INCOME TAX OFFICER, WARD-7-3, Jaipur V. M/S MAYUR LEATHER PRODUCTS LTD., Jaipur

ITA 1109/JPR/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4189 (ITAT-JAIPUR)
• Duration Of Justice: 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 25-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ADJ APPLICATION REJECTED DHK
• Keywords: Earning of tax free income; Tax effect
• Section: 14A

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES A, JAIPUR JH FOT; IKY JKO ] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA - @ ITA NO. 1109/JP/2018 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2011-12 D.C.I.T., CIRCLE-7, JAIPUR. CUKE VS. M/S MAYUR LEATHER PRODUCTS LTD., 65-67, UDHYOG VIHAR, JAITPURA INDUSTRIAL AREA, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AABCM 1848 A VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS @ REVENUE BY : SHRI ANUP SINGH (JCIT) FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : ADJ. APPLICATION REJECTED . LQUOKBZ DH RKJH[K @ DATE OF HEARING: 31/10/2018 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 31/10/2018 VKNS'K@ ORDER PER: VIJAY PAL RAO, J.M.: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 10/07/2018 OF LD. CIT(A)-3, JAIPUR FOR THE A.Y. 2011-12. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, WHETHER FINDING GIVEN BY THE LD. CIT(A) IN GIVING RELIEF OF RS. 3,1 0,000/- OUT OF TOTAL DISALLOWANCE OF RS. 3,18,500/- MADE U/S 14A R.W. RU LE 8D, WAS NOT IN CONTRAVENTION TO THE PROVISIONS OF SECTION 14A OF T HE INCOME TAX ACT, 1961 AND CLARIFICATION ISSUED BY THE CBDT VIDE CIRC ULAR 05/2014 DATED 11.02.2014? 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, WHETHER LD. CIT(A) WAS JUSTIFIED IN GIVING RELIEF OF RS. 3,10,000/- OU T OF TOTAL DISALLOWANCE OF RS. 3,18,500/- MADE U/S 14A R.W. RULE 8D BY STATING THAT DISALLOWANCE U/S 14A CANNOT EXCEED MORE THAT EXEMPT INCOME DECLA RED DURING THE RELEVANT YEAR EVEN THOUGH THIS FINDING WAS IN CONTR AVENTION TO THE CBDTS CIRCULAR 05/2014 DATED 11.02.2014 WHEREIN IT HAS BEEN CLEARLY 2 ITA NO. 1109/JP/2018 DCIT VS. MAYUR LEATHER PRODUCTS LTD. MENTIONED THAT DISALLOWANCE U/S 14A IS APPLICABLE E VEN WHERE TAXPAYER IN A PARTICULAR YEAR HAS NOT EARNED ANY EXEMPT INCO ME? 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, WHETHER LD. CIT(A) WAS JUSTIFIED IN GIVING RELIEF OF RS. 3,10,000/- OU T OF TOTAL DISALLOWANCE OF RS. 3,18,500/- MADE U/S 14A R.W. RULE 8D BY IGNORIN G THE RATIO OF DECISION AWARDED BY VARIOUS COURTS INCLUDING THE HO NBLE APEX COURT IN THE CASE OF M/S MAXOPP INVESTMENT LTD. VS. CIT (201 8) 91 TAXMANN.COM 154 WHEREIN IT IS CLEARLY HELD THAT THE DOMINANT PU RPOSE FOR WHICH INVESTMENT IS MADE BY THE ASSESSEE IS NOT RELEVANT SINCE THIS INVESTMENT IN SHARES RESULTED IN EXEMPT INCOME? 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND, WITHDRAW OR INSERT ANY GROUND OR GROUNDS OF APPEAL BEFORE OR AT THE TIME O F HEARING OF THE APPEAL. 2. THE ASSESSEE SOUGHT ADJOURNMENT OF THE HEARING, HOWEVER, THE TAX EFFECT IN THE DEPARTMENTS APPEAL IS NOT EXCEEDING THE LIM IT AS PROVIDED IN THE CBDT CIRCULAR NO. 3 OF 2018 DATED 11 TH JULY, 2018, THEREFORE, THE REQUEST FOR ADJOURNMENT WAS TURNDOWN AND APPEAL OF THE DEPARTME NT IS HEARD EX PARTE. 3. THOUGH THE LD. DR HAS ACCEPTED THAT THE TAX EFFE CT INVOLVED IN THIS APPEAL IS NOT EXCEEDING RS. 20.00 LACS AS PRESCRIBED IN TH E CBDT CIRCULAR NO. 3/2018 DATED 11 TH JULY, 2018, HOWEVER, AS IT IS MENTIONED IN THE GRO UNDS, THE PRESENT CASE FALL IN THE EXCEPTION UNDER PARA 10(B) OF THE SAID CIRCULAR. 4. THERE IS NO DISPUTE THAT THAT THE TAX EFFECT IN THE REVENUES APPEAL IS VERY LESS AS THE RELIEF OF RS. 3.10 LACS WAS GIVEN BY TH E LD. CIT(A). HOWEVER, THE LD DR HAS CONTENDED THAT THE MATTER FALLS IN THE EXCEPTIO N UNDER PARA 10(B) OF THE CBDT CIRCULAR. WE DO NOT FIND MERIT IN THIS CONTENT ION OF THE LD AR AS THE ISSUE OF DISALLOWANCE U/S 14A, WHICH WAS DELETED BY THE LD. CIT(A) DOES NOT INVOLVE ANY NOTIFICATION, INSTRUCTION OR CIRCULAR ISSUED BY THE CBDT HAS BEEN HELD TO BE ILLEGAL 3 ITA NO. 1109/JP/2018 DCIT VS. MAYUR LEATHER PRODUCTS LTD. OR ULTRA VIRES. THEREFORE, IN OUR CONSIDERED OPINIO N THAT THE PRESENT APPEAL IS NOT COVERED BY THE EXCEPTION IN PARA 10(B) CLAIMED BY T HE DEPARTMENT OR ANY OTHER EXCEPTION PRESCRIBED IN THE SAID CBDT CIRCULAR NO. 3 OF 2018 DATED 11 TH JULY, 2018. ACCORDINGLY, THE APPEAL OF THE DEPARTMENT IS LIABLE TO BE DISMISSED AS NOT MAINTAINABLE. ORDER PRONOUNCED IN THE OPEN COURT ON 31/10/2018. SD/- SD/- FOE FLAG ;KNO FOT; IKY JKO (VIKRAM SINGH YADAV) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 31 ST OCTOBER, 2018 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE D.C.I.T., CIRCLE-7, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- M/S MAYUR LEATHER PRODUCTS LTD., JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K]T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 1109/JP/2018 ) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR