Secunderabad Hotels Private Limited , Secunderabad V. Income Tax Officer, Ward-3(4), Hyderabad

ITA 1770/Hyd/2018

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 0543 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-03-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 25-02-2021
• Assessment Year: 2013-2014
• Appeal Filed On: 31-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M MAHIDHAR
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Question of law; Rule 8D
• Section: 143(3); 14A; 115JB; 40(a)(ia); 201(1); 201

Judgement Text

ITA NO 1770 OF 2018 SECUNDERABAD HOTELS P LTD SEC UNDERABAD PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD (THROUGH VIDEO CONFERENCING) BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO.1770/HYD/2018 ASSESSMENT YEAR: 2013-14 SECUNDERABAD HOTELS (P) LTD, SEUNDERABAD PAN:AAICS6896B VS. ITO WARD 3(4) HYDERABAD (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI P MURALI MOHAN RAO REVENUE BY : SRI M. MAHIDHAR, DR DATE OF HEARING: 25/02/2021 DATE OF PRONOUNCEMENT: 03/03/2021 ORDER PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y 2013-14 AGAIN ST THE ORDER OF THE CIT (A)-3, HYDERABAD, DATED 13.07. 2018. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY, ENGAGED IN THE BUSINESS OF RUNNING OF HOTELS, FILED ITS RETURN OF INCOME FOR THE A.Y 2013-14 ON 23.10.2013 ADMITTING LOSS OF RS.1,89,87,555/- UNDER NORMAL PROVISIONS AND BOOK P ROFIT OF RS.31,29,451/- FOR THE PURPOSE OF PAYMENT OF MINIMU M ALTERNATIVE TAX U/S 115JB OF THE ACT. DURING THE AS SESSMENT PROCEEDINGS U/S 143(3) OF THE ACT, THE AO MADE DISA LLOWANCE U/S 14A R.W.RULE 8D AND ALSO U/S 40(A)(IA) OF THE ACT. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A). SI NCE NONE APPEARED FOR THE ASSESSEE BEFORE THE CIT (A), THE A PPEAL OF THE ITA NO 1770 OF 2018 SECUNDERABAD HOTELS P LTD SEC UNDERABAD PAGE 2 OF 3 ASSESSEE WAS PARTLY ALLOWED. AGAINST THE CONFIRMATI ON OF THE DISALLOWANCE U/S 40(A)(IA) OF THE ACT, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUND S OF APPEAL: 1 . THE LD. COMMISSIONER OF INCOME TAX (APPEALS)- 3, HYDERABAD, ERRED BOTH IN LAW AND ON FACTS IN PASSIN G THE APPELLATE ORDER UPHOLDING THE ASSESSMENT ORDER PASS ED BY THE AO UL S 143(3) OF LT ACT, 1961 ON DT 13.07.2018 . 2. THE LD. CIT (A) OUGHT TO HAVE ALLOWED THE APPEAL IN FULL. 3. THE LD.CIT (A) ERRED IN UPHOLDING THE DISALLOWAN CE MADE BY THE AO UL S 40(A)(IA) TOWARDS INTEREST EXPENSES OF RS.6,60,899/-. 4. THE LD.CIT (A) OUGHT TO HAVE APPRECIATED THE SUB MISSIONS AND EVIDENCE FURNISHED BEFORE HER, BEFORE PASSING H ER ORDER. 5. THE LD. CIT (A) OUGHT TO HAVE APPRECIATED THE FA CT THAT THE A.O ERRED IN MAKING ADDITION UL S 40(A)(IA) OF THE ACT, WITHOUT DECLARING THE APPELLANT AS THE ASSESSEE IN DEFAULT UNDER SECTION 201 (1) OF THE ACT. 6. THE LD.CIT(A) OUGHT TO HAVE APPRECIATED THE FACT THAT THE PAYEE'S HAVE FILED THEIR RETURNS AND ADMITTED THE P AYMENTS AS THEIR INCOME AND PAID TAXES IN AND THEREFORE PRO VISIONS OF SECTION 40(A)(IA) ARE NOT APPLICABLE. 7. THE LD.CIT(A) OUGHT TO HAVE APPRECIATED THE FACT THE AO CANNOT MADE ADDITION UL S 40A (IA) WITHOUT THERE BE ING ANY PROCEEDINGS ULS 201(1) OF INCOME TAX ACT 1961. 8. THE APPELLANT MAY ADD OR ALTER OR AMEND OR MODIF Y OR SUBSTITUTE OR DELETE AND/OR RESCIND ALL OR ANY OF T HE GROUNDS OF APPEAL AT ANY TIME BEFORE OR AT THE TIME OF HEAR ING OF THE APPEAL. 3. FURTHER, THE ASSESSEE HAS RAISED THE FOLLOWING ADDITIONAL GROUNDS OF APPEAL: 9) AD PER THE RATIO LAID DOWN BY THE HON'BLE SUPRE ME COURT OF INDIA IN THE CASE OF NATIONAL THERMAL POWE R CO. LTD VS. CIT (1998) 229 ITR 383 (S.C) THE ITAT HAS JURISDICTION TO EXAMINE THE QUESTION OF LAW THOUGH NOT ARISEN BEFORE THE CIT (A) BUT HAS ARISEN BEFORE THE ITAT FOR THE FIRST TIME. 10) THE LEARNED CIT (A) OUGHT TO HAVE CONSIDERED TH E SETTLED POSITION OF LAW THAT, THE AMOUNT DISALLOWED U/S 14A OF THE I.T. ACT, 1961 CANNOT BE ADDED TO ARRIVE AT BOOK PROFIT FOR MAT CALCULATION U/S 115JB OF THE AC T. ITA NO 1770 OF 2018 SECUNDERABAD HOTELS P LTD SEC UNDERABAD PAGE 3 OF 3 11) THE LEARNED CIT (A) ERRED IN NOT FOLLOWING DECI SION OF THE HON'BLE SUPREME COURT IN THE CASE OF APOLLO TYR ES LTD 122 TAXMAN 562 WHEREIN IT IS HELD THAT AO ERRED AO DOES NOT HAVE THE JURISDICTION TO GO BEHIND THE NET PROFIT SHOWN I THE PROFIT AND LOSS A/C EXCEPT TO THE EXTEN T PROVIDED IN THE EXPLANATION TO SECTION 115J. 12) THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR MOD IFY OR SUBSTITUTE ANY OTHER POINT TO THE GROUNDS OF APPEAL AT ANY TIME BEFORE OR AT THE TIME OF HEARING OF THE AP PEAL. 4. WE FIND THAT THESE ADDITIONAL GROUNDS ARE LEGAL GROUNDS BUT WERE NOT RAISED BY THE ASSESSEE BEFORE EITHER THE AO OR THE CIT (A). THEREFORE, WE ARE INCLINED TO ADMIT THE ADDITIONAL GROUNDS OF APPEAL AND REMAND THEM TO THE FILE OF TH E AO FOR DENOVO CONSIDERATION IN ACCORDANCE WITH LAW. 5. IN THE RESULT, ASSESSEES APPEAL IS TREATED AS A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD MARCH, 2021. SD/- SD/- (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 3 RD MARCH, 2021. VINODAN/SPS COPY TO: 1 M/S. SECUNDERABAD HOTELS (P) LTD C/O P. MURALI & CO. CAS, 6-3- 655/2/3 SOMAJIGUDA, HYDERABAD 500082 2 ITO WARD 3(4) HYDERABAD 3 CIT (A)-3 HYDERABAD 4 PR. CIT 3 HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER