Indian Sugar Exim Corporation Ltd. vs ACIT

Per Satbeer Singh Godara, Judicial Member:

These assessee’s and Revenue’s cross appeals ITA No . 4744/Del/2024 and ITA No . 5033/Del/2024, for Asse ssment Year 2016-17, arise against the CIT(A)/NFAC, Delhi’ s DIN & order No. ITBA/NFAC/S/250/2024-25/1067600006(1) dated 13.08.2024, in p roceedings u/s 143(3) of the Income Tax Act, 1961 (in short “The Act”).

Heard both the p arties at length. Case files peruse d.

We take up the assessee’s appeal ITA No . 4744/Del/2024 first of all raising it’s three substantive grounds of foreign travelling expenditure, emp loyer’s co ntrib utio n to P F and section 14A r.w. Rule 8D disallowance(s) amounting to Rs.14,27,239/-, Rs.3,87,364/- and Rs.46 ,01,527/-; respectively, made in assessment order dated 2 3.12.2018 as upheld in the lower appellate d iscussio n.

Coming to the first and foremo st issue of foreign travelling expenditure disallowance, there is not much a dispute between the parties that the same is a recurring one wherein the assessee is stated to have alre ady succeeded in the preceding assessment year s. Learned counsel places strong reliance on the said earlier order(s) to buttress the point that the impugned expenditure had been incurred wholly and exclusively for the purpose of the business. The fact however remains that it has not been able to successfully discharge the onus u/s 37 of the Act befor e both the learned lo wer authorities to this effect. We thus accep t both the parties rival submissions in part to restrict the impug ned disallowance to a lump sum figure of Rs.50,000/- only w ith a rider that the same shall no t be treated as a precedent. The assessee g ets re lief of Rs.13,77,239/- in other words. Ordered accordingly.

The second substantive issue in the assessee’s appeal is that of e mployer ’s contribution disallowance made by both the learned lower authorities for the sole reason that the correspond ing fund is not a “recognized” one. W e note in this factual backdrop that the assessee has already succeeded on the very issue r ight from assessment year 2003-04 as well as in A.Y. 2011-12. We thus adopt judicial consistency to accept the instant second substantive ground in the assessee’s favour in very terms.

Lastly co mes section 14A r.w. Rule 8D disallowance of Rs.46,01,527/-. There is hard ly any dispute between the parties that the assessee had indeed derived exempt income of Rs.4 ,31,59,051/- representing interest on tax fre e bonds etc. And that the impugned disallo wance is in the nature of administrative expenditure under Rule 8D(2)(iii) o f the Income Tax Rules wherein the department fails to rebut the clinching settled proposition in AC B Industries Ltd. vs. ACIT 374 IT R 108 (Del.) that the same o ught to be computed only qua the exempt income yielding investment s. We accord ingly direct the learned Assessing Officer to finalize his afresh computation as per law in very terms.

All other grounds raised at the assessee’s behest have not been pressed during the course o f hearing.

This assessee’s appeal ITA No. 4744/Del/2024 is partly allowed.

Next comes the Revenue’s cross appeal ITA No. 5033/Del/2024 wherein it seeks to revive the Assessing Officer’s action adding interest on FDRs of Rs.4,34,98,961/-and depreciation disallowance on build ing amo unting to Rs.10,27,171; respectively, w hich stand reversed in the lower appellate discussion.

Coming to the instant first issue, we note that there arose a dispute in civil suit No. 2443/2009 before assessee and M/s Standard Char te red Bank regarding redemption proceeds of mutual funds which could be settled by way of a conse nt decree on 31.01.2017 only. That being the clinching factual position, we quote in light of Chainrup Sampatram Vs. CIT (1953) 24 ITR 461 (SC) that there has no reasonable certainty of the impug ned interest income accr ual so as to be assessed as income in the assessee’s hands in the re levant previous year; and, therefore, we hereby uphold the learned CIT(A)’s findings deleting the impugned addition.

Next comes the depreciation disallowance of Rs.10,27,171/- which was disallowed by the Assessing Officer on the ground that no conveyance deed has bee n executed in the taxpayer’s favour. There is not much a disp ute that the assessee has already succeeded on the very issue in preceding assessment years including befo re hon’ble jurisdictional high cour t in A.Y. 2004-05 (page 593 in the paper book). We thus adopt judicial consistency to reject the Revenue’s instant latter substantive ground as we ll as the cross appeal herein IT A No. 5033/Del/2024 in very terms.

To sum up, this assessee’s appeal ITA No. 4744/Del/2024 is partly allow and the Reve nue’s cross appeal ITA No. 5033/Del/2024 is dismissed. A copy of this common order be placed in the respective case files.