Paresh Pritamlal Mehta, Pune V. Income-tax Officer,

ITA 1715/PUN/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2521 (ITAT-PUNE)
• Duration Of Justice: 2 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 30-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRI
• Assessee Lawyers: S K TYAGI
• Keywords: Revised return
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E , , !'#'' $ , % & BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM / ITA NO. 1715/PN/2015 %' ( ')( / ASSESSMENT YEAR : 2012-13 SHRI PARESH PRITAMLAL MEHTA, 401, WOOD CREST, 27/A, GIDNEY PARK, SALISBURY PARK, PUNE 411037 PAN : ACDPM3218P ....... / APPELLANT ' / V/S. INCOME TAX OFFICER, WARD 5(1), PUNE / RESPONDENT ASSESSEE BY : SHRI S.K. TYAGI REVENUE BY : SHRI PANKAJ GARG / DATE OF HEARING : 15-03-2016 / DATE OF PRONOUNCEMENT : 18-03-2016 * / ORDER PER VIKAS AWASTHY, JM : THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDE R OF COMMISSIONER OF INCOME TAX (APPEALS)-2, PUNE DATED 15-10 -2015 FOR THE ASSESSMENT YEAR 2012-13. 2 ITA NO. 1715/PN/2015, A.Y. 2012-13 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM THE RE CORDS ARE: THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING IN SHARES. THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2012-1 3 ON 28-09-2012 DECLARING TOTAL INCOME AT ` 1,73,590/-. THEREAFTER, THE ASSESSEE FILED REVISED RETURN OF INCOME ON 06-02-2013. HO WEVER, THERE WAS NO CHANGE IN THE TOTAL INCOME DECLARED. THE CASE O F THE ASSESSEE WAS SELECTED FOR SCRUTINY AND ACCORDINGLY NOTICE U/S. 143 (2) WAS ISSUED TO THE ASSESSEE ON 06-08-2013. DURING THE PERIOD RELE VANT TO THE ASSESSMENT YEAR 2012-13, THE ASSESSEE HAD EARNED DIVID END INCOME OF ` 12,04,572/-. THE SAID DIVIDEND INCOME WAS EARNED BY THE A SSESSEE ON THE SHARES HELD AS STOCK-IN-TRADE. DURING THE COURSE O F SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER MADE DISALLOW ANCE OF ` 46,89,748.83/- U/S. 14A R.W. RULE 8D OF THE INCOME TAX RULE S, ON THE TAX FREE INCOME EARNED BY THE ASSESSEE. AGGRIEVED BY THE ASSESSMENT ORDER DATED 23-01-2015, T HE ASSESSEE PREFERRED AN APPEAL BEFORE THE COMMISSIONER OF I NCOME TAX (APPEALS). BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) T HE ASSESSEE STATED THAT THE TRIBUNAL IN ITA NO. 1903/PN/2 013 IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2010-11 DECID ED ON 04-09-2015 HAS HELD THAT NO DISALLOWANCE U/S. 14A R.W. R ULE 8D CAN BE MADE ON DIVIDEND INCOME FROM SHARES HELD AS STOCK-IN-T RADE. HOWEVER, THE COMMISSIONER OF INCOME TAX (APPEALS) DISREGARD ING THE ORDER OF TRIBUNAL PASSED IN ASSESSEES OWN CASE, FOLLOWED THE DECISION OF MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF HDFC BANK L TD. VS. DCIT IN ITA NO. 374/MUM/2012 DECIDED ON 23-09-2015 AND REJECTED 3 ITA NO. 1715/PN/2015, A.Y. 2012-13 THE CLAIM OF THE ASSESSEE. AGAINST THE FINDINGS OF THE COM