AIR INDIA LTD, MUMBAI V. DCIT 5(1), MUMBAI

ITA 1767/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1340 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 25-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR YADAV
• Assessee Lawyers: D J SHUKLA
• Keywords: Revised return
• Section: 14A

Judgement Text

INCOME-TAX APPELLATE TRIBUNAL A BENC H MUMBAI , , BEFORE S/SHJOGINDER SINGH,JUDICIA L MEMBER & RAJENDRA,ACCOUNTANT MEMBER ./I.T.A./1767/MUM/2015 , /ASSESSMENT YEAR: 2005-06 M/S. AIR INDIA LTD. FINANCE BLDG. OLD AIRPORT, KALINA, SANTACRUZ (E),MUMBAI-400 029. PAN:AAACA 9213 E VS. DCIT-5(1) AAYAKAR BHAVAN, M.K. ROAD MUMBAI-400 020. ( /APPELLANT ) ( / RESPONDENT ) REVENUE BY: SHRI RAJESH KUMAR YADAV ASSESSEE BY: SHRI D.J. SHUKLA / DATE OF HEARING: 11.04.2017 / DATE OF PRONOUNCEMENT: 11.04.2017 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDER DATED 12.12.2014 OF CIT(A)-10 MUMBAI THE ASSESSEE HAS FILED THE PRESENT APPEAL.ASSESSEE-COMPANY, ENGAGED IN THE BUS INESS OF AIR TRANSPORTATION OF PASSENGERS AND CARGO,FILED ITS RETURN OF INCOME ON 29.10.2005, DECLARING TOTAL INCOME AT RS.NIL.THE ASSESSING OFFICER(AO)COMPLETED ASSESSMENT U/S. 143( 3) OF THE ACT ON 26/12/2007 DETERMIN - ING ITS INCOME AT RS.44 . 33 CRORES,WHEREIN, INTERE ST DISALLOWANCE,U/S. 14A OF THE ACT,WAS MADE AT RS.12.83LAKHS. MATTER TRAVELLED UPTO THE TR IBUNAL AND ISSUE WAS SET ASIDE TO THE FILE OF AO TO DECIDE THE ISSUE AFRESH.HE COMPLETED ASSES SMENT ON 30.03.2013 U/S.143(3) R.W.S. 254 OF THE ACT,DETERMINING THE INCOME OF THE ASSESS EE AT RS.33.19 CRORES. 2. EFFECTIVE GROUND OF APPEAL IS ABOUT DISALLOWANCE MA DE U/S. 14A OF THE ACT, FOR THE INVESTMENT MADE IN SHARES OF COCHIN INTERNATIONAL AIRPORT LTD. (CIAL). IT WAS BROUGHT TO OUR NOTICE THAT IDENTICAL ISSUE WAS DELIBERATED UPO N AND DECIDED BY THE TRIBUNAL FOR AY. 2007 -08 ON 01.01.2016 (ITA/5204/MUM/2011). WE ARE REPRO DUCING PARAGRAPHS 2.1 TO 2.3 OF THE SAID ORDER AND SAME READ AS UNDER: 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE IS A PUBLIC SECTOR CORPORATION WHOLLY OWNED BY GOVERNMENT OF INDIA AND IS A NATIONAL CARRIER, ENGAGED IN NATIONA L/INTERNATIONAL AIR TRANSPORTATION OF PASSENGERS AN D CARGO. THE ASSESSEE IN ITS REVISED RETURN DECLARED LOSS OF RS.660,50,85,118/-. THE ASSESSEE SHOWED DIVIDEND INCOME, DURING FINANCIAL YEAR 2006-07, AMO UNTING TO RS.3,06,00,000/- AND OUT OF WHICH DIVIDEND INCOME OF RS.2,56,00,000/- WAS OFFERED AS TAXABLE AS INCOME FROM OTHER SOURCES AS THE SAME WAS RECEIVED FROM FOREIGN INVESTMENT. THE BALANCE A MOUNT OF RS.50 LAKHS WAS RECEIVED FROM COCHIN INTERNATIONAL AIRPORT LTD. (IN SHORT CIAL) AND WAS CLAIMED AS EXEMPT U/S 10(34) OF THE ACT ON THE GROUND THAT CIAL IS AN INDIAN COMPANY IN WHICH AIR INDIA HOLDS EQUITY SHARES. THE LD. ASSESSING OFFICER ASKED THE ASSESSEE AS TO WHY THE EXPENSES S HOULD NOT BE DISALLOWED BY APPLYING RULE-8D OF THE INCOME TAX RULES. THE ASSESSEE VIDE COMMUNICATION D ATED 30/12/2009 READ AS UNDER:- 1767/M/15-AIR INDIA 2 THE INVESTMENT MADE IN THE SHARES OF CIAL IS OUT O F THE FUNDS OWNED BY THE COMPANY AND NOT FROM THE BORROWED FUNDS. THEREFORE, NO EXPENDIT URE HAS BEEN INCURRED IN MAKING THE INVESTMENT IN THE SHARES OF CIAL. THUS, NO EXPENDIT URE SHOULD BE DISALLOWED. 2.2. THE LD. ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE ON THE PLEA THAT THE ASSESSEE DID NOT PRODUCE ANY EVIDENCE THAT THE INVESTMENT WAS MADE O UT OF OWN FUNDS. HE MADE A DISALLOWANCE OF RS.31,39,880/- U/S 14A OF THE ACT. ON APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEAL), IN THE STAND TAKEN IN THE ASSESSMENT ORDER WAS AFFIRMED AG AINST WHICH THE ASSESSEE IS IN FURTHER APPEAL BEFOR E THIS TRIBUNAL. 2.3. IF THE OBSERVATION MADE IN THE ASSESSMENT ORD ER, LEADING TO ADDITION MADE TO THE TOTAL INCOME, CONCLUSION DRAWN IN THE IMPUGNED ORDER, MATERIAL AV AILABLE ON RECORD, ASSERTIONS MADE BY THE LD. RESPECTIVE COUNSEL, IF KEPT IN JUXTAPOSITION AND AN ALYZED, WE FIND THAT THE NECESSARY DETAILS WAS VERY MUCH MADE AVAILABLE BEFORE THE ASSESSING OFFICER/ C OMMISSIONER OF INCOME TAX (APPEAL). THE INVESTMENT WAS MADE OUT OF OWN FUNDS FOR THE PURPOS ES OF EARNING DIVIDEND. THE AVAILABILITY OF FUNDS, DETAILS OF CAPITAL SHARE AND RESERVE AND SURPLUS IS EVEN AVAILABLE AT PAGE-6 OF THE IMPUGNED ORDER. SO FAR AS, APPLICABILITY OF RULE-8D IS CONCERNED, SO F AR AS, ASSESSMENT YEAR INVOLVED IS 2007-08, THEREFO RE, RULE 8D IS APPLICABLE BUT AT THE SAME TIME IT CANNO T BE APPLIED MECHANICALLY. THE ASSESSEE INVESTED RS.5 CRORE IN EQUITY SHARE CAPITAL OF CIAL AND FURT HER INVESTED RS.5 CRORE IN THE EQUITY SHARE CAPITAL , THEREFORE, IN THE ABSENCE OF ANY CONTRARY MATERIAL AND SINCE THE OWN FUNDS WERE INVESTED AND NO EXPENSES WERE CLAIMED, THE DISALLOWANCE IS NOT JUST IFIED, CONSEQUENTLY, THIS GROUND OF THE ASSESSEE IS ALLOWED. RESPECTFULLY FOLLOWING THE ABOVE EFFECTIVE GROUND O F APPEAL (GOA-1-5) IS DECIDED IN FAVOUR OF THE ASSESSEE. AS A RESULT APPEAL FILED BY ASSESSEE STANDS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH ,APRIL,2017. 11 2017 SD/- SD/- ( /JOGINDER SINGH) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /MUMBAI; /DATED : 11.04.2017. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR G BENCH, ITAT, MUMBAI / , , . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.