PUJIT R. AGGARWAL, MUMBAI V. DCIT CEN CIR 47, MUMBAI

ITA 1642/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83834 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2005-2006
• Appeal Filed On: 28-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Opportunity of being heard; Earning of tax free income
• Section: 143(3); 14A; 32

Judgement Text

C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE S/SHRI VIJAY PAL RAO, JM AND N.K. BILLAIYA, AM , . . , !./ I.T.A. NO.1641 TO 1647 /MUM/2013 ( / ASSESSMENT YEARS : 2004-05, 2005-06, 2006-07, 2007- 08, 2008-09, 2009-10 & 2010-11 SHRI PUJIT R. AGGARWAL, 901/902, THE ANGEL, 2, KRISHNA SANGHI PATH, GAMDEVI, MUMBAI- 400 007. / VS. DY. COMMISSIONER OF INCOME TAX CENT CIR- 47, MUMBAI. # ! ./ PAN : ADAPA4673N ( #$ / APPELLANT ) .. ( %&#$ / RESPONDENT ) A PPELLANT BY SHRI RAKESH JOSHI RESPONDENT BY A.C. TEJPAL ' ( ) * + / DATE OF HEARING : 4-9-2014 ,-./ ) * + / DATE OF PRONOUNCEMENT :04-09-2014 [ 0 / O R D E R PER BENCH : ALL THESE APPEALS BY THE ASSESSEE ARE FOR ASSESSMEN T YEARS 2004-05, 2005-06, 2006-07, 2007-08, 2008-09, 2009-10 & 2010- 11. 2. ALL THESE APPEALS ARE BARRED BY LIMITATION BY TW O DAYS. THE ASSESSEE HAS FILED AN AFFIDAVIT EXPLAINING THE REASONS FOR T HE DELAY ALONG WITH A REQUEST FOR THE CONDONATION OF DELAY. AFTER PERUSING THE C ONTENT OF THE AFFIDAVIT, WE FIND THAT THE ASSESSEE WAS PREVENTED BY REASONABLE AND SUFFICIENT CAUSE, THEREFORE THE DELAY IS CONDONED. ITA 1641 TO 1647/MUM/2013 2 3. IN ITA NOS. 1641 TO 1644/MUM/2013 FOR A.YS. 2004 -05 TO 2007-08 INVOLVE COMMON ISSUE. SIMILARLY, IN ITA NO. 1645 TO 1647 FOR A.YS. 2008-09 TO 2010-11 INVOLVE COMMON ISSUE. THESE APPEALS ARE HE ARD TOGETHER AND DISPOSE OF BY THIS COMMON ORDER FOR THE SAKE OF CON VENIENCE AND BREVITY. ITA NO. 1641 TO 1644/MUM/2013 FOR A.YS. 2004-05 TO 2007-08 4. THE SUM AND SUBSTANCE OF THE GRIEVANCE OF THE AS SESSEE IS THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF THE A.O. I N PASSING THE ORDER U/S 143(3) READ WITH SECTION 153(A) OF THE INCOME TAX A CT, 1961. DISREGARDING THE FACT THAT THE PROCEEDINGS FOR THE YEAR UNDER CONSID ERATION ARE PENDING BEFORE THE INCOME TAX SETTLEMENT COMMISSION FOR FINAL DISP OSAL. 5. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE STATED THAT ON IDENTICAL SET OF FACTS IN EARLIER ASSESSMENT YEAR IN THE CASE OF M/S ORBIT CONSTRUCTIONS VS. DCIT IN ITA 1461/MUM/2013 ORDER DATED 24-5-2013 , THE TRIBUNAL HAS SET ASIDE THE ORDER FOR FRESH ADJUDICATION IN ACCOR DANCE WITH THE ORDER OF THE SETTLEMENT COMMISSION. 6. THE LD. D.R. FAIRLY CONCEDED TO THIS. 7. AS NO DISTINGUISHING FACTS HAVE BEEN BROUGHT ON RECORD BEFORE US, IN OUR CONSIDERED OPINION, THE MATTER SHOULD GO BACK T O THE FILE OF THE A.O. AS THE ORDER OF THE SETTLEMENT COMMISSION IS AWAITED. WE, THEREFORE, SET ASIDE THE ORDER OF THE AUTHORITIES BELOW AND REMIT THE MA TTER BACK TO THE FILE OF THE A.O. TO PASS A FRESH ORDER IN ACCORDANCE WITH THE O RDER OF THE SETTLEMENT COMMISSION AND AFTER AFFORDING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 8. THESE APPEALS FILED BY THE ASSESSEE ARE ACCORDIN GLY ALLOWED FOR STATISTICAL PURPOSE. ITA 1641 TO 1647/MUM/2013 3 ITA NO. 1645 TO 1647 FOR A.YS. 2008-09 TO 2010-11 9. THE COMMON GRIEVANCE IN ALL THESE APPEALS RELATE TO THE DISALLOWANCE U/S 14A BY INVOKING THE PROVISIONS OF RULE 8-D OF T HE INCOME TAX RULES, 1962 THOUGH THE QUANTUM OF DISALLOWANCE DIFFER IN EACH Y EAR. 10. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, TH E A.O. NOTICED THAT THE ASSESSEE HAS EARNED DIVIDEND INCOME OF RS. 2,98,39, 318/- IN A.Y. 2008-09, RS. 2,63,50,861/- IN A.Y. 2009-10 & RS. 1, 06,71,51 5/- IN A.Y. 2010-11. THE A.O. WAS OF THE FIRM BELIEF THAT THE ASSESSEE MUST HAVE INCURRED CERTAIN EXPENDITURE IN EARNING THESE EXEMPT INCOME, AS NO E XPENDITURE WAS FOUND ALLOCATED BY THE ASSESSEE. THE A.O. PROCEEDED BY A PPLYING THE PROVISIONS OF SECTION 14A READ WITH RULE 8-D AND COMPUTED THE DIS ALLOWANCE @ 0.5% OF THE AVERAGE INVESTMENT. HOWEVER, THE A.O. RESTRICTED TH E DISALLOWANCE TO THE EXTENT OF THE TOTAL CLAIM OF EXPENSES MADE BY THE A SSESSEE. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) BUT WITHOU T ANY SUCCESS. AGGRIEVED BY THIS, THE ASSESSEE IS IN APPEAL BEFORE US. 11. THE LD. COUNSEL FOR THE ASSESSEE STATED THAT IN RESPECT OF ASSESSMENT YEARS 2009-10 AND 2010-11, THE ASSESSEE HIMSELF HAS DISALLOWED RS. 1,07,696/- AND RS. 2,37,086/- RESPECTIVELY, THEREFO RE, THERE WAS NO CAUSE FOR ANY FURTHER DISALLOWANCE. IN ALTERNATIVE, THE LD. C OUNSEL FOR THE ASSESSEE PLEADED THAT THE A.O. HAS DISALLOWED THE ENTIRE EXP ENSES CLAIMED BY THE ASSESSEE WHICH ALSO INCLUDES DEPRECIATION. THEREFOR E, THE SAME SHOULD BE EXCLUDED FROM THE TOTAL EXPENSES. IN SUPPORT, RELIA NCE WAS PLACED ON THE DECISION OF THE TRIBUNAL IN ITA NO. 3567/MUM/07 AND ALSO THE DECISION OF THE AHMEDABAD SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. VISHNU ANANT MAHAJAN [2012] 137 ITD 189 (AHM.)[SB]. 12. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUT HORITIES BELOW. IT IS NOT IN DISPUTE THAT THE PROVISIONS OF SECTION 14A READ WITH RULE 8-D ARE ITA 1641 TO 1647/MUM/2013 4 APPLICABLE FOR THE YEAR UNDER CONSIDERATION. THE ON LY POINT OF DISPUTE IS WHETHER THE EXPENDITURE TO BE CONSIDERED FOR DISALL OWANCE MUST EXCLUDE THE DEPRECIATION. WE FIND THAT THE SPECIAL BENCH OF IT AT, AHMEDABAD IN THE CASE OF VISHNU ANANT MAHAJAN (SUPRA) HAS HELD THAT DEPRE CIATION BEING A STATUTORY ALLOWANCE U/S 32, PROVISIONS OF SECTION 14A WOULD N OT APPLY IN RESPECT OF DEPRECIATION. ACCORDING TO THIS DECISION OF THE SPE CIAL BENCH, THE STATUTORY ALLOWANCE U/S 32 IS NOT AN EXPENDITURE. RESPECTFULL Y FOLLOWING THE SAID DECISION OF THE SPECIAL BENCH OF ITAT IN THE CASE O F VISHNU ANANT MAHAJAN (SUPRA), WE DIRECT THE A.O. TO EXCLUDE THE DEPRECIA TION FROM THE DISALLOWANCE OF EXPENDITURE AND RECOMPUTE THE DISALLOWANCE. THES E APPEALS FILED BY THE ASSESSEE ARE ACCORDINGLY PARTLY ALLOWED. 13. IN THE RESULT, APPEALS FILED BY THE ASSESSEE IN ITA NO. 1641 TO 1644/MUM/2013 FOR A.YS. 2004-05 TO 2007-08 ARE ALLO WED FOR STATISTICAL PURPOSES AND APPEALS FILED BY THE ASSESSEE IN ITA N O. 1645 TO 1647 FOR A.YS. 2008-09 TO 2010-11 ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH SEPTEMBER, 2014. 0 ) ,-./ ' 1 2!3 04-9-2014 - ) 4( SD/- SD/- (VIJAY PAL RAO) (N.K. BILLAIYA ) JUDICIAL MEMBER ACCOUNTANT MEMBER ' !( MUMBAI ; 2! DATED 04-09-2014. [ .../ R.K. , SR. PS ITA 1641 TO 1647/MUM/2013 5 ! ' #$%& ' &$ / COPY OF THE ORDER FORWARDED TO : 1. #$ / THE APPELLANT 2. %&#$ / THE RESPONDENT. 3. ' F* ( ) / THE CIT(A) CONCERNED, MUMBAI 4. ' F* / CIT- CONCERNED, MUMBAI 5. I4 %*JK , + JK / , ' !( / DR, ITAT, MUMBAI C BENCH 6. 4LM N( / GUARD FILE. ! ( / BY ORDER, &* %* //TRUE COPY// )/(* + ( DY./ASSTT. REGISTRAR) , ' !( / ITAT, MUMBAI