DCIT, New Delhi V. M/s. Diamond Leasing & Finance Ltd., New Delhi

ITA 2815/DEL/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8085 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 10 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 30-03-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 07-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V R SONBHADRA
• Assessee Lawyers: R M MEHTA
• Keywords: Earning of tax free income; Revised return
• Section: 143(3); 142(1); 14A

Judgement Text

ITA NO.2815/DEL/2012 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B, NEW DELHI BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SHRI H.S. SIDHU, JUDICIAL MEMBER I.T.A. NO. 2815 /DEL/201 2 A.Y. : 20 0 6 - 0 7 DCIT, CIRCLE-10(1), NEW DELHI VS. M/S DIAMOND LEASING AND FINANCE LTD., 2-A, SHANKAR MARKET, CONNAUGHT PLACE, NEW DELHI (PAN: AAACD4172D) (APPELLANT) (APPELLANT) (APPELLANT) (APPELLANT) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) DEPARTMENT BY : SH. V.R. SONBHADRA, SR. DR ASSESSEE BY : SH. R.M. MEHTA, ADV. DATE OF HEARING : DATE OF HEARING : DATE OF HEARING : DATE OF HEARING : 30 3030 30- -- -03 0303 03- -- -201 201 201 2016 66 6 DATE OF ORDER : DATE OF ORDER : DATE OF ORDER : DATE OF ORDER : 27 2727 27- -- -04 0404 04- -- -201 201 201 2016 66 6 ORDER ORDER ORDER ORDER PER PER PER PER H.S. SIDHU H.S. SIDHU H.S. SIDHU H.S. SIDHU : : : : J JJ JM MM M THE DEPARTMENT HAS FILED THIS APPEAL AGAINST THE IMPUG NED ORDER DATED 1.03.2012 OF LD. CIT(A)-V, NEW DELHI PERTAINING TO A SSESSMENT YEAR 2006-07 ON THE FOLLOWING GROUNDS:- 1. WHETHER THE LD. CIT(A) UNDER THE FACTS AND CIRCUMSTANCE S OF THE CASE AND IN LAW JUSTIFIED IN CONSIDERING THE PROVISION OF SE CTION 14A OF I.T. ACT, 1961 READ WITH RULE 8D OF IT RULES IS APPLICABLE FORM AY 2008-09. ITA NO.2815/DEL/2012 2 2. WHETHER THE LD. CIT(A) UNDER THE FACTS AND CIRCUMSTANCE S OF THE CASE AND IN LAW IS JUSTIFIED IN ALLOWING THE CARRY FORWARD L ONG TERM CAPITAL LOSS WHICH WAS NOT CLAIMED BY THE ASSESSEE IN ITS RETURN OF INCOME. 3. THE APPELLANT CRAVES LEAVE, TO ADD, ALTER OR AMEND AN Y GROUND OF APPEAL RAISED ABOVE AT THE TIME OF THE HEARING. IT IS PRAYED THAT THE ORDER OF THE CIT(A), BEING CONTRA RY TO THE FACTS ON RECORD AND THE SETTLED POSITION OF LAW, BE SET ASIDE AND THAT OF THE AO BE RESTORED. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY DURING THE YEAR UNDER CONSIDERATION WAS ENGAGED IN THE BUSINESS OF HO LDING, ACQUIRING AND DEALING IN SHARES AND SECURITIES. THE MAIN INCOME DURING THE YE AR HAS BEEN DERIVED FROM TRADING OF SHARES, DIVIDEND AND PROFIT ON THE SALE OF INVESTMENT. THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING A TOTAL LOSS OF RS. 2,7 1,54,528/- ON 30.11.2006 AND THE SAME WAS PROCESSED U/S. 143(1) OF THE I.T. ACT, 1961 ON 19.7.2007. THE CASE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND SUBSEQUENTLY NO TICE U/S. 143(2) OF THE I.T. ACT, 1961 WAS ISSUED ON 29.9.2007. NOTICE U/S. 142(1) OF I.T. ACT, 1961 ALONGWITH DETAILED QUESTIONNAIRE DATED 7.11.2008 WAS ISSUED AND DULY SER VED UPON THE ASSESSEE. IN