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TMI Blog2019 (6) TMI 1374X X X X Extracts X X X X X X X X Extracts X X X X ..... essary in support of conclusions of any adjudicating authority. If we visualize written submissions and finding given by the ld.CIT(A), then it is apparent that such finding does not contain any adjudication on the submissions of the assessee and not sustainable. Therefore, we set side finding of the ld.CIT(A) on this issue in all three years and restore for readjudication. Deduction u/s 80HHC - HELD THAT:- Deduction u/s 80HHC is to be computed after reducing deduction allowed u/s 80IA and 80IB (b) excise duty and sales-tax are to be included in the total turnover for the purpose of calculating 80HHC as required under the formula, and (c) sale proceeds of DEPB licence is to be reduced from profit of the business to the extent of 4,89,81,959/-. For this purpose, the AO has relied upon the amendment brought in Finance Act, 2005 with retrospective effect. It was pointed out that this amendment has been held as unconstitutional by Hon ble Gujarat High Court in the case of Avani Exports [ 2012 (7) TMI 190 - GUJARAT HIGH COURT] . The matter was set aside to the AO by the Tribunal with a direction to recompute the deduction in view of amendment by the Taxation Law. AO has passed a fresh a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessee : Shri S.N. Soparkar, And Shri Parin Shah, AR For the Revenue : Shri H.V. Gujjar, CIT-DR, Shri B.L. Meena, Sr.DR ORDER PER BENCH: In the assessment years 2002-03 and 2003-04, the assessee and Revenue are in cross-appeals against orders of the ld.CIT(A) dated 16.2.2015 and 10.7.2014 passed for the Asstt.Years 2002-03 and 2003-04 respectively. In the Asstt.Year 2004-05 assessee alone is in appeal against order of the ld.CIT(A) dated 8.1.2015. Common issues are involved in all these appeals. Therefore, we heard them together and dispose of by this common order. 2. First common issue raised by the assessee is that the ld.CIT(A) has erred in confirming the addition of ₹ 1,59,56,205/-; ₹ 1,80,32,866/- and ₹ 1,71,98,885/- (₹ 1,65,41,873/-) in the assessment years 2003-03, 2003-04 and 2004-05 respectively. The above additions were made by the AO on the recommendation of TPO suggesting adjustment in arm's length price (ALP) of the assessee relating to international transactions with its AE. The ld.counsel for the assessee pointed out that in the Asstt.Year 2004-05, original upward adjustment was made of ₹ 1,71,98,885/- in the second round of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 007, restored the matter to the file of TPO/AO. The Tribunal directed the assessee to show that the sale price of the controlled transactions was at arms length. If there were differences between the controlled and uncontrolled transactions, the assessee was held to be entitled to the benefit of adjustment for such differences under the TP rules. Consequent upon the Tribunal's order, vide the order dtd. 28-10-2011 the TPO reduced the addition to ₹ 1,80,32,866/-, While passing the order the TPO dealt with various contentions raised by the appellant. As seen from the written submission reproduced above, appellant once again re-iterated the submissions made before the TPO. I have carefully considered the facts of the matter. Keeping in view detailed reasoning given by the TPO and the appellant's inability to controvert the TPO's observations, I am of the view that no interference is called for. Impugned addition is sustained. These grounds of appeal are dismissed." 4. At this stage, we deem it appropriate to take note of the finding of the ld.CIT(A) in the Asstt.Year 2002-03 also, which reads as under: "(A) Ground No. 1 to 7 are interlinked and against the deter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g order at the end of the ld.CIT(A). Full Bench of the Hon'ble Punjab & Haryana High Court in the case of Roadmaster Industries of India P.Ltd. Vs. ACIT, 303 ITR 138 (P&H) has considered large number of judgments at the end of Hon'ble Supreme Court as well as at the end of Hon'ble High Courts in order to propound why reasons are necessary in support of conclusions of any adjudicating authority. In order to appraise ourselves as well as to the ld.First Appellate Authority about the importance of assigning reasons, we deem it appropriate to take note of the following finding from this judgment: "4. On a perusal of impugned order, even the counsel for the revenue could not dispute that the order passed by the CIT cannot be termed to be a speaking order which could stand in judicial scrutiny. As to whether in exercise of quasi-judicial powers, the authorities are required to pass orders by giving reasons in support thereof is wellsettled by a series of judgments by the Hon'ble Supreme Court of India. 5. In Harinagar Sugar Mills Ltd. v. Shyam Sunder Jhunjhunwala AIR 1961 SC 1669, while dealing with an order passed by the Central Government in exercise of its appellate powers und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court while quashing the cancellation of the petitioner's licence by the District Magistrate, observed : ". . . Recording of reasons in support of a decision on a disputed claim by a quasi-judicial authority ensures that the decision is reached according to law and is not the result of caprice, whim or fancy or reached on grounds of policy or expediency. A party to the dispute is ordinarily entitled to know the grounds on which the authority has rejected his claim. If the order is subject to appeal, the necessity to record reasons is greater, for without recorded reasons the appellate authority has no material on which it may determine whether the facts were properly ascertained, the relevant law was correctly applied and the decision was just." (p. 1304) 9. In Woolcombers of India Ltd. v. Woolcombers Workers' Union AIR 1973 SC 2758, Hon'ble the Supreme Court quashed the award passed by the Industrial Tribunal on the ground that it was not supported by reasons and observed : ". . .The giving of reasons in support of their conclusions by judicial and quasi-judicial authorities when exercising initial jurisdiction is essential for various reasons. Fir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n has been drawn between ordinary Courts of law and Tribunals and authorities exercising judicial functions on the ground that a Judge is trained to look at things objectively uninfluenced by considerations of policy or expediency whereas an executive officer generally looks at things from the stand point of policy and expediency. 35. Reasons, when recorded by an administrative authority in an order passed by it while exercising quasi-judicial functions, would no doubt facilitate the exercise of its jurisdiction by the appellate or supervisory authority. But the other considerations, referred to above, which have also weighed with this Court in holding that an administrative authority must record reasons for its decisions are of no less significance. These considerations show that the recording of reasons by an administrative authority serves a salutary purpose, namely, it excludes chances of arbitrariness and ensures a degree of fairness in the process of decisions-making. The said purpose would apply equally to all decisions and its application cannot be confined to decisions which are subject to appeal, revision or judicial review. In our opinion, therefore, the requirement th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a speaking order. In the absence of any reasons in support of the order, the said Courts cannot examine the correctness of the order under review. The High Court and the Supreme Court would be powerless to interfere so as to keep the administrative officer within the limits of the law. The result would be that the power of judicial review would be stultified and no redress being available to the citizen, there would be insidious encouragement to arbitrariness and caprice. If this requirement is insisted upon, then, they will be subject to judicial scrutiny and correction." (p. 1) 13. Keeping in view the above settled principles of law and applying the same in the facts and circumstances of the present case, we are of the view that the order passed by the CIT does not satisfy the prerequisites of a speaking order, as the same does not contain reasons to support the order." 6. In the light of the above, if we visualize written submissions and finding given by the ld.CIT(A), then it is apparent that such finding does not contain any adjudication on the submissions of the assessee and not sustainable. Therefore, we set side finding of the ld.CIT(A) on this issue in all thre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iating the facts and circumstances. Therefore, we do not find any merit in this ground of appeal. It is rejected. 11. In the result, the appeal of the Revenue in the Asstt.Year 2003-04 is dismissed. 12. Next common issue in the Asstt.Year 2002-03 relates to quantification of expenditure requires to be disallowed for the purpose of earning tax free income. 13. With the assistance of ld.representatives, we have gone through the record carefully. It emerges out from the record that the assessee has dividend income of ₹ 1,73,50,995/- which is claimed as exempt. In order to find out expenditure required to be disallowed under section14A, the ld.AO took help of Rule 8D and worked out the disallowance at ₹ 2,00,34,000/-. Dissatisfied with the disallowance, the assessee carried the matter in appeal before the ld.CIT(A). It has submitted details of dividend receipt for the year and interest free fund available. The ld.CIT(A) restricted this disallowance to ₹ 12.30 lakhs and deleted the addition of ₹ 1,87,83,000/-. The finding recorded by the ld.CIT(A) on this issue reads asunder: "The appellant in appeal contended that in view of Hon'ble Bombay high Ccourt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 5,91,630/-. In my view to adjudicate this issue on the basis of reasonability, about 10% of total exempt income can be held as reasonable. This reasonability is based on the legislation's intention of such expenditure as evident from the provisions of 80HHC, 80IA etc. where out of the receipt like interest, brokerage, DEPB etc., 90% is reduced treating 10% of such receipt is treated as expenses incurred to have such receipt. The 10% of the total exempt income of ₹ 1,73,50,999/- worked out to ₹ 17,35,099/- i.e. 17,35,100/-. The A.O's disallowance as per Rule 8D (2)(iii) is at ₹ 12.51 lac. It is therefore a reasonable disallowance of ₹ 12.51 lac as per A.O. can be held justified which incorporate the objection from appellant also .It is therefore disallowance of ₹ 12.51 lac are upheld. The A.O. is directed to delete the balance disallowance & addition of ₹ 1,87,83,000/- (20034000- 1251000). The appellant gets part relief. This ground is partly allowed." 14. With the assistance of the ld.representatives, we have gone through the record. As far as the finding of the ld.CIT(A) that disallowance cannot be made with help of Rule 8D is concern ..... X X X X Extracts X X X X X X X X Extracts X X X X
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