DCIT, New Delhi V. M/s. Central News Agency P. Ltd., New Delhi

ITA 1262/DEL/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74060 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-01-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 06-02-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 05-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: NIDHI SRIVASTAVA
• Keywords: Business income; Earning of tax free income
• Section: 143(3); 14A; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B NEW DELHI) BEFORE SHRI U. B. S. BEDI, JUDICIAL MEMBER AND SHRI B. C. MEENA, ACCOUNTANT MEMBER I.T.A. NO. 1265 & 1262 /DEL/2013 (ASSESSMENT YEAR 2008-09 & 2006-07 RESPECTIVELY) DCIT, CIRCLE 3(1), VS. M/S. CENTRAL NEWS AGENCY P . LTD., NEW DELHI 23/90, CONNAUGHT CIRCUS, NEW DELHI PAN/GIR NO.: AAACC4233C (APPELLANTS) (RESPONDENTS) ASSESSEE BY : SMT. NIDHI SRIVASTAVA, SR. DR DEPARTMENT BY: SHRI RANJAN CHOPRA, CA ORDER PER BENCH: THESE TWO APPEALS OF THE DEPARTMENT ARE DIRECTED A GAINST SEPARATE ORDERS PASSED BY LD. CIT(A) VI, NEW DELHI DATED 28. 12.2012 AND 26.12.2012 AND 26.12.2012 FOR THE ASSESSMENT YEAR 2 008-09 AND 2006-07 RESPECTIVELY. 1.1 AS REGARDS THE APPEAL IN I.T.A. NO. 1262/DEL/20 13 FOR ASSESSMENT YEAR 2006-07 IS CONCERNED, DEPARTMENT HAS CHALLENGE D DELETION OF PENALTY OF RS.7,29,108/- IMPOSED BY THE O U/S 271(1)(C). 2. AT THE VERY OUTSET, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN THIS CASE, THE ASSESSMENT WAS COMPLETED U/S 143(3) ON 11 .11.2008 WHEREIN INCOME OF THE ASSESSEE COMPANY WAS ASSESSED AT RS.9 9,30,110/- AS AGAINST THE RETURNED INCOME OF RS.93,87,177. WHILE COMPLET ING THE ASSESSMENT ,THE I.T.A. NOS. 1265 & 1262/DEL/2013 2 A.O. TAXED SHORT TERM CAPITAL GAIN OF RS.30,81,610/ - ON SALE OF UNITS OF MUTUAL FUND AS NORMAL BUSINESS INCOME OF THE ASSESS EE COMPANY AND INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) ON THIS ADDITION. THE ABOVE ADDITION WAS SUBSEQUENTLY CONFIRMED BY LD. CIT(A) O N 20.01.2010 AND ASSESSEE COMPANY PREFERRED FURTHER APPEAL BEFORE IT AT WHICH DELETED THE AFORESAID ADDITION IN ITS ORDER DATED 20.02.2011IN I.T.A. NO. 1166/DEL/2010. MEANWHILE, THE A.O. IMPOSED PENALTY U/S 271(1)(C) I N RESPECT OF AFORESAID ADDITION OF RS.30,81,610/- AT RS.7,29,108/- BEING 1 00% OF THE TAX SOUGHT TO BE EVADED VIDE HIS ORDER DATED 23.02.2011 AND THE A SSESSEE PREFERRED APPEAL AGAINST SUCH ORDER OF THE A.O. AND SUBMITTED BEFORE THE FIRST APPELLATE AUTHORITY THAT THE ADDITION MADE BY THE A.O. AND CO NFIRMED BY LD. CIT(A) HAS SINCE BEEN DELETED IN QUANTUM APPEAL BY ITAT DE LHI BENCH VIDE ITS ORDER DATED 22.02.2011 IN I.T.A. NO. 1166/DEL/2010. SINCE THE QUANTUM ADDITION HAS BEEN DELETED, THE IMPUGNED PENALTY ORD ER U/S 271(1)(C) IS NOT SUSTAINABLE AND, THEREFORE, PENALTY MAY BE DELETED. 