PRIVI ORGANICS LTD., MUMBAI V. D.C.I.T. 4(3), MUMBAI

ITA 2615/MUM/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71671 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-11-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 31-07-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 18-04-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DEEPAK KUMAR SINHA
• Assessee Lawyers: SANJAY R PARIKH
• Keywords: Earning of tax free income; Revised return
• Section: 14A; 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C , BENCH, MUMBAI , BEFORE SHRI H.L.KARWA , PRESIDENT & SHRI N.K.BILLAIYA , AM ITA NO . 2615 / MUM/ 20 1 2 ( ASSESSMENT YEAR : 20 0 8 - 0 9 ) M/S PRIVI ORGANICS LTD., A - 71, TTC THANE BELAPUR ROAD, KOPARKHAIRANE, MUMBAI - 400 709 VS. DCIT 4(3), MUMBAI - 400 020 PAN/GIR NO. : A A AC P 4717 A ( APPELLANT ) .. ( RESPONDENT ) /ASSESSEE BY : SHRI SANJAY R. PARIKH /REVENUE BY : SHRI DEEPAK KUMAR SINHA DATE OF HEARING : 6 TH NOVEMBER, 2013 DATE OF PRONOUNCEMENT : 8 TH NOVEMBER , 2013 O R D E R PER N.K.BILLAIYA , A.M : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A) - 8, MUMBAI, DATED 29 - 2 - 2012, PERTAINING TO A.Y. 2008 - 09. 2 . THE ASSESSEE HAS RAISED TWO SUBSTANTIVE GROUNDS OF APPEAL. GROUND NO.1 RELATES TO THE DISALLOWANCE OF THE CLAIM OF DEDUCTION UNDER SECTION 10B OF THE ACT AND GROUND NO.2 RELATES TO DISALLOWANCE UNDER SECTION 14A OF THE ACT. 3 . THE ASSESSEE FILED RETURN OF INCOME ON 29 - 9 - 2008 DECLARING TOTAL INCOME AT RS. 3,27,72,5 00/ - . THE SAID RETURN WAS REVISED ON 31 - 3 - 2009 AND THE INCOME WAS REVISED AT RS.5,22,84,360/ - . DURING THE COURSE OF THE SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSEE SUBMITTED ITS AUDIT REPORT. THE AO NOTICED THAT THE ASSESSEE HAS CLAIMED EXEMPT ION OF RS. 3 93,22,635/ - UNDER SECTION 10B OF THE ACT IN THE REVISED RETURN. THE ITA NO. 2615 /1 2 2 ASSESSEE IN SUPPORT OF ITS CLAIM FILED COPY OF FORM 56G, WHICH WAS DATED 31 - 3 - 2009. THE AO WAS OF THE FIRM BELIEF THAT THE DEDUCTION UNDER SECTION 10B CANNOT BE ALLOWED TO THE ASSESSEE IF HE DOES NOT FURNISH THE RETURN OF INCOME UNDER SECTION 139(1) OF THE ACT AND THE RETURN SHOULD BE ACCOMPANIED WITH THE REPORT OF THE ACCOUNTANT CERTIFYING THE DEDUCTION HAS BEEN CORRECTLY CLAIMED. THE AO FURTHER OBSERVED THAT SINCE THE ASSESSEE HAS MADE TH E CLAIM OF DEDUCTION UNDER SECTION 10B OF THE ACT IN ITS REVISED RETURN, THEREFORE, THE SAME CANNOT BE ALLOWED TO THE ASSESSEE. THE ASSESSEE WAS ASKED TO JUSTIFY ITS CLAIM. THE ASSESSEE FILED A DETAILED REPLY ON 16 - 12 - 2010, WHICH HAS BEEN REPRODUCED BY THE AO AT PAGE 5 TO 10 OF HIS ORDER. THE SUBMISSIONS OF THE ASSESSEE DID NOT FIND ANY FAVOUR FROM THE AO. THE AO WAS OF THE OPINION THAT FORM 56G WAS NOT OBTAINED BY THE ASSESSEE BEFORE THE DUE DATE OF FILING OF RETURN. THE AO WAS CONVINCED THAT THE ASSESSEE HAS NOT FULFILLED THE CONDITION FOR GRANT OF EXEMPTION UNDER SECTION 10B OF THE ACT AND ACCORDINGLY DISALLOWED THE CLAIM OF THE ASSESSEE. 4 . THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A), BUT WITHOUT ANY SUCCESS. THE CIT(A) CONC URRED WITH THE VIEW OF THE AO THAT THE ASSESSEE HAS FAILED TO OBTAIN THE CERTIFICATE IN FORM 56G BEFORE THE DUE DATE OF FILING THE RETURN OF INCOME AND, HENCE, DID NOT SATISFY THE CONDITION LAID DOWN UNDER SECTION 10B OF THE ACT AND CONFIRMED THE DISALLOWANCE MADE BY THE AO. ITA NO. 2615 /1 2 3 5 . BEFORE US, LEARNED COUNSEL FOR THE ASSESSEE STRONGLY SUBMITTED THAT THE LOWER AUTHORITIES HAVE NOT APPRECIATED THE FACTS CORRECTLY. THE ASSESSEE HAS MADE CLAIM OF DEDUCTION UNDER SECTION 10B OF THE ACT IN THE ORIGINAL RETURN OF INCOME ITSELF, THOUGH THE DEDUCTION WAS REVISED IN THE REVISED RETURN OF INCOME. THE COUNSEL FURTHER SUBMITTED THAT FILING OF AUDIT REPORT ALONG WITH THE CERTIFICATE IS ONLY DECLARATORY AND NOT MANDATORY AND THE SAME CAN BE FILED DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS ITS ELF. THE COUNSEL RELIED UPON THE DECISION OF THE HON BLE DELHI HIGH COURT IN THE CASE OF CIT VS. INTEGRATED DATABASE S INDIA LIMITED, (2009) 178 TAXMAN 432 (DELHI) . 6 . PER CONTRA , LEARNED DR STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 7 . WE H AVE CAREFULLY PERUSED THE ORDER S OF THE LOWER AUTHORITIES AND THE MATERIAL EVIDENCES BROUGHT ON RECORD. A PERUSAL OF THE ORIGINAL RETURN OF INCOME FILED ON 30 - 9 - 2008 SHOW THAT THE ASSESSEE CLAIMED DEDUCTION UNDER SECTION 10B OF THE ACT AT RS. 3.90 CRORES AN D THE SAID CLAIM WAS REVISED TO RS.3.93 CRORES IN THE REVISED RETURN FILED ON 31 - 3 - 2009. AS BOTH THE RETURNS WERE FILED ELECTRONICALLY UNDER THE NEW SCHEME OF FILING OF THE RETURN, OBVIOUSLY THE AUDIT REPORT COULD NOT BE FLED ALONG WITH THE RETURN OF INCOM E AS NOW THE ELECTRONIC FILING OF RETURN IS MANDATORY AND IS A PAPERLESS RETURN. SO FAR AS FILING OF THE REPORT OF AN ACCOUNTANT IN FORM NO.56G AS PER PROVISIONS OF SECTION 10B(5) OF THE I.T. ACT , IS CONCERNED , THE HON BLE DELHI HIGH COURT HAS HELD THAT ITA NO. 2615 /1 2 4 TH E SAME IS DIRECTORY AND NOT MANDATORY. THE HON B LE HIGH COURT HAS OBSERVED THAT : - AS LONG AS THE REPORT OF AN ACCOUNT ANT IS FILED BEFORE FRAMING OF THE ASSESSMENT, THE PROVISIONS OF SECTION 10B(5) WOULD BE COMPLIED WITH INASMUCH AS THE SAME ARE DIRECTOR Y AND NOT MANDATORY . RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY THE H O N BLE DELHI HIGH COURT AND AS NO DISTINGUISHING CASE HAS BEEN BROUGHT BEFORE US BY THE LEARNED DR, WE DIRECT THE AO TO ALLOW THE CLAIM OF DEDUCTION UNDER SECTION 10B OF THE ACT. GR OUND NO.1 IS ACCORDINGLY ALLOWED. 8 . GROUND NO.2 RELATES TO DISALLOWANCE UNDER SECTION 14A OF THE ACT. 9 . DURING THE COURSE OF THE SCRUTINY ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE HAS EARNED DIVIDEND INCOME OF RS.11,928/ - , WHICH IT HAS CLAI MED AS EXEMPT. THE AO FURTHER NOTICED THAT THE ASSESSEE HAS NOT DISALLOWED ANY EXPENDITURE INCURRED FOR EARNING THIS EXEMPT INCOME AS PER PROVISIONS OF SECTION 14A OF THE ACT. THE ASSESSEE WAS ASKED TO EXPLAIN. THE ASSESSEE FILED A COMPUTATION COMPUTING TH E DISALLOWANCE UNDER SECTION 14A READ WITH RULE 8D AT RS. 1 LAKH. THE AO ACCEPTED THIS COMPUTATION AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. THE ASSESSEE AGITATED THIS ISSUE BEFORE THE CIT(A). THE CIT(A) WAS CONVINCED THAT THE AO HAS RIGHTLY INVOK ED THE PROVISIONS OF SECTION 14A READ WITH RULE 8D AND ACCORDINGLY DISMISSED THE ASSESSEES GRIEVANCE. ITA NO. 2615 /1 2 5 10 . BEFORE US, THE COUNSEL FOR THE ASSESSEE STRONGLY SUBMITTED THAT THE DISALLOWANCE OF RS. 1 LAKHS FOR EARNING A DIVIDEND INCOME OF RS. 11,928/ - IS UNREA SONABLE AND EXCESSIVE. WE DO NOT FIND ANY FORCE IN THE CONTENTION OF THE ASSESSEE AS THE ASSESSEE ITSELF HAS COMPUTED DISALLOWANCE UNDER SECTION 14A READ WITH RULE 8D AND THE COMPUTATION OF THE ASSESSEE HAS BEEN ACCEPTED BY THE AO. THEREFORE, WE DO NOT FIN D ANY REASON FOR AGITATING THIS ISSUE BEFORE US. GROUND NO. 2 IS ACCORDINGLY DISMISSED. 11 . RESULTANTLY , APPEAL OF THE ASSESSEE IS PARTLY ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 08 / 11/2013 . SD/ - ( ) ( H.L.KARWA ) SD/ - ( ) ( N.K.BILLAIYA ) / PRESIDENT / ACCOUNTANT MEMBER MUMBAI ; DATED : 08 /11 / 2013 /PKM , PS COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) , MUMBAI. 4. / CIT 5. / DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// / BY ORDER, ( ASSTT. REGISTRAR) / ITAT, MUMBAI