DCIT CEN CIR 5(4), MUMBAI V. EMERALD REALTORS P.LTD, MUMBAI

ITA 2392/MUM/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1951 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2013-2014
• Appeal Filed On: 18-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMIT PRATAP SINGH
• Keywords: Earning of tax free income; Rule 8D
• Section: 14A; 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E , BENCH MUMBAI BEFORE SHRI M.BALAGANESH, AM & SHRI RAM LAL NEGI, JM ITA NO. 239 2 /MUM/201 8 & 2393/MUM/2018 ( ASSESSMENT YEAR : 2013 - 14 & 2014 - 15 ) DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 5(4) R.N O.1927, 19 TH FLOOR AIR INDIA BUILDING NARIMAN POINT MUMBAI 400 021 VS. M/S. EMERALD REALTORS PVT. LTD. 2 ND FLOOR, CAPRI ANANT KANEKAR MARG BANDRA (EAST) MUMBAI 400 051 PAN/GIR NO. AAACE4757B (APPELLANT ) .. (RESPONDENT ) REVENUE BY SHRI AMIT PRATA P SINGH ASSESSEE BY NONE DATE OF HEARING 26 / 11 /2019 DATE OF PRONOUNCEMENT 26 / 11 /2019 / O R D E R PER M. BALAGANESH (A.M) : THESE APPEAL S IN ITA NO. 2 392 /MUM/2018 & 2393/MUM/2018 FOR A.Y. 2013 - 14 & 2014 - 15 ARISE OUT OF THE ORDER BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 53, MUMBAI IN APPEAL NO. CIT(A) - 53/IT - 90/ACCC - 5(4)/2016 - 17 & CIT(A) - 53/IT - 331/DCCC - 5(4)/2016 - 17 RESPECTIVELY DATED 16/02/2018 (LD. CIT(A) IN SHORT) AGAINST THE ORDER OF ASSESSMENT PASSED U/S.143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS ACT) DATED 30/03/2016 & 26/11/2016 RESPECTIVELY BY THE LD. DY. COMMISSIONER ITA NO. 239 2 /MUM/2018 & 2393/MUM/2018 M/S. EMERALD REALTO RS PVT. LTD. 2 OF INCOME TAX & ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 5(4), MUMBAI (HEREINAFTER REFERRED TO AS LD. AO). 2. THE ONLY IDENTICA L ISSUE TO BE DECIDED IN BOTH THE YEARS IS AS TO WHETHER THE LD CIT(A) WAS JUSTIFIED IN DELETING THE DISALLOWANCE MADE U/S.14A OF THE ACT R.W.RULE 8D OF THE RULES WHEN THE ASSESSEE HAD NOT RECEIVED ANY EXEMPT INCOME. 3. NONE APPEARED ON BEHALF OF THE ASSE SSEE. WE HAVE HEARD THE LD. DR. IT IS NOT IN DISPUTE THAT ASSESSEE HAD NOT EARNED OR RECEIVED ANY EXEMPT INCOME DURING THE YEARS UNDER CONSIDERATION. WE FIND THAT THIS ISSUE IS NOW COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF HONBLE DELHI HIGH COU RT IN THE CASE OF JOINT INVESTMENTS PVT. LTD., VS. CIT REPORTED IN 372 ITR 694 (DEL). THE RELEVANT OPERATIVE PORTION OF THE SAID JUDGEMENT IS AS UNDER: - 9. IN THE PRESENT CASE, THE AO HAS NOT FIRSTLY DISCLOSED WHY THE APPELLANT/ASSESSEE'S CLAIM FOR ATTRI BUTING RS.2,97,440/ - AS A DISALLOWANCE UNDER SECTION 14A HAD TO BE REJECTED. TAIKISHA SAYS THAT THE JURISDICTION TO PROCEED FURTHER AND DETERMINE AMOUNTS IS DERIVED AFTER EXAMINATION OF THE ACCOUNTS AND REJECTION IF ANY OF THE ASSESSEE'S CLAIM OR EXPLANATI ON. THE SECOND ASPECT IS THERE APPEARS TO HAVE BEEN NO SCRUTINY OF THE ACCOUNTS BY THE AO - AN ASPECT WHICH IS COMPLETELY UNNOTICED BY THE CIT (A) AND THE ITAT. THE THIRD, AND IN THE OPINION OF THIS COURT, IMPORTANT ANOMALY WHICH WE CANNOT BE UNMINDFUL IS THAT WHEREAS THE ENTIRE TAX EXEMPT INCOME IS RS.48,90,000/ - , THE DISALLOWANCE ULTIMATELY DIRECTED WORKS OUT TO NEARLY 110% OF THAT SUM, I.E., RS.52,56,197/ - . BY NO STRETCH OF IMAGINATION CAN SECTION 14A OR RULE 8D BE INTERPRETED SO AS TO MEAN THAT THE ENTI RE TAX EXEMPT INCOME IS TO BE DISALLOWED. THE WINDOW FOR DISALLOWANCE IS INDICATED IN SECTION 14A, AND IS ONLY TO THE EXTENT OF DISALLOWING EXPENDITURE 'INCURRED BY THE ASSESSEE IN RELATION TO THE TAX EXEMPT INCOME'. THIS PROPORTION OR PORTION OF THE TAX E XEMPT INCOME SURELY CANNOT SWALLOW THE ENTIRE AMOUNT AS HAS HAPPENED IN THIS CASE. ITA NO. 239 2 /MUM/2018 & 2393/MUM/2018 M/S. EMERALD REALTO RS PVT. LTD. 3 4. RESPECTFULLY FOLLOWING THE AFORESAID DECISION, WE HOLD THAT THE LD. CIT(A) WAS RIGHT IN GRANTING RELIEF TO THE ASSESSEE. ACCORDINGLY, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 5. IN THE RESULT, APPEALS OF REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 26 / 11/ 201 9 SD/ - ( RAM LAL NEGI ) SD/ - (M.BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEM BER MUMBAI ; DATED 26 / 11 / 2019 KARUNA , SR.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//