TMI Blog2022 (6) TMI 237X X X X Extracts X X X X X X X X Extracts X X X X ..... in allowing deduction at the rate on which the GEB supplied power to its customers ignoring the rate on which GSECL (a power generating company) supplied its power to GEB and not considering rate other than the selling price charged by the assessee? - HELD THAT:- Respectfully following judgment of jurisdictional High Court in the assessee s own case [ 2017 (1) TMI 513 - GUJARAT HIGH COURT] decided the issue in favour of assessee. - ITA No.560/Ahd/2020 - - - Dated:- 3-6-2022 - Smt. Annapurna Gupta, Accountant Member And T.R. Senthil Kumar, Judicial Member For the Revenue : Shri Mohd Usman, CIT-DR For the Assessee : Shri S.N. Soparkar, Sr.Adv. And Shri Parin Shah, AR ORDER PER T.R. SENTHIL KUMAR, JUDICIAL MEMBER This appeal is filed by the Revenue against order dated 17.8.2021 passed by the Commissioner of Income-tax (Appeals)-1), Vadodara relating to the Asst.Year 2013-14. 2. Registry has pointed out that the appeal filed by the Revenue is time barred by 115 days. At the time of hearing of the case, when the same was put to the notice of the ld.DR, he submitted that the Department could present its appeal before the Tribunal only on 18.11.2020 in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . As far as first ground is concerned viz. disallowance under section 14A of the Act, from the reading of the assessment order it could be seen that during the assessment proceedings, the AO noticed that the assessee made suo moto disallowance of Rs.77,649/- on account of disallowance under section 14A of the Act, as against the exempt income of Rs.9,19,64,038/-. The AO noticed from the profit loss account and balance sheet of the assessee that there was an investment of Rs.23.42 crores in assets and equity shares, and there was no fresh investment during this assessment year 2013-14. The assessee has made detailed explanation about the outstanding investment, and its source of funds utilized in previous year. Further, the AO held that the assessee has not considered any proportionate interest expenses and financial charges, administrative expenses, common facility, utilization of assets of business for the investment activities. The assessee has huge investment on which dividend was earned and also borrowed funds on which interest was paid. Therefore, the expenses required to be computed as per the Rule 8D r.w.s. 14A of the Act, and accordingly the same was computed at Rs.43,70, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... investment yielding exempt income and if own reserve surplus fund is more than such investment then presumption would arise that investment was made from own surplus reserve fund. Thus, Rule 8D(i) and 8D(ii) are not applicable. So far as administrative expenses are concerned, this issue is also by the decision in favour of the assessee in the case of CIT vs. Industries Ltd., wherein, the Hon'ble Gujarat High Court held that no disallowance u/s 14A of the Act in respect of interest and administrative expenses ought to be made where there are sufficient own funds. The High Court ruling was confirmed by the Hon'ble Supreme Court by dismissing SLP filed by the Revenue. Since, the reserve surplus fund are more than the investment made yielding exempt income, hence, following the ratio laid down by the Hon'ble Supreme Court in both the cases cited above, I am of considered view that further disallowance u/s. 14A of the Act i.e. more than that of the appellant was not required. In other words, the AO is directed to restrict disallowance u/s 14A of the Act of Rs.77,649/- to the extent of disallowance-suo motu made by the appellant. Ground No.2 is allowed.: 6. Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue in favour of the assessee as follows: We have carefully considered/the orders of the authorities below. There is no dispute that the share capital and reserve and surplus of the appellant company stands at Rs.31573.31 lacs whereas the cost of investment is Rs.798.80 lacs. Thus, it can be seen that the interest free funds are far more in excess of the cost of the investment. We find that on identical set of facts, the Co-ordinate Bench in assessee's own case in A.Y. 2009-10 (supra) has held as under- 8. We have heard the rival contentions, perused the material available on record and gone through the orders of the authorities below. As the facts emerge, we find that the assessee's own funds, /,e., equity, reserve and surplus funds amounting to Rs.32,699.06 lakhs far exceed the tax free investments. The Impugned investments are old and out of own funds have not been rebutted. Relying on the Hon'ble Gujarat High Court judgments in the case of Hitachi Home and Life Solutions (I) Ltd (supra), Torrent Power Ltd (supra)'and other judgments mentioned above, we are of the view that when the assessee possesses own ' funds much more than the tax free invest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Whether the Tribunal was right in law in allowing the assessee s claim of deduction of Rs. 1954 crores u/s 80-IA(4) of the I.T. Act, 1961, when the assessee had adopted rate of power generation at Rs. 4.73 per unit, rate on which the GEB supplied power to its consumers, ignoring the rate of Rs. 2.36 per unit, the rate on which power generating company supplied its power to GEB? 12. On these questions of law, the Hon ble High Court held as follows: 6. We have heard learned counsel for the parties. We have perused the order of the Tribunal. So far as issue Nos. (i) and (ii) are concerned, for the detailed reasons given in Tax Appeal No. 471 of 2009 in ground (C) and (D) where after considering the decisions of the Madras High Court in the case of Tamilnadu Petro Products Ltd. v. Assistant Commissioner of Income-tax reported in 338 ITR 643 and Commissioner of Income-tax v. Cethar Ltd., reported in 228 Taxman 139 (Madras) (Mag.) and other decisions cited by learned counsel for the assessee, we have held the issues in favour of the assessee, the issues in the present appeal require to be answered in favour of the assessee and against the revenue. In that view of the matter, w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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