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ITA 1155/BANG/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6995 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 19-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BALAKRISHNA J
• Assessee Lawyers: CHERIAN K BA
• Keywords: Business income
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH A : BANGALORE BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI JASON P.BOAZ, ACCOUNTANT MEMBER ITA NO. 1155/ BANG/20 1 3 (ASSESSMENT YEAR: 20 09 - 10) DEPUTY COMMISSIONER OF INCOME - TAX, LTU , BANGALORE. APPELLANT VS. M/S.DTDC COURIER & CARGO LTD. DTDC HOUSE , NO.3, VICTORIA ROAD, BANGALORE - 560047. PAN: AAACD8017H RESPONDENT APPELLANT BY: SHRI BALAKRISHNA, JCIT(DR) RESPONDENT BY: SHRI CHERIAN K.BABY, C A DATE OF HEARING : 22 - 07 - 2014 . DATE OF PRONOUNCEMENT: 08 - 08 - 2014 . O R D E R PER SMT. P.MADHAVI DEVI, JM : THIS IS AN APPEAL BY THE REVENUE DIRECTED AGAINST THE ORDER OF THE CIT(A),LTU, BANGALORE, DATED 20 - 5 - 2013 FOR THE ASSESSMENT YEAR 2009 - 10. 2. THE REVENUE IS AGGRIEVED BY THE ORDER OF THE CIT(A) IN GIVING RELIEF TO THE ASSESSEE BY DELETING (I) THE PROVISION FOR ITA NO . 1155/BANG/2013 M/S.DTDC COURIER & CARGO LTD. PAGE 2 OF 6 LEAVE ENCASHMENT DEBITED TO PROFIT & LOSS ACCOUNT AMOUNTING TO RS.30,73,367/ - DISALLOWED U/S 43B(F) OF THE INCOME - T AX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT'] AND (II) THE DISALLOWANCE OF RS.8,41,515/ - U/S 14A READ WITH RULE 8D OF THE IT RULES. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE - COMPANY , WHICH IS ENGAGED IN THE BUSINESS OF COURIER AND CARGO, FIL ED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009 - 10 ON 30 - 9 - 2009 DECLARING TAXABLE INCOME OF RS.5,45,62,975/ - . DURING THE ASSESSMENT PROCEEDING U/S 143(3) OF THE ACT, THE ASSESSING OFFICER (AO) OBSERVED THAT THE ASSESSEE HAS NOT MADE ANY DISALLOWANCE U/S 43B(F) OF THE ACT OF THE PROVISION FOR LEAVE ENCASHMENT OF RS.91,60,760/ - . THE AO CALLED FOR DETAILS OF THE EXPENDITURE AND LEAVE ENCASHMENT. IN RESPONSE TO THE SAME, THE ASSESSEE STATED IN ITS LETTER DATED 9 - 9 - 2011 THAT THE ISSUE IS COVERED IN FAVOU R OF THE ASSESSEE BY THE DECISION OF THE HON BLE HIGH COURT OF CALCUTTA IN THE CASE OF EXIDE INDUSTRIES LTD. AND ANR. VS. UNION OF INDIA & OTHERS REPORTED IN 292 ITR 470 AND THEREFORE THE ASSESSEE HAS NOT MADE ANY DISALLOWANCE AND THAT THE SAID DECISION H AS ONLY BEEN STAYED BY THE HON BLE SUPREME COURT AND THE HON BLE SUPREME COURT HAS NOT DECIDED AGAINST THE COMPANY AND NOTHING FURTHER HAS HAPPENED SO FAR AND NEITHER HAS IT BEEN DISMISSED. THE AO, THEREFORE, HELD THAT THE DECISION OF THE HON BLE HIGH COU RT CANNOT BE TREATED AS BEING IN ITA NO . 1155/BANG/2013 M/S.DTDC COURIER & CARGO LTD. PAGE 3 OF 6 OPERATION AND THEREFORE CANNOT BE FOLLOWED. HE, ACCORDINGLY, MADE THE DISALLOWANCE OF THE PROVISION OF LEAVE ENCASHMENT OF RS.30,73,367/ - , AS QUANTIFIED BY THE ASSESSEE VIDE ITS LETTER DATED 27 - 9 - 2011, U/S 43B(F) OF THE AC T. 3.1 AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) WHO DELETED THE DISALLOWANCE BY HOLDING THAT THOUGH THE DECISION OF THE HON BLE CALCUTTA HIGH COURT HAS BEEN STAYED BY THE HON BLE SUPREME COURT, THE ISSUE IS COVERED BY THE DECISION OF THE HON BLE SUPREME COURT ITSELF IN THE CASE OF BEML VS. CIT (245 ITR 428) AND ALSO THE DECISION OF THE KERALA HIGH COURT IN THE CASE OF CIT VS. HINDUSTAN LATEX LTD. IN ITA 64 OF 2012. HE OBSERVED THAT THE FACTS OF THE CASE BEFORE HIM WERE IDENTICAL TO TH E FACTS OF THE CASE BEFORE THE HON BLE APEX COURT AND KERALA HIGH COURT AND FURTHER THAT ON AN IDENTICAL ISSUE FOR THE ASSESSMENT YEAR 2008 - 09 IN THE ASSESSEE S OWN CASE , CO - ORDINATE BENCH OF THE TRIBUNAL, BY ITS ORDER DATED 10 - 5 - 2013 HAS DELETED THE DISAL LOWANCE MADE U/S 43B(F) OF THE ACT. HE ACCORDINGLY DELETED THE DISALLOWANCE. THE REVENUE IS IN APPEAL BEFORE US. 3.2 THE ONLY GROUND TAKEN BY THE REVENUE IS THAT THE CASE - LAWS RELIED UPON BY THE CIT(A) HAVE NOT ATTAINED FINALITY. THE LEARNED DEPARTMENT AL REPRESENTATIVE SUPPORTED THE ORDER OF THE ITA NO . 