3. LD. CIT(A) WHILE CONSIDERING AND ACCEPTING THE P LEA OF THE ASSESSEE, HAS DELETED SUCH PENALTY LEVIED BY THE A.O. BY RELY ING UPON THE CASE OF K. C. BUILDERS VS ACIT (265 ITR 562 (S.C.), CIT VS R. DAL MIA (1992)107 TAXMAN 107 ADDL.CIT VS BAURIKASH PRASAD (1993) ITR 206 ALLD. AND OTHER DECISIONS OF ITAT AHMEDABAD AND MUMBAI BENCHES AND ANDHRA PRADESH AND RAJASTHAN HIGH COURT DECISIONS. 3.1 DEPARTMENT CHALLENGED SUCH ORDER AND LD. A.R. O F THE ASSESSEE PLEADED THAT SINCE ADDITIONS ON THE BAISS OF WHICH PENALTY HAS BEEN IMPOSED, HAS BEEN DELETED, THEREFORE, PENALTY HAS RIGHTLY BE EN DELETED BY LD. CIT(A). HIS ACTION SHOULD BE CONFIRMED. I.T.A. NOS. 1265 & 1262/DEL/2013 3 4. LD. D.R. COULD NOT CONTROVERT THIS FACTUAL ASPEC T AND PLEADED THAT APPEAL SHOULD BE DECIDED AS PER LAW. 5. WE HAVE HEARD BOTH THE SIDES, CONSIDERED THE MAT ERIAL ON RECORD AND FIND THAT THE ADDITION ON WHICH PENALTY HAS BEEN IM POSED STANDS ALREADY DELETED BY ITAT, THEREFORE, VERY FOUNDATION FOR LEV Y OF PENALTY GETS VANISHED. AS SUCH LD. CIT(A)S ACTION IN DELETING THE PENALTY IS JUST AND PROPER, WHICH IS CONFIRMED AND APPEAL OF THE REVENU E IS DISMISSED. 6. AS REGARDS APPEAL IN I.T.A. NO. 1265/DEL/2013 FO R ASSESSMENT YEAR 2008-09 IS CONCERNED, THE DEPARTMENT HAS RAISED FOL LOWING THREE EFFECTIVE GROUNDS: I) WHETHER THE LD. CIT(A) HAS ERRED ON FACTS AND I N LAW IN DELETING THE ADDITION MADE U/S 14A AMOUNTING TO RS. 36,246/-. II) WHETHER THE LD. CIT(A) HAS ERRED ON FACTS AND IN LA W IN DELETING THE ADDITION OF RS.1,56,104/- MADE ON ACCO UNT OF INTEREST EXPENSES. III) WHETHER THE LD. CIT(A) HAS ERRED ON FACTS AND IN LA W IN DELETING THE ADDITION OF RS.19,17,411/- TREATING AS BUSINESS INCOME AS AGAINST SHORTS TERM CAPITAL GAIN IGNORING THE FACT THAT HE ASSESSEE COMPANY SOLD SHARES WHERE SHORT TE RM CAPITAL GAIN HAS BEEN SHOWN VERY FREQUENTLY AND THE HOLDING PERIOD IS ALSO VERY SHORT. 7. AS REGARDS THE FIRST ISSUE, THE SAME RELATES TO DELETION OF ADDITION MADE U/S 14A AMOUNTING TO RS.36,246/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A.O. NOTED THAT THE ASSESSEE COMPA NY HAD EARNED DIVIDEND INCOME OF RS.2,42,701/- BUT NO EXPENSES HAVE BEEN C LAIMED TO HAVE BEEN INCURRED FOR EARNING THE EXEMPT INCOME. SO, THE A. O. DISALLOWED A SUM OF RS.36,246/- U/S 14A READ WITH RULE 8D OF THE I. T. ACT, 1961. 