MISSIONER OF INCOME TAX (APPEALS), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3. SHRI S.K. TYAGI APPEARING ON BEHALF OF THE ASSESSEE SUB MITTED THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS COMMITTE D AN ERROR IN NOT FOLLOWING THE JUDICIAL DISCIPLINE BY IGNORING THE ORDER OF TRIBUNAL IN ASSESSEES OWN CASE ON IDENTICAL ISSUE IN THE EARLIER ASSESSMENT Y EAR. THE LD. AR SUBMITTED THAT THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2010-11 HAD UPHELD THE ORDER OF COMMIS SIONER OF INCOME TAX (APPEALS) IN DELETING THE ADDITION MADE U/S. 14A R.W. RULE 8D ON THE DIVIDEND INCOME FROM SHARES HELD AS STOCK-IN-TR ADE. THE LD. AR FURTHER SUBMITTED THAT THE ORDER OF MUMBAI BENCH OF T HE TRIBUNAL IN THE CASE OF HDFC BANK LTD. VS. DCIT (SUPRA) ON WHICH T HE COMMISSIONER OF INCOME TAX (APPEALS) HAS PLACED RELIANCE HA S BEEN REVERSED BY THE HON'BLE BOMBAY HIGH COURT IN WRIT PETITIO N NO. 1753 OF 2016 TITLE HDFC BANK LTD. VS. DCIT DECIDED ON 25-02-2016 . THE LD. AR SUBMITTED THAT THE COMMISSIONER OF INCOME TAX (APPEA LS) SHOULD HAVE FOLLOWED THE ORDER OF TRIBUNAL PASSED UNDER IDENTICAL SET OF FACTS RATHER THAN DISTINGUISHING THE SAME. THE LD. AR ON THE ISS UE OF JUDICIAL PROPRIETARY PLACED RELIANCE ON THE FOLLOWING DECISIONS: I. BHOPAL SUGAR INDUSTRIES LTD. VS. ITO, 40 ITR 618 (SC); II. UNION OF INDIA AND OTHERS VS. KAMALAKSHMI FINANCE, AIR 1992 SC 711; III. EAGLE FLASK INDUSTRIES LTD. VS. DY. CIT, 72 ITD 455 (PUNE); IV. ICICI PRUDENTIAL LIFE INSURANCE CO. LTD. VS. CIT, 110 DTR 3 15 (BOM). 4 ITA NO. 1715/PN/2015, A.Y. 2012-13 4. ON THE OTHER HAND SHRI PANKAJ GARG REPRESENTING TH E DEPARTMENT FAIRLY ADMITTED THAT THE ISSUE RAISED IN THE P RESENT APPEAL IS IDENTICAL TO THE ISSUE ADJUDICATED BY THE TRIBUNAL IN AS SESSEES OWN CASE IN ITA NO. 1903/PN/2013 FOR ASSESSMENT YEAR 2010-11. 5. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESEN TATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIE S BELOW. WE HAVE ALSO CONSIDERED THE DECISIONS ON WHICH THE LD. AR HAS PLACED RELIANCE IN SUPPORT OF HIS SUBMISSIONS. THE ASSESSEE HAS E ARNED TAX FREE DIVIDEND INCOME OF ` 12,04,572/-. THE ASSESSEE HAS EARNED AFORESAID DIVIDEND INCOME ON SHARES HELD AS STOCK-IN-TRAD E. IT IS NOT DISPUTED BY THE DEPARTMENT THAT THE ASSESSEE IS ENGAG ED IN THE BUSINESS OF TRADING OF SHARES AND THE ASSESSEE IS NOT MA INTAINING ANY INVESTMENT PORTFOLIO. THE ASSESSING OFFICER MADE DISALLOWANCE OF ` 46,89,749/- U/S. 14A R.W. RULE 8D. IT IS ALSO AN ADMITTED FACT THAT SIMILAR DISALLOWANCE WAS MADE IN THE CASE OF ASSESSEE IN THE ASSESSMENT YEAR 2010-11. THE COMMISSIONER OF INCOME TA X (APPEALS) DELETED THE DISALLOWANCE, THE DEPARTMENT CARRIED THE MATT ER IN APPEAL TO THE TRIBUNAL. THE CO-ORDINATE BENCH OF THE TRIBUNAL BY PLACING RELIANCE ON THE DECISION RENDERED IN THE CASE OF KUNAL POL YMERS VS. DCIT IN ITA NO. 1859/PN/2012 DECIDED