TMI Blog2021 (6) TMI 258X X X X Extracts X X X X X X X X Extracts X X X X ..... wance under Section 14A of the Act. The investments was made out of own funds and not borrowed funds and therefore, the assessee has not made any disallowance out of interest expenditure. AR s contentions that under Rule 8D (2)(iii), what is disallowable is an amount equal to percentage of the average value of investment, the income from which does not or shall not form part of the total income, is right. Therefore, as per the chart given by the Ld. AR, at the time of hearing, we direct the AO to verify the same and thereafter restrict the disallowance only if the contentions of the assessee are found correct, otherwise proceed according to the provisions of Income Tax Act and Rules. Disallowance of expenses on account of non deduction and short deduction of TDS u/s 40(a)(ia) - HELD THAT:- As the issue relating to non deduction of TDS is decided against the assessee in its own case for A.Y. 2008-09 wherein the Tribunal while relying upon the decision of Hon ble Supreme Court in case of Shree Choudhary Transport Compan [ 2020 (8) TMI 23 - SUPREME COURT] held that the amendment made to provisions of Section 40(a)(ia) of the Act vide Finance Act, 2014 do not have retrospect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... untant Member And Ms Suchitra Kamble, Judicial Member For the Appellant : Ms. Nidhi Srivastava, CIT, DR For the Respondent : Sh. Ajay Vohra, Sr. Adv, Sh. Rohit Jain, Adv Ms. Deepashree Rao, CA ORDER PER SUCHITRA KAMBLE, JM These two appeals are filed by the assessee and Revenue against the order dated 28/03/2103 passed by CIT(A)- XXXIII, New Delhi for Assessment Year 2009-10. 2. The grounds of appeal are as under:- ITA No. 4042/DEL/2013 (Revenue s appeal) 1. On the facts and in the circumstance of the case the CIT(A) has erred in deleting the addition of ₹ 4904354/- made by the Assessing Officer under section 69 of the income tax act, 1961. 2. On the facts and in the circumstances of the case, the CIT(A) has erred in deleting the 50% of the total addition of ₹ 14413318/- made by the A.O by applying he G.P. rate on the undisclosed sales. 3. On the facts and in the circumstances of the case, the CIT(A) has erred in directing the Assessing Officer to allow deduction under section 80IB(11A) of the Income tax Act,1961. 4. On the facts and in the circumstances of the case, the CIT(A) has erred in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Addition U/s 14A r/w Rule 8D 8. That in view of the facts and circumstances of the case and in law the A.O./CIT(A) has erred in making disallowance to the tune of ₹ 5,10,020/- u/s 14A read with Rule 8D of the Act. The disallowance made is unjust, unlawful and is also highly excessive. 9. That CIT(A), in view of the facts and circumstances of the case, has erred in law and on facts in not appreciating that assessing officer has failed to record the satisfaction with the correctness of the claim of the assessee in respect of expenditure in relation to income which does not form part of total income under the Act before making disallowance U/s 14A r/w rule 8D of the Act. Disallowance of expenses on account of Non-Deduction and Short-Deduction of TDS 10. That CIT(A), in view of the facts and circumstances of the case, has erred in law and on facts in only allowing the part relief in respect of disallowance made U/s 40(a)(ia) by the AO. The CIT(A) should have deleted the entire addition/disallowance on this account. 11. Without prejudice to the above, the CIT(A), in view of the facts and circumstances of the case, has erred in law and on f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as there is no delay in filling of return and there is no default of payment of Advance tax as the receipt / income is liable to TDS and it could not have anticipated such additions. In any case the interest charged has been wrongly worked out and is excessive. 20. That all the above grounds are independent to each other and mutually exclusive. 3. Original return of income was field on 30/09/2009 declaring total income of ₹ 1,35,27,247/-. A search u/s 132 was carried out in Daawat Group of cases including the assessee company on 10/02/2009. Statutory notice u/s 143(2) was issued on 2/8/2010. The Assessing Officer vide its order dated 24/12/2010 called for special audit u/s 142 (2A) for Assessment Year 2009-10 which was submitted on 22/6/2011 by the special auditor through their report. The Assessing Officer passed assessment order dated 19/08/2011 thereby assessed total income at ₹ 23,42,49,777/- after making additions. 4. Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee. 5. First we are taking up appeal of the assessee whereby the Ld. AR submitted that Gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in assessee s own case for the assessment years 2008-09 and 2009-10 by order dated 4/9/2012. It is also an admitted fact that the Ld. DRP directed the Assessing Officer not to make the addition on this issue. Such a finding has become final and as on the date it is not get disturbed. Further, the Revenue does not dispute the fact that the four individuals declared such income and surrendered the same while duly paying the taxes thereon. If at all those four individuals were not liable to pay such amount, the Revenue should not have accepted the same in their hands. Having accepted the contention of those four individuals and collecting the tax in their hands, it is not open for the revenue now to such individuals were not liable to pay tax, but it is the company and company alone that is liable to pay tax. Revenue cannot approbate and reprobate and shift its stands. 14. While accepting the stand taken by the assessee that since the tax was collected in the hands of the four individuals who are the promoters of the company and this fact was taken notice by the Ld. DRP while passing the order dated 4/9/2012 in assessee s own case for the assessment years 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ern of the assessee) The Ld. AR further submitted that under Rule 8D (2)(iii), what is disallowable is an amount equal to percentage of the average value of investment, the income from which does not or shall not form part of the total income. In view of the aforesaid, percentage of the average value of investments made only in Raghunath Agro Industries claimed as exempt under Section 10(34) of the Act was to be taken into consideration for the purpose of clause (iii), as against total investments appearing in balance sheet for the relevant year. Thus, strictly in terms of Section 14A of the Act read with Rule 8D(2)(iii) of the Income Tax Rules, 1962, the actual amount of disallowance amounts to ₹ 23,634/- as tabulated hereunder: Investment in dividend yielding investments 31.03.2008 31.03.2009 Raghunath Agro Industries ₹ 4,397,778 ₹ 4,907,798 Average Value of investment ₹ 46,524,788 % of Average Value of Investment ₹ 23,264 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee therein. 13. The Ld. DR relied upon the order of the CIT(A) and the assessment order. 14. We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the issue relating to non deduction of TDS is decided against the assessee in its own case for A.Y. 2008-09 in ITA No. 4158/Del/2013 vide order dated 19.01.2021 wherein the Tribunal while relying upon the decision of Hon ble Supreme Court in case of Shree Choudhary Transport Company vs. ITO 272 Taxman 472, held that the amendment made to provisions of Section 40(a)(ia) of the Act vide Finance Act, 2014 do not have retrospective application and thus, confirmed the disallowance made by the Assessing Officer under Section 40(a)(ia) of the Act. Thus, issue of non-deduction of TDS is decided against the assessee in this year as well as the facts are identical in the present assessment year. As regards to short-deduction of TDS, the Ld. AR submitted that the issue is covered in assessee s own case by the Tribunal in A.Y. 2008-09 in ITA No. 4158/Del/2013 vide order dated 19.01.20121 wherein it is held that no disallowance under Section 40(a)(ia) is sustainable in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent has been recorded in the special audit report. The Ld. AR pointed out that there was minor difference of 92.46 Metric Tons (MT) in the quantity of stock of paddy at the time of physical verification by search team. However, no difference was found in the quantity of rice. The Ld. AR submitted that the reason for alleged difference in stock noted by search team was on account of erroneous presumption drawn by the search team. The Ld. AR explained the reasons for difference in stock as under: a) In its books of accounts, the assessee maintained stock in MT only and not in bags, as quantity in each bag is likely to vary. However, at the time of search, stock was counted in bags only and then converted into M on assumption basis and not on the basis of actual weight. Thus, the stock estimated varied from actual stock as per books of accounts. b) The search authorities adopted an erroneous basis that each bag weighs 55 kgs. For all varieties of stock, which was fallacious. However, as submitted by the assessee in reconciliation statement, quantity in bags should be converted into MT s on average quantity per bag based on Purchase Register (i.e. Total quantity purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tement dated 11.02.2009. Thus, there was no discrepancy revealed in sales or purchase of the company during the course of search as per the books of accounts and stock. In fact, the stock registers, reveals that the opening stock and closing stock completely tallied with the stock and closing stock as certified in the tax audit report. Even sales tax department has accepted the sales made by the assessee during the year under consideration and no adverse inference has been drawn on this account. The books of accounts have also been statutorily audited with no adverse comments by the auditors. The assessee is following consistent method of valuation of stock which is in accordance with the well accepted principle of accounting propounded by the ICAI, and also has been approved/accepted for the purpose of the computing the taxable income by various Courts and Tribunals from time to time. In this context, the decisions of the Apex Court in case of Chainrup Sampatram vs. CIT 24 ITR 481 and CIT vs. British Paints India Ltd. 188 ITR 44 (SC) along with United Commercial Bank vs. CIT 240 ITR 355 (SC) relied by the Ld. AR are applicable in the present case. Further, there is no evidence for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 46/Del/2013 wherein the Tribunal on identical facts allowed deduction claimed under Section 80IB (11A) of the Act. The Ld. AR further relied upon the order of the CIT(A). 24. We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the Section 80IB (11A) of the Act mandates that the undertaking of the assessee should be engaged in an integrated business and the assessee has demonstrated before us that the combining or co-ordinating of the three elements i.e. handling, storage and transportation of food grains is harmonious interrelated as whole activity and thus eligible for deduction under Section 80IB(11A) of the Act. The decision in case of Dilip Kumar (Supra) held that exemption notification should be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification. When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject/assessee and it must be interpreted in favour of the revenue. In the present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t food grain loss. ......... 63. We, accordingly find that the assessee cannot be denied the deduction under section 80IB(11A) of the Act either in respect of the activities conducted by the assessee to meet the demand of the section, namely, deriving income from the integrated business of handling, storage and transportation of food grains or for non-compliance with the conditions depleted under Section 80IB(2) of the Act. We do not find anything illegality are regularity either in the reasoning or the conclusions reached by the Ld. CIT(A) on this aspect, and while confirming the same find the grounds number 1 to 3 of Revenue s appeal devoid of merits and reliable to be dismissed. Thus, the CIT(A) has rightly allowed the claim of deduction under Section 80IB(11A) of the Act. It is pertinent to note that all the conditions which have been stipulated in the statute have been fulfilled i.e. all the three activities of handling, storing and transportation have been undertaken on an integrated basis by the assessee. Thus, Ground No. 3 to 5 of Revenue s appeal are dismissed. 25. In result, the appeal of the assessee is partly allowed and the appeal for the Reve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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