7.1 THE ASSESSEE TOOK UP THE MATER IN APPEAL AND CH ALLENGED THE ACTION OF THE A.O. IN THIS REGARD. IT WAS CONTENDED TO DELET E THE IMPUGNED ADDITION. I.T.A. NOS. 1265 & 1262/DEL/2013 4 7.1 LD. CIT(A) BY REFERRING TO VARIOUS DECISIONS ME NTIONED IN HIS ORDER, HAS CONCLUDED TO DELETE THE ADDITION AS PER PARA 3. 2 AND 3.3.3 OF HIS ORDER BY HOLDING THAT THE A.O. HAS ERRED IN APPLYING RULE 8D IN THE CASE OF THE ASSESSEE COMPANY. 8. AGAINST SUCH ORDER OF THE LD. CIT(A) WHO DIRECTE D THE DELETION OF ADDITION MADE U/S 14A WHILE FOLLOWING EARLIER YEAR S DECISION IT WAS CONTENDED BY LD. D.R. THAT POSITION OF LAW ABOUT AP PLICATION OF RULE 8D IS NOT THE SAME AS IT WAS FOR ASSESSMENT YEAR 2005-06 TO 2007-08 BECAUSE IN THOSE YEARS, RULE 8D WAS NOT APPLICABLE WHEREAS FOR THE ASSESSMENT YEAR 2008-09, SAID RULE 8D IS APPLICABLE. SO, IN THE IN TEREST OF JUSTICE AND TO HAVE FAIR PLAY IN THE MATTER, IT WOULD BE JUST AND APPRO PRIATE TO SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND TO RESTORE THE MATTER BACK TO THE FILE OF THE A.O. FOR RECONSIDERATION OF THE ISSUE AFRESH IN THE LIGH T OF HONBLE DELHI HIGH COURT DECISION IN THE CASE OF MAXOPP INVESTMENT LTD . VS CIT 347 ITR 272 AND TO THIS ARGUMENT OF LD. D.R., LD. A.R. DID NOT SERIOUSLY OBJECT BUT CONTENDED TO UPHOLD THE ORDER OF LD. CIT(A). 9. WE HAVE HEARD BOTH THE SIDES AND CONSIDERED THE MATERIAL ON RECORD AS WELL AS CASE LAW RELIED UPON AND FIND THAT IN ALL F AIRNESS IT WILL MEET ENDS OF JUSTICE IF THE ISSUE RELATABLE TO DISALLOWANCE U/S 14A READ WITH RULE 8D IS RESTORED BACK TO THE FILE OF THE A.O. FOR RECONSIDE RATION OF THE SAME IN THE LIGHT OF MEXOPP INVESTMENTS LTD (SUPRA) FOR REDECID ING THE ISSUE AFRESH AS BOTH THE SIDES HAVE NOT OBJECTED TO THE SAME. WE O RDER AND DIRECT ACCORDINGLY. 10. AS REGARDS 2 ND ISSUE, IT WAS CONTENDED BY LD. A.R. THAT SIMILAR ADDITION WAS MADE IN THE CASE OF THE ASSESSEE FOR T HE ASSESSMENT YEAR 2005- 06, 2006-07 AND 2007-08 WHICH WERE DELETED BY LD. C IT(A) VIDE ORDER I.T.A. NOS. 1265 & 1262/DEL/2013 5 DATED 09.01.2009, 20.01.2010 AND 27 TH OCT. 2011 RESPECTIVELY AND THE ORDERS OF LD. CIT(A) HAVE ALSO BEEN CONFIRMED BY ITAT VIDE ORDER DATED 13.07.2012 IN I.T.A. NO. 5860/DEL/2011 AND HENCE AD DITION SHOULD BE DELETED. 11. LD. CIT(A), WHILE CONSIDERING AND ACCEPTING THE PLEA OF THE ASSESSEE, DELETED THE IMPUGNED ADDITION WHILE RELYING UPON IT ATS ORDER IN RESPECT TO GROUND NO.2 AND IN APPEAL AGAINST SUCH ORDER OF LD. CIT(A), DEPARTMENT HAS PLEADED FOR SETTING ASIDE THE ORDER OF LD. CIT( A) AND RESTORING THAT OF THE A.O. WHEN ASKED IF THERE IS ANY CONTRARY DECIS ION, SHE WAS UNABLE TO GIVE ANY ANSWER IN THIS REGARD. 12. AFTER HEARING BOTH THE SIDES AND CONSIDERING TH E MATERIAL ON RECORD, WE FIND THAT THE ISSUE IN RELATION TO GROUND NO.2 I S SQUARELY COVERED IN FAVOUR OF THE ASSESSEE. THEREFORE, FOLLOWING THE I TAT DECISION FOR THE EARLIER YEAR, WE UPHOLD THE ORDER OF LD. CIT(A) WHI CH IS IN CONFORMITY WITH ITAT ORDER AND DISMISS THIS GROUND OF APPEAL OF THE REVENUE. 13. AS REGARDS 3 RD ADDITION, WE FIND THAT THE SAME HAS BEEN DELETED B Y LD. CIT(A) VIDE PARA 5, 5.1 AND 5.2 WHICH IS REPRODUCED BELOW: 5. GROUND OF APPEAL NO.4 RELATES TO THE GRIEVANCE OF THE ASSESSEE AGAINST THE ACTION OF THE A.O. IN HOLDING SHORT TER M CAPITAL GAIN OF 19,17,411/- WAS ASSESSABLE AS INCOME FROM BUSINESS OR PROFESSION AND NOT UNDER THE HEAD INCOME FROM CAPITAL GAINS. 5.1 IT WAS SUBMITTED ON BEHALF OF THE APPELLANT THA T THE ASSESSMENT YEAR 2006-07 AND 2007-08, ADDITIONS ON SIMILAR GROU ND I.E. INCOME UNDER THE HEAD CAPITAL GAINS ASSESSED AS INCOME UNDER THE HEAD BUSINESS OR PROFESSION, WAS MADE BY THE THEN A.O. U/S 143(3). AGAINST THE ABOVE ORDER, ASSESSEE HAD FILED APPEAL BEFORE THE CIT(A) AND THEN BEFORE HONBLE ITAT, WHO WAS PLEASED TO AL LOW THE APPEAL IN FAVOUR OF THE ASSESSEE. 5.2 I HAVE CONSIDERED THE SUBMISSIONS MADE ON BEHAL F OF THE APPELLANT AND THE FACTS ON RECORD. I HAVE ALSO PER USED THE ORDERS I.T.A. NOS. 1265 & 1262/DEL/2013 6 PASSED B CIT(A)-VII, NEW DELHI AND HONBLE ITAT, DE LHI FOR ASSESSMENT YEAR 2006-07 AND 2007-08 REFERRED TO ABO VE, WHEREIN IT WAS HELD THAT PROFITS ON SALE OF UNITS OF MUTUAL FU NDS WILL BE ASSESSABLE UNDER THE HEAD CAPITAL GAINS AND NOT A S BUSINESS INCOME. RESPECTFULLY FOLLOWING HT DECISION OF HON BLE ITAT, DELHI IN THE APPELLANTS OWN CASE FOR ASSESSMENT YEAR 200 6-07 AND 2007- 08; GROUND OF APPEAL NO.4 IS ALLOWED BY HOLDING THA T PROFITS ON SALE OF UNITS OF MUTUAL FUNDS WILL BE ASSESSABLE UNDER T HE HEAD CAPITAL GAINS. 14. AGAINST SUCH ORDER OF LD. CIT(A), DEPARTMENT HA S COME UP IN APPEAL. 15. AFTER HEARING BOTH THE SIDES AND CONSIDERING TH E MATERIAL ON RECORD, WE FIND THAT LD. CIT(A) HAS PASSED THE ORDER WHILE FOLLOWING ITAT DECISION FOR THE ASSESSMENT YEAR 2006-07 AND 2007-08. NO CON TRARY DECISION AGAINST ITAT DECISION HAS BEEN FILED BEFORE US, THEREFORE, WE HAVE NO OPTION BUT TO UPHOLD THE ORDER OF LD. CIT(A) WHICH IS UPHELD AND APPEAL OF THE REVENUE ON THIS ISSUE IS ALSO DISMISSED. 16. AS A RESULT, APPEAL OF THE DEPARTMENT GETS DISM ISSED. 17. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH FEB., 2014. SD./- SD./- (B. C. MEENA) (U.B.S.BEDI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 14 TH FEB., 2014. SP. COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A)-XXV, NEW DELHI AR, ITAT, 5. CIT(ITAT), NEW DELHI NEW DELHI