Essel Shyam Communication Ltd., New Delhi V. DCIT, New Delhi

ITA 2758/DEL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3376 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 16-05-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAVI KANT GUPTA SENIOR
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A : NEW DELHI) BEFORE HONBLE PRESIDENT, SHRI G.D. AGRAWAL AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.2758/DEL./2016 (ASSESSMENT YEAR : 2012-13) M/S. PLANETCAST MEDIA SERVICES LTD., VS. DCIT, (FORMERLY KNOWN AS ESSEL SHYAM CENTRAL CIRCLE 26, COMMUNICATION LTD.), NEW DELHI. 1121, HEMKUNT CHAMBERS, 11 TH FLOOR, NEHRU PLACE, NEW DELHI. (PAN : AAACE2299Q) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VED JAIN, ADVOCATE REVENUE BY : SHRI RAVI KANT GUPTA, SENIOR DR DATE OF HEARING : 08.02.2018 DATE OF ORDER : 19.02.2018 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : THE APPELLANT, M/S. PLANETCAST MEDIA SERVICES LTD. (HEREINAFTER REFERRED TO AS THE ASSESSEE COMPANY) BY FILING THE PRESENT APPEAL, SOUGHT TO SET ASIDE THE IMPUGNED OR DER DATED 22.03.2016 PASSED BY LD. CIT(APPEALS)-29, NEW DELHI QUA THE ASSESSMENT YEAR 2012-13 ON THE GROUNDS INTER ALIA T HAT :- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A)] IS BAD BOTH IN THE EYE OF LA W AND ON FACTS. ITA NO.2758/DEL./2016 2 2(I). ON THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE ORDER PASSED BY THE LEARNED CIT (A) HAS ERRED, BOTH ON FACTS AND IN LAW, IN CONFIRMING THE ADDITION OF RS.6,18,628/- MADE BY AO INVOKING THE PROVISIONS OF THE SEC. 14A READ WITH RULE 8D(III). (II) THAT THE ABOVE ADDITION HAS BEEN CONFIRMED BY ARBITRAL REJECTING THE SUBMISSIONS AND EXPLANATIONS SUBMITTED BY THE ASSESSEE. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICA TION OF THE CONTROVERSY AT HAND ARE : DURING THE ASSESSMENT PRO CEEDINGS, THE AO NOTICED THAT THE ASSESSEE HAS SHOWN LONG TERM IN VESTMENT IN ESSEL SHYAM TECHNOLOGIES LIMITED AND CALCULATED THE DISALLOWANCE AT RS.15,53,485/- WITHOUT DISALLOWING THE SAME IN THE COMPUTATION OF INCOME. THE AO AFTER INVOKING THE P ROVISIONS CONTAINED U/S 14A OF THE INCOME-TAX ACT, 1961 (FOR SHORT THE ACT) READ WITH RULE 8D OF THE INCOME-TAX RULES, 1962 (FO R SHORT THE RULES) CALCULATED THE DISALLOWANCE AT RS.17,71,482/ - AND MADE ADDITION THEREOF TO THE TOTAL INCOME OF THE ASSESSE E. 3. ASSESSEE COMPANY CARRIED THE MATTER BY WAY OF FI LING APPEAL BEFORE THE LD. CIT (A) WHO HAS RESTRICTED THE DISAL LOWANCE TO RS.6,18,628/- ON THE AVERAGE VALUE OF THE INVESTMEN T OF RS.12,37,25,500/- BY PARTLY ALLOWING THE APPEAL. F EELING AGGRIEVED, THE ASSESSEE COMPANY HAS COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEAL. ITA NO.2758/DEL./2016 3 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. LD. AR FOR THE ASSESSEE CHALLENGING THE IMPUGNED ORDER CONTENDED INTER ALIA THAT THE AO HAS COMPLETELY IGN ORED THE SUBMISSION OF THE ASSESSEE COMPANY AND WITHOUT RECO RDING ANY SATISFACTION HAS INVOKED THE PROVISIONS OF RULE 8D TO COMPUTE THE DISALLOWANCE AT RS.17,71,482/-; THAT THE DISALLOWAN CE MADE BY THE AO AND PART THEREOF CONFIRMED BY THE DL. CIT (A) IS UNJUSTIFIED; AND THAT IN ANY CASE, THE DISALLOWANCE CANNOT EXCEE D THE EXEMPT INCOME. HOWEVER, ON THE OTHER HAND, LD. DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 6. UNDISPUTEDLY, ASSESSEE HAS EARNED DIVIDEND TO TH E TUNE OF RS.2,62,827/- DURING THE YEAR UNDER ASSESSMENT. WI THOUT ENTERING INTO THE OTHER ARGUMENTS ADDRESSED BY THE LD. AR FO R THE ASSESSEE, WHEN THE LD. AR IS CORNERED WITH THE FACT THAT SOME EXPENDITURE HAVE BEEN INCURRED BY THE ASSESSEE TO EARN THE DIVI DEND INCOME, HE HAS ACCEDED TO THE SETTLED PRINCIPLES OF LAW, THAT THE DISALLOWANCE MORE THAN THE EXEMPT INCOME EARNED BY THE ASSESSEE DURING THE YEAR UNDER ASSESSMENT CANNOT BE MADE, AS HAS BEEN H ELD BY THE ITA NO.2758/DEL./2016 4 HONBLE DELHI HIGH COURT IN THE CASE OF JOINT INVESTMENTS PVT. LTD. VS. CIT (2015) 372 ITR 694 (DEL.). 7. WHILE DECIDING THE IDENTICAL ISSUE, HONBLE DELH I HIGH COURT IN CIT VS. TAIKISHA ENGG. INDIA LTD. (2015) 370 ITR 338 HAS HELD AS UNDER :- THUS, S. 14A(2) OF THE ACT AND R. 8D(1) IN UNISON AND AFFIRMATIVELY RECORD THAT THE COMPUTATION OR DISALL OWANCE MADE BY THE ASSESSEE OR CLAIM THAT NO EXPENDITURE WAS IN CURRED TO EARN EXEMPT INCOME MUST BE EXAMINED WITH REFERENCE TO TH E ACCOUNTS, AND ONLY AND WHEN THE EXPLANATION/CLAIM OF THE ASSE SSEE IS NOT SATISFACTORY, COMPUTATION UNDER SUB-R. (2) OF R. 80 OF THE RULES IS TO BE MADE. 13. WE NEED NOT, THEREFORE, GO ON TO SUB-R. (2) OF R. 8D OF THE RULES UNIT AND UNLESS THE AO HAS FIRST RECORDED THE SATISFACTION, WHICH IS MANDATED BY SUB-S. (2) OF S. 14A OF THE AC T AND SUB-R. (1) OF R. 8D OF THE RULES.' 8. SO, IN VIEW OF THE MATTER, WE ARE OF THE CONSIDE RED VIEW THAT THE DISALLOWANCE IN THIS CASE CANNOT BE MADE MORE T HAN DIVIDEND INCOME RECEIVED BY THE ASSESSEE TO THE TUNE OF RS.2 ,62,827/- AND ACCORDINGLY, DISALLOWANCE U/S 14A IS RESTRICTED TO RS.2,62,827/-. CONSEQUENTLY, PRESENT APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 19 TH DAY OF FEBRUARY, 2018. SD/- SD/- (G.D. AGRAWAL) (KULDIP SINGH) PRESIDENT JUDICIAL MEMBER DATED THE 19 TH DAY OF FEBRUARY, 2018 TS ITA NO.2758/DEL./2016 5 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-7, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.