M/s VMT Spinning Company Limited, Ludhiana V. DCIT, Circle 1, Ludhiana

ITA 1445/CHANDI/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 4918 (ITAT-CHANDIGARH)
• Duration Of Justice: 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 22-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Rule 8D; Set aside
• Section: 14A

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, B, CHANDIGARH , ! '# $ % & '# , () BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ./ ITA NO. 1445/CHD/2018 / ASSESSMENT YEAR : 2015-16 M/S VMT SPINNING CO . LTD., CHANDIGARH ROAD, LUDHIANA THE DCIT, CIRCLE-1. LUDHIANA ./ PAN NO: JDVL02065A / APPELLANT / RESPONDENT ! / ASSESSEE BY : SHRI TEJ MOHAN SINGH, ADVOCATE PROXY FOR SHRI SUBHASH AGGARWAL ' ! / REVENUE BY : SHRI MANJIT SINGH , CIT DR # $ % /DATE OF HEARING : 30.10.2019 &'() % / DATE OF PRONOUNCEMENT : 30.10.2019 (* / ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER DATED 8.09.2018 OF THE COMMISSIONER OF INCOME TAX (APPEALS)-1, LUDHIANA [HEREINAFTER REFERRED TO AS CIT(A)]. 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- 1. THAT THE ORDER PASSED BY THE LD.CIT(A) IS CONTRARY TO LAW AND FACTS OF THE CASE. 2. THAT THE LD.CIT(A) ERRED IN LAW AND ON FACTS IN UPHOLDING THE APPLICABILITY OF RULE 8D AND MAKING DISALLOWANCE THEREUNDER. ITA NO. 1445/CHD/2018- M/S VMT SPINNING CO. LIMITED, LUDHIANA 2 3. THAT THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN APPLYING AMENDED PROVISIONS OF RULE 8D WHICH WERE EFFECTIVE FROM 02.06.2016. 4. THAT THE LD. AO ERRED IN LAW AND ON FACTS IN DISALLOWING EXPENSES (CALCULATED UNDER RULE 8D) OF RS.10,17,334/- UNDER MAT PROVISION. AS THIS GROUND IS OF PURELY LEGAL NATURE IT MAY PLEASE BE ADMITTED AND DECIDED ON MERITS. 5. THAT THE APPELLANT CRAVES LEAVE TO ADD/ALTER/AMEND ANY GROUND OF APPEAL ON OR BEFORE THE DUE DATE OF HEARING OF APPEAL. 3. THE MAIN ISSUE RAISED IN THIS APPEAL IS REGARDIN G THE APPLICABILITY OF RULE 8D OF THE INCOME TAX RULES, 1962 AS AMENDE D W.E.F. 2.6.2016. THE PLEA OF THE ASSESSEE IS THAT THE AMENDED RULES ARE APPLICABLE PROSPECTIVELY. THE HON'BLE SUPREME COURT IN THE CAS E OF CIT VS. ESSAR TELEHOLDINGS LTD., [2018] 90 TAXMANN.COM 2 (SC), H AS HELD THAT THE AMENDED RULES ARE TO BE APPLIED PROSPECTIVELY. THEREFORE, THE ORDER OF THE LOWER AUTHORITIES APPLYING THE AMENDED RULES RE TROSPECTIVELY IS NOT SUSTAINABLE AS PER THE LAW. WE, ACCORDINGLY RESTOR E THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER TO DECIDE THE SAME AFRESH IN ACCORDANCE WITH LAW IN THE LIGHT OF THE RULES, IF SO FOUND APPLICAB LE, AS WERE IN FORCE IN THE ASSESSMENT YEAR UNDER CONSIDERATION. HOWEVER, THE ABOVE OBSERVATION DOES NOT MEAN THAT THE ASSESSING OFFICE R HAS TO MANDATORY APPLY RULE 8D OF THE I.T. RULES. IT WILL BE OPEN T O ASSESSEE TO CONTEST ITS CLAIM REGARDING THE APPLICABLY OF THE RULE 8D O R OTHERWISE. 4. ANOTHER GROUND RAISED BY THE ASSESSEE IN THIS AP PEAL IS REGARDING ITA NO. 1445/CHD/2018- M/S VMT SPINNING CO. LIMITED, LUDHIANA 3 THE APPLICABILITY OF MAT PROVISIONS FOR THE PURPOS E OF CLAIMING DISALLOWANCE U/S 14A OF THE INCOME TAX ACT, 1961 ( IN SHORT 'THE ACT') READ WITH RULE 8D OF THE INCOME TAX RULES, 1962. THIS GROUND, IT APPEARS, HAS BEEN TAKEN FOR THE FI RST TIME BEFORE THIS TRIBUNAL AS THE SAME WAS NOT RAISED BEFORE THE LOWER AUTHORITIES. THIS ISSUE IS REQUIRED TO BE EXAMINED BY THE ASSESS ING OFFICER. IN VIEW OF THIS, THE ORDER OF THE ASSESSING OFFICER IS SET ASIDE AND THE MATTER IS RESTORED TO THE FILE OF ASSESSING OFFICER FOR DECIS ION AFRESH ON THE ISSUE. IN THE RESULT, THE APPEAL OF THE ASSESSEE STAND AL LOWED FOR STATISTICAL PURPOSES. ORDER DICTATED AND PRONOUNCED IN THE OPEN COURT IM MEDIATELY ON COMPLETION OF HEARING. SD/- SD/- ( $ % & '# / ANNAPURNA GUPTA) () / ACCOUNTANT MEMBER ( / SANJAY GARG) / JUDICIAL MEMBER DATED : 30.10.2019 .. '+ ,- .- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. # / / CIT 4. # / ( )/ THE CIT(A) 5. -01 2 , % 2 , 34516 / DR, ITAT, CHANDIGARH 6. 15 7$ / GUARD FILE ITA NO. 1445/CHD/2018- M/S VMT SPINNING CO. LIMITED, LUDHIANA 4 '+ # / BY ORDER, 8 ' / ASSISTANT REGISTRAR