M/s. Galgotia Publication (P) Ltd., New Delhi V. DCIT, Noida

ITA 1238/DEL/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 0486 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 02-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S N MEENA SR DR
• Assessee Lawyers: P K MISRA
• Keywords: Business income; Rule 8D
• Section: 14A; 13

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C, NEW DELHI ! !! ! ! !! !#$% #$% #$% #$% & & & & ' ' ' ' BEFORE MS. SUSHMA CHOWLA, JM & SH. N.K.BILLAIYA, AM ! !! ! / ITA NOS.1238 & 1239/DEL/2017 (( (( (( (( / ASSESSMENT YEARS- 2012-13 & 2013-14 GALGOTIA PUBLICATION (P.) LTD., 4405/6, PRAKASH APARTMENTS-II, 5, ANSARI ROAD, DARYAGANJ, NEW DELHI-110002. PAN-AAACG1557F .......... )* /APPELLANT VS THE DCIT, CENTRAL CIRCLE, NOIDA. . +,)* / RESPONDENT )*-. / APPELLANT BY : SH. P.K.MISRA, CA +,)*-. / RESPONDENT BY : SH. S.N.MEENA, SR.DR -/0& / DATE OF HEARING : 17.12.2019 12-/0& / DATE OF PRONOUNCEMENT: 23.12.2019 / ORDER PER SUSHMA CHOWLA, JM: THE PRESENT APPEALS FILED BY ASSESSEE ARE AGAINST T HE ORDER OF CIT(A)-IV, KANPUR, DATED 28.12.2016 RELATING TO ASS ESSMENT YEARS 2012- 13 & 2013-14 AGAINST ORDER PASSED UNDER SECTION 143 (3) OF THE INCOME- TAX ACT, 1961 (IN SHORT THE ACT). 2. BOTH APPEALS FILED BY THE ASSESSEE WERE HEARD TO GETHER AND ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER FOR T HE SAKE OF CONVENIENCE. 2 ITA NOS.1238 & 1239/DEL/2017 ASSESSMENT YEARS- 2012-13 & 2013-14 ITA NO.1238/DEL/2017 [ASSESSMENT YEAR- 2012-13] 3. THE ASSESSEE IN THIS APPEAL RELATING TO ASSESSME NT YEAR 2012-13 HAS RAISED SOLITARY ISSUE AGAINST THE DISALLOWANCE MADE U/S 14A R.W. RULE 8D OF INCOME TAX RULES, 1962 (IN SHORT RULES) AT RS.44,21,688/-. 4. THE LD.AR FOR THE ASSESSEE AT THE OUTSET POINTED OUT THAT THE ASSESSEE HAS ONLY EARNED DIVIDEND INCOME OF RS.830/ - AND HENCE, THERE IS NO MERIT IN THE AFORESAID DISALLOWANCE MADE AGAINST THE ASSESSEE. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE LIMITED ISSUE WHICH IS RAISED IS AGAINST THE DISAL LOWANCE MADE U/S 14A R.W. RULE 8D OF RULES. THE ASSESSEE HAD EARNED DIV IDEND INCOME OF RS.830/- AND THE ISSUE WHICH HAS BEEN URGED BEFORE US IS THE DISALLOWANCE TO BE RESTRICTED TO THE AMOUNT OF DIVI DEND INCOME EARNED. WE FIND THAT THE SAID ISSUE HAS BEEN DECIDED BY THE HONBLE DELHI HIGH COURT IN JOINT INVESTMENT PVT.LTD. VS CIT 372 ITR 6 94 (DEL.) AND CIT VS HOLCIM (INDIA) PVT.LTD. 272 CTR 282 (DEL.). FOLLOW ING THE SAME PARITY OF REASONING, WE HOLD THAT THE DISALLOWANCE U/S 14A R. W. RULE 8D OF RULES IS RESTRICTED TO RS.830/-. HENCE, GROUNDS RAISED BY T HE ASSESSEE IN THIS APPEAL ARE ALLOWED. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. 3 ITA NOS.1238 & 1239/DEL/2017 ASSESSMENT YEARS- 2012-13 & 2013-14 ITA NO.1239/DEL/2017 [ASSESSMENT YEAR- 2013-14] 7. FURTHER, THE ASSESSEE IN THIS APPEAL RELATING TO ASSESSMENT YEAR 2013-14 HAS RAISED THE ISSUE AGAINST THE ESTIMATED ADDITION MADE IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF DECLINE IN GROS S PROFIT RATE. 8. BRIEFLY IN THE FACTS OF THE CASE RELATING TO THE ISSUE THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF BOOKS PUBLICATION. FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE DECLARED GROSS PROFIT O F RS.371.43 LACS AGAINST SALE OF RS.1350.86 LACS FOR THE YEAR WHICH GAVE GRO SS PROFIT RATE OF 27.51% AS AGAINST GROSS PROFIT RATE OF 34.49% FOR IMMEDIAT ELY PRECEDING YEAR. THE ASSESSEE BEFORE THE ASSESSING OFFICER SUBMITTED THAT DECLINE IN GROSS PROFIT RATE COULD BE ATTRIBUTED TO SALE OF OLD BOOK S WHICH HAD LOST THEIR MARKETABILITY DUE TO FRESH EDITIONS COMING IN THE M ARKET. THE ASSESSEE ALSO SUBMITTED THAT DECLINE WAS ON ACCOUNT OF FACT THAT FAKE EDITIONS OF THEIR BEST SELLERS CAME IN THE MARKET AND TO RECAPT URE THEIR LOST MARKET THEY HAD TO RESORT TO SELLING BOOKS AT HEAVY DISCOU NT. THE ASSESSING OFFICER HOWEVER, DID NOT ACCEPT THE GROSS PROFIT RA TE DECLARED BY THE ASSESSEE AND MADE AN ADDITION @ 2% OF GROSS SALES O N ACCOUNT OF DECLINE IN GROSS PROFIT RATE RESULTING IN ADDITION OF RS.27 ,01,424/-. THE CIT(A) UPHELD THE ORDER OF THE ASSESSING OFFICER AGAINST W HICH THE ASSESSEE IS IN APPEAL BEFORE US. 9. THE LD.AR FOR THE ASSESSEE POINTED OUT THAT THE EXPLANATION FILED BY THE ASSESSEE BEFORE THE AUTHORITIES BELOW HAS BEEN REJECTED IN MECHANICAL MANNER. IT WAS FURTHER STATED THAT DECL INE IN GROSS PROFIT RATE 4 ITA NOS.1238 & 1239/DEL/2017 ASSESSMENT YEARS- 2012-13 & 2013-14 WERE IN LINE IN THE TRADE CARRIED ON BY THE ASSESSE E AS THERE WAS STIFF COMPETITION IN THE MARKET AND THE ASSESSEE HAD TO O FFER DISCOUNTS; HENCE THE GROSS PROFIT RATE DECLARED BY THE ASSESSEE COUL D NOT BE DISTURBED. 10. THE LD. DR HOWEVER, PLACED RELIANCE ON THE ORDE RS OF THE AUTHORITIES BELOW. 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE WAS ENGAGED IN PUBLICATION OF BOOKS. DURI NG THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD DECLARED GROSS PROF IT RATE OF 27.51% ON TOTAL SALES OF RS.1350.86 LACS AS AGAINST GROSS PRO FIT RATE OF 34.49% ON SALES OF 1080.03 LACS IN THE PRECEDING YEAR. THE ASSESSEE HAD FILED THE REASONS FOR DECLINE IN GROSS PROFIT RATE BEFORE THE AUTHORITIES BELOW AND POINTED OUT THAT THE SAME WAS ATTRIBUTABLE TO SALE OF OLD BOOKS, BECAUSE OF FRESH EDITIONS COMING IN THE MARKET AND ALSO ON ACCOUNT OF DISCOUNTS BEING OFFERED IN ORDER TO BE COMPETITIVE IN THE MAR KET. THE TURNOVER OF THE ASSESSEE HAD ALSO INCREASED WHEN COMPARED TO TH E TURNOVER OF PRECEDING YEAR. THERE IS NO MERIT IN THE ORDERS OF THE AUTHORITIES BELOW IN HOLDING THAT THE ESTIMATED ADDITION HAS TO BE MADE ON ACCOUNT OF FALL IN GROSS PROFIT RATE. THE BOOKS OF ACCOUNTS MAINTAINE D BY THE ASSESSEE HAD NOT BEEN REJECTED BY THE ASSESSING OFFICER AND ONLY THE GROSS PROFIT RATE HAS BEEN ESTIMATED @ 2% OVER AND ABOVE, THE GROSS P ROFIT RATE DECLARED BY THE ASSESSEE. WE FIND NO MERIT IN THE ORDERS OF TH E AUTHORITIES BELOW IN THE GIVEN SET OF FACTS OF THE CASE AND ACCORDINGLY, WE DELETE THE AFORESAID 5 ITA NOS.1238 & 1239/DEL/2017 ASSESSMENT YEARS- 2012-13 & 2013-14 ADDITIONS MADE IN THE HANDS OF THE ASSESSEE. THE GR OUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS ALLOWED. 12. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD DAY OF DECEMBER, 2019. SD/- SD/- (N.K.BILLAIYA) (SUS HMA CHOWLA) & & & & /ACCOUNTANT MEMBER /JUDICIAL MEMBER / DATED : 23 RD DECEMBER, 2019 . * AMIT KUMAR * -+/#4#/5 COPY OF THE ORDER IS FORWARDED TO : 1. )* / THE APPELLANT 2. +,)* / THE RESPONDENT 3. 6 7 8 / THE CIT(A) 4. 9 6 / THE PR. CIT 5. 6. #:;+/ / DR, ITAT, DELHI ;<(=5 GUARD FILE. / BY ORDER , ,#/+/ // TRUE COPY // ?@A , ASSISTANT REGISTRAR, ITAT, DELHI