Sarabhai Holdings Pvt. Ltd., Ahmedabad V. The Dy.CIT, Circle-8, Ahmedabad

ITA 2741/AHD/2013

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9559 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 09-12-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 25-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: M K PATEL
• Section: 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD , , BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ./ I.T.A. NO.2741/AHD/2013 ( / ASSESSMENT YEAR : 2010-11) SARABHAI HOLDINGS PVT.LTD. OPP: JANSATTA PRESS MIRZAPUR ROAD MIRZAPUR, AHMEDABAD-380 001 / VS. THE DCIT CIRCLE-8 AHMEDABAD # ./ ./ PAN/GIR NO. : AAECS 6919 B ( #% / APPELLANT ) .. ( &#% / RESPONDENT ) #%' / APPELLANT BY : SHRI M.K. PATEL, AR &#%(' / RESPONDENT BY : SHRI PRASOON KABRA, SR.DR )*(+ / DATE OF HEARING 09/12/2016 ,-./(+ / DATE OF PRONOUNCEMENT 02/01/2017 / O R D E R PER PRADIP KUMAR KEDIA, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-I, AHMEDABAD DA TED 24.09.2013 FOR ASSESSMENT YEAR(AY) 2010-11. GROUNDS TAKEN BY THE ASSESSEE READ AS UNDER:- ITA NO.2741/AHD /2013 SARABHAI HOLDINGS PVT.LTD. VS. DCIT ASST.YEAR 2010-11 - 2 - (1) THAT ON FACTS, AND IN LAW, THE LEARNED CIT(A) HAS GRIEVOUSLY ERRED IN PARTLY CONFIRMING THE DISALLOWANCE MADE U/ S.14A OF THE ACT R.W. RULE 8D. (2) THAT ON FACTS, AND IN LAW, THE LEARNED CIT(A) HAS G RIEVOUSLY ERRED IN CONFIRMING THE DISALLOWANCE OF RS.1,30,567 /- MADE U/S.40(A)(IA) OF THE ACT. (3) THAT THE LEARNED CIT(A) HAS GRIEVOUSLY ERRED IN CON FIRMING THE LEVY OF INTEREST U/S.234A, 234A, 234C AND 234D OF T HE ACT. 2. BRIEFLY STATED, ASSESSMENT OF THE ASSESSEE WAS F RAMED UNDER SECTION 143(3)OF THE INCOME TAX ACT, 1961 (HEREINAF TER REFERRED TO AS 'THE ACT'). THE ASSESSING OFFICER (AO) WHILE FRAMI NG THE ASSESSMENT MADE DISALLOWANCE BY INVOKING THE PROVISIONS OF SEC TION 14A R.W.RULE 8D OF THE INCOME TAX RULES, 1962 AMOUNTING TO RS.13 ,59,892/- AND ALSO MADE DISALLOWANCE OF RS.1,30,567/- UNDER SECTION 40 (A)(IA) OF THE ACT. THE CIT(A) CONFIRMED THE ACTION OF THE AO IN THE FI RST APPEAL. 3. AGGRIEVED THERETO, THE ASSESSEE IS IN SECOND APP EAL BEFORE THE TRIBUNAL. 4. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT W ITH REFERENCE TO GROUND NO.1 OF THE APPEAL MEMO THAT THE ADDITION HA S BEEN MADE INVOKING THE PROVISIONS OF SECTION 14A R.W.RULE 8D OF THE I.T. ACT, 1962 COMPUTED AT RS.13,59,892/-. THE LD.AR MADE A SHORT ARGUMENT THAT THE AUTHORITIES BELOW HAVE WRONGLY INVOKED THE PROVISIO NS OF RULE 8D IN RELATION TO INVESTMENTS, A PART OF WHICH IS IN THE NATURE OF INVESTMENTS ITA NO.2741/AHD /2013 SARABHAI HOLDINGS PVT.LTD. VS. DCIT ASST.YEAR 2010-11 - 3 - GIVING RISE TO TAXABLE INCOME. HE ACCORDINGLY PRAY ED THAT THE MATTER MAY BE REMANDED BACK TO THE FILE OF THE AO WITH A DIREC TION TO RECOMPUTE THE DISALLOWANCE UNDER SECTION 14A, IF ANY, AFTER EXAMI NING THE FACTS AFRESH IN ACCORDANCE WITH LAW. 5. THE LD.DR DID NOT OBJECT FOR RE-EXAMINATION OF T HE POINT IN ISSUE BY THE AO. 6. HAVING REGARD TO THE ASSERTIONS MADE BY THE LD.A R ACROSS THE BAR, WE CONSIDER IT EXPEDIENT THAT THE POINT IN ISSUE PE RTAINING TO DISALLOWANCE OF SECTION 14A BE SET ASIDE TO THE FILE OF AO FOR R E-EXAMINATION DE NOVO IN