DCIT CIRCLE- 2(1)(1) , MUMBAI V. M/S CABLE CORPORATION OF INDIA LTD. , MUMBAI

ITA 1010/MUM/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 6752 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-09-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2016-2017
• Appeal Filed On: 07-02-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: NISHITH KHATRI
• Keywords: Earning of tax free income; Rule 8D
• Section: 43B; 14A; 139(1)

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA (AM) & SHRI RAVISH SOOD ( JM) I.T.A. NO.1010/MUM/2020 (ASSESSMENT YEAR : 2016-1 7) I.T.A. NO.1011/MUM/2020 (ASSESSMENT YEAR : 2013-1 4) DCIT,CIRCLE - 2(1)(1) ROOM NO.561, 5 TH FLOOR, AAYKAR BHAWAN, M.K.ROAD MUMBAI-400 020 VS . CABLE CORPORATION OF INDIA LTD. 4 TH FLOOR, LAXMI BUILDING 6, SHOORJI VALLABHDAS MARG BALLARD ESTATE MUMBAI-400 002 PAN : AAACC2936J ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHRI NISHITH KHATR I DEPARTMENT BY MS. SHREEKALA PARDESHI DATE OF HEARING 01/09 /2021 DATE OF PRONOUNCEMENT 02 /09 /2021 O R D E R PER SHAMIM YAHYA (AM) :- THESE ARE REVENUES APPEALS DIRECTED AGAINST RESPE CTIVE ORDERS OF LEARNED CIT(A) PERTAINING TO ASSESSMENT YEARS 2013- 14 AND 2016-17. 2. SINCE THE ISSUES ARE COMMON AND CONNECTED AND TH E APPEALS WERE HEARD TOGETHER, THESE HAVE BEEN CONSOLIDATED AND DISPOSED OFF TOGETHER FOR THE SAKE OF CONVENIENCE. 3. GROUNDS OF APPEAL READ AS UNDER :- WE ARE REFERRING TO THE GROUNDS IN AY 2013-14. 1. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW. THE LD. CIT'(A) ERRED IN ALLOWING RELIEF TO THE ASSESSEE RELYING ON THE D ECISION OF THE HONBLE GUJARAT HIGH COURT IN CASES OF CIT VS. CORRTCCH ENERGY (P) LTD. VS. (2015) 372 ITR 97 (GUJARAT) & CHEMINVEST LTD. VS. CIT (2015) 61 TAXMANN.COM 118 (DELHI), WITHOUT CABLE CORPORATION OF INDIA LTD. 2 APPRECIATING THE FACT THAT AS PER CBDT CIRCULAR NO, 5 OF 2014. IT WAS DIRECTED THAT DISALLOWANCE U/S. I4A SHOULD HE MADE EVEN IF THE AS SESSEE DID NOT EARN ANY EXEMPT INCOME DURING THE YEAR.' 2. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW. THE LD. CIT(A) ERRED IN ALLOWING RELIEF TO THE ASSESSEE WITHOUT APP RECIATING THE FACT THAT LATE PAYMENTS OF EMPLOYEE'S CONTRIBUTION TO EPF IS N OT AN ALLOWABLE DEDUCTION U/S. 36 (L)(VA) R.W.S. 2(24)(X).' APROPOS GROUND NO.1 4. ON THIS ISSUE LD. AO HAD MENTIONED THAT THE AP PELLANT HAD NOT EARNED ANY DIVIDEND INCOME ON THE INVESTMENT ESTIMATED AT RS.5 7,35,00,000/- IN SHARES OF M/S CCI PROJECTS PVT.LTD. ACCORDING TO THE A.O, IF APPELLANT HAD EARNED DIVIDEND INCOME ON IT, THEN IT MUST HAVE CLAIMED EX EMPTION U/S 10(34) OF THE ACT. IN VIEW OF THESE FACTS, THE LD. AO INVOKED THE PROVISION OF SEC 14A R.W.RULE 8D AND WORKED OUT A DISALLOWANCE OF RS.6,2 9,08,698/- UNDER RULE 8D(3)(II) AND RS.28,67,500/- UNDER RULE 8D(2)(III). 5. UPON ASSESSEES APPEAL LD.CIT(A) ACCEPTED THE A SSSESSEES SUBMISSIONS THAT SINCE NO EXEMPT INCOME HAS BEEN ERRED ON DISAL LOWANCE U/S. 14A IS PERMISSIBLE. IN THIS REGARD, HE REFERRED TO THE DEC ISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CHEMINVEST LTD. VS CIT 378 IT R 33 AND HONBLE GUJARAT HIGH COURT IN CIT VS. CORRTECH ENERGY P.LTD. 372 IT R 97. 6. AGAINST THE ABOVE ORDER, THE REVENUE HAS FILED APPEAL BEFORE ITAT. UPON HEARD BOTH THE COUNSELS AND PERUSED THE RECORDS, WE NOTE THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION R EFERRED ABOVE. NO DISALLOWANCE U/S. 14A IS PERMISSIBLE WHEN THE ASSES SE HAS NOT EARNED EXEMPT INCOME. THIS PROPOSITION IS FURTHER SUPPORTED BY TH E DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF DELITE ENTERPRISES (IN ITA NO. 110 OF 2009) AND HONBLE APEX COURT DECISION IN MAXOPP INVESTMENT LT D. 402 ITR 640 (SC) WHEREIN THE PROPOSITION THAT DISALLOWANCE CANNOT EX CEED THE EXEMPT INCOME HAS BEEN UPHELD. AS AN OBVIOUS COROLLARY, WHEN THER E IS NO EXEMPT INCOME CABLE CORPORATION OF INDIA LTD. 3 THERE CANNOT BE DISALLOWANCE U/S 14A. HENCE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD.CIT(A). ACCORDINGLY, WE UPHOLD THE ORDER OF LD.CIT(A). 7. APROPOS GROUND NO.2 ON THIS ISSUE AO MADE DISALLOWANCES OF A SUM OF RS. 49,37,006/- BEING CONTRIBUTION MADE TOWARDS THE EMPLOYEES PROVIDENT F UND ON THE GROUND THAT IT HAS PAID BEYOND THE DUE DATES PRESCRIBED U/S. 24 (X) R.W.S. 36(1)(VA) OF THE ACT. 8. ON ASSESSEES APPEAL, LD.CIT(A) NOTED THAT THE APPELLANT SUBMITTED THAT DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL, THE APPELLANT HAD CONTRIBUTED RS.69,38,071/- TOWARDS EM PLOYEES PROVIDENT FUND. OUT OF THE SAID AMOUNT, A SUM OF RS.30,20,066/- WAS DEPOSITED AFTER THE DUE DATE PRESCRIBED BY THE RESPECTIVE FUNDS AND THE SAI D AMOUNT WAS DEPOSITED BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME U NDER SECTION 139(1) OF THE ACT. 9. LD.CIT(A) ACCEPTED THE ASSESSEES CONTENTIONS TH AT SINCE THE PAYMENT WAS MADE BY THE ASSESSEE BEFORE THE DUE DATE FILING OF THE RETURN, NO DISALLOWANCE CAN BE MADE. THE LD.CIT(A) REFERRED TO HONBLE BOMB AY HIGH COURT DECISION IN THE CASE OF CIT V. GHATGE PATIL TRANSPORTS LTD. 368 ITR 749 WHEREIN HONBLE HIGH COURT HAS HELD THAT SECTION 43B IS APPLICABLE TO BOTH EMPLOYERS AND EMPLOYEES CONTRIBUTION. HENCE, THE TRIBUNAL WAS RIG HT IN HOLDING THAT PAYMENTS THEREOF ARE SUBJECT TO BENEFITS OF SECTION 43B. LD.CIT(A) IN THIS REGARD ALSO REFERRED TO THE EARLIER LD.CIT(A)S OR DER IN ASSESSEES OWN CASE FOR AY 2014-15 WHERE THE ISSUE WAS SIMILARLY ALLOWED. L D.CIT(A) FURTHER REFERRED TO SEVERAL TRIBUNAL DECISIONS IN THIS REGARD. HE CONCL UDED AS UNDER:- DURING THE YEAR UNDER CONSIDERATION, THERE IS NEITH ER ANY FACTUAL CHANGE, NOR ANY LEGAL CHANGE, THE APPELLANT HAS DEPOSITED THE C ONTRIBUTION MADE TOWARDS THE EMPLOYEES PROVIDENT FUND BEFORE THE DUE DATE OF FILING OF RETURN, CABLE CORPORATION OF INDIA LTD. 4 THEREFORE, RESPECTIVELY FOLLOWING JUDGMENTS OF HON BLE TRIBUNALS AND HONBLE HIGH COURTS AS DISCUSSED IN THE FOREGOING PARAS, AP PEAL OF THE ASSESSEE IS ALLOWED ON THIS GROUND. 10. AGAINST THE ABOVE ORDER, REVENUE IS IN APPEAL BEFORE US. 11. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORD. WE FIND THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION REFERRED HEREINABOVE. IT IS NOT DISPUTED THAT THE IMPUGNED A MOUNTS WERE PAID/DEPOSITED BEFORE THE DUE DATE OF FILING OF THE RETURN. LD. DR COULD NOT CONTROVERT THAT THE ISSUES ARE COULD NOT COVERED IN FAVOUR OF THE ASSESSEE. ACCORDINGLY, WE UPHOLD THE ORDER OF LD.CIT(A). 12. IN THE RESULT, THIS APPEAL IS DISMISSED. ITA NO.1010/MUM/2020 FOR AY 2016-17 13. THE GROUNDS OF APPEAL AND THE ORDERS OF THE AU THORITIES BELOW ARE SIMILAR TO THE ONE ADJUDICATED BY US IN AY 2013-14 DEALT WI TH ABOVE. NO CHANGE IN FACTS AND CIRCUMSTANCES HAS BEEN POINTED OUT BY REV ENUE. HENCE, OUR ABOVE ADJUDICATION APPLIES MUTATIS MUTANDIS AND FOR THIS YEAR ALSO. ACCORDINGLY, THIS APPEAL BY THE REVENUE ALSO STAND DISMISSED. 14. IN THE RESULT, BOTH APPEALS BY THE REVENUE A RE STANDS DISMISSED PRONOUNCED IN THE OPEN COURT ON 02 /09/2021 SD/- SD/- (RAVISH SOOD) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED : 02/09/2021 THIRUMALESH, SR.PS COPY OF THE ORDER FORWARDED TO : CABLE CORPORATION OF INDIA LTD. 5 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR) ITAT, MUMBAI