DCIT, New Delhi V. M/s Minda Investment Ltd., Delhi

ITA 2172/DEL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2893 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2011-2012
• Appeal Filed On: 21-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R K KAPOOR
• Keywords: Earning of tax free income; Revised return
• Section: 14A

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL, DELHI BENCH C, NEW DELHI BEFORE : SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 2172/DEL./2016 ASSESSMENT YEAR: 2011-12 D.C.I.T., CIRCLE 16(2), NEW DELHI. (APPELLANT) VS. M/S. MINDA INVESTMENT LTD., B-64/1, WAZIRPUR INDUSTRIAL AREA, DELHI (PAN : AAACL 1433F) (RESPONDENT) A PPELLANT BY SHRI ARUN KUMAR YADAV, SR. DR RESPONDENT BY SHRI R.K. KAPOOR, CA ORDER PER L.P. SAHU, A.M.: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 08.02.2016 OF THE LEARNED CIT(A)-20, NEW DELHI FOR THE ASSESSM ENT YEAR 2011-12 ON THE FOLLOWING GROUNDS : 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE & IN LAW, THE LD. CIT(A) IS JUSTIFIED IN RESTRICTING THE ADDITION TO R S. 47,91,971/- U/S 14A OF THE INCOME TAX ACT, 1961 READ WITH RULE 8D OF THE INCOME TAX RULES, 1962 OUT OF THE TOTAL DISALLOWANCE OF RS. 1,06,41,818/- SUO MOT O MADE BY THE ASSESSEE IN THE RETURN OF INCOME? 2. WHETHER ON THE FACTS AND ON CIRCUMSTANCES OF TH E CASE AND IN LAW, THE CIT(A) IS JUSTIFIED IN NOT UPHOLDING DISALLOWANCE OF RS. 1,34,19,838/- U/S 14A OF THE ACT WITHOUT CONSIDERING A LEGAL PRINCIPLES T HAT ALLOWABILITY OF EXPENDITURE UNDER THE ACT IS NOT CONDITIONAL UPON T HE EARNING OF THE INCOME DATE OF HEARING 15.02.2018 DATE OF PRONOUNCEMENT 21 .03.2018 ITA NO. 2172/DEL./2016 2 AS UPHELD BY HON'BLE SUPREME COURT IN CASE OF CIT VS , RAJENDRA PRASAD MOODY [1978]115 ITR519. 3. THAT THE ORDER OF THE LD. CIT (A) IS ERRONEOUS AN D IS NOT TENABLE ON FACTS AND IN LAW. 4. THAT THE GROUNDS OF APPEAL ARE WITHOUT PREJUDIC ED TO EACH OTHER. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FILED A RETURN OF INCOME ON 23.09.2011 DECLARING A TAXABLE INCOME OF RS.4,89,05 ,712/-. IN THE RETURN OF INCOME, THE ASSESSEE CLAIMED DIVIDEND INCOME OF RS. 47,90,971/- AS EXEMPT U/S. 10(34) OF THE ACT AND SUO MOTTO DISALLOWED EXPENDIT URE OF RS.1,06,41,818/- U/S. 14A READ WITH RULE 8D. HOWEVER, IN THE SCRUTINY PRO CEEDINGS OF ASSESSMENT, THE ASSESSEE, AFTER TAKING COGNIZANCE OF CIT(A)S ORDER IN HIS OWN CASE FOR A.Y. 2010- 11 AND TAKING ANALOGOUS METHOD OF WORKING OUT THE D ISALLOWANCE U/S. 14A, RE- WORKED OUT THE SUO MOTTO DISALLOWANCE U/S. 14A TO RS.23,00,575/- WITH THE REQUEST THAT THE DISALLOWANCE OFFERED IN RETURN WAS INCORRECT AND SUO MOTTO DISALLOWANCE U/S. 14A TO THE EXTENT OF RS.23,00,575 /- MAY BE CONSIDERED IN PLACE OF RS.1,06,41,818/- SHOWN IN THE RETURN OF INCOME. THE ASSESSING OFFICER REJECTED THE CLAIM OF THE ASSESSEE RELYING THE DECISION OF H ONBLE APEX COURT IN THE CASE OF GOETZE (INDIA) LTD. VS. CIT, 284 ITR 323 (SC), WHER EIN IT HAS BEEN HELD THAT THE ASSESSING OFFICER HAS NO POWER TO AMEND A RETURN UN LESS A REVISED RETURN IS FILED BY THE ASSESSEE. THE ASSESSING OFFICER FURTHER OBSE RVED THAT THE DEPARTMENT HAS FILED AN APPEAL BEFORE THE ITAT AGAINST SAID ORDER OF LD. CIT(A) FOR A.Y. 2010-11, CHALLENGING THE COMPUTATION OF DISALLOWANCE, BEING AGAINST RULE 8D OF THE IT RULES. THE ASSESSEE CHALLENGED THE ASSESSMENT ORDER ON THIS ISSUE IN APPEAL BEFORE THE LD. CIT(A), WHO AFTER CONSIDERING THE CO NTENTIONS OF BOTH THE PARTIES, MATERIAL AVAILABLE ON RECORD AND RELYING ON VARIOUS DECISIONS OF JURISDICTIONAL HIGH COURT, SUPREME COURT AND CBDT CIRCULAR, RESTRI CTED THE DISALLOWANCE TO THE ITA NO. 2172/DEL./2016 3 EXTENT OF THE EXEMPT INCOME OF RS.47,91,971/- VIDE IMPUGNED ORDER. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 3. THE LEARNED DR, RELYING ON THE ASSESSMENT ORDER, SUBMITTED THAT THE LD.CIT(A) WAS NOT JUSTIFIED IN RESTRICTING THE DISA LLOWANCE TO RS.47,91,971/- AS AGAINST THE DISALLOWANCE OF RS.1,06,41,818/- SUO MO TO SHOWN BY THE ASSESSEE IN THE RETURN OF INCOME. THE LD. CIT(A) WHILE REDUCING THE DISALLOWANCE U/S. 14A HAS FAILED TO CONSIDER THE LEGAL PRINCIPLES THAT ALLOWA BILITY OF EXPENDITURE UNDER THE ACT IS NOT CONDITIONAL UPON EARNING OF EXEMPT INCOM E. HE, THEREFORE URGED TO SET ASIDE THE IMPUGNED ORDER AND TO RESTORE THE ASSESSM ENT ORDER. 4. ON THE OTHER HAND, THE LD. AR OF THE ASSESSEE, R ELYING ON THE IMPUGNED ORDER, FILED A WRITTEN SYNOPSIS, WHICH READS AS UND ER : THE FACTS IN BRIEF ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME, DECLARING A TAXABLE INCOME OF RS.4,89,05,712/-.. THE ASSESSEE HA D MADE A DISALLOWANCE OF RS. 1,06,41,818/- U/S 14A READ WITH RULE 8D IN ACCO RDANCE WITH ASSESSEE'S UNDERSTANDING AT THE TIME OF FILING OF THE TAX RETUR N. HOWEVER, SINCE BY THE TIME THE ASSESSMENT WAS UNDERTAKEN, THE ASSESSEE HA D THE BENEFIT OF ORDER PASSED BY THE LEARNED CIT(A) IN ASSESSEE'S OWN CASE FOR THE ASSESSMENT YEAR 2010-11. THE ASSESSEE FILED A REVISED DISALLOWANCE U /S 14A BASED ON THE FINDINGS IN SUCH ORDER AND A REVISED DISALLOWANCE U /S 14A TO RS.23,00,577/- WAS WORKED OUT AS AGAINST RS. 1,06,41,818/- WHICH H AD BEEN MADE BY THE ASSESSEE IN ITS RETURN OF INCOME. THE ASSESSING OFFICER DID NOT ACCEPT SUCH REVISED DI SALLOWANCE MADE BY THE ASSESSEE ON TWO COUNTS: 1) THE ASSESSING OFFICER WAS OF THE VIEW THAT THE AS SESSEE SHOULD HAVE REVISED ITS RETURN FOR THIS PURPOSE TO REDUCE ITS DISALLOWA NCE U/S 14A. THE ASSESSING OFFICER RELIED UPON THE JUDGEMENT OF HON'BLE SUPREM E COURT IN THE CASE OF M/S. GOETZE INDIA LTD. 284 ITR 323. ITA NO. 2172/DEL./2016 4 2) THAT THE ORDER OF CIT(A) FOR THE ASSESSMENT YEAR 2 010-11 IS UNDER CHALLENGE BY THE DEPARTMENT BEFORE THE HON'BLE ITAT. THE ASSESSEE TOOK UP THIS MATTER WITH THE LEARNED CI T(A) WHO VIDE THE ORDER UNDER CHALLENGE APPRECIATED ALL THE FACTS AND ALSO CONSIDERED THE JUDGEMENT RELIED UPON BY THE ASSESSING OFFICER. THE LEARNED CI T(A) CAME TO THE CONCLUSION BY RELYING UPON THE JUDGEMENT OF HON'BLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER COMPANY LTD. VS. CIT 229 ITR 383 THAT A LEGAL CLAIM OF THE ASSESSEE CAN BE ENTERTAINED BY T HE APPELLATE AUTHORITIES. THE LEARNED CIT(A) HAS CATEGORICALLY AND CORRECTLY OB SERVED THAT THE JUDGEMENT OF HON'BLE SUPREME COURT IN THE CASE OF M /S. GOETZE INDIA LTD. RELIED UPON BY THE ASSESSING OFFICER RESTRICTS THE POWER OF THE ASSESSING OFFICER TO ENTERTAIN A NEW CLAIM EXCEPT AND OTHERWI SE CLAIMED BY A REVISED RETURN. HOWEVER, IT DOES NOT IMPINGE UPON THE POWER S OF THE APPELLATE AUTHORITIES. FURTHER, THE LEARNED CIT(A) NOTED THE JUDGEMENT OF D ELHI HIGH COURT IN THE CASE OF M/S. JOINT INVESTMENT PVT. LTD. ON THE LAST PAGE OF HIS ORDER, WHICH JUDGEMENT IS REPORTED IN 372 ITR 694 AND RESTRICTED THE CLAIM OF THE ASSESSEE TOWARDS DISALLOWANCE TO THE EXTENT THE ASSESSEE HAD EARNED THE EXEMPT INCOME WHICH IS RS.47,91,971/- DURING THE YEAR. THE ASSESSEE ACCEPTED SUCH ORDER AND HAS NOT FILED ANY APPEAL. IT IS AGAINST THIS ORDER OF CIT(A) WHICH IS PERFECTL Y AS PER THE PROVISIONS OF LAW THAT THE DEPARTMENT HAS COME IN APPEAL BEFORE T HE HON'BLE ITAT. IT IS RESPECTFULLY SUBMITTED THAT THE ORDER PASSED BY THE LEARNED CIT(A) IS AS PER THE PROVISIONS OF LAW AND CALLS FOR NO FURTHER INFERENCE AND THE APPEAL FILED BY THE DEPARTMENT NEEDS TO BE DISMISSED. IT IS FURTHER SUBMITTED THAT THE VIEW OF THE CIT(A) IS SUPPORTED BY LARGE NUMBER OF JUDGEMENTS INCLUDING THE CIRCULAR ISSUED BY THE BOARD AS EARLY AS IN 1955 WHEREIN THE LEGAL PROPOSITION OF COMPUTING A TAXABLE INCOME HAS BEEN WELL EXPLAINED AND SETTLED. COPY OF ONE OF SUCH JUDGEMENT OF THE HON'BLE DELHI HIGH COURT AS REPORTED IN 360 ITR 682 IS ENCLOSED FOR YOUR HONOUR'S READY REFERENCE AND R ECORDS WHEREIN ALSO IT HAS CATEGORICALLY BEEN HELD BY RELY ING UPON THE VARIOUS JUDGEMENTS AS ALSO THE BOARD CIRCULAR THAT IT IS TH E DUTY OF THE DEPARTMENT TO DETERMINE THE CORRECT TAXABLE INCOME AS PER THE PRO VISIONS OF LAW. IF AN ASSESSEE OMITS TO MAKE A CLAIM TO WHICH ASSESSEE IS LAWFULLY ENTITLED TO, THEN ITA NO. 2172/DEL./2016 5 THERE IS NO BAR IN RAISING SUCH CLAIM FOR THE FIRST TIME EVEN BEFORE THE TRIBUNAL EVEN IF IT HAS NOT BEEN RAISED BEFORE ANY O F THE AUTHORITIES BELOW I.E. AO/CIT(A). HOWEVER, IN THE CASE OF THE ASSESSEE, THE REVISED COMPUTATION OF DISALLOWANCE U/S 14A WAS MADE BEFORE THE ASSESSING OFFICER. IT IS ONLY THIS CLAIM WHICH HAS BEEN ALLOWED BY THE LEARNED CIT(A) B Y FOLLOWING THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF M/S. JOINT INVESTMENT PVT. LTD. AS REGARDS OTHER CLAIM OF THE ASSESSING OFFICER THA T THE DEPARTMENT WAS BEFORE THE HON'BLE ITAT IN OWN ASSESSMENT YEAR 2010- 11, IT IS RESPECTFULLY SUBMITTED THAT EVEN IN ASSESSMENT YEAR 2010-11, THE HON'BLE ITAT HAS NOTED THE SIMILAR DECISION OF JOINT INVESTMENTS PVT. LTD. AND HAS REFERRED BACK THE MATTER OF THE FILE OF THE ASSESSING OFFICER FOR DEC IDING THE DISALLOWANCE AS PER LAW. NO FRESH ORDER HAS SO FAR BEEN PASSED BY THE A SSESSING OFFICER IN COMPLIANCE WITH THE DIRECTIONS OF THE ITAT IN ASSESS MENT YEAR 2010-11. THE ISSUES OF MAKING DISALLOWANCE U/S 14A READ WITH RULE 8D ARE BY LARGE WELL SETTLED NOW BY A NUMBER OF JUDGEMENTS AND FOLL OWING PRINCIPLES HAVE EMERGED: 1) NO EXEMPT INCOME, NO DISALLOWANCE U/S 14A. 2) THE DISALLOWANCE U/S 14A READ WITH RULE 8D NEEDS TO BE RESTRICTED TO THE EXTENT OF DIVIDEND/EXEMPT INCOME EARNED BY AN ASSES SEE. THEREFORE, THE ORDER OF THE LEARNED CIT(A) IN ACCORDA NCE WITH THESE TWO PRINCIPLES AND THE SAME IS PRAYED TO BE UPHELD. COPY OF FOLLOWING JUDGEMENTS ARE ENCLOSED HEREWITH FOR YOUR READY REFERENCE AND RECORD: 1) CIT VS. SAM GLOBAL SECURITIES LTD. 360 ITR 682, PA GE NO. 1 TO 5. 2) JOINT INVESTMENTS PVT. LTD. VS. CIT 2015-TIOL-574- HC-DEL-IT ALSO REPORTED IN 372 ITR 694, PAGE NO. 6 TO 9. 3) COPY OF ITAT'S ORDER IN ASSESSEE'S OWN CASE FOR A SSESSMENT YEAR 2010-11, PAGE NO. 10 TO 13. IT IS, THEREFORE, PRAYED THAT DEPARTMENTAL APPEAL M AY KINDLY BE DISMISSED. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAV E GONE THROUGH THE ENTIRE MATERIAL AVAILABLE ON RECORD AND WE FIND NO JUSTIFICATION TO INTERFERE WITH ITA NO. 2172/DEL./2016 6 THE IMPUGNED ORDER. A PERUSAL OF IMPUGNED ORDER REV EALS THAT THE LD. CIT(A) WHILE REDUCING THE DISALLOWANCE HAS CONSIDERED THE FACTS OF THE CASE IN THE LIGHT OF VARIOUS JUDICIAL PRONOUNCEMENT ON THE MERITS OF DISALLOWANCE AS WELL AS THE DECISION IN GOETZE INDIA (SUPRA) ON THE OBJECTION R AISED BY THE ASSESSING OFFICER. FOR READY REFERENCE, WE DEEM IT APPROPRIATE TO REPR ODUCE THE FINDINGS REACHED BY THE LD. CIT(A) IN THE IMPUGNED ORDER AS UNDER : (5.3). I HAVE CONSIDERED THE SUBMISSION OF THE APPE LLANT AND THE ASSESSMENT ORDER. FOLLOWING FACTS HAVE EMERGED : 1. THAT THE APPELLANT HAD EARNED DIVIDEND INCOME OF RS.47,91,971/- WHICH WAS CLAIMED EXEMPT UNDER THE PROVISIONS OF SECTION 10(3 4) OF THE INCOME-TAX ACT. 2. THAT THE APPELLANT HAD FILED REGULAR RETURN OF INCOME ON 23/09/2011, DECLARING A TAXABLE INCOME OF RS.4,89,05,712/- 3. THAT IN THE REGULAR RETURN, THE APPELLANT HAD DECLARED DIVIDEND INCOME OF RS.47,90,971/- IN THE FORM OF DIVIDEND WHICH IS EXE MPT UNDER SECTION 10(34) OF THE ACT. 4. THE APPELLANT SUO-MOTTO HAD DISALLOWED RS .1,06,41,818/- UNDER SECTION 14A COMPUTED AS PER RULE 8D OF IT RULES, 1962. 5. THAT DURING THE COURSE OF ASSESSMENT PROC EEDINGS, THE APPELLANT HAD REVISED THE CALCULATION OF DISALLOWANCE UNDER SECTION 14A TO BE READ WITH RULE 8D. IN THE REVISED CALCULATION THE DISALLOWANCE HAD COME DOWN TO RS.23 ,00,577/-. {5.4} THE APPELLANT HAD REVISED THE CALCULATION U NDER RULE 8D, TAKING COGNIZANCE OF CIT-A ORDER IN HIS OWN CASE FOR A.Y 2010-11. THE A. O HAD REJECTED THE CLAIM OF THE ASSESSEE CITING APEX COURT JUDGMENT IN THE CASE OF GOETZE (INDIA) LTD VS CIT, 284ITR323, WHERE IT IS HELD THAT A.O. HAS NO POWER TO AMEND A RETURN UNLESS A REVISED RETURN IS FILED BY THE ASSESSEE. THE A.O HAS FURTHE R CONTENDED THAT EVEN ON MERIT ALSO THE SUBMISSION OF THE ASSESSEE IS FIT TO BE REJECTED BE CAUSE THE ASSESSEE HAS RELIED ON THE DECISION OF THE LD. CIT(A)-IX IN THE ASSESSEE'S CAS E FOR THE A.Y. 2010-11 AGAINST WHICH THE DEPARTMENT HAS PREFERRED APPEAL BEFORE THE ITAT , AS THE ABOVE COMPUTATION OF DISALLOWANCE IS NOT AS PER THE PROVISION OF RULE 8D , WHICH IS PENDING AS ON DATE. {5.5} BASIC ISSUES THAT HAVE EMERGED FROM THE SUB MISSIONS OF APPELLANT AND THE A.O ARE; 1. CAN APPELLATE AUTHORITY ALLOW THE ASSESSEE TO TAKE BENEFIT OF RECALCULATION OF ITS TAXABLE INCOME RESULTING INTO LESSER TAXABLE THAN WHAT HAVE BEEN DECLARED IN THE REGULAR RETURN IN ABSENCE OF RETURN BEEN REVISED? ITA NO. 2172/DEL./2016 7 2. APART FROM THE ABOVE MENTIONED QUESTION, T HERE IS ALSO A FUNDAMENTAL QUESTION IN THE PRESENT CASE AS TO WHETHER DISALLOWANCE OF EXPE NSES UNDER SECTION 14A TO BE READ WITH RULE 8D CAN BE MORE THAN THE EXEMPT INCOME? QUESTION NO.1: THE APEX COURT IN THE JUDGMENT IN THE CASE OF GOET ZE (INDIA) LTD HAS CLEARLY DEMARCATED THE POWERS OF THE A.O AND THE AP PELLATE AUTHORITY. THE RELEVANT EXTRACT OF THE ABOVE JUDGMENT IS GIVEN BELOW:- 2. THE QUESTION RAISED IN THIS APPEAL RELATES TO WHETH ER THE APPELLANT ASSESSEE COULD MAKE A CLAIM FOR DEDUCTION OTHER THAN BY FILING A REVISE D RETURN. THE ASSESSMENT YEAR IN QUESTION WAS 1995-96. THE RETURN WAS FILED ON 30-11 -1995, BY THE APPELLANT FOR THE ASSESSMENT YEAR IN QUESTION. ON 12-1-1998, THE APPE LLANT SOUGHT TO CLAIM A DEDUCTION BY WAY OF A LETTER BEFORE THE ASSESSING OFFICER. THE DE DUCTION WAS DISALLOWED BY THE ASSESSING OFFICER ON THE GROUND THAT THERE WAS NO PROVISION U NDER THE INCOME TAX ACT TO MAKE AMENDMENT IN THE RETURN OF INCOME BY MODIFYING AN A PPLICATION AT THE ASSESSMENT STAGE WITHOUT REVISING THE RETURN. 3. THIS APPELLANT'S APPEAL BEFORE THE .COMMISSIONER (APPEALS) WAS ALLOWED. HOWEVER, THE ORDER OF THE FURTHER APPEAL OF THE DEPARTMENT BEFORE THE INCOME TAX APPELLATE TRIBUNAL WAS ALLOWED. THE APPELLANT HAS APPROACHED THIS COUR T AND HAS SUBMITTED THAT THE TRIBUNAL WAS WRONG IN UPHOLDING THE ASSESSING -JEER' S ORDER. HE HAS RELIED UPON THE DECISION OF THIS COURT IN NATIONAL THERMAL POWER CO MPANY LTD. V. CTT(1998) 29 TTR 383, TO CONTEND THAT IT WAS OPEN TO THE ASSESSEE TO RAIS E THE POINTS OF LAW EVEN BEFORE THE APPELLATE TRIBUNAL. 4. THE DECISION IN QUESTION IS THAT THE POWER OF TH E TRIBUNAL UNDER SECTION 254 OF THE INCOME TAX ACT, 1961, IS TO ENTERTAIN FOR THE FIRST TIME A POINT OF LAW PROVIDED THE FACT ON THE BASIS OF WHICH THE ISSUE OF LAW CAN BE RAISED BEF ORE THE TRIBUNAL. THE DECISION DOES NOT IN ANY WAY RELATE TO THE POWER OF THE ASSESSING OFF ICER TO ENTERTAIN A CLAIM FOR DEDUCTION OTHERWISE THAN BY FILING A REVISED RETURN. IN THE C IRCUMSTANCES OF THE CASE, WE DISMISS THE CIVIL APPEAL. HOWEVER, WE MAKE IT CLEAR THAT THE IS SUE IN THIS CASE IS LIMITED TO THE POWER OF THE ASSESSING AUTHORITY AND DOES NOT IMPINGE ON THE POWER OF THE INCOME TAX APPELLATE TRIBUNAL. THE ORDER HAS CLEARLY STATED THAT A.O DOES NOT HAVE THE POWER TO ENTERTAIN A FRESH CLAIM OTHERWISE THAN BY FILING A REVISED RETURN. HOWEVER, THE APEX COURT HAS MADE IT CLEAR THAT IT DOES IMPINGE ON THE POWER OF THE INCOME TAX APPELLATE TRIBUNAL. QUESTION NO.2: HON'BLE DELHI HIGH COURT IN ITS ORDER IN THE CASE O F JOINT INVESTMENT PVT LTD VS COMMISSIONER OF INCOME TAX, ITA, 117/2015 HAS CONTE NDED AS UNDER; '.....BY NO STRETCH OF IMAGINATION CAN SECTION 14A OR RULE 3D BE INTERPRETED SO AS TO MEAN THAT THE ENTIRE TAX EXEMPT INCOME IS TO BE DISALLOWED. THE WINDOW FOR DISALLOWANCE IS INDICATED IN SECTION 14A, AND IS ONLY TO THE4 EXTEN T OF DISALLOWING EXPENDITURE 'INCURRED BY THE ASSESSEE IN RELATION TO TAX EXEMPT INCOME'. THIS PROPORTION OR PORTION OF THE TAX EXEMPT INCOME SURELY CAN NOT SWALLOW THE ENTIRE AMO UNT AS HAS HAPPENED IN THIS CASE...' ITA NO. 2172/DEL./2016 8 {5.6} I HAVE TAKEN INTO ACCOUNT CBDT CIRCULAR NO. 1955. THE RELEVANT PORTION OF THE CIRCULAR IS REPRODUCED AS UNDER; 3. OFFICERS OF THE DEPARTMENT MUST NOT TAKE ADVANTAGE OF IGNORANCE OF AN ASSESSEE AS TO HIS RIGHTS. IT IS ONE OF THEIR DUTIES TO ASSIST A TAXPAYER IN EVERY REASONABLE WAY, PARTICULARLY IN THE MATTER OF CLAIMING AND SECURING RELIEFS AND IN THIS REGARD THE OFFICERS SHOULD TAKE THE INITIATIVE IN GUIDING A TAXPAYER WHERE PROCEEDI NGS OR OTHER PARTICULARS BEFORE THEM INDICATE THAT SOME REFUND OR RELIEF IS DUE TO HIM. THIS ATTITUDE WOULD, IN THE LONG RUN, BENEFIT THE DEPARTMENT FOR IT WOULD INSPIRE CONFIDEN CE IN HIM THAT HE MAY BE SURE OF GETTING A SQUARE DEAL FROM THE DEPARTMENT. ALTHOUGH , THEREFORE, THE RESPONSIBILITY FOR CLAIMING REFUNDS AND RELIEFS RESTS WITH ASSESSEES ON WHOM IT IS IMPOSED BY LAW, OFFICERS SHOULD : (A) DRAW THEIR ATTENTION TO ANY REFUNDS OR RELIEFS TO WHICH THEY APPEAR TO BE CLEARLY ENTITLED BUT WHICH THEY HAVE OMITTED TO CLAI M FOR SOME REASON OR OTHER, (B) FREELY ADVISE THEM WHEN APPROACHED BY THEM AS TO THEIR RIG HTS AND LIABILITIES AND AS TO THE PROCEDURE TO BE ADOPTED FOR CLAIMING REFUNDS AND REL IEFS. I HAVE CONSIDERED THE APEX COURT JUDGMENT IN THE CA SE OF M/S GOETZE INDIA LTD WHERE IT IS HELD THAT THERE WAS NO PROVISION UNDER THE INCOM E TAX ACT TO MAKE AMENDMENT IN THE RETURN OF INCOME BY MODIFYING AN APPLICATION AT THE ASSESSMENT STAGE WITHOUT REVISING THE RETURN. BUT THE JUDGMENT ITSELF HAS MA DE IT CLEAR THAT THIS PARTICULAR ISSUE IS LIMITED TO THE POWER OF THE ASSESSING AUTHORITY AND DOES NOT IMPINGE ON THE POWER OF THE INCOME TAX APPELLATE TRIBUNAL. IN VIEW OF THE ABOVE MENTIONED DISCUSSION I HAVE CO NSIDERED THE GROUND OF APPEAL RAISED BY THE APPEAL IN THE APPELLATE PROCEEDINGS. IT IS A MATTER OF FACT THAT THE ASSESSEE HAD CLAIMED AN EXEMPT INCOME OF RS.47,91,971/-. AGA INST THIS EXEMPT INCOME, THE ASSESSEE IN THE REGULAR RETURN OF INCOME HAS DISALL OWED EXPENSES ATTRIBUTABLE TO THIS EXEMPT INCOME AT RS. 1,06,41,818/-CALCULATED AS PER RULE 8D TO BE READ WITH SEC.14A. THUS, AGAINST EXEMPT INCOME OF RS.47,91,971/-, EXPE NDITURE CLAIMED TO HAVE BEEN INCURRED IS RS.1,06,41,818/-. HOWEVER, ON THE BASIS OF COMMISSIONER OF INCOME TAX(A) ORDER IN THE APPELLANT'S OWN CASE FOR A.Y:2010-11, IT HAS RE-CALCULATED THE DISALLOWANCES UNDER SEC14A TO BE READ WITH RULE 8D AT RS.23,00,577/-. THE BONE OF CONTENTION IS THE INCLUSION OR EXCLUSION OF BANK INTEREST CHARGES IN THE CALCULATION TO BE MADE UNDER RULE 8D. I HAVE FURTHER TAKEN INTO CONSIDERATION THE H ON'BLE DELHI HIGH COURT JUDGMENT IN THE CASE OF JOINT INVESTMENT PVT LTD VS COMMISSIONE R OF INCOME TAX, ITA 117/2015 THAT BY NO STRETCH OF IMAGINATION CAN SECTION 14A OR RUL E 8D BE INTERPRETED SO AS TO MEAN THAT THE ENTIRE TAX EXEMPT INCOME IS TO BE DISALLOWED. THEREFORE, EVEN ON THE MERIT OF THE CALCULATION ORIGINALLY MADE BY THE APPELLANT AND AL SO CALCULATED BY THE A.O, THE DISALLOWANCE WOULD BE RESTRICTED TO THE EXEMPT INCO ME I.E RS.47,91,971/-. THEREFORE IN MV CONSIDERED VIEW THE DISALLOWANCES UNDER RULE 8D WOULD BE RESTRICTED TO RS.47.91.971/-. 6. A PERUSAL OF THE IMPUGNED ORDER REVEALS THAT THE LD . CIT(A) HAS CONSIDERED THE ISSUE IN RIGHT PERSPECTIVE. THE CONTENTION OF T HE ASSESSING OFFICER THAT NO ITA NO. 2172/DEL./2016 9 CLAIM OF ASSESSEE COULD BE ACCEPTED OTHERWISE BY WA Y OF REVISED RETURN HAS ALSO BEEN PROPERLY MET OUT BY THE LD. CIT(A) BY RELYING ON VARIOUS DECISIONS, WHEREIN THE FINDINGS OF HONBLE APEX COURT IN GOETZE (INDIA ) (SUPRA) HAS BEEN CONSIDERED, INASMUCH AS THE DECISION OF HONBLE SUPREME COURT W AS LIMITED TO THE POWER OF ASSESSING OFFICER AND DID NOT IMPINGE TO THE POWERS OF TRIBUNAL. THE LD. CIT(A) IN THIS REGARD HAS ALSO TAKEN INTO ACCOUNT CBDT CIRCUL AR NO. 1955 AS REPRODUCED IN THE IMPUGNED ORDER, AGAINST WHICH THERE IS NOTHING ON RECORD FROM THE SIDE OF REVENUE. APART FROM THIS, THE HONBLE DELHI HIGH CO URT IN CIT VS. SAM GLOBAL SECURITIES LTD., 38 TAXMANN.COM 129, AFTER CONSIDER ING THE DECISION IN GOETZE INDIA (SUPRA) HAS DECIDED THIS ISSUE IN FAVOUR OF T HE ASSESSEE. THE LD. CIT(A) HAS ALSO RELIED ON THE DECISION OF HONBLE JURISDICTIO NAL HIGH COURT IN JOINT INVESTMENT PVT. LTD. VS. CIT IN ITA NO. 117/2015 FO R RESTRICTING THE ADDITION TO THE EXTENT OF EXEMPT INCOME EARNED BY THE ASSESSEE. IN FACT, THE LD. CIT(A) HAS PASSED A REASONED ORDER, WHICH DOES NOT CALL FOR AN Y INTERFERENCE FOR WANT OF ANY CONTRARY MATERIAL ON RECORD. ACCORDINGLY, THE APPEA L OF THE REVENUE IS FOUND TO HAVE NO MERITS AND IS LIABLE TO FAIL. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST MARCH, 2018. SD/- SD/- (H.S. SIDHU) (L.P . SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 21.03.2018 *AKS* COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR