D M Estates Pvt Ltd , Bangalore V. The Deputy Commissioner of Income TAx Circle-11(1), Bangalore

ITA 1466/BANG/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 4800 (ITAT-BANGALORE)
• Duration Of Justice: 11 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 22-06-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR P V PRADEEP KUMAR
• Assessee Lawyers: S VENKATARAMAN
• Keywords: Earning of tax free income
• Section: 14A; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, B ENGALURU BEFORE S HRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER I TA NO S . 1466 & 1467 / BANG/2 0 1 7 (ASSESSMENT YEAR S : 20 1 1 - 12 & 2012 - 13 ) M/S. D.M.ESTATES PVT. LTD. 1 ST F LOOR, EMBASSY POINT, 150 INFANTRY ROAD, BENGALURU - 560001. PAN:AAACD 7449 M VS. APPELLANT DEPUTY COMMISSIONER OF INCOME - TAX, CIRCLE 11(1), BENGALURU. RESPONDENT APPELLANT BY : SHRI S.VENKATARAMAN, CA. RESPONDENT BY : DR. P.V.PRAD EEP KUMAR, ADDL.CIT(DR) DATE OF HEARING : 13/03/2018 DATE OF PRONOUNCEMENT : 31 /05/2018 O R D E R PER I NTURI RAMA RAO, AM : TH ESE ARE APPEALS FILED BY THE ASSESSEE DIRECTED AGAINST DIFFERENT ORDERS OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) - 2 , BENGALURU [CIT(A)] DATED 11/04/2017 FOR THE ASSESSMENT YEAR S 2011 - 12 AND 2012 - 13 . FOR THE SAKE OF CLARITY AND CONVENIENCE, FACTS RELEVANT TO ASSESSMENT YEAR 2011 - 12 ARE STATED HEREUNDER. 2. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APP EAL: ITA NO S . 1466 & 1467/BANG/2017 PAGE 2 OF 4 1. THE COMMISSIONER OF INCOME - TAX (APPEALS) ERRED BOTH IN LAW AND ON THE F ACTS OF THE CASE IN SUSTAINING THE FOLLOWING ADDITIONS (I) UNBILLED REVENUE RS. 11,06,827 (II) DISALLOWANCE U/S 14A OF THE ACT RS. L.59,634 2. SHE FAILED TO APPRECIATE THAT T HE SUM OF RS. 11,06,827 REPRESENT THE REALIZATION OF THE AMOUNTS DUE TO THE ASSESSEE PERTAINING TO THE EARLIER YEARS AND DID NOT RELATE TO THIS YEAR OF ACCOUNT. 3. SHE ALSO FAILED TO APPRECIATE THAT THE AMOUNTS HAD BEEN OFFERED AS INCOME IN THE EARLIER YEAR AND ASSESSING THE SAME IN THE CURRENT YEAR AMOUNTS TO TAXING THE INCOME TWICE. 4. SHE ALSO FAILED TO APPRECIATE THAT ALL THE INVESTMENTS WERE STRATEGIC INVESTMENTS MADE FOR BUSINESS PURPOSES. 5. SHE FAILED TO APPRECIATE THAT BORROWED FUNDS WER E UTILIZED ONLY FOR BUSINESS PURPOSES AND NOT FOR INVESTMENTS AND THAT, THE NON - INTEREST BEARING FUNDS / OWN FUNDS WERE IN EXCESS OF THE INVESTMENTS. THE APPELLANT SUBMITS THAT, IN ANY CASE, THE ADDITION MADE IS EXCESSIVE AND UNREASONABLE. THE APPELLANT, THEREFORE, PRAYS THAT THE ADDITION OF RS. 12,66,461 MAY BE DELETED. 3. BRIEFLY, THE FACTS OF THE CASE ARE THAT T HE ASSESS E E IS A COMPANY ENGAGED IN THE BUSINESS OF PROPERTY DEVELOPERS. THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2011 - 12 WAS FILED ON 27/09/2011 DECLARING INCOME OF RS. 63,48,290/ - AND THE RETURN OF INCOME WAS REVISED ON 9/1/2013 DECLARING INCOME OF RS.58,10,430/ - . AGAINST THE SAID RETURN OF INCOME, THE ASSESSMENT WAS COMPLETED BY THE DEPUTY COMMISSIONER OF INCOME - TAX(APPEALS) , CIRCLE 11 (1), BANGALORE, [AO] VIDE ORDER DATED 30/12/2015 PASSED U/S 