BHISMA REALTY LTD, MUMBAI V. ASST CIT CIR 2(1)(1), MUMBAI

ITA 1476/MUM/2017

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5818 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 02-03-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ABDUL HAKEEM M
• Keywords: Business income; Depreciation; Earning of tax free income
• Section: 143(3); 14A; 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B , MUMBAI BEFORE HONBLE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND HONBLE SHRI SANDEEP GOSAIN , JUDICIAL MEMBER ITA NO.1476 /MUM/201 7 ASSESSMENT YEAR: 2012 - 13 M/S BHISMA REALTY LTD., SIR VITHALDAS CHAMBERS, 3 RD FLOOR 16 MUMBAI SAMACHAR MARG FORT, MUMBAI 400 001. PAN: AAACB5995N VS. ASST. CIT, CIRCLE 2(1)(1), AAYAKAR BHAVAN, MUMBAI 20. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K. GOPAL & MS. NEHA PARANJPE REVENUE BY : ABDUL HAKEEM M. (DR) DATE OF HEARING : 05 .11.2018 DATE OF PRONOUNCEMENT : 05 .12 .201 8 O R D E R PER SANDEEP GOSAIN , JM: 1. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AG AINST THE ORDER OF THE LD. CIT(A) - 3, MUMBAI DATED 13.12 .201 6 FOR THE A.Y 201 2 - 13 , WHICH IN ITSELF DIRECTED AGAINST THE ORDER PASSED BY THE ASSESSING OFFICER (FOR SHORT A.O ) UNDER SEC. 143(3) OF THE IT ACT , 1961 . 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING TOTAL INCOME AT RS. 1,64,43,790/ - . THE CASE WAS SELECTED FOR SCRUTINY AND AFTER CERTAIN STA TUTORY NOTICES AND SEEKING REPLY OF THE ASSESSEE, THE ORDER OF THE ASSESSMENTS WERE PASSED BY THE A.O THEREBY MAKING ADDITIONS / DISALLOWANCE U/S 14A OF THE IT ACT, 1961 AND IN SPITE OF DEPRECIATION ON MOTOR CAR WERE ADDED TO THE TOTAL INCOME OF THE ASSES SEE. AGGRIEVED BY THE A.O THE ASSESSEE 2 ITA NO. 1476/MUM/2017. BHISHMA REALTY LTD., MUMBAI PREFERRED AN APPEAL BEFORE THE CIT(A), WHO DISMISSED THE APPEAL OF THE ASSESSEE. 3. AGGRIEVED BY THE ORDER OF THE LD. CIT(A) THE ASSESSEE PREFERRED SECOND APPEAL BEFORE US ON THE GROUND MENTIONED HEREIN ABOVE. GROUND NO.1 4. THIS GROUND RAISED BY THE ASSESSEE RELATES TO CHALLENGING THE ORDER OF LD. CIT(A) IN CONFIRMING THE DISALLOWANCES U/S 14A R.W.R 8D OF THE IT RULE MADE BY THE A.O. 5. WE HAVE HEARD THE COUNSELS OF THE BOTH THE PARTIES AND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD AS WELL AS JUDGEMENTS CITED BY THE PARTIES AND ALSO ORDERS PASSED BY THE REVENUE AUTHORITIES. FROM THE RECORDS, WE NOTICED THAT THE ASSESSEE HAD FURNISHED THE DETAILS OF INVESTMENT WHICH ARE AT PAGE NO. 9 OF THE PAPER BOOK W HICH REFLECTS THAT ALL THE INVESTMENTS DO NOT YIELD EXEMPT INCOME. SINCE THE INVESTMENTS, WHICH YIELD EXEMPT INCOME CAN BE CONSIDERED FOR THE PURPOSE OF COMPUTING DISALLOWANCE U/S 14A R.W.R 8D OF THE IT RULES, 1962. THEREFORE, WE FEEL THAT THE REVENUE AU THORITIES HAS NOT CONSIDERED THIS POINT INTO CONSIDERATION WHILE COMPUTING DISALLOWANCE. 6. THE ASSESSEE HAD PLACED ON RECORD THE COMPUTATION OF DISALLOWANCE WHICH IS AT PAGE NO. 9 OF PAPER BOOK. BE THAT AS IT MAY, WE ARE OF THE VIEW THAT IT IS ONLY THOSE INVESTMENTS WHICH YIELD EXEMPT INCOME CAN ONLY BE CONSIDERED FOR THE PURPOSE OF COMPUTING DISALLOWANCES U/S 14A R.W.R 8D OF THE IT RULES, 1962. THEREFORE, IN SUCH CIRCUMSTANCES, WE ARE OF THE VIEW THAT ENDS OF THE JUSTICE WOULD BE MET ONLY IF WE SET ASID E THE ORDER OF THE CIT(A) AND REMIT THE MATTER BACK TO THE FILE OF THE A.O FOR AFRESH ADJUDICATION WHILE TAKING INTO CONSIDERATION OUR ABOVE OBSERVATIONS . IT IS NEEDLESS SAY TO MENTION THAT BEFORE PASSING THE ORDER ON THIS GROUND, THE A.O SHALL 3 ITA NO. 1476/MUM/2017. BHISHMA REALTY LTD., MUMBAI PROVIDE OP PORTUNITY TO THE ASSESSEE. IT IS ALSO MADE CLEAR THAT ASSESSEE SHALL EXTEND ALL NECESSARY COOPERATION IN EXPEDITIOUS DISPOSAL OF THE MATTER. WITH THESE DIRECTIONS THIS GROUND OF APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. GROUND NO. 2. 7. THIS GROUND RA ISED BY THE ASSESSEE IS RELATES TO CHALLENGING THE ORDER OF THE LD. CIT(A) IN CONFIRMING THE DISALLOWANCE OF DEPRECIATION ON MOTOR CAR AMOUNTING TO RS. 7,41,010/ - HOLDING THE SAME SHOULD BE ADDED TO THE WORK - IN - PROGRESS. 8. WE HAVE HEARD BOTH THE PARTIES A ND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD AS WELL AS THE ORDERS PASSED BY THE REVENUE AUTHORITIES. THE LD. AR SUBMITTED BEFORE US THAT THE PROFIT AND LOSS ACCOUNT FOR THE YEAR UNDER CONSIDERATION IS AVAILABLE AT PAGE NO. 11 OF THE PAPER BOOK. BIFURCATION OF OTHER INCOME IS ALSO PROVIDED IN NOTE - 16 AND THE SAID NOTE ALSO REFLECTS / SHOWS THAT THE ASSESSEE HAS EARNED RS. 95.06 LAKHS AS INTEREST INCOME AND THE SAME HAS BEEN OFFERED FOR TAX AS BUSINESS INCOME. LD. AR ALSO RELIED UPON THE JUDRISDICTIONAL HIGH COURT IN THE CASE OF CIT VRS. LOKHANDWALA CONSTRUCTION 2003 ITR PAGE 579. 9. FROM THE RECORDS WE ALSO NOTICED THAT COMPUTATION OF INCOME IS ENCLOSED AT PAGES 13 AND 14 OF THE PAPER BOOK AND PAGE 20 OF THE PAPER BOOKS CONTAINS THE PART ICULARS OF DEPRECIATION ALLOWABLE AS PER INCOME TAX ACT, 1961 FOR THE YEAR ENDED 31.03.2009. THE SCHEDULE FARMING PART OF BALANCE SHEET FOR THE YEAR ENDED 31.03.2010 AND YEAR ENDED 31.03.2011 ARE AT PAGE NOS. 30 AND 31 OF THE PAPER BOOK. 10. THE LD. AR AL SO DRAWN OUR ATTENTION TO THE FACT THAT THE CLAIM OF DEPRECIATION IN THE CASE O F THE ASSESSEE HAS BEEN ACCEPTED FOR THE A.YS. 2010 - 11 AND 2011 - 12 VIDE ASSESSMENT ORDERS PASSED U/S 143(3) OF THE IT ACT VIDE LETTER DATED 26.03.2013 AND 13.03.2 014 4 ITA NO. 1476/MUM/2017. BHISHMA REALTY LTD., MUMBAI RESPECTIVEL Y. THUS, REQUESTED FOR DELETION OF DISALLOWANCE OF DEPRECIATION. 11. CONSIDERING THE SUBMISSIONS AS MENTIONED ABOVE, WE NOTICED THAT ALL THE ABOVE FACTS HAVE NOT BEEN CONSIDERED BY THE CIT(A) WHILE DISPOSING THIS GROUND. THE ONLY REASON MENTIONED BY CIT(A ) IN ITS ORDER FOR NOT INTERFERING THE FINDING OF THE A.O IS BY MENTIONING THAT THE A.O HAS RIGHTLY TRANSFER THE DEPRECIATION AS SO AS THE OTHER EXPENSES ARE TRANSFERRED IN WORK - IN - PROGRESS. 12. BE THAT AS IT MAY, CONSIDERING THE FACTS OF THE PRESENT CASE, WE ARE OF THE CONSIDERED VIEW THAT E NDS OF THE JUSTICE WOULD BE MET ONLY IF THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES BY SETTING ASIDE THE ORDER OF THE CIT(A) AND REMIT TING BACK TO THE FILE OF THE A.O FOR AFRESH DECISION AFTER TAKING INTO CONSIDERAT ION OF THE ABOVE FACTS. IT IS NEEDLESS TO MENTION THAT BEFORE PASSING THE ORDER, THE A.O SHALL PROVIDE OPPORTUNITY TO THE ASSESSEE AND ASSESSEE SHALL ALSO EXTEND ALL NECESSARY COOPERATION TO THE A.O IN EXPEDITIOUS DISPOSAL OF THIS MATTER. 13. BEFORE PART ING WE MAY MAKE IT CLEAR THAT OUR DECISION TO RESORE THE MATER BACK TO THE FILE OF THE A.O SHALL IN NO WAY BE CONSTRUED HAVING ANY REFLECTION OR EXPRESSION, MERITS OF THE DISPUTE, WHICH SHALL BE ADJUDICATED BY A.O INDEPENDENTLY IN ACCORDANCE WITH LAW. WIT H THESE DIRECTIONS THIS GROUND OF APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. GROUND NO. 3 14. THIS GROUND OF APPEAL RAISED BY THE ASSESSEE RELATES TO LEVY OF INTEREST , WHICH ACCORDING TO US IS MANDATORY AS RIGHTLY HELD BY HONBLE SUPREME COURT IN THE CAS E OF ANJUM H. GHASWALA 252 ITR 1 (SC) AND IS TO BE DETERMINED IN ACCORDANCE WITH THE MANDATORY PROVISIONS OF SECTION 234C OF THE I.T. ACT. IT IS ORDERED ACCORDINGLY. 5 ITA NO. 1476/MUM/2017. BHISHMA REALTY LTD., MUMBAI GROUND NO. 4 15. THIS GROUND OF APPEAL RAISED BY THE ASSESSEE IS GENERAL IN NATURE AND NEEDS NO SPECIAL ADJUDICATION . 16. IN THE RESULT APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATIST ICAL PURPOSES WITH NO ORDER AS TO COST. ORDER PRONOUNCED IN THE OP EN COURT ON THIS 5 T H DEC , 201 8 . S D / - S D / - ( B.R. BASKARAN ) ( SANDEEP GOSAIN ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 0 5 /12 /201 8 KRK / PS / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / (ASSTT.REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY/