Appeal details
Counselvise Citation
[2019] 116 COUNSELVISE.COM (IT) 6758 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 year(s) 5 month(s) 28 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
04-07-2019
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
Not Allotted
Assessment Year
2010-2011
Appeal Filed On
06-01-2017
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER I.T.A. NO.174/MUM/2017 (ASSESSMENT YEAR: 2010-11) ACIT CIRCLE-2(3)(1), ROOM NO. 552, 5 TH FLOOR, AAYAKAR BHAVA N, M.K. ROAD, MUMBAI-400020 VS. M/S. VARUN CORPORATION PVT. LTD., 6, SHOORJI VALLABHDAS MARG, BALLARD ESTATE, MUMBAI-400001 PAN : AAACK1582A ( APPELLANT ) .. ( RESPONDENT ) REVENUE BY : SHRI RAJEEV GUBGOTRA (DR) ASSESSEE BY: MS. SWETA NARVEKAR (AR) DATE OF HEARING : 04.07.2019 DATE OF PRONOUNCEMENT : 04.07.2019 O R D E R PER PAWAN SINGH, JUDICIAL MEMBER 1. THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORDE R OF COMMISSIONER (APPEALS)-6 MUMBAI DATED 21 ST OF OCTOBER 2016 FOR ASSESSMENT YEAR 2010- 11, WHICH IN TURN ARISES FROM ASSESSMENT ORDE R PASSED BY ASSESSING OFFICER UNDER SECTION 143(3) READ WITH SECTION 147 DATED 26 TH FEBRUARY 2016. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF A PPEAL: (1) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE LEARNED COMMISSIONER (APPEALS) ERRED IN RESTRICTING DISALLO WANCE UNDER SECTION 14A TO THE EXTENT OF AMOUNT SUO MOTO DISALL OWED BY THE ITA NO. 174/MUM/2017- M/S. VARUN CORPORATION PVT. LTD. 2 ASSESSEE IGNORING THE DISALLOWANCE 14A SHOULD BE CA LCULATED AS PER WORKING OF RULE 8D. (2) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, LEARNED COMMISSIONER (APPEALS) ERRED IN RESTRI CTING THE DISALLOWANCE UNDER SECTION 14A TO THE EXTENT OF AMO UNT DISALLOWED SUO MOTO BY ASSESSEE, WITHOUT CONSIDERING THE FACTS AND NOTIFICATION 43 /2016 DATED 2 ND OF JUNE 2016 WILL NOT APPLY FOR THE ASSESSMENT YEAR . 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFI CER WHILE PASSING THE ASSESSMENT ORDER UNDER SECTION 143(3) READ WITH SEC TION 147 ON 26 TH FEBRUARY 2016, DISALLOWED A SUM OF RS. 17,66,49,965 / -UNDER SECTION 14A AGAINST THE EXEMPT INCOME OF RS. 2.05 CRORE (APROX) . ON APPEAL BEFORE LEARNED COMMISSIONER (APPEALS), THE ASSESSEE BESIDE S CHALLENGING THE REOPENING UNDER SECTION 147 ALSO CHALLENGED THE DIS ALLOWANCE MADE BY ASSESSING OFFICER AND URGED THAT DISALLOWANCE UNDER SECTION 14 A CANNOT EXCEED THE EXEMPT INCOME EARNED BY THE ASSESSEE DU RING THE RELEVANT PERIOD. DURING THE RELEVANT PERIOD THE ASSESSEE HAS EARNED EXEMPT INCOME OF RS. 2,05,50,820/- WHEREAS THE ASSESSEE VOLUNTAR ILY DISALLOWED A SUM OF RS. 15,36,20,152/- UNDER SECTION 14A. THE LEARNE D COMMISSIONER (APPEALS) AFTER CONSIDERING THE SUBMISSION OF ASSES SEE GRANTED PARTIAL RELIEF TO THE ASSESSEE IN RESTRICTING THE ADDITION/ DISALLOWANCE UNDER SECTION 14A, TO THE VOLUNTARY DISALLOWANCE MADE BY ASSESSEE . HOWEVER, THE LEARNED COMMISSIONER (APPEALS) ON THE ISSUE OF REOP ENING HELD THAT THE ASSESSEE IS GRANTED RELIEF, THUS, THE ISSUE OF REOP ENING HAS BECOME ITA NO. 174/MUM/2017- M/S. VARUN CORPORATION PVT. LTD. 3 ACADEMIC. THUS, AGGRIEVED BY THE ORDER OF COMMISSIO NER (APPEALS) THE REVENUE HAS FILED THE PRESENT APPEAL BEFORE US. 3. WE HAVE HEARD THE SUBMISSION OF LEARNED DR OF THE R EVENUE AND LEARNED AND DR FOR REVENUE AND PERUSED THE MATERIAL AVAILAB LE ON RECORD. ON OUR SPECIFIC QUARRY IT WAS DISCLOSED THAT THE LD AR APP EARING ON BEHALF OF THE ASSESSEE, THAT THE ASSESSEE HAS NOT FILED ANY FURTH ER APPEAL BEFORE THIS TRIBUNAL AGAINST PARTIAL DISALLOWANCE UNDER SECTION 14A. THE LEARNED DR FOR THE REVENUE SUPPORTED THE ORDER OF ASSESSING OF FICER. THE LEARNED DR FURTHER SUBMITS THAT THE LEARNED COMMISSIONER (APPE ALS) INSTEAD OF CONFIRMING THE DISALLOWANCE IN ACCORDANCE WITH THE RULE 8D, RESTRICTED THE SAME TO THE EXTENT OF VOLUNTARY DISALLOWANCES M ADE BY ASSESSING AND PRAYED TO REVERSE THE ORDER AND TO RESTORE THE ORDE R PASSED BY ASSESSING OFFICER. 4. ON THE OTHER HAND THE LEARNED AR FOR THE ASSESSEE S UBMITS THAT THOUGH THE DISALLOWANCE UNDER SECTION 14A SHOULD NOT EXCEED TH E EXEMPT INCOME AS LAW LAID DOWN BY VARIOUS SUPERIOR COURTS AND THE TR IBUNALS. AS THE ASSESSEE HAS NOT FILED ANY APPEAL AGAINST THE DISAL LOWANCES RESTRICTED BY ASSESSING OFFICER. THE APPEAL FILED BY THE VENUE SH OULD BE DISMISSED AT THRESHOLD. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THERE IS N O DISPUTE THAT DURING THE RELEVANT PERIOD THE ASSESSEE HAS EARNED EXEMPT INCOME OF ITA NO. 174/MUM/2017- M/S. VARUN CORPORATION PVT. LTD. 4 RS.2,05,50,820/-. THE ASSESSEE MADE SUO MOTO DISALLOWANCE OF RS.15,36,20,152/-. THE ASSESSING OFFICER IN REASSES SMENT PROCEEDING INVOKED THE PROVISION OF RULE 8D AND COMPUTED THE D ISALLOWANCES OF RS.17,66,49,695/-, WHICH CONSIST OF DISALLOWANCE UN DER RULE 8 D2(I) OF RS. 23,10,23,327/-, UNDER RULE 8D2(II) OF RS. 14,92 ,77,372/- AND UNDER RULE 8D2(III) OF RS. 42,70,266/-. HOWEVER, THE LEAR NED COMMISSIONER (APPEALS) AFTER CONSIDERING THE SUBMISSION OF ASSES SEE AND THE DECISION OF DELHI HIGH COURT IN JOINT INVESTMENT PRIVATE LTD 59 TAXMANN.COM 295, PUNJAB AND HARYANA HIGH COURT IN PCIT VERSUS EMPIRE PACKAGE (ITA NO. 415 OF 2015) AND THE DECISIONS OF MUMBAI TRIBUN AL IN DAGA GLOBAL CHEMICAL PVT LTD (IT NO. 5592/M/2012) CONCLUDED THA T AS THE ASSESSEE HAS EARNED ONLY EXEMPT INCOME OF RS. 2.05 CRORE (AP ROX) AND THE ASSESSEE ITSELF HAS DISALLOWED A SUM OF RS. 15.36 C RORE (APROX), WHICH IS MORE THAN THE EXEMPT INCOME EARNED BY THE ASSESSEE, THUS NO FURTHER DISALLOWANCE CAN BE SUSTAINED. THE LEARNED DR FOR T HE REVENUE WAS UNABLE TO CONVINCE IS AS TO WHY THE DISALLOWANCE SU STAINED BY LD COMMISSIONER (APPEALS) TO THE EXTENT OF RS. 15.36 C RORE IS INADEQUATE DISALLOWANCES AGAINST THE EXEMPT INCOME OF RS. 2.05 CRORE (APROX). 6. AS WE HAVE ALREADY RECORDED THAT THE ASSESSEE HAS N OT FILED ANY FURTHER APPEAL AGAINST THE ORDER OF LEARNED COMMISSIONER (A PPEALS) AGAINST RESTRICTING THE DISALLOWANCE TO RS. 15.36 CRORE, NO R WAS ANY CROSS OBJECTIONS FILED. THEREFORE, IN VIEW OF THE ABOVE D ISCUSSION WE DO NOT ITA NO. 174/MUM/2017- M/S. VARUN CORPORATION PVT. LTD. 5 FIND ANY MERIT IN THE SUBMISSION MADE BY LEARNED DR FOR THE REVENUE, IN THE RESULT APPEAL OF THE REVENUE IS DISMISSED. 7. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF H EARING OF THE APPEAL. ORDER PRONOUNCED IN THE OPEN COURT ON 04.07 .2019 SD/- SD/- (G. MANJUNATHA) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 04.07.2019 SK P.S. COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) CONCERNED, MUMBAI 4. THE CIT- CONCERNED, MUMBAI 5. THE DR BENCH, 6. MASTER FILE // TUE COPY// BY ORDER DY/ASSTT. REGISTRAR ITAT, MUMBAI
