The DCIT, Circle-4(1)(2), Ahmedabad V. M/s. TGB Banquest and Hotels Limited, Ahmedabad

ITA 1017/AHD/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2541 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 1 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2013-2014
• Appeal Filed On: 27-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S N DIVATIA
• Keywords: Depreciation; Earning of tax free income; Reasonable cause; Rule 8D
• Section: 14A

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI RIFAUR RAHMAN, ACCOUNTANT MEMBER ./ ITA NO.1017/AHD/2017 WITH CO NO.14/AHD/2019 / ASSTT. YEAR: 2013-14 DCIT, CIR.4(1)(2) AHMEDABAD. VS. M/S.TGB BANQUETS AND HOTELS LTD. 380, THE GRAND BHAGWATI, S.G. HIGHWAY, BODAKDEV AHMEDABAD 380 054. PAN : AABCB 6825 A / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI S.N. DIVATIA, AR REVENUE BY : SMT.SMITI SAMANT, SR.DR ! / DATE OF HEARING : 17/06/2019 '#$ ! / DATE OF PRONOUNCEMENT: 18 /06/2019 %& / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST OR DER OF THE LD.CIT(A)-8, AHMEDABAD DATED 21.2.2017 PASSED FOR T HE ASSTT.YEAR 2013-14. ON RECEIPT OF NOTICE IN REVENU ES APPEAL, THE ASSESSEE HAS FILED CROSS OBJECTION BEARING NO.CO 14 /AHD/2019. 2. IN THE FIRST GROUND OF APPEAL, REVENUE HAS PLEAD ED THAT THE LD.CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS.31,67,820/- WHICH WAS ADDED BY THE AO WITH THE AID OF SECTION 1 4A OF THE INCOME TAX ACT, 1961. ITA NO.1017/AHD/2017 WITH CO 2 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAS FILED ITS RETURN OF INCOME ON 30.3.2015 DECLARING TOTAL INCOM E AT RS.24,36,97,633/-. THE CASE OF THE ASSESSEE WAS SEL ECTED FOR SCRUTINY ASSESSMENT AND NOTICE UNDER SECTION 143(2) WAS ISSUED AND SERVED UPON THE ASSESSEE. ON SCRUTINY OF THE A CCOUNTS, THE LD.AO HAS OBSERVED THAT THE ASSESSEE HAS MADE HUGE INVESTMENT IN SHARES, BUT DID NOT WORK OUT ANY DISALLOWANCE RE QUIRED TO BE MADE UNDER SECTION 14A R.W. RULE 8D OF THE INCOME T AX ACT. HE THEREFORE WORKED OUT DISALLOWANCE AT RS.31,67,820/- . ON APPEAL, IT WAS CONTENDED BEFORE THE LD.CIT(A) THAT DISALLOW ANCE UNDER SECTION 14A R.W. RULE 8D COULD BE MADE IN RESPECT O F EXPENDITURE WHICH ARE RELATABLE TO EARNING OF TAX FREE INCOME. BUT IN THIS YEAR, THERE IS NO TAX FREE INCOME. THEREFORE, AS PER THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. C ORRETECH ENERGY P.LTD., 372 ITR 97 NO DISALLOWANCE REQUIRES TO BE MADE. THE LD.CIT(A) HAS FOLLOWED THIS DECISION AND DELETE D THE DISALLOWANCE. 4. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, W E HAVE GONE THROUGH THE RECORD CAREFULLY. HONBLE JURISDICTION AL HIGH COURT IN THE CASE OF CIT VS. CORRTECH ENERGY (SUPRA) HAS PRO POUNDED THAT IF THERE IS NO TAX FREE INCOME IN A YEAR TO THE ASS ESSEE, THEN NO DISALLOWANCE ON ACCOUNT OF EXPENDITURE DESERVES TO BE MADE UNDER SECTION 14A R.W. RULE 8D OF THE INCOME TAX AC T. THE LD.CIT(A) HAS RIGHTLY CONSIDERED THE JUDGMENT OF HO NBLE JURISDICTIONAL HIGH COURT AND HAS RIGHTLY PLACED ON IT. THEREFORE, NO INTERFERENCE IS CALLED IN THE ORDER OF THE LD.CI T(A) ON THIS ISSUE. ITA NO.1017/AHD/2017 WITH CO 3 5. IN THE NEXT GROUND OF APPEAL, THE GRIEVANCE OF T HE REVENUE IS THAT THE LD.CIT(A) HAS ERRED IN GRANTING DEPRECI ATION ON GOODWILL. 6. THE LD.COUNSEL FOR THE ASSESSEE AT THE VERY OUTS ET SUBMITTED THAT IN THE ASSTT.YEAR 2007-08, DISPUTE ON SIMILAR ISSUE TRAVELLED UPTO THE HONBLE GUJARAT HIGH COURT AND THE HONBLE COURT IN TAX APPEAL NO.470 OF 2012 DECIDED ON 31.6.2016 HAS HELD THE ALLOWANCE OF DEPRECIATION TO THE ASSESSEE ON GOODWI LL. WE FIND THAT DECISION OF THE ITAT PASSED IN ITA NO.1549/AHD /2012 DATED 2.11.2012 IN THE ASSESSEES OWN CASE WAS RELIED UPO N BY THE ASSESSEE. IT IS ALSO POINTED OUT THAT IN THE ASSTT .YEAR 2007-08 THE TRIBUNAL HAS DECIDED THE ISSUE IN ITA NO.1312/AHD/2 011 VIDE ORDER DATED 28.2.2012 IN FAVOUR OF THE ASSESSEE. T HIS ORDER OF THE TRIBUNAL HAS BEEN UPHELD BY THE HONBLE GUJARAT HIG H COURT IN TAX APPEAL NO.470 OF 2012 AND OTHERS. CONSIDERING THE LD.CIT(A)S ORDER, WE ARE OF THE VIEW THAT THE LD.CIT(A) HAS PL ACED ITS RELIANCE ON THE DECISION OF JURISDICTIONAL HIGH COURT IN THE ASSESSEES OWN CASE WHILE GRANTING THE DEPRECIATION ON GOODWILL, A ND DID NOT COMMIT ANY MISTAKE EITHER CONSTRUING THE JUDGMENT O R APPRECIATING THE FACTS OF THE ISSUE. THEREFORE, NO INTERFERENCE IS CALLED FOR ON THIS ISSUE. 7. SO FAR AS CO IS CONCERNED, REGISTRY HAS POINTED OUT THAT CO IS TIME BARRED BY 263 DAYS. NO APPLICATION FOR CON DONATION OF DELAY HAS BEEN FILED BY THE ASSESSEE. NO DOUBT AS PER SUB-SECTION (5) OF SECTION 253, TRIBUNAL MAY ADMIT AN APPEAL OR PERMIT FILING OF MEMORANDUM OF CROSS-OBJECTION AFTER EXPIRY OF RE LEVANT PERIOD, IF IT IS SATISFIED THAT THERE WAS A SUFFICIENT CAU SE FOR NOT PRESENTING IT WITHIN THAT PERIOD. THAT SINCE NO AP PLICATION IS BEING ITA NO.1017/AHD/2017 WITH CO 4 SUBMITTED BY THE ASSESSEE THEREFORE, NO REASONABLE CAUSE IS DISCERNIBLE FOR FILING CO AFTER EXPIRY OF TIME LIMI T. ACCORDINGLY, CO IS REJECTED. 8. IN THE RESULT, APPEAL OF THE REVENUE AND CO OF T HE ASSESSEE, BOTH ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 18 TH JUNE, 2019. SD/- SD/- (RIFAUR RAHMAN) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER