COMMISSIONER OF INCOME-TAX Vs. JUNDAL ALUMINIUM LIMITED

JUDGEMENT

(1.) This appeal under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as the Act for short) has been preferred by the revenue. The subject matter of the appeal pertains to the Assessment year 2008-09. The appeal was admitted by a bench of this Court vide order dated 14.03.2014 on the following substantial questions of law:

(2.) Facts leading to filing of the appeal briefly stated are that the assessee is a company engaged in the business of manufacture and sale of aluminum extrusions and generation of wind energy. The assessee filed its return of income on 25.09.2008 for the Assessment Year 2008-09 which was assessed under Section 143(3) of the Act on a total income of Rs.69,30,00,030/-. The Assessing Officer by an order dated 01.10.2010 disallowed the claim of the assessee under Section 80IA and Section 14A of the Act. Being aggrieved, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) who by an order dated 30.03.2012 inter alia held that deduction under Section 80IA of the Act has to be granted only on profit making unit. The Commissioner of Income Tax (Appeals) restricted the claim of the disallowance under Section 14A of the Act to Rs.14,40,471/- as against Rs.45,01,582/-. Thus, the appeal preferred by the assessee was partly allowed. Being aggrieved, the assessee as well as the revenue filed the appeals before the Income Tax Appellate Tribunal (hereinafter referred to as 'the Tribunal' for short), which were decided by a common order dated 30.04.2013. The Tribunal dismissed the appeal of the revenue and remitted the claim of the assessee for disallowance under Section 14A of the Act in respect of Rs.14,40,470/- to the Assessing Officer. In the aforesaid factual background, the revenue is in appeal before us.

(3.) Learned counsel for the revenue submitted that Section 80IA(1) of the Act is applicable to eligible business and all profit making and loss making units have to be aggregated and then deduction under Section 80IA has to be computed. It is contended that Section 80IA(5) is in respect of eligible business and not in respect of each unit. It was also pointed out that this court in I.T.A.No.377/2012 vide decision dated 07.09.2020 has permitted aggregation and set off under Section 70 of the Act. It is also pointed out that amendment to Section 14A(2) read with Rule 8D of the Rules is applicable with effect from Assessment Year 2008-09 as has been held by the Supreme Court as well as by this court. It is also argued that Assessing Officer has recorded reasons / satisfaction regarding incorrectness of claim of expenditure of the assessee under Section 14A of the Act and therefore, the mandate contained in the decision in 'GODREJ & BOYCE MFG. CO. LTD. VS. DEPUTY COMMISSIONER OF INCOME-TAX, RANGE 10(2), MUMBAI', (2010) 328 ITR 81 stands satisfied. Alternatively it is submitted that even if the Tribunal was of the opinion that the satisfaction as required under Section 14A of the Act has not been complied with as held by Bombay High Court in Godrej & Boyce Mfg. Co. Ltd., supra, the matter ought to have been remitted to the Assessing Officer as was done by Bombay High Court in para 73 of its decision. Alternatively it is submitted that the judgment rendered in Godrej & Boyce Mfg. Co. Ltd., supra is not applicable as in the aforesaid decision, Bombay High Court dealt with Assessment Year 2002-03 i.e., the legal position as it existed prior to amendment to Section 14A(2) of the Act and therefore, in any case, the aforesaid decision is not applicable to the facts of the case. It is also submitted that the object of introduction of Section 14A which has been dealt by Supreme Court in 'COMMISSIONER OF INCOME-TAX, MUMBAI VS. WALFORT SHARE & STOCK BROKERS (P.) LTD.', 326 ITR 1 has not been taken into account by the Tribunal. It is also urged that the Tribunal grossly erred in considering the surplus as on 01.04.2007 and recording a finding that investment is out of surplus and without taking into consideration the fact that investment was made by the assessee much prior to 01.04.2007.