M/s Multiplex Capital Ltd., New Delhi V. CIT, New Delhi

ITA 2080/DEL/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7502 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 21-12-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 27-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: REENA S PURI; SRUJANI MOHANTY SENIO
• Keywords: Earning of tax free income; Deemed to accrue or arise in india; Difference of opinion; Change of opinion; Futures and options
• Section: 143(3); 11A; 14A; 115JB; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E : NEW DELHI) BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.2080/DEL./2011 (ASSESSMENT YEAR : 2006-07) M/S. MULTIPLEX CAPITAL LIMITED, VS. ACIT, CIRCLE 5 (1), 100/28, KESHAV TOWER, NEW DELHI. RAJAPUR MARKET, SECTOR 9, ROHINI, DELHI-110 085. (PAN : AAACM1761B) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI AJAY WADHWA, ADVOCATE REVENUE BY : SMT. REENA S. PURI, CIT DR AND SMT. SRUJANI MOHANTY, SENIOR DR ORDER PER B.C. MEENA, ACCOUNTANT MEMBER : THIS APPEAL FILED BY THE ASSESSEE ARISES OUT OF THE ORDER OF CIT, DELHI II, NEW DELHI DATED 29.03.2011 FOR THE ASSESSMENT Y EAR 2006-07. THE GROUNDS OF APPEAL READ AS UNDER :- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT, DELHI-II, NEW DELHI HAS ERRED IN PASSING ORDER U/S 263 OF THE INCOME-TAX ACT, 1961 SETTING ASIDE THE ASSESSMENT ORDER U/S 14 3(3) DATED 29.12.2008 FOR MAKING IT AFRESH. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE ASSESSMENT ORDER U/S 143(3) DATED 29.12.2008 WAS NE ITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE AND HENCE, T HE ORDER OF THE CIT U/S 263 IS BAD IN LAW AND DESERVES TO BE QUASHED. ITA NO.2080/DEL./2011 2 3. THAT THE LD. CIT WHILE PASSING THE ORDER U/S 263 HAS GROSSLY ERRED IN STATING THAT THE ASSESSMENT ORDER IS ERRONEOUS A ND PREJUDICIAL TO THE INTEREST OF REVENUE ON THE ISSUE OF ALLOWABILITY OF REBATE U/S 88E, TAX PAYABLE U/S 115JB AND DISALLOWANCE U/S 14A OF THE I NCOME-TAX ACT, 1961. 3. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, OR AMEND ANY GROUNDS OF THE APPEAL RAISED ABOVE AT THE TIME OF HEARING. 2. IN THIS APPEAL, THE ISSUE INVOLVED IS AGAINST TH E ORDER OF CIT UNDER SECTION 263 OF THE INCOME-TAX ACT IN WHICH THE ORDE R OF ASSESSING OFFICER PASSED U/S 143(3) DATED 29.12.2008 HAS BEEN SET ASI DE FOR MAKING ASSESSMENT AFRESH. ASSESSEE IS DOING BUSINESS OF BROKING IN S HARES AND SECURITIES. IT TRADES IN SHARES, FUTURES AND OPTIONS. 3. THE LEARNED AR SUBMITTED THAT THE CIT HAS SET AS IDE THE ORDER OF THE ASSESSING OFFICER EVEN THOUGH THE ASSESSMENT ORDER PASSED BY ASSESSING OFFICER WAS NEITHER ERRONEOUS NOR PREJUDICIAL TO TH E INTEREST OF THE REVENUE. THE ORDER HAS BEEN SET ASIDE ON THREE GROUNDS BY TH E CIT AND HELD AS UNDER :- I AM, THEREFORE OF THE VIEW THAT THE ASSESSMENT O RDER PASSED BY THE A.O. IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST O F REVENUE TO THE EXTENT DISCUSSED ABOVE ON THE ISSUE OF ALLOWABILITY OF REB ATE U/S 88E, TAX PAYABLE U/S 115JB AND DISALLOWANCE U/S 14A OF THE IT ACT. CIT IS OF THE VIEW THAT THE REBATE UNDER SECTION 88 E CLAIMED AND ALLOWED ON THE INCOME OTHER THAN THE INCOME CHARGEABLE UNDER T HE HEAD PROFIT AND GAIN OF BUSINESS PROFESSION ARISING FROM TAXABLE SECURI TIES TRANSACTIONS IS NOT ALLOWABLE. THE CIT WAS ALSO OF THE VIEW THAT THE T AX PAYABLE U/S 115JB HAS NOT BEEN CHARGED SEPARATELY WITHOUT GIVING REBATE U /S 88E OF THE INCOME-TAX ACT. THE THIRD GROUND WAS THAT THE ASSESSEE HAS CL AIMED EXEMPT INCOME ON ACCOUNT OF DIVIDEND INCOME TO THE TUNE OF RS.8,36,2 67/- AND THE REQUISITE ITA NO.2080/DEL./2011 3 DISALLOWANCE U/S 14A HAS NOT BEEN MADE WHICH SHOULD HAVE BEEN MADE IN ACCORDANCE WITH THE PROVISIONS OF RULE 8D OF THE IN COME-TAX RULES, 1962. THE LEARNED AR SUBMITTED THAT THE REBATE U/S 80E OF THE INCOME-TAX ACT WAS NEVER A DEBATABLE ISSUE. THE RETURN OF INCOME PRE SCRIBED BY THE RULES WHICH HAS FORCE OF LAW PROVIDES IN PART B-TTI FOR COMPUTA TION OF TAX LIABILITY ON TOTAL INCOME. AS PER THIS, THE REBATE UNDER SECTIO N 80E IS ALLOWABLE. BALANCE TAX PAYABLE HAS TO BE WORKED OUT ONLY AFTER REDUCIN G THE REBATE U/S 88E OF THE INCOME-TAX ACT. THEREFORE, THE ORDER OF ASSESSING OFFICER WAS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENU E ON THIS COUNT. VARIOUS BENCHES OF ITAT HAD ACCEPTED THIS IN ITS DECISIONS. THE OTHER ISSUE ON WHICH THE CIT INVOKED THE PROVISIONS OF SECTION 263 OF IN COME-TAX ACT WAS FOR DISALLOWANCE U/S 14A READ WITH RULE 8D. THE LEARNE D AR SUBMITTED THAT VARIOUS COURTS HAD ALREADY DECIDED AND HELD THAT PR OVISIONS OF RULE 8D ARE NOT RETROSPECTIVE. THESE ARE APPLICABLE ONLY FROM THE ASSESSMENT YEAR 2008- 09 ONWARDS. THE YEAR UNDER CONSIDERATION IS ASSESS MENT YEAR 2006-07 WHERE RULE 8D IS NOT APPLICABLE. ASSESSEE ITSELF DISALLO WED REASONABLE AMOUNT PERTAINING TOWARDS EXEMPTED INCOME WHICH HAS BEEN A CCEPTED BY ASSESSING OFFICER. THEREFORE, ON THIS COUNT ALSO, THE ORDER OF ASSESSING OFFICER WAS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST O F REVENUE. LEARNED AR PLEADED THAT THE CIT WAS NOT JUSTIFIED BY INVOKING THE JURISDICTION U/S 263 ON THESE GROUNDS. THE ORDER OF ASSESSING OFFICER WAS NEITHER ERRONEOUS NOR ITA NO.2080/DEL./2011 4 PREJUDICIAL TO THE INTEREST OF REVENUE. THE ASSESS ING OFFICER HAS TAKEN A POSSIBLE VIEW THAT REBATE U/S 88E IS ALLOWABLE ON T HE INCOME OTHER THAN THE INCOME CHARGEABLE UNDER THE HEAD PROFIT & GAIN OF BUSINESS & PROFESSION ARISING FROM TAXABLE SECURITY TRANSACTIONS AND TAX PAYABLE U/S 115JB IS NOT CHARGEABLE WITHOUT GIVING REBATE U/S 88E. SIMILARL Y, THE ASSESSING OFFICER TOOK A VIEW THAT APPLICABILITY OF RULE 8D IS PROSPE CTIVE AND NOT APPLICABLE FOR ASSESSMENT YEAR 2006-07. ASSESSING OFFICER ACCEPTE D THE REASONABLE DISALLOWANCE U/S 14A. ASSESSING OFFICER TOOK THESE POSSIBLE VIEWS WHICH HAVE BEEN APPROVED BY VARIOUS COURTS. THE ASSESSIN G OFFICER HAD TAKEN POSSIBLE VIEWS WHICH WERE SUSTAINABLE IN LAW. LAW DOES NOT PERMIT THE CIT TO REPLACE HIS POINT OF VIEW ON THE SUSTAINABLE POS SIBLE VIEW TAKEN BY ASSESSING OFFICER BY INVOKING AND PASSING AN ORDER U/S 263 OF THE ACT. THE ASSESSING OFFICERS VIEW IS NOT UNSUSTAINABLE VIEW IN LAW. LEARNED AR ALSO RELIED ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIES CO. LTD. VS. CIT 243 ITR 83. 4. LEARNED DR RELIED ON THE ORDER OF THE CIT AND PL EADED TO SUSTAIN THE SAME. 5. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. THE CIT INITIATED THE PROCEEDINGS U/S 263 ON THREE COUNTS (I) RELIEF TO THE REBATE U/S 88E WHICH WAS CLAIMED AND ALLOWED; (II) TAX PAYABLE U/S 115JB NOT CHARGED SEPARATELY WITHOUT GIVING REBATE UNDER SECTION 88E; AND (III) NOT MAKING DISALLOWANCE AS ITA NO.2080/DEL./2011 5 PER THE PROVISIONS RULE 8D OF THE IT RULES R.W.S. 1 4A OF THE INCOME-TAX ACT. A BARE READING OF SECTION 263 OF THE INCOME-TAX ACT , 1961, MAKES IT CLEAR THAT THE PREREQUISITE FOR THE EXERCISE OF JURISDICTION B Y THE COMMISSIONER SUO MOTU UNDER IT, IS THAT THE ORDER OF THE INCOME-TAX OFFIC ER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. TH E COMMISSIONER HAS TO BE SATISFIED OF TWIN CONDITIONS, NAMELY, (I) THE ORDER OF THE ASSESSING OFFICER SOUGHT TO BE REVISED IS ERRONEOUS; AND (II) IT IS P REJUDICIAL TO THE INTERESTS OF THE REVENUE. IF ONE OF THEM IS ABSENT IF THE ORD ER OF THE INCOME-TAX OFFICER IS ERRONEOUS BUT IS NOT PREJUDICIAL TO THE REVENUE OR IF IT IS NOT ERRONEOUS BUT IS PREJUDICIAL TO THE REVENUE RECOURSE CANNOT BE HAD TO SECTION 263(1) OF THE ACT. THE PROVISION CANNOT BE INVOKED TO CORRECT E ACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE ASSESSING OFFICER , IT IS ONLY WHEN AN ORDER IS ERRONEOUS THAT THE SECTION WILL BE ATTRACTED. T HE ASSESSING OFFICER WAS WELL AWARE THAT THE ASSESSEE IS A COMPANY REGISTERED AS SHARE BROKER UNDER SEBI AND HAVING THE MEMBERSHIP OF NSE, SSE FUTURE OPTION AND NSDL DEPOSITORY AND IT IS DEALING IN SHARES AND SECURITI ES. ASSESSING OFFICER WAS ALSO AWARE THAT ASSESSEE HAD CLAIMED REBATE U/S 80E IN RESPECT OF SECURITIES TRANSACTION TAX IN RETURN OF INCOME. THE RETURN OF INCOME FILED BY THE ASSESSEE PRESCRIBED FROM BY THE CBDT UNDER THE I.T. RULES. COPY OF THE SAME WAS FILED BY THE ASSESSEE AND PLACED AT PAGES 13 TO 17 OF THE PAPER BOOK. PART B-TTI OF THIS RETURN PROVIDES ABOUT THE COMPUT ATION OF TAX LIABILITY ON ITA NO.2080/DEL./2011 6 TOTAL INCOME. IT ALSO PROVIDES FOR TAX PAYABLE ON THE DEEMED INCOME U/S 115JB. THE COMPUTATION OF TAX LIABILITY COLUMN AS PROVIDED IN THE RETURN OF INCOME ARE AS UNDER :- PART B TTI COMPUTATION OF TAX LIABILITY ON TOTAL INCOME 1 TAX PAYABLE ON DEEMED TOTAL INCOME UNDER SECTION 115JB (7 OF SCHEDULE MAT) 1 0 COMPUTATION OF TAX LIABILITY 2 TAX PAYABLE ON TOTAL INCOME A TAX AT NORMAL RATES 2A 0 B TAX AT SPECIAL RATES (11 OF SCHEDULE SI) 2B 0 C TAX PAYABLE ON TOTAL INCOME (2A + 2B) 2C 0 3 GROSS TAX PAYABLE (HIGHER OF 2C AND 1) 3 0 4 CREDIT UNDER SECTION 115JAA OF TAX PAID IN EARLIER YEARS (IF 2C IS MORE THAN 1) (7 OF SCHEDULE MATC) 4 0 5. TAX PAYABLE AFTER CREDIT UNDER SECTION 115JAA (3 4) 5 0 6. REBATE UNDER SECTION 88E(4 OF SCHEDULESTTC) 6 0 7. BALANCE TAX PAYABLE (5 6) 7 0 8. SURCHARGE ON 7 8 0 9. EDUCATION CESS INCLUDING SECONDARY AND HIGHER EDUCATION CESS ON (7 + 8) 9 0 10. GROSS TAX LIABILITY (7 + 8 + 9) 10 0 11. TAX RELIEF A SECTION 90 11A B SECTION 91 11B C TOTAL (11A + 11B) 11C 0 12. NET TAX LIABILITY (10 11C) 12 0 13. INTEREST PAYABLE A FOR DEFAULT IN FURNISHING THE RETURN (SECTION 234A) 13A 0 B FOR DEFAULT IN PAYMENT OF ADVANCE TAX (SECTION 13B 0 C FOR DEFERMENT OF ADVANCE TAX (SECTION 234C) 13C 0 D TOTAL INTEREST PAYABLE (13A + 13B + 13C) 13D 0 14. AGGREGATE LIABILITY (12 + 13D) 14 0 THUS, IN OUR CONSIDERED VIEW, THE ASSESSING OFFICER ACCEPTED THE CLAIM OF THE ASSESSEE AS PER THE RETURN OF INCOME FILED IN THE P RESCRIBED FORM AND SUCH VIEW HAS BEEN UPHELD BY VARIOUS ITAT BENCHES. ASSE SSING OFFICER HAS TAKEN ITA NO.2080/DEL./2011 7 A VIEW ON THE ISSUE. THUS, ANY DEVIATION FROM THE SAME WILL AMOUNT TO A CHANGE OF OPINION. CIT CANNOT INVOKE THE PROVISIO NS OF SECTION 263 ONLY FOR THE SAKE OF CHANGE OF OPINION ON A PARTICULAR ISSUE . VARIOUS BENCHES OF THE ITAT HAVE ACCEPTED THE METHOD OF WORKING OUT THE TA X PAYABLE ON THE DEEMED TOTAL INCOME U/S 115JB AFTER PROVIDING REBAT E U/S 88E. THEREFORE, THE VIEW TAKEN BY THE ASSESSING OFFICER WAS A POSSIBLE VIEW SUSTAINABLE IN LAW. THUS, IN OUR CONSIDERED VIEW, THE ORDER PASSED BY A SSESSING OFFICER WAS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST O F REVENUE ON THIS COUNT. 6. THE OTHER ISSUE ON WHICH THE CIT INVOKED THE PRO VISIONS OF SECTION 263 IS NOT DISALLOWING U/S 14A READ WITH RULE 8D. THE ASSESSEE HIMSELF HAS DISALLOWED EXPENSES OF RS.3,000/- OF PEONS, CONVEYA NCE, POSTAGE, ETC. THE ASSESSING OFFICER ACCEPTED THE QUANTUM OF DISALLOWA NCE. CIT TAKES A VIEW THAT THE DISALLOWANCES SHOULD BE AS PER RULE 8D. V ARIOUS COURTS HAD HELD THAT THE PROVISIONS OF RULE 8D CANNOT BE INVOKED RE TROSPECTIVELY. THESE PROVISIONS ARE APPLICABLE PROSPECTIVELY ONLY AND W. E.F. ASSESSMENT YEAR 2008- 09 ONWARDS. IN THE ASSESSEES CASE, THE YEAR INVOL VED IS ASSESSMENT YEAR 2006-07. THUS, THE VIEW TAKEN BY THE ASSESSING OFF ICER BY ACCEPTING THE REASONABLE DISALLOWANCE BY NOT INVOKING THE APPLICA BILITY OF RULE 8D IS A SUSTAINABLE VIEW IN LAW. THE ASSESSING OFFICER ACC EPTED THE DISALLOWANCE AS MADE BY ASSESSEE. KEEPING THESE FACTS IN VIEW, WE HOLD THAT THE ORDER OF ASSESSING OFFICER WAS NEITHER ERRONEOUS NOR PREJUDI CIAL TO THE INTEREST OF ITA NO.2080/DEL./2011 8 REVENUE ON THIS COUNT ALSO. THE ASSESSING OFFICER HAS NEITHER MADE INCORRECT ASSUMPTION OF FACTS OR NOR MADE AN INCORRECT APPLIC ATION OF LAW WHICH ARE NECESSARY FOR DECLARING AN ORDER BEING ERRONEOUS. THE VIEW TAKEN BY THE ASSESSING OFFICER ON THESE THREE COUNTS IS NOT UNSU STAINABLE IN LAW. THEREFORE, IN OUR CONSIDERED VIEW, THE CIT WAS NOT JUSTIFIED IN INVOKING THE PROVISIONS OF SECTION 263 OF THE INCOME-TAX ACT, TH EREFORE, WE SET ASIDE THE ORDER OF THE CIT. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 20 TH DAY OF JANUARY, 2012. SD/- SD/- (RAJPAL YADAV) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 20 TH DAY OF JANUARY, 2012 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT, DELHI-II, DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.