M/s Anriya Project Management Services P. Ltd., V. DCIT,

ITA 1799/BANG/2013

• Counselvise Citation: 179921114 RSA 2013
• Duration Of Justice: 1 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 11-02-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 19-12-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR K SHANKAR PRA SAD
• Keywords: Earning of tax free income; Proportionate interest
• Section: 234B; 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SMT. P. MADHAVI DEVI , JUDICIAL MEMBER A ND SHRI JASON P.BOAZ, ACCOUNTANT MEMBER ITA NO. 1 799 / BANG/20 13 (ASSESSMENT YEAR: 20 0 9 - 10 ) M/S.ANRIYA PROJECT MANAGEMENT SERVICES(P)LTD. NO .164, 1 ST CROSS, 1 ST STAGE, AECS LAYOUT, SANJAYNAGAR, RMV II STAGE, BANGALORE 560058. APPELLANT PAN: AA ECA 3362 L VS. DEPUTY COMMISSIONER OF INCOME - TAX, CIRCLE 11(1 ), BANGALORE. RESPONDENT APPELLANT BY: SHRI NARENDRA SHARMA, ADVOCATE . RESPONDENT BY: DR.K.SHANKAR PRASAD, CIT(DR). DATE OF HEARING : 1 1 /02/2015. DATE OF PRONOUNCEMENT: 20 /02/2015. O R D E R PER SMT.P.MADHAVI DEVI, JM: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) - I, BANGALORE, DATED 30/09/2013 FOR THE ASSESSMENT YEAR 2009 - 10. 2. IN THIS APPEAL, THOUGH THE ASSESSEE HAS RAISED AS MANY AS 12 GROUNDS OF APPEAL, WE FIND THAT GROUND NOS.1, 11 AN D 12 ARE GENERAL IN NATURE AND NEED NO ADJUDICATION. ITA NO . 1 79 9 /BANG/20 1 3 M/S. ANRIYA PROJECT MANAGEMENT SERVICES (P) LTD. PAGE 2 OF 7 3. G ROUND NOS.2 TO 6 RELATE TO THE ASSESSEE S CLAIM OF DEDUCTION U/S 80 - IB(10) OF THE INCOME - TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT' FOR SHORT] WHILE GROUND NOS.7 TO 9 ARE AGAINST THE DISALLOWANCE MADE BY THE ASSESSING OFFICER (AO) U/S 14A OF THE A CT. 3.1 B RIEF FACTS OF THE CASE ARE THAT THE ASSESSEE WHICH IS CARRYING ON THE BUSINESS OF DEVELOPING AND BUILDING OF RESIDENTIAL FLATS AND COLONIES, FILED ITS RETURN OF INCOME DECLARING TOTAL INCOME OF RS.1,95,84,996/ - AFTER CLAIMING DE DUCTION U/S 80 - IB(10) OF THE ACT. THE RETURN OF INCOME WAS FILED ON 9/3/2010 U/S 139(4) OF THE ACT. DURING THE ASSESSMENT PROCEEDINGS, THE AO OBSERVED THAT THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S 80 - IB(10) OF THE ACT SINCE THE RETURN IS NOT FILED WITHIN DUE DATE AS SPECIFIED U/S 139(1) OF THE ACT I.E. ON OR BEFORE 30/9/2009. THEREFORE, APPLYING THE PROVISIONS OF SEC.80AC OF THE ACT, THE AO DISALLOWED THE CLAIM U/S 80 - IB(10) OF THE ACT. 3.2 BEING AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) WHO CONFIRMED THE DISALLOWANCE MADE BY THE AO AFTER CONSIDERING THE ISSUE IN THE LIGHT OF VARIOUS JUDICIAL PRECEDENTS ON THE ISSUE. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 3.3 AT THE TIME OF HEA RING, LEARNED COUNSEL FOR THE ASSESSEE, SHRI NARENDRA SHARMA, FAIRLY ADMITTED THAT THIS ISSUE ITA NO . 1 79 9 /BANG/20 1 3 M/S. ANRIYA PROJECT MANAGEMENT SERVICES (P) LTD. PAGE 3 OF 7 IS NOW COVERED AGAINST THE ASSESSEE BY THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL AT RAJKOT IN THE CASE OF SAFFIRE GARMENTS VS. ITO, WARD 2 REPORTED IN ( 2012) 28 TAXMAN.COM 27 (RAJ)(SB) WHEREIN IT WAS HELD THAT THE REQUIREMENT OF FILING OF RETURN WITHIN THE DUE DATE PRESCRIBED U/S 139(1) OF THE ACT FOR CLAIMING DEDUCTION IS MANDATORY AND IF THE SAID CONDITION IS NOT COMPLIED WITH, THEN THE DEDUCTION U/S 10 A OF THE ACT IS NOT ALLOWABLE. 3.4 THE LEARNED DEPARTMENTAL REPRESENTATIVE ALSO RELIED ON THE JUDGMENT OF THE SPECIAL BENCH. 3.5 HAVING REGARD TO THE RIVAL CONTENTIONS AS WELL AS THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE C ASE OF SAFFIRE GARMENTS (CITED SUPRA), WE CONFIRM THE ORDER OF THE CIT(A). THEREFORE, THE GROUNDS NO.2 TO 6 ARE REJECTED. 4. AS REGARDS GROUND NOS.7 TO 9 ARE CONCERNED, IT IS THE CASE OF THE ASSESSEE THAT IT HAS NOT MADE ANY CLAIM OF EXEMPT INCOME IN ITS RETURN OF INCOME AND THEREFORE NO DISALLOWANCE U/S 14A CAN BE MADE. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AO HAD MADE THE DISALLOWANCE U/S 14A READ WITH RULE 8D E VEN THOUGH THERE WAS NO EXEMPT INCOME DURING THE RELEVANT FINANCIAL YEAR . T HE CIT(A) HAD CONFIRMED THE ORDER OF THE AO BY HOLDING THAT THERE IS INCREASE IN THE INVESTMENT OF THE ASSESSEE DURING THE RELEVANT ASSESSMENT YEAR RESULTING IN INCREASE OF INTEREST ON TOTAL LOAN S AND THUS INTEREST BEARING ITA NO . 1 79 9 /BANG/20 1 3 M/S. ANRIYA PROJECT MANAGEMENT SERVICES (P) LTD. PAGE 4 OF 7 FUNDS WERE UTILIZED IN I NVESTMENT S EARNING EXEMPT INCOME. THEREFORE, HE HELD THAT PROPORTIONATE INTEREST ON INVESTMENT S EARNING EXEMPT INCOME IS DISALLOWABLE. HE RELIED UPON THE VARIOUS DECISIONS OF ITAT TO CONFIRM THE DISALLOWANCE MADE BY THE AO. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 4.1 THE LEARNED COUNSEL FOR THE ASSESSEE, WHILE REITERATING THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE THE AUTHORITIES BELOW, FILED A COPY OF THE PROFIT AND LOSS ACCOUNT BEFORE US TO DEMONSTRATE THAT THERE WAS NO CLAIM OF ANY EXEM PT INCOME IN ITS RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR . HE PLACED REL IANCE UPON THE DECISION OF THE B BENCH OF THE TRIBUNAL IN THE CASE OF BHUWALKA STEEL INDUSTRIES LTD. IN ITA NO.349/BANG/2013 DATED 4/7/2014 WHEREIN, AFTER CONSIDERING VARIO US JUDICIAL PRONOUNCEMENTS OF THE HON BLE HIGH COURT , IT WAS HELD THAT WHEN THERE IS NO EXEMPT INCOME DURING THE PREVIOUS YEAR, THEN THE PROVISIONS OF SEC.14A CANNOT BE INVOKED . A COPY OF THE SAID ORDER IS FILED BEFORE US. 4.2 THE LEARNED DEPARTM ENTAL REPRESENTATIVE, HOWEVER, RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND THE JUDICIAL PRECEDENTS RELIED UPON BY THE CIT(A) WHILE CONFIRMING THE DISALLOWANCE. 4.3 HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THA T THE ASSESSEE HAS NOT MADE ANY CLAIM OF EXEMPT INCOME DURING THE RELEVANT ASSESSMENT YEAR. THE CO - ITA NO . 1 79 9 /BANG/20 1 3 M/S. ANRIYA PROJECT MANAGEMENT SERVICES (P) LTD. PAGE 5 OF 7 ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF BHUWALKA STEEL INDUSTRIES LTD. (CITED SUPRA) HAD RELIED UPON THE DECISIONS OF THE VARIOUS HIGH COURTS IN COMI NG TO THE CONCLUSION THAT IN THE ABSENCE OF EXEMPT INCOME EARNED BY THE ASSESSEE, THE PROVISIONS OF SEC.14A CANNOT BE INVOKED. THE RELEVANT PORTION OF THE TRIBUNAL ORDER IS REPRODUCED HEREUNDER FOR THE SAKE OF CONVENIENCE. 17. THE LEARNED COUNSEL FOR THE ASSESSEE RELIED ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS OF THE HON BLE HIGH COURTS TO THE PROPOSITION THAT IF THERE IS NO EXEMPT INCOME DURING THE PREVIOUS YEAR, THEN THE PROVISIONS OF SECTION 14A OF THE ACT CANNOT BE INVOKED: CIT V. WINSOM TEXTILE I NDUSTRIES LTD.(2009) 319 ITR 204 (P&H); CIT V CORRTECH ENERGY P. LTD. (TAX APPEAL NO.239 OF 2014, DT.24.03.2014)(GUJ); JCIT V. SHIVAM MOTORS (P) LTD. (ITA.17/LKW/2012, DATED 12.11.2013)(ITAT - LUCKNOW); AND CIT V. M/S SHIVAM MOTORS (P)LTD. (ITA.88 OF 2014, D ATED 5.5.14) ALA LHABAD HIGH CO URT 18. THE LEARNED DR RELIED ON THE ORDER OF THE ASSESSING OFFICER AND DREW OUR ATTENTION TO THE CIRCULAR NO.5 OF 2014, DT.11.02.2014, WHEREIN THE CBDT HAS OPINED THAT EVEN IN THE ABSENCE OF EXEMPT INCOME EARNED BY THE ASSESSEE DURING THE PREVIOUS YEAR, PROVISIONS OF SECTION 14A HAVE TO BE INVOKED. ITA NO . 1 79 9 /BANG/20 1 3 M/S. ANRIYA PROJECT MANAGEMENT SERVICES (P) LTD. PAGE 6 OF 7 19. WE HAVE GIVEN A CAREFUL CONSIDERATION TO THE RIVAL SUBMISSIONS. ON THE BASIS OF THE DOCUMENTS TO WHICH OUR ATTENTION WAS DRAWN IT IS CLEAR THAT THE ASSESSE E DID NOT EARN ANY EXEMPT INCOME DURING THE PREVIOUS YEAR. IN SUCH CIRCUMSTANCES AS LAID DOWN IN THE DECISIONS RELIED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE, PROVISIONS OF SECTION 14A COULD NOT BE INVOKED. THE BOARD CIRCULAR WHICH IS CONTRARY TO TH E HON BLE HIGH COURT S DECISIONS CANNOT THEREFORE BE THE BASIS TO SUSTAIN THE DISALLOWANCE MADE BY THE REVENUE AUTHORITIES. WE, THEREFORE, HOLD THAT THE DISALLOWANCE MADE U/S 14A OF THE ACT SHOULD BE DELETED. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS AL LOWED. RESPECTFULLY FOLLOWING THE DECISION OF THE CO - ORDINATE BENCH ON SIMILAR SET OF FACTS , WE HOLD THAT THE DISALLOWANCE MADE U/S 14A OF THE ACT IS TO BE DELETED. THUS GROUNDS NO.7 TO 9 ARE ALLOWED. 5. GROUND NO.10 RELATES TO INTEREST U/SS. 234 A, 234B AND 234C OF THE ACT. WE REMAND THE SAME TO THE AO TO GIVE CONSEQUENTIAL RELIEF TO THE ASSESSEE, IF ANY. THIS GROUND IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 6. IN THE RESULT, THE ASSESSEE S APPEAL IS PARTLY ALLOWED. PRON OUNC ED IN THE OPEN COURT ON 20 TH FEBRUARY , 201 5 . S D/ - S D/ - (JASON P BOAZ ) ( SMT. P.MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER EKSRINIVASULU ITA NO . 1 79 9 /BANG/20 1 3 M/S. ANRIYA PROJECT MANAGEMENT SERVICES (P) LTD. PAGE 7 OF 7 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FI LE BY ORDER ASSISTANT REGISTRAR INCOME - TAX APPELLATE T RIBUNAL BANGALORE