Gujarat High Court
M/S. Banaskantha Dist Co.Op Milk ... vs The Assistant Commissioner Of Income ... on 7 February, 2024
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
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C/TAXAP/768/2023 ORDER DATED: 07/02/2024
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/TAX APPEAL NO. 768 of 2023
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M/S. BANASKANTHA DIST CO.OP MILK PRODUCERS UNION LTD.
Versus
THE ASSISTANT COMMISSIONER OF INCOME TAX
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Appearance:
MR ASIM PANDYA SENIOR ADVOCATE WITH MR DARSHAK N
TRIVEDI(9276) for the Appellant(s) No. 1
MR.JAY S SHAH(7244) for the Appellant(s) No. 1
for the Opponent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR. JUSTICE NIRAL R. MEHTA
Date : 07/02/2024
ORAL ORDER
(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)
[1] By this Tax Appeal under Section 260A of the Income Tax
Act, 1961 (for short, "the Act"), the appellant has proposed the
following substantial question of law arising out of the order dated
23rd March 2018 passed by the Income Tax Appellate Tribunal,
Ahmedabad 'C' Bench, Ahmedabad (for short, "the Tribunal") in
ITA No.1582/Ahd/2015 for A.Y. 2011-12:
"A. Whether in law and fact the Appellant Tribunal erred in
disallowing the expenditure under sec. 14A r/w. Rule 8D of
Rs.3,91,35,065/- being the expenses on borrowing by considering
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the same as an expenditure in relation to the income not
includible in the total income of the assessee?"
[2] The assessee is a cooperative society engaged in the business
of procuring and processing milk, milk products and other ancillary
products. The return of income for A.Y. 2011-12 was filed by the
assessee on 30th September 2011 declaring total income of
Rs.6,82,16,070/- and agriculture income of Rs.4,48,429/-. The
assessee claimed deduction of Rs.14,05,24,145/- under the various
provisions of the Act. After scrutiny assessment, the Assessing
Officer passed the assessment order dated 31st January 2014 under
Section 143(3) of the Act. The Assessing Officer made various
additions including addition under Section 14A read with Section
36(1)(iii) of the Act, as the assessee has debited the interest and
expenses of Rs.42,53,44,446/- on one hand and claimed the
deduction under Section 80P(2)(d) of the Act.
[3] The Assessing Officer, thereafter, made the addition under
Section 80(2)(d) of the Act amounting to Rs.7,19,41,260/- and
without prejudice to the disallowance of the deduction claimed
under Section 80P(2)(d) of the Act made by the Assessing Officer, a
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corresponding disallowance was also made under Section 14A of
the Act, by holding that as per Rule 8D of the Income Tax Rules,
1962, however, the Assessing Officer, after calculating disallowance
of Rs.3,91,35,065/-, did not make any formal addition and it was
observed by the Assessing Officer that such disallowance is merged
with disallowance made under Section 80P(2)(d) and shall come
into effect only if at some stage deduction under Section 80P(2)(d)
is found allowable.
[4] Being aggrieved, the assessee preferred the appeal before the
CIT(A). The CIT(A), however, on the ground of earlier assessment
orders, allowed the appeal of the assessee with regard to
disallowance under Section 14A of the Act and disallowance under
Section 80P(2)(d) was rejected by the CIT(A), however,
disallowance under Section 14A was set aside by the CIT(A) relying
upon the earlier assessment orders passed in the case of the
assessee.
[5] Being aggrieved by the order passed by the CIT(A), both the
Revenue as well as the assessee preferred appeals before the
Tribunal. The Tribunal passed the following order after considering
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the submissions:
"8. We have heard rival contention Case file perused Learned
counsel representing assessee urges us to adopt judicial
consistency as this tribunal has decided the very issue against the
Revenue in preceding assessment years. Learned Departmental
Representative first of all quotes quotes Punjab & Haryana High
Court's judgment (2016) 67 taxmann.com 27 (Punjab & Haryana)
Punjab State Cooperative Milk Producers Federation Ltd vs. CIT
deciding the issue in Revenue's favour that Section 14A
disallowance provision is applicable even to income claimed as
deduction u/s.80P(2)(d) of the Act. Mr. Kabra then cites Hon'ble
Apex Court's latest judgment in Maxopp Investment Ltd. vs. CIT in
Civil Appeal Nos. 104- 109 of 2015 settling the law that the
impugned disallowance has to be made in case an assessee has
derived any exempt income regardless of its purpose test. We thus
accept Revenue's instant substantive ground in principle and
direct the Assessing Officer to frame consequential computation as
per law after affording adequate opportunity of hearing to the
assessee Revenue's instant sole substantive ground and main
appeal ITA No.1582/Ahd/2015 is accepted for statistical
purposes.
9. We quote our above detailed discussion to partly allow
former asessee's appeal ITA Nos.1891/Ahd/2014 and allow its
appeal ITA No.2987/Ahd/2015 & latter assessee's appeal ITA
No.1090/Ahd/2015. Revenue's appeal ITA No.1582/Ahd/2015 in
case of latter assessee is allowed for statistical purposes."
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[6] As the Tribunal has remanded the matter back to the
Assessing Officer to frame the consequential computation as per
law vis-a-vis the disallowance under Section 14A of the Act, after
affording adequate opportunity of hearing to the assessee, we are
of the opinion that no substantial question of law would arise from
the impugned order passed by the Tribunal. The appeal is,
therefore, devoid of merit and is, accordingly, dismissed.
(BHARGAV D. KARIA, J)
(NIRAL R. MEHTA,J)
CHANDRESH