143(1) OF THE I NCOME - TAX ACT,1961 [HEREINAFTER REFERRED TO AS THE ACT ] AT TOTAL INCOME OF RS.70,76,890/ - . WHILE DOING SO, THE AO MADE ADDITION OF RS.11,06,827/ - ON THE GROUND THAT THE ASSESSEE HAD NOT OFFERED SAME TO TAX ON ACCOUNT OF UNBILLED REVENUE THOUGH WORK WAS PERFORMED. FURTHER DISALLOWANCE OF RS.1,59,634/ - WAS MADE INVOKING THE PROVISIONS OF SECTION 14A OF THE ACT ON THE GROUND THAT THE ASSESSE MADE INVESTMENTS IN THE FORM OF EQUITY S HARES IN VARIOUS COMPANIES REJECTING THE ARGUMENT OF THE ASSESSE THAT NO EXEMPT INCOME WAS EARNED BY THE ASSESSEE. ITA NO S . 1466 & 1467/BANG/2017 PAGE 3 OF 4 4. BEING AGGRIEVED BY THE ABOVE ORDER, AN APPEAL WAS PREFERRED BEFORE THE LD.CIT(A) , WHO VIDE IMPUGNED ORDER DISMISSED THE APPEAL. 5. BEING AGGRIEVED, THE ASSESSEE IS BEFORE US . G ROUND NOS. 1 , 6 AND 7 ARE GENERA L IN NATURE AND DO NOT REQUIRE ADJUDICA TION . GROUND NOS. 2 AND 3 CHALLENGES THE ADDITION OF RS. 11 , 06 , 827 / - AS CONFIRMED BY THE LD. CIT (A). IT IS SUBMITTED THAT THE ASSESSE E IS MAINTAINING A CCOUNTS ON MERCANTILE BASIS. O UT OF THE OPENING BALANCE OF RS. 33 , 98 , 029 / - ON ACCOUNT OF UNBILLED REVENUE , A SUM OF RS. 11 , 06 , 827 / - , HA D BEEN RE VERSED AND THE BALANCE OF RS. 22 , 91 , 202 / - WAS SHOWN AS CLOSING BALANCE AND THE BALANCE AMOUNT OF RS. 11 , 06 , 827 / - WAS ALREADY OFFERED TO TAX IN THE EARLIER YEAR AND THEREFORE THE QUESTION OF AGAIN ASSESSING THE SAME AMOUNT DOES NOT ARISE . 6. WE HEARD RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. S INCE THE ASSESSEE RAISED A CO NTENTION T HAT IT WAS ALREADY OFFERED TO TAX, WE REMAND THE ISSUE BACK TO THE F ILE OF THE AO TO EXAMINE WHETHER IN THE EARLIER A SSESSMENT YEAR, THIS SUM OF RS.11,06,827/ - WAS OFFERED TO T AX, IF SO, TO DELETE THE AD DITION MADE IN THIS YEAR. THUS, T HESE GROU ND S OF APPEAL ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES . 7. AS REGARDS GROUND NOS. 4 AND 5 CHALLENG ING THE ADDITION O N ACCOUNT OF 14 A, THE ONLY CONTENTION RA ISED BY THE ASSESSEE IS THAT 14A IS NOT APPLICABLE , AS THERE WAS NO EXEMPT INCOME EARNED DURING THE PREVIOUS YEAR R ELEVANT TO THE ASSESSMENT YEAR U ND ER CONSIDERATION . N OW THE LAW IS SETTLED THAT IN THE ABSENCE OF EXEMPT INCOME , PROVISIONS OF SECTION 14 A CANNOT BE ATTRACTED. T HEREFORE WE DIRECT THE AO TO D ELETE THE ADDITION MADE U/S 14A OF THE ACT. 8. F OR THE ASSESSMENT YEAR 2012 - 13 THE ONLY ISSUE INVOLVED IS ADDITION U/S 14A. FOLLOWING THE REASONS GIVEN IN THE ASSESSMENT YEAR 2011 - 12 IN ITA NO.1466/BANG/2017 (SUPRA), WE DIRECT THE AO TO DELETE THE ADDITION. ITA NO S . 1466 & 1467/BANG/2017 PAGE 4 OF 4 9. IN THE RESULT, THE APP EAL IN ITA NO.1466/BANG/2017 IS PARTLY ALLOWED AND THE APPEAL IN ITA NO.1467/BANG/2017 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST MAY , 2018 S D/ - SD/ - ( SUNIL KUMAR YADAV ) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE : BENGALURU. D A T E D : 31 / 0 5 /201 8 SRINIVASULU, SPS COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A) 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY INCOME - TAX APPELLATE TRIBUNAL BANGALORE