitted fact that the assessee made an investment in tax free bonds and units to the extent of Rs. 3,75,15,666/- and earned tax free d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts involved in the earlier years. We therefore considering the totality of the facts are of the view that the impugned disallowance made by the Assessing Officer and sustained by the learned CIT(A) was not justified. Accordingly, the same is deleted. 21. The next issue vide ground No.3 relates to the depreciation on WEG installed in the A.Y. 2008-09. As regard to this issue, the learned counsel for the assessee at the very outset stated that this issue is covered vide order dated 23/01/2013 in I.T.A.NO. 375/Jodh/2011 for the A.Y. 2008-09 in assessee's own case, copy of the said order was furnished, which is placed on record. Learned D.R. in his rival submissions, could not controvert the aforesaid contention of the learned counsel for the assessee. 22. After considering the submissions of both the partiers and the material on record, it is noticed that in the preceding year, depreciation was not allowed by the Assessing Officer and when the matter travelled up to the tribunal it was directed to allow the depreciation by holding that the assessee was eligible for depreciation under section 32 of the Act qua the wind mills. IN view of that, we direct the Assessing Officer to allo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Devganga Enterprises, Udaipur (copy is placed on record). 28. In his rival submissions, learned D.R. supported the orders of the authorities below. 29. We have considered the submission of both the parties and perused the material vaiable on the record. In the present case, it seems that the assessee pledged the FDR as security for export oriented units (EOU) and earned the interest on those FDRs. In the instant case, the FDRs were pledged for commercial expediency of the assessee, therefore as per the ratio laid down by the Hon'ble Bombay High Court in the case of CIT Vs. Jagdish Prasad M. Joshi ((supra)), it is to be considered as business income and eligible for deduction under section 10B of the Act. On a similar issue, this bench of the ITAT in the case of ACIT, Udiapur Vs. M/s. Devganga Enterprises (supra) held in para 3 as under:- 3. We have heard rival submissions. Both parties have reiterated their earlier stand. Apart from the above ld. A.R. has placed reliance on the decision of the Hon'ble High Court of Patna rendered in the case of Shyam Bihari Vs CIT Anothers reported in (2012) 345 ITR 283 (Pat). The ld. D.R. has relied on the decision of Special Bench, Delh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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