ACCORDANCE WITH LAW AFTER GIVING PROPER OPPORTUN ITY OF BEING HEARD TO THE ASSESSEE. NEEDLESS TO SAY, THE INVESTMENTS YIE LDING TAXABLE INCOME CANNOT BE CONSIDERED FOR THE PURPOSE OF COMPUTING D ISALLOWANCE UNDER SECTION 14A OF THE ACT. 7. THE SECOND GRIEVANCE OF THE ASSESSEE IS TOWARDS DISALLOWANCE OF RS.1,30,567/- UNDER SECTION 40(A)(IA) OF THE ACT. THE LD.AR SUBMITTED THAT THE ASSESSEE HAS PAID A SUM OF RS.1,30,567/- T O ONE BAKUBHAI AMBALAL (REALTY) PVT.LTD. ON WHICH THE ASSESSEE HAS NOT DEDUCTED TDS UNDER SECTION 194-I OF THE ACT ON THE ASSUMPTION TH AT IT IS IN THE NATURE OF SERVICE CHARGES NOT AMENABLE TO TDS UNDER SECTI ON 194-I OF THE ACT. THE LD.AR ADDED THAT THE AO ON THE OTHER HAND HAS D ISALLOWED THE ITA NO.2741/AHD /2013 SARABHAI HOLDINGS PVT.LTD. VS. DCIT ASST.YEAR 2010-11 - 4 - AFORESAID PAYMENT UNDER SECTION 40(A)(IA) ON THE GR OUND THAT IT IS TOWARDS RENT OF THE PREMISES WHICH IS SUSCEPTIBLE TO SECTIO N 194I OF THE ACT.. THE LD.AR NEXT SUBMITTED THAT THE RECIPIENT OF THE RENT , IN ANY CASE, HAS PAID TAXES AND THEREFORE SUBSTANTIAL COMPLIANCE HAS BEEN MADE. HE REFERRED TO THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ANSAL LAND MARK TOWNSHIP (P) LTD. REPORTED AT (2015 ) 377 635 (DELHI) AND SOUGHT RETROSPECTIVE BENEFIT OF SECOND PROVISO TO SECTION 40(A)(IA) INSERTED VIDE FINANCE ACT, 2012. HE ACCORDINGLY SU BMITTED THAT THE MATTER MAY BE SET ASIDE TO ASCERTAIN THAT THE DEDUC TEE HAS ALREADY INCLUDED THE IMPUGNED PAYMENTS IN ITS ACCOUNTS AND OFFERED THE SAME FOR TAXATION. THE LD.DR DID NOT OBJECT TO THE REQUEST FOR VERIFICATION BY THE AO. 8. IN VIEW OF THE CONSISTENT STAND TAKEN BY THE TRI BUNAL FOLLOWING VARIOUS JUDICIAL PRECEDENTS AND ALSO IN THE LIGHT O F DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF ANSAL LAND MARK TOWNSHIP (P) LTD. (SUPRA), WE CONSIDER IT EXPEDIENT TO SET ASIDE THE ISSUE TO THE FILE OF AO FOR FRESH ADJUDICATION IN ACCORDANCE WITH LAW IN THE LIGHT OF THE DECISION IN THE CASE OF ANSAL LAND MARK TOWNSHIP ( P) LTD.(SUPRA). THE AO SHALL DELETE THE DISALLOWANCE MADE UNDER SECTION 40(A)(IA) IF IT IS FOUND THAT THE DEDUCTEE HAS INCLUDED THE RECEIPT IN ITS RETURN OF INCOME FOR TAXATION PURPOSES. THE ISSUE IS ACCORDINGLY RESTORED TO THE FILE OF AO IN TERMS OF DIRECTIONS NOTED ABOVE. ITA NO.2741/AHD /2013 SARABHAI HOLDINGS PVT.LTD. VS. DCIT ASST.YEAR 2010-11 - 5 - 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. THIS ORDER PRONOUNCED IN OPEN COURT ON 02/01/2017 SD/- SD/- () ( ) (RAJPAL YADAV) ( PRADIP KUMAR KEDIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 02/ 01 /2017 3..),.)../ T.C. NAIR, SR. PS !'#$%$' / COPY OF THE ORDER FORWARDED TO : 1. #% / THE APPELLANT 2. &#% / THE RESPONDENT. 3. 456+ 7+ / CONCERNED CIT 4. 7+ ( ) / THE CIT(A)-I, AHMEDABAD 5. 89:+)56 , 56/ , 4 / DR, ITAT, AHMEDABAD 6. :<* / GUARD FILE. / BY ORDER, &8++ //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 9.12.2016 (DICTATION-PAD 11 - PAGES ATTACHED AT THE END OF THIS APPEAL- FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 13.12.2016 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.03/01/2017 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 03/01/2017 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER