HOLTEC CONSULTING INDIA PVT. LTD., NEW DELHI V. ADDL. CIT, SPECIAL RANGE - 4, NEW DELHI

ITA 253/DEL/2019

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 1793 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-07-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 13-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Rule 8D
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “C” DELHI BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER I.T.A. No.253/DEL/2019 Assessment Year 2010-11 Holtec Consulting Pvt. Ltd., 01-0103 Imperial Tower C-Block Community Centre, Naraina Vihar, New Delhi. v. Addl. Commissioner of Income Tax, Special Range-04, New Delhi. TAN/PAN: AAACH0031M (Appellant) (Respondent) Appellant by: Shri Atul Ninawat, CA Respondent by: Shri Gurpreet Shah Singh, Sr.DR Date of hearing: 27 07 2022 Date of pronouncement: 29 07 2022 O R D E R PER PRADIP KUMAR KEDIA, A.M.: The captioned appeal has been at the instance of the Assessee against the order of the Co mmissioner of Inco me Tax (Appeals)-XXXV, Ne w Delhi [‘CIT( A) ’ in short], dated 28.10.2018 arising fro m the assessment order dated 29.09.2017 passed by the Assessing Officer (AO) under Section 143(3) of the Inco me Tax Act, 1961 (the Act) concerning AY 2010-11. 2. Th e g ro u n d s o f ap p eal ra ised b y th e assesse e read s as u n d er: “ 1 . T h e o r d e r p a s se d b y t h e L e a rn e d CI T (A ) [ ' L d CI T(A )'] , u p h o l d i n g t h e d i s a l l o wa n c e o f I NR 4 3 , 0 0 , 7 4 5 / - m a d e b y t h e l e a r n e d A s s e s si n g O f f i c e r (' L d . A O ' ) u / s 1 4 A o f t h e I n c o m e T a x A c t , 1 9 6 1 (' t h e A c t ' ) , i s b a d i n l a w a n d o n t h e f ac t s a n d I.T.A. No.253/Del/2019 2 c i rc u m st a n c e s o f t h e c a s e . 1 . 1 T h e L d . CI T (A ) h a s e r re d i n u p h o l d i n g t h e d i sa ll o wa n c e s t h a t h a v e b e e n m a d e b y t h e L d . A O i n a m e c h a n i c a l ma n n e r wi t h o u t f o l l o wi n g d i re c t i o n o f t h e H o n ' b l e I T A T . 1 . 2 T h e L d . CI T (A ) h a s e r re d i n u p h o l d i n g t h e d i sa ll o wa n c e s t h a t h a v e b e e n m a d e b y t h e L d . A O b a se d o n c o n j e c t ur e s a n d su r m i se s a n d w i t h o u t b r i n g i n g o n re c o r d a n y e x p e n d it u r e i n c u rr e d f o r e a rn i n g e x e m p t i n c o m e . 1 . 3 T h e L d . CI T (A ) h a s e r re d i n u p h o l d i n g t h e d i sa ll o wa n c e s t h a t h a v e b e e n m a d e b y t h e L d . A O e r ro n e o u sl y w i t h ou t e x c l u d i n g i n v e st m e n t s n o t y i e l d i n g a n y i n c o m e o r y ie l d i n g t a x a b l e i n c o m e wh i l e a p p l y i n g R u l e 8 D ( i i i ) o f I n c o me T a x R u l e s , 1 9 6 2 . 1 . 4 T h e L d . CI T (A ) h a s e r re d i n u p h o l d i n g t h e d i sa ll o wa n c e s wi t h o u t a d d re s si n g t h e v a r i o u s c o n t e n t i o n s ra i se d by t h e a p p e l l a n t v i d e su b m i s si o n s p l a c e d o n re c o rd . 1 . 5 T h e L d . CI T ( A ) h a s e r re d i n l a w b y u p h o l d i n g t he d i sa l l o wa n c e s so l e l y b a se d o n t h e J u d g e m e n t o f H o n 'b l e A p e x Co u rt i n c a s e o f M a x o p p I n v e st m e n t L t d . v s . CI T [ 2 01 8] 4 0 2 I T R 6 4 0 (S C ) wi t h o u t t a k i n g i n t o a c c o u n t t h e su b m i ss i o n d a t e d 1 6 . 1 0 . 2 0 1 8 p ro v i d i n g d e t a i l e d a r g u m e n t s f o r n o n - a p pl i c a b i l i t y o f t h e a f o re s a i d j u d g m e n t , t o t h e f a c t s o f t h e c a s e . 1 . 6 T h e L d . CI T (A ) a s we l l a s t h e L d . A s s e s s i n g O f fi c e r h a v e e r r e d i n p a s si n g o rd e r b y i g n o ri n g t h e v a r i o u s j u d ic i a l p r e c e d e n t s re l i e d u p o n b y t h e a p p e l l a n t . 2 . T h e L d . A s se s si n g O f f i c e r h a s e r r e d i n d e t e r m i n in g t h e t a x a b l e i n c o m e e x c e s s i v e b y I NR 1 1 , 5 5 , 3 3 1 d u e t o a do p t i n g I.T.A. No.253/Del/2019 3 a s s e ss e d i n c o m e u n d e r S e c t i o n 2 5 0 / 1 4 3 (3 ) a s I NR 4 3 ,0 6 , 2 8 , 7 1 8 i n st e a d o f I NR 4 2 , 9 4 , 7 3 , 3 8 7 / - ” 3 . Wh en th e matt er was cal led fo r h earin g , th e ld . co u n sel su b mit ted th a t th e Gro un d No .1 rela tes to d isa l lo wan ce o f ex p en d itu re u n d er Sect io n 1 4 A o f th e Act. It was sub mi t ted th a t in th e l ig h t o f th e d ecis io n o f Co -o rd inate Ben ch in th e c ase o f th e assesse e in ITA No .4 37 /Del/2 0 1 9 ; Assessmen t Yea r 2 009 -10 , o rd er d ated 30 t h May , 2 0 2 2 similar r eli e f sh o u ld b e g iven an d the Assessin g Offi cer may b e d ir ect ed to co mp u te d isa llo wan ce u n d er Ru le 8 D(2 )(iii) b y co n sid erin g o n ly th o se in v estments wh ich h ave y ield ed ex emp t i n co me d u rin g th e y ear. In th is con tex t, th e assesse e h as fu rn i sh ed th e fo l lo win g wo rk in g to d emo n strate th e q u an tu m o f in v est men t wh ich y ie ld ed ex emp t in co me du rin g th e y ear. Particular Details Balance as on 31.03.2009 Balance as on 31.03.2010 Average Total Investments (-) Provision for diminution of investments 80,73,67,329 (5,000) 1,13,22,60,956 (5,000) Net Investments (A) 80,73,62,329 1,13,22,55,956 96,98,09,142 investment yielding taxable income (B) 34,06,80,05 1,98,628 17,04,39,340 investment yielding no income (C) 26,05,78,070 41,86,93,920 33,96,35,995 Investment yielding exempt income (D)=(A)- (BHC) 20,61,09,208 71,33,68,408 45,97,38,808 Total Disallowance under Rule 8D(iii) (E) = (D)*0.5% 22, 98,694 (-)Amount suo-moto disallowed by assessee (F) (40,000) Net Disallowance under Rule 8D(iii) (G)=(E)-(F) 22,58,694 4 . A referen ce was mad e to th e ju d g me n t o f th e Ho n ’b le Delh i Co u rt in th e c ase o f Pr.CIT v s. Car af Bu ild ers & Con str u ctio n (P.) Ltd ., (2 0 1 9 ) 10 1 tax man n .co m 1 6 7 (Del). I.T.A. No.253/Del/2019 4 5 . Ld . DR fo r th e R e v en u e relied u p o n th e o b serv atio n s o f th e Assessin g Offi cer an d CIT(A). 6 . We h av e carefu ll y co n sid ered th e riv al su b miss ion s and p eru sed th e mater i al o n reco rd . Th e assesse e h as reli e d u po n the d ecisio n o f th e Co -o rd in ate Ben ch in Assess men t Ye ar 2 0 09 -10 on si mi lar fa cts wh ich are rep ro d u ced h ereu n d er: “ 7 . W e h a v e c o n si d e r e d ri v a l s u b m i s si o n s a n d p e ru s ed t h e o n re c o r d . S p e c i f i c c o n t e n t i o n o f l e a rn e d c o u n se l f o r t h e a s se s s e e b e f o re u s i s, t h e d i sa l l o w a n c e u n d e r R u l e 8 D (2 ) (i i i) sh o u l d b e c o m p u t e d b y c o n s i d e ri n g o n l y t h o s e i n v e st m e n t s w h i ch h a v e y i e l d e d e x e m p t i n c o m e d u ri n g t h e y e a r . I n t h i s r e g ar d , t h e a s s e ss e e h a s f u r n i s h e d a wo r k i n g w h i c h h a s b e e n re pr o d u c e d e l se w h e r e i n t h e o rd e r . 8 . A s c o u l d b e se e n f ro m t h e wo r k i n g f u r n i sh e d b y th e a s s e s s e e , t h e i n c o m e f ro m so m e i n v e st m e n t s a re t a x a b l e . T h e ref o re , t h o s e i n v e st m e n t s o b v i o u s l y h a v e t o b e re d u c e d f ro m t h e av e r a g e v a l u e o f i n v e st m e n t s. A s r e g a r d s t h e i n v e s t m e n t s, w h i c h ha v e n o t y i e l d e d a n y e x e m p t i n c o m e d u ri n g t h e y e a r, a s p e r ra t i o l a i d d o wn i n v a ri o u s j u d i c i a l p r e c e d e n t s , t h e y c a n n o t b e c o n s i d e r e d f o r c o m p u t i n g d i s a l l o w a n c e u n d e r R u l e 8 D (2 ) (i i i ) . In t h i s c o n t e x t , t h e f o l l o wi n g o b s e rv a t i o n s o f t h e H o n ’ b l e D e l h i H i g h Co u rt i n c a s e o f P r . CI T V s. C a ra f B u i l d e r s & C o n stru c t i o n s (P . ) L t d . (s u p r a ) wo u l d b e re l e v a n t : “ 2 6 . T h e re i s a n o t h e r e rr o r m a d e b y t h e A s s e s si n g Of f i c e r i n c o m p u t i n g t h e d i s a l l o wa n c e u n d e r c l a u se s (i i ) o f R ul e 8 D (2 ) wi t h re f e re n c e t o t h e f o r m u l a p re s c ri b e d . N u m e ri c a l B i n c l a u se (i i ) r e f e r s t o a v e r a g e v a l u e o f t h e i n v e s t m e n t , i n co m e f r o m wh i c h d o e s n o t f o r m p a rt o r sh a l l n o t f o r m p a rt o f t h e t o t a l i n c o m e . T h e A s se s s i n g O f f i c e r f o r n u m e ri c a l B i n c la u s e (i i ) I.T.A. No.253/Del/2019 5 h a d t a k e n t h e t o t a l v a l u e o f t h e i n v e s t m e n t a n d n o t t h e i n v e st m e n t t h a t h a d y i e l d e d e x e m p t i n c o m e . T h e D e l hi H i g h Co u rt i n I T A No . 6 1 5 / 2 0 1 4 , A CB I n d i a L t d . v s. A s st t. Co m m i ss i o n e r o f I n c o m e T a x d e c i d e d o n 2 4 t h M a r c h , 20 1 5 h a s h e l d t h a t o n l y a v e r a g e v a l u e o f t h e e n t i r e i n v e st m en t t h a t d o e s n o t f o r m p a rt o f t h e t o t a l i n c o m e i s t h e f a c t o r wh ic h c o u l d b e c o v e r e d b y t h e n u m e r i c a l B f o r c o m p u t i n g d i sa l l o w a nc e u n d e r c l a u se (i i ) o f R u l e 8 D (2 ) o f t h e R u l e s . ” 9 . T h u s , k e e p i n g i n v i e w t h e r a t i o l a i d d o wn b y t he H o n h i e D e l h i H i g h C o u rt , a s r e f e r re d t o a b o v e , w e d i r e c t th e A s se s si n g O f f i c e r t o f a c t u a l l y v e ri f y a s s e ss e e ’ s c l a i m w i t h re f e r e n c e t o t h e wo r k i n g o f t h e i n v e s t m e n t s w h i c h h a v e e i t h e r y i e l d ed t a x a b l e i n c o m e o r n o t y i e l d e d a n y i n c o m e a n d , t h e r e a f t e r, co m p u t e t h e d i sa l l o wa n c e b y c o n s i d e r i n g o n l y t h o s e i n v e st m e n t s w h i c h h a v e y i e l d e d e x e m p t i n c o m e d u r i n g t h e y e a r. 1 0 . I n t h e re s u l t , t h e a p p e a l i s p a r t l y a l l o w e d . ” 7 . Th e o b serv atio n s mad e in Assess me n t Year 2 0 0 9 -1 0 sh all ap p ly mu ta tis mu ta n d is to th e As sessmen t Year 2 0 1 0 -1 1 in q u estio n . 8 . Acco rd in g ly , th e ma tter is resto r ed to th e file o f th e Assessin g Offi cer with a d irectio n fo r factu a l v erifica tio n o f assesse e’s cl ai m w ith re feren ce to wo rk in g o f in v est men ts wh ich h av e eith er y ie ld e d tax ab le in co me o r n o t y ield ed an y in co me an d co mp u te th e d isa ll o wan ce with referen ce to o n ly th ose in v estmen t s wh ich h av e y ield e d ex emp t in co me d u rin g th e y ear. 9 . Gro un d No . 1 o f th e ap p eal o f th e as sessee is p art ly al l o wed in t erms o f d irec ti o n n o ted ab o v e. I.T.A. No.253/Del/2019 6 1 0 . Gro un d No .2 co n cern s, d eter min a tio n o f tax ab le in co me at a h ig h er fig u re o f R s.4 3 ,0 6 ,2 8 ,7 18 /- in stead o f Rs .4 2,9 4 ,7 3 ,3 87 /-. It was su b mitt ed th at th e Assessin g Officer wh ile g iv in g ap p eal effec t to th e o rd er o f th e ITAT h as wro ng ly assu med th e assessed in co me at a h ig h er fig u re with o u t an y b asis, th e c orrectio n o f wh ich h as n o t b een carried o u t result in g in th e d etermin a tio n o f h ig h er tax ab le in co me with o u t an y leg al b asis. In th e l ig h t o f th e su b miss io n s mad e o n b eh alf o f th e assess ee, we c o n sid er it ex p ed ien t to rest o re th is issu e a l so b ack to th e file o f th e Assessin g Offic er. Th e assess ee sh all b e a t lib erty to p ro v id e su itab l e ex p lan at i o n and add u ce su ch ev id en ce as may b e n ecessary to estab lish i ts case b efo r e th e Assessing Offic er. Th e Assessin g Officer sh all d isp o se o f th e g riev an ce o f th e assesse e in th e lig h t o f th e fac ts in ac co rd an ce with law. 1 1 . Gro un d No .2 o f t h e ap p eal o f th e assesse e is a cco rd in g ly allo wed fo r st at ist i cal p u rp o ses. 1 2 . In th e resu l t, th e a p p eal o f th e asses s ee is p art ly a l lo wed . Order was pronounced in the open Court on 29/07/2022. Sd/- Sd/- [KUL BHARAT] [PRADIP KUMAR KEDIA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: /07/2022 Prabhat