1155/BANG/2013 M/S.DTDC COURIER & CARGO LTD. PAGE 4 OF 6 AO WHILE THE LEARNED COUNSEL FOR THE ASSESSEE SUPPORTED THE ORDER OF THE CIT(A). 3.3 HAVING HEARD BOTH THE PARTIES AND HAVING CONSIDERED THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT SIMILAR IS SUE HAD COME UP BEFORE THE TRIBUNAL IN THE ASSESSEE S OWN CASE FOR THE EARLIER ASSESSMENT YEAR I.E. 2008 - 09 AND THE TRIBUNAL, AFTER CONSIDERING THE DECISION OF THE APEX COURT IN THE CASE OF BEML (CITED SUPRA) AS WELL AS THE HON BLE KERALA HIGH COURT IN THE CASE OF HINDUSTAN LATEX LTD (CITED SUPRA) HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. AS THERE IS NO CHANGE IN FACTS BEFORE US FOR THE RELEVANT ASSESSMENT YEAR, WE ARE INCLINED TO FOLLOW THE DECISION OF THE CO - ORDINATE BENCH AND ACCORDINGLY, WE CONF IRM THE ORDER OF THE CIT(A). 4. THE NEXT DISALLOWANCE IS U/S 14A OF THE ACT. THE AO HAS OBSERVED THAT THE ASSESSEE HAS MADE INVESTMENT IN SHARES AND HAS DERIVED INCOME FROM DIVIDEND AND HAS CLAIMED THE SAME TO BE EXEMPT U/S 10(34) OF THE ACT. THEREFORE, HE HELD THAT THE PROVISIONS OF 14A READ WITH RULE 8D ARE APPLICABLE AND HE ACCORDINGLY COMPUTED THE DISALLOWANCE AT RS.8,41,515/ - . 4.1 AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) STATING THAT DIVIDEND INCOME EARNED BY THE ASSESSEE IS ONLY A SUM OF RS.27,550/ - AND THE EXPENDITURE CLAIMED BY THE ITA NO . 1155/BANG/2013 M/S.DTDC COURIER & CARGO LTD. PAGE 5 OF 6 ASSESSEE IS IN NO WAY RELATABLE TO THE INVESTMENT MADE BY THE ASSESSEE. IT WAS ALSO SUBMITTED THAT THE INVESTMENT FROM WHICH DIVIDEND INCOME WAS EARNED ALL RELATE TO EARLIER YEARS AND HENCE T HERE IS NO SCOPE FOR DIRECT EXPENDITURE AS PER RULE 8D(2)(I) OF THE ACT. THE CIT(A), AFTER CONSIDERING ALL THE ARGUMENTS OF THE ASSESSEE AND ALSO AFTER EXAMINING THE BIFURCATION OF EXPENSES INCURRED BY THE COMPANY HELD THAT NO PART OF INTEREST EXPENDITURE IS ATTRIBUTABLE TO THE INVESTMENT BUT CLEARLY RELATED TO THE CARRYING ON OF THE BUSINESS ACTIVITIES FROM WHICH BUSINESS INCOME IS EARNED. AGAINST THE RELIEF GIVEN BY THE CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 4.2 THE LEARNED DEPARTMENTAL REPRESENTAT IVE SUPPORTED THE ORDER OF THE AO WHILE THE LEARNED COUNSEL FOR THE ASSESSEE SUPPORTED THE ORDER OF THE CIT(A) AS WELL AS THE DECISION OF THE TRIBUNAL IN THE ASSESSEE S OWN CASE FOR ASSESSMENT YEAR 2008 - 09. 4.3 AFTER GOING THROUGH THE RELEVANT MATERIAL AN D AFTER CONSIDERING THE RIVAL CONTENTIONS, WE FIND THAT THE CIT(A) HAS APPRECIATED THE EVIDENCE FILED BEFORE HIM IN COMING TO THE CONCLUSION THAT THE EXPENDITURE CLAIMED BY THE ASSESSEE IS ALL RELATABLE TO THE BUSINESS ACTIVITIES OF THE ASSESSEE FROM WHICH BUSINESS INCOME IS EARNED. FURTHER, WE FIND THAT THE DIVIDEND INCOME EARNED BY THE ASSESSEE IS ONLY RS.27,550/ - WHEREAS THE ITA NO . 1155/BANG/2013 M/S.DTDC COURIER & CARGO LTD. PAGE 6 OF 6 DISALLOWANCE MADE BY THE AO U/S 14A OF THE ACT IS RS.8,41,515/ - . IN SIMILAR CIRCUMSTANCES, THE TRIBUNAL, IN THE EARLIER ASSESSMEN T YEAR, HAS OBSERVED THAT THE DISALLOWANCE IS NOT WARRANTED. RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL IN THE ASSESSEE S OWN CASE FOR THE ASSESSMENT YEAR 2008 - 09, IN SIMILAR SET OF FACTS, WE ARE INCLINED TO CONFIRM THE ORDER OF THE CIT(A). 5. IN THE RESULT, THE REVENUE S APPEAL IS DISMISSED. PRON OUNCED IN THE OPEN COURT ON 8 TH OF AUGUST, 201 4. SD/ - SD/ - (JASON P BOAZ ) ( SMT. P.MADHAVI D EVI) ACCOUNTANT MEMBER JUDICIAL MEMBER EKSRINIVASULU COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME - TAX APPEL LATE TRIBUNAL BANGALORE