ACIT, New Delhi V. M/s HUDCO Ltd., New Delhi

ITA 2619/DEL/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2834 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 7 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2006-2007
• Appeal Filed On: 09-05-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PARAMITA TRIPATHY
• Keywords: Reopening of assessment; Reassessment proceedings
• Section: 143(3); 14A; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: F , NEW DELHI BEFORE SHRI G.D.AGRAWAL , PRESIDENT AND SMT. BEENA A PILLAI, JUDICIAL MEMBER ITA NO. 2 6 1 9 /DEL/201 6 A.Y. 20 06 - 07 ACIT, CIRCLE 11(2) NEW DELHI VS. HUDCO LTD. CORE 7A, INDIAN HABITATE CENTRE LODHI ROAD NEW DELHI 110 003 PAN: AAACH 0632 A (APPELLANT) (RESPONDENT) APPELLANT BY SMT.PARAMITA TRIPATHY, CIT, DR RESPONDENT BY SHRI GAGAN KUMAR, ADV. DATE OF HEARING 1 9 TH DEC EMBER, 2017 DATE OF PRONOUNCEMENT 21 ST DECEMBER , 2017 ORDER PER BEENA A PILLAI, JUDICIAL MEMBER T HE PRESENT APPEAL HAS BEEN FILED BY REVENUE AGAINST ORDER DATED 01/0 2 /16 PASSED BY LD.CIT(A) - 16, NEW DELHI FOR ASSESSMENT YEAR 2006 - 07 ON THE FOLLOWING GROUNDS OF APPEAL: 1. WHETHER ON THE FACTS & THE CIRCUMSTANCES OF THE CASE, LD.CIT(A) WAS CORRECT IN DELETING THE DISALLOWANCE OF RS.43.46 LAKHS MADE ON ACCOUNT U/S 14A R.W. RULE 8D? ITA NO. 2619/DEL/2016 ASSESSMENT YEAR : 2006 - 07 ACIT VS. HUDCO LTD. 2 2. WHETHER THE ASSESSEE WHO FAILED TO DEVELOP NEXUS OF INTEREST FREE FUNDS WITH INVESTMENTS CAN BE GRANTED RELIEF MERELY ON THE BASIS THAT THE METHOD APPLIED BY THE AO WAS NOT IN STATUTE WHEREAS NO OTHER REASONABLE METHOD WAS AVAILABLE W ITH THE AO IN ARRIVING AT THE QUANTUM OF DISALLOWANCE AND THE FACT THAT THE CIT(A) HAS NOT POINTED OUT ANY DEFECT IN THE METHOD EMPLOYED BY THE AO AND HAS NOT GIVEN ANY OTHER REASONABLE METHOD. 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY GROUN D OF APPEAL RAISED ABOVE AT THE TIME OF HEARING. 2. BRIEF FACTS OF THE CASE ARE AS UNDER: A SSESSEEE FILED ITS ORIGINAL RETURN OF INCOME ON 01/12/06 DECLARING INCOME OF RS. 3,72,96,37,039 / - . THE RETURN WAS PROCESSED UNDER SECTION 143 (1) AND THE ASSESSMEN T WAS COMPLETED UNDER SECTION 143 (3) AT TOTAL INCOME OF RS. 416,23,63,065 / - VIDE ASSESSMENT ORDER DATED 31/12/08. 2.1. SUBSEQUENTLY NOTICE UNDER SECTION 148 OF THE A CT WAS ISSUED AND SERVED UPON ASSESSEE AS THE A SSESSING O FFICER HAD INFORMATION AND REASON S TO BELIEVE THAT THE INCOME EXCEEDING RS. 1 LAKH HA S ESCAPED ASSESSMENT ON THE GROUNDS OF DISALLOWANCE UNDER SECTION 14 A AND ACCRUED INTEREST ON ACCOUNT OF REFUND OF ADVANCE TO THE PROPERTY TAX PAID TO MCD. THE REASSESSMENT WAS COMPLETED UNDER SECTION 14 7 READ WITH 143 (3) BY COMPUTING THE INCOME IN THE HANDS OF THE ASSESSEE AT RS. 575,08,65,378 / - . 2.2. AGGRIEVED BY THE ORDER OF REASSESSMENT PASSED BY LD.AO ASSESSEE PREFERRED APPEAL BEFORE THE LD.CIT(A) CONFIRMED THE DISALLOWANCE MADE UNDER SECTION 14 A READ WITH RULE 8D ONLY TO AN ITA NO. 2619/DEL/2016 ASSESSMENT YEAR : 2006 - 07 ACIT VS. HUDCO LTD. 3 EXTENT OF RS. 30,000 / - VIS - A - VIS THE DISALLOWANCE MADE BY LD. AO . AT RS. 164,58,87,920/ - 2. 3 . AGAINST ORDER OF LD.CIT (A) REVENUE IS IN APPEAL BEFORE US FOR THE REDUCTION OF DISALLOWANCE MADE UNDER SECTION 14A READ WITH RULE 8D OF THE A CT. 2. 4 . AT THE OUTSET LD.AR SUBMITTED THAT AGAINST THE ORIGINAL ASSESSMENT ORDER PASSED B Y LD. AO UNDER SECTION 143(3) DT. 31.12.2008 , THE APPEAL IS PENDING BEFORE LD.CIT (A). HE SUBMITTED THAT THE DISALLOWANCE MADE BY ASSESSING OFFICER IN THE ORIGINAL ASSESSMENT ORDER U/S 14A R.W.RULE 8D WAS TO AN EXTENT OF RS. 42,24,000 / - . HE REQUESTED FOR SETTING ASIDE THIS ISSUE TO LD.CIT(A) SO THAT A CONSENSUS COULD BE ARRIVED AT THE QUANTUM OF DISALLOWANCE UNDER SECTION 14 A READ WITH RULE 8D OF THE ACT. 2. 5 . LD. DR DID NOT OP POSE TO THE REQUEST ADVANCED BY LD.AR. 3. WE HAVE PERUSED THE RELEVANT MATERIALS ON RECORD IN THE LIGHT OF THE SUBMISSIONS ADVANCED BY BOTH THE SIDES. 3.1. IT IS OBSERVED THAT THE ISSUE RELATING TO DISALLOWANCE UNDER SECTION 14A READ WITH R ULE 8D HAS BEEN MADE BY LD. AO UNDER THE ORIGINAL ASSESSMENT PROCEEDINGS AS WELL AS IN THE REOPENING OF ASSESSMENT. IT IS ALSO OBSERVED THAT THE DISALLOWANCE MADE UNDER SECTION 14A READ WITH RULE 8D UNDER BOTH THESE PROCEEDINGS ARE DIFFERENT. AS THE APPEAL FILED BY ASSESSEE AGAINST THE ORIGINAL ASSESSMENT IS PENDING BEFORE LD.CIT(A), IN THE INTEREST OF NATURAL J USTICE , WE FIND IT APPROPRIATE TO SET ASIDE THIS ISSUE TO THE FILE OF LD. CIT(A) TO ADJUDICATE THE DISALLOWANCE UNDER SECTION 14A READ WITH RULE 8D IN CONSENSUS. ITA NO. 2619/DEL/2016 ASSESSMENT YEAR : 2006 - 07 ACIT VS. HUDCO LTD. 4 3.2. AT THIS JUNCTURE WE MAKE IT AMPLY CLEAR THAT NO OPINION HAS BEEN M ADE IN TERMS OF VALIDITY OF REASSESSMENT PROCEEDINGS, AS THE ISSUE HAS NOT BEEN RAISED BEFORE US BY ASSESSEE. LD. CIT (A) IS DIRECTED TO DECIDE THE ISSUE AS PER LAW. 3.3 . ACCORDINGLY THIS GROUND RAISED BY REVENUE STANDS ALLOWED FOR STATISTICAL PURPOSES. 4. IN THE RESULT APPEAL FILED BY THE REVENUE STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 2 1 S T DECEMBER, 2017. S D / - S D / - ( G.D.AGRAWAL ) (BEENA A PILLAI) PRESIDENT JUDICIAL MEMBER DATED : 2 1 S T DECEMBER , 2017. *MV ITA NO. 2619/DEL/2016 ASSESSMENT YEAR : 2006 - 07 ACIT VS. HUDCO LTD. 5 COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GUARD FILE BY ORDER ASST. REGISTRAR ITAT, DELHI BENCHES, NEW DELHI