SARYU PROPERTIES & HOTELS PRIVATE LIMITED, MUMBAI V. DEPUTY COMMISSIONER OF INCOME TAX - CENTRAL CIRCLE 4(2), MUMBAI

CO 39/MUM/2019

• Counselvise Citation: [2019] 111 COUNSELVISE.COM (IT) 5564 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 23 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 10-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2014-2015
• Appeal Filed On: 18-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Earning of tax free income; Tax effect; Condonation of delay; Set aside
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G, BENCH MUM BAI BEFORE SHRI G. MANJUNATHA, ACCOUNTANT MEMBER & SHRI RAM LAL NEGI, JUDICIAL MEM BER CO NO.39/MUM/2019 (ARISING OUT OF ITA NO. 164/MUM/2018) ( ASSESSMENT YEAR :2014-15 ) M/S SARAYU PROPERTIES & HOTELS LIMITED, PLOT NO. 25, B WING1ST FLOOR, GIRNAR PALIMALA ROAD, PALI HILLS, BANDRA (WEST), MUMBAI-400050 VS. DCIT,CENTRAL CIRCLE-4(2) MUMBAI-400 021 PAN : AAACS6983M ( APPELLANT ) .. RESPONDENT ) ASSESSEE BY SHRI. MAYUR KISHNADWALA/VINAY SINHA REVEUNE BY V. VINODKUMAR- SR, DR DATE OF HEARIN G 03 / 10 /2019 DATE OF PRONOUNCEME NT 10 / 10 /201 9 / O R D E R PER G.MANJUNATHA (A.M) : THIS CROSS OBJECTION FILED BY THE ASSESSEE IS DIRE CTED AGAINST, ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)5 2, MUMBAI, DATED 10/10/2017 AND IT PERTAINS TO ASSESSMENT YEAR 2014-15. 2. AT THE OUTSET, THE LD. COUSEL FOR ASSESSEE SUBM ITETD THAT THERE IS 4 DAYS DELAY IN FILING CROSS OBJECTION, FOR WHIC H NECESSARY PETITION ALONG WITH AFFIDAVIT HAS BEEN FILED EXPLAINING REAS ONS FOR SAID DELAY. THEREFORE, DELAY IN FILING CROSS OBJECTION MAY BE C ONDONED. THE LD. DR, ON THE OTHER HAND FAIRLY AGREED FOR CONDONATION OF DELAY IN FILING ITA NO.5748/MUM/2018 MOBILE TRADING & INVESTMENT P.LTD. 2 CROSS OBJECTION. HAVING HEARD BOTH SIDES AND CONSID ERED REASONS GIVEN FOR DELAY IN FILING CROSS OBJECTION, WE CONDO NED 4 DAYS DELAY IN FILING CROSS OBJECTION AND ADMIT FOR HEARING. 3. WE HAVE HAERD BOTH PARTIES, PERUSED MATERIALS AV AILABLE ON RECORD. THE LD. AR FOR THE ASSESSEE SUBMITTED THAT, THE APPEAL OF THE REVEUNE IN ITA NO. 164/MUM/2018 HAD BEEN DISMISSED BY THE ITAT, MUMABI, ON THE GROUND OF LOW TAX EFFECT, ON THE BAS IS OF CBDT CIRCULAR NO.3/2018 DATED 11/7/2018, WITHOUT TAKING NOTE OF CROSS OBJECTION FILED BY THE ASSESSEE. HE FURTHER SUBMITT ED THAT THE ASSESSEE HAS FILED CROSS OBEJCTION, AGAINST FINDING S OF THE LD. CIT(A), IN NOT CONSIDERING ARGUMENT OF THE ASSESSEE FOR RES TRICTING DISALLOWANCES OF EXPENSES CONTEMPLATED U/S 14A TO T HE EXTENT OF EXEMPT INCOME EARNED FOR THE YEAR. HE, THEREFORE, P LEADED FOR DISALLOWANCES TO THE EXTENT OF EXEMPT INCOME. THE L D. DR ON THE OTHER HAND SUPPORTED ORDER OF THE CIT(A). 4. HAVING CONSIDERED ARGUMENTS OF BOTH PARTIES, WE FIND MERIT IN CONTENTION OF THE LD. AR FOR THE ASSESSEE FOR THE R EASON THAT THE ISSUE INVOLVED IN CROSS OBJECTION IS SQUARELY COVER D IN FAVOUR OF THE ASSESSEE BY THE DECISION OF HON, BLE DELHI HC, IN C ASE OF PCIT VS. MCDONALDS INDIA (P) LTD (2019) 101 TAXMAN.COM 86 ( DELHI), WHERE IT WAS HELD THAT WHERE THERE IS NO EXEMPT INCOME, N O DISALLOWANCE COULD BE MADE U/S 14A OF THE INCOME TAX ACT, 1961. THE HONBLE DELHI HC, IN CASE OF CHEMINVEST LTD VS. CIT(2015) 3 78 ITR 33 HAD ALSO EXPRESSED SIMILAR VIEW. THE SUM AND SUBSTANCE OF RATIO LAID DOWN BY THE HON; BLE DELHI HC IS THAT DISALLOWANCES CONTEMPLATED U/S 14A CANNOT EXCEED EXEMPT INCOME EARNED FOR THE YEAR. IN THIS CASE, THE ASSESSEE CLAIMS DISALLOWANCES MADE U/S 14 A IS MORE THAN ITA NO.5748/MUM/2018 MOBILE TRADING & INVESTMENT P.LTD. 3 AMOUNT OF EXEMPT INCOME EARNED FOR THE YEAR. WE, TH EREFORE, ARE OF THE OPINION THAT THERE SHOULD NOT BE ANY DISALLOWAN CE OF EXPENSES U/S 14A OVER AND ABOVE EXPEMPT INCOME AND HENCE DIR ECT THE AO TO RESTRICT DISALLOWANCES U/S 14A TO THE EXTENT OF EXE MPT INCOME EARNED FOR THE YEAR, HOWEVER, SUCH DISALLIWANCE SHA LL NOT GO BELOW SU-MOTO DISALLOWANCES MADE BY THE ASSESSEE. BUT, TH E FACT WITH REGARD TO AMOUNT OF EXEMPT INCOME EARNED FOR THE YE AR IS NOT EMNATE FROM ORDERS OF LOWER AUTHORITIES, NOR THE AS SESSEE HAS FURNISHED DETAILS. THEREFORE, WE SET ASIDE THE ISSU E TO THE FILE OF AO FOR VERIFACTION OF FACTS AND TO RECOMPUTE DISALLOWA NCES U/S 14A OF THE INCOME TAX ACT, 1961 IN TERMS OF OUR OBSERVATIO NS GIVEN HEREINABOVE. 5. IN THE RESULT, CROSS OBJECTION FILED BY THE ASSE SSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 10 /10/ 2019 SD/- ( RAM LAL NEGI ) SD/- ( G. MANJUNATHA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 10/10/2019 THIRUMALESH SR.PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT ITA NO.5748/MUM/2018 MOBILE TRADING & INVESTMENT P.LTD. 4 BY ORDER, (ASSTT. REGISTRAR) ITAT, MUMBAI 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//