ON 15-07-2015 AND THE DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT V S. INDIA ADVANTAGE SECURITIES LTD. IN INCOME TAX APPEAL NO. 1131 OF 2013 DECIDED ON 13-04-2015 DISMISSED THE APPEAL OF THE DEPART MENT. THE ASSESSING OFFICER VIDE ASSESSMENT ORDER DATED 23-01-2015 MADE SIMILAR DISALLOWANCE ON THE SHARES HELD AS STOCK-IN-TRADE FO R THE ASSESSMENT YEAR UNDER APPEAL. IN FIRST APPEAL THE COMMIS SIONER OF 5 ITA NO. 1715/PN/2015, A.Y. 2012-13 INCOME TAX (APPEALS) DISREGARDING THE ORDER OF TRIBUNAL IN ASSESSEES OWN CASE IN THE EARLIER ASSESSMENT YEAR DECIDED THE ISSU E AGAINST THE ASSESSEE BY PLACING RELIANCE ON THE DECISION OF MUMBAI BEN CH OF THE TRIBUNAL IN THE CASE OF HDFC BANK LTD. VS. DCIT (SUPRA) AND THE DECISION OF MUMBAI BENCH OF THE TRIBUNAL (THIRD MEMBER) IN THE CASE OF D.H. SECURITIES PVT. LTD. VS. DCIT REPORTED AS 41 TAXMANN.COM 352. 6. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. INDIA ADVANTAGE SECURITIES LTD. (SUPRA) HAS CONFIRMED THE ORDER OF TRIBUNAL WHEREIN IT WAS HELD THAT NO DISALLOWANCE U/S. 14A R.W. RULE 8D CAN BE MADE ON SHARES HELD AS STOCK-IN-TRADE. THE PUNE BENC H OF THE TRIBUNAL HAS BEEN CONSISTENTLY FOLLOWING THIS VIEW BY PLACING RELIANCE ON THE JUDGMENT RENDERED BY THE HON'BLE KARNATAKA H IGH COURT IN THE CASE OF CCI LTD. VS. JCIT REPORTED AS 71 DTR 141 (KAR.). THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF HDFC BANK LTD. VS. DCIT (SUPRA) HAS REVERSED THE ORDER OF MUMBAI BENCH OF THE TRIBUNAL. 7. WE OBSERVE THAT THE COMMISSIONER OF INCOME TAX (APPE ALS) HAS ERRED IN NOT FOLLOWING THE ORDER OF TRIBUNAL IN ASESSEES OW N CASE. THE CO-ORDINATE BENCH OF THE TRIBUNAL HAD REJECTED THE APP EAL OF DEPARTMENT FOR ASSESSMENT YEAR 2010-11 ON IDENTICAL SET OF FACTS. THE COMMISSIONER OF INCOME TAX (APPEALS) SHOULD HAVE MAINTAINED JUDICIAL PROPRIETY IN FOLLOWING THE ORDER OF APPELLATE AUTH ORITY. AS OF NOW WE RESTRAIN OURSELVES FROM COMMENTING ON THE JUDICIAL INDISCIPLINE COMMITTED BY THE COMMISSIONER OF INCOME TAX (APPEALS) AND EXPECT 6 ITA NO. 1715/PN/2015, A.Y. 2012-13 THAT HE SHALL BE MORE CAREFUL IN FUTURE IN HONOURING THE OR DERS OF THE HIGHER APPELLATE AUTHORITIES. 8. IN VIEW OF THE FACTS OF THE CASE AND DOCUMENTS ON REC ORD THE IMPUGNED ORDER IS SET ASIDE DISALLOWANCE OF ` 46,89,749/- U/S. 14A R.W. RULE 8D IS DELETED AND THE APPEAL OF THE ASSESSEE IS ALLOWED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON FRIDAY, THE 18 TH DAY OF MARCH, 2016. SD/- SD/- ( . . / R.K. PANDA) ( ! ' / VIKAS AWASTHY) #' / ACCOUNTANT MEMBER $ % #' / JUDICIAL MEMBER / PUNE; &# / DATED : 18 TH MARCH, 2016 RK *+,%-.#/#)- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ' () / THE CIT(A)-2, PUNE 4. ' / THE CIT-1, PUNE 5. !*+ %%,- , ,- , . ./0 , / DR, ITAT, B BENCH, PUNE. 6. + 1 23 / GUARD FILE. // ! % // TRUE COPY// #4 / BY ORDER, %5 ,0 / PRIVATE SECRETARY, ,- , / ITAT, PUNE