COMPLIANCE TO THESE NOTICES ASSESSEES AUTHORISED REPRE SENTATIVE ATTENDED THE PROCEEDINGS FROM TIME TO TIME AND FILED THE DETAILED A SKED FOR. THEREAFTER, THE AO COMPLETED THE ASSESSMENT AN INCOME OF RS. 1,16,25,669/ - VIDE ORDER DATED 29.12.2008 PASSED U/S. 143(3) OF THE I.T. ACT ACT AND MADE THE VARIOUS ADDITIONS. ITA NO.2815/DEL/2012 3 3. AGGRIEVED BY THE AFORESAID ORDER OF THE ASSESSING OFFICER DATED 29.12.2008 PASSED U/S. 143(3), ASSESSEE FILED AN APPEAL BEFORE THE LD. FIRST APPELLATE AUTHORITY, WHO VIDE IMPUGNED ORDER DATED 1.03.2012 HAD PARTLY AL LOWED THE APPEAL OF THE ASSESSEE. 4. AGGRIEVED WITH THE AFORESAID FINDING OF THE LD. CI T(A), REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 5. APROPOS GROUND NO. 1 - WHETHER THE LD. CIT(A) UND ER THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW JUSTIFIED IN CO NSIDERING THE PROVISION OF SECTION 14A OF I.T. ACT, 1961 READ WITH RULE 8D OF IT RULES IS APPLICABLE FORM AY 2008-09 5.1 ON THIS ISSUE, LD. DR RELIED UPON THE ORDER OF THE AO AND REITERATED THE CONTENTIONS RAISED IN THE GROUNDS OF APPEAL FILED BY THE REVENUE. 5.2 ON THE OTHER HAND, LD. COUNSEL OF THE ASSESSEE R ELIED UPON THE ORDER OF THE LD. CIT(A) AND STATED THAT LD. CIT(A) HAS PASSED A WE LL REASONED ORDER WHICH DOES NOT NEED ANY INTERFERENCE AND THE SAME MAY BE UPHELD . 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECOR DS, ESPECIALLY THE ORDERS OF THE REVENUE AUTHORITIES AND PRECEDENTS REL IED UPON BY THE LD. CIT(A) IN HIS IMPUGNED ORDER. WE FIND FORCE IN THE LD. CIT(A) FIN DING THAT IT IS A SETTLED LAW THAT RULE 8D OF I.T. RULES DOES NOT HAVE RETROSPECTIVE EFF ECT; IT IS EFFECTIVE FROM AY 2008- 09 AND (II) FOR WORKING OUT EXPENDITURE ATTRIBUTABLE TO TH E EARNING OF EXEMPT INCOME THE AO HAS TO ADOPT A REASONABLE BASIS. THEREFORE, THE LD. CIT(A) HAS RIGHTLY HELD ITA NO.2815/DEL/2012 4 THAT THE ACTION OF THE AO IN APPLYING RULE 8D WAS NOT IN ORDER AND HENCE, THE AO WAS RIGHTLY DIRECTED TO WORK OUT EXPENSES ATTRIBUTABLE TO EAR NING OF DIVIDEND INCOME AFTER APPLYING A REASONABLE BASIS. OUR VIEW IS FULLY SUPPORTED BY THE HONBLE BOMBAY HIGH COURT DECISION IN THE CASE OF GODREJ & BOYCE CO . LTD. VS. CIT (308 ITR 91) WHEREIN IT HAS BEEN HELD THAT RULE 8D IS NOT APPLICA BLE RETROSPECTIVELY AND IS APPLICABLE ONLY WITH EFFECT FROM AY 2008-09 ONWARDS. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A), HENCE, WE UPHOLD THE SAME ON THIS ISSUE AND DISMISS THE GROUND NO. 1 RAISED BY THE REVENUE. 7. APROPOS GROUND NO. 2 RELATING TO ALLOWING THE CAR RY FORWARD LONG TERM CAPITAL LOSS. 7.1 ON THE ISSUE, LD. DR RELIED UPON THE ORDER OF THE AO AND REITERATED THE CONTENTIONS RAISED IN THE GROUNDS OF APPEAL FILED BY THE REVENUE. 7.2 ON THE OTHER HAND, LD. COUNSEL OF THE ASSESSEE RELIED UPON THE ORDER OF THE LD. CIT(A) AND STATED THAT LD. CIT(A) HAS PASSED A WE LL REASONED ORDER WHICH DOES NOT NEED ANY INTERFERENCE ON THE ISSUE IN DISPUTE AND THE SAME MAY BE UPHELD. 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE REL EVANT RECORDS ESPECIALLY THE ORDERS OF THE REVENUE AUTHORITIES AND PRECEDENTS R ELