ITO 9(3)(1), MUMBAI V. DATAMATICS SOFTWARE SERVICES LTD, MUMBAI

ITA 1128/MUM/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9903 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-07-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 04-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN
• Keywords: Earning of tax free income; Tax effect
• Section: 143(3); 14A; 115JB

Judgement Text

I T A N O . 1 1 2 8 / M U M / 2 0 1 6 A . Y . 2 0 1 2 - 13 P A G E | 1 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI G.S. PANNU , AM AND SHRI RAVISH SOOD, JM ./ I.T.A. NO. 1128/MUM/2016 ( / ASSESSMENT YEAR: 2012 - 13) ITO - 9(3)(1), R. NO. 260A, 2 ND FLOOR, AAYAKAR BHAVAN, M.K. MARG, MUMBAI - 400 020 / VS. M/S DATAMATICS SOFTWARE SERVICES LTD., PLOT NO. 58, KNOWLEDGE CENTRE, STREET NO.17, MIDC, ANDHERI(EAST), MUMBAI - 400 093. ./ ./ PAN/GIR NO. AABCD2439C ( / REVENUE ) : ( / ASSESSEE) / REVENUE BY : SHRI V. JUSTIN, D.R / ASSESSEE BY : SHRI J.P. BAIRAGRA, A.R / DATE OF HEARING : 06 /07/2017 / DATE OF PRONOUNCEMENT : 07 /07/2017 / O R D E R PER RAVISH SOOD, JUDICIAL MEMBER T HE CAPTIONED APPEAL FILED BY THE REVENUE PE RTAINING TO ASSESSMENT YEAR 2012 - 13 IS DIRECTED AGAINST THE ORDER PASSED BY CIT(A) - 16, MUMBAI, DATED 21 /12/2015 , WHICH IN TURN ARISES OUT OF AN I T A N O . 1 1 2 8 / M U M / 2 0 1 6 A . Y . 2 0 1 2 - 13 P A G E | 2 ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT), DATED 18/02/2015 . THE REVENUE ASSAI LING THE ORDER OF THE CIT(A) HAD THEREIN RAISED THE FOLLOWING GROUNDS OF APPEAL BEFORE US: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CI T(A) ERRED IN HOLDING THAT THE D ISALLOWANCE U/S 14A R.W. RULE 8D CANNOT BE MORE THAN THE EXEMPT INCOME EARNED IN VIOLATION OF THE CONTENTS OF CIRCULAR NO.5 OF 2014, ISSUED BY THE CBDT . THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE ITO 9(3)(1) BE RESTORED. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUNDS OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY HAD FILED ITS RETURN OF INCOME DECLARING TOT AL INCOME OF RS. NIL, WHICH WAS PROCESS ED AS SUCH U/S 143(1) OF THE ACT . THE ASSESSEE COMPANY THEREAFTER REVISED ITS RETURN OF INCOME ON 11.02.2013 DECLARING TOTAL INCOME OF RS. NIL UNDER THE NORMAL PROVISION, AND RS.37,02,720/ - U/S. 115JB OF THE ACT. THE CASE OF THE ASSESSEE WAS TAKEN UP FOR SCRUTINY ASSESSMENT, WHEREIN THE A.O AFTER COMPUTING THE DISALLOWANCE U/S. 14A AT RS.35,13,719/ - IN THE HANDS OF THE ASSESSEE , THEREIN COMPUTED ITS TOTAL INCOME AT RS. NIL UNDER THE NORMAL PROVISION, WHILE FOR THE BOOK PROFIT UNDER THE PROVI SIONS OF SECTION115JB WAS WORKED OUT AT RS.72,16,439/ - . 3. THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE A.O , THEREIN CARRIED THE S AME IN APPEAL BEFORE THE CIT(A). THE CIT(A) BEING OF THE CONSIDERED VIEW THAT THE DISALLO WANCE U/S. 14A R.W. RULE 8D C O ULD NOT BE MORE THAN THE QUANTUM OF THE EXEMPT INCOME EARNED, THEREFORE RESTRICTED THE SAID DISALLOWANCE TO AN AMOUNT OF RS.2,22,422/ - AS WAS OFFERED BY THE ASSESSEE IN ITS RETURN OF INCOME, AND AS SUCH ALLOWED THE APPEAL OF THE ASSESSEE. - I T A N O . 1 1 2 8 / M U M / 2 0 1 6 A . Y . 2 0 1 2 - 13 P A G E | 3 4. THE REVENUE BEI NG AGGRIEVED WITH THE ORDER OF THE CIT(A), HAD THEREIN CARRIED THE MATTER IN APPEAL BEFORE US. I T WAS AT THE VERY OUTSET POINTED OUT BY THE LD. AUTHORIZED REPRESENTATIVES (FOR SHORT A.R.) FOR THE ASSESSEE THAT THE TAX EFFECT INVOLVED IN THE PRESENT APPEA L WAS LESS THAN RS.10 LAC AS PRESCRIBED IN THE CBDT CIR CULAR NO. 21/2015, DATED 10/12/ 2015, AS PER WHICH THE MONETARY LIMIT FOR FILING OF THE APPEAL BY THE DEPARTMENT BEFORE THE INCOME TAX APPELLATE TRIBUNAL HAD BEEN REVISED RETROSPECTIVELY. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE (FOR SHORT D.R.) THEREIN SUBMITTED THAT AS AFTER INCLUDING THE SURCHARGE INVOLVED IN THE PRESENT APPEAL , THE TAX EFFECT WAS MORE THAN THE CUT OFF LIMIT OF RS.10 LAC CONTEMPLATED IN THE AFORESAID CIRCULAR NO. 21/201 5 (SUPRA), THEREFORE , THE CASE OF THE ASSESSEE WAS NOT COVERED BY THE AFORESAID CIRCULAR IS S U ED BY THE CBDT. 5. WE HAVE HEARD THE AUTHORIZED REPRESENTATIVE S FOR THE BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL PRODUCED BEFORE US. WE FIND THAT THE TAX EFFECT EXCLUDING THE SURCHARGE IN THE PRESENT APPEAL STAND S COMPUTED AT RS.8,91,740/ - . WE ARE OF THE CONSIDERED VIEW THAT FOR THE PURPOSE OF CONSIDERIN G THE AMOUNT OF TAX EFFECT AS ENVISAGED IN CBDT CIR CULAR NO. 21/2015, DATED 10/12/ 2015, WHAT HAS TO BE CONSIDERED IS THE AMOUNT OF TAX EXCLUDING THE AMOUNT OF SURCHARGE AND EDUCATION CESS. WE FIND THAT OUR AFORESAID VIEW STAND S FORTIFIED BY AN ORDER PASS ED BY THE TRIBUNAL IN THE CASE OF THE DCIT, CENTRAL CIRCL E - 1(1), MUMBAI VS. M/S. TILAKN AGAR INDUSTRIES LTD. (ITA NO. 2506/MUM/2015, DATED 31.05.2015), WHEREIN IT WAS OBSERVED AS UNDER: - THE TAX EFFECT ON THIS DISPUTED INCOME COMES TO RS.9,86,391/ - , EXCL UDING T H E SURCHARGE AND EDUCATION CESS OF RS.1,31,190/ - OUR CO - OR DINATE BENCH IN THE CASE OF DCIT VS. M/S. DOME BELL ELECTRONICS INDIA LTD., IN ITA NO.2480/MUM/2012 DATED 22/07/2016 HAS HELD THAT FOR THE PURPOSES OF CONSIDERING THE I T A N O . 1 1 2 8 / M U M / 2 0 1 6 A . Y . 2 0 1 2 - 13 P A G E | 4 AMOUNT OF TAX EFFECT AS ENVISAGED IN CBDT CIRCULAR DATED 10/12/2015 (SUPRA), WHAT HAS TO BE CONSIDERED IS THE AMOUNT OF TAX EXCLUDING THE AMOUNT OF SURCHARGE AND EDUCATION CESS. THEREFORE, IN THIS VIEW OF THE MATTER, THE TAX EFFECT IN DISPUTE IN THE CAPTIO NED APPEAL IS STATED TO BE BELOW THE MONETARY LIMIT OF RS.10.00 LACS SPECIFIED IN THE CBDT CIRCULAR DATED 10/12/2015 (SUPRA), THE SAME IS DISMISSED AS NOT MAINTAINABLE. WE THUS FINDING OURSELVES TO BE IN AGREEMENT WITH THE VIEW TAKEN BY THE TRIBUNAL IN T HE AFOREMENTIONED CASE , THUS ARE OF THE CONSIDERED VIEW THAT AS THE TAX EFFECT INVOLVED IN THE PRESENT APPEAL IS BELOW THE MONETARY CEILING CONTEMPLATED IN THE CBDT CIRCULAR NO. 21/2015, DATED 10/12/2015, THEREFORE , THE APPEAL OF THE DEPARTMENT IS NOT MAINTAINABLE. 6. IN THE RESULT, THE APPEAL OF THE REVENUES IS DISMISSED. ORDER PRON OUNCED IN THE OPEN COURT ON 07 .07.2017 SD/ - SD/ - (G.S. PANNU) ( RAVISH SOOD ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI , DATED 07 / 0 7 / 2017 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT , 2. THE RESPONDENT. 3. THE CIT(A) - 52 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI I T A N O . 1 1 2 8 / M U M / 2 0 1 6 A . Y . 2 0 1 2 - 13 P A G E | 5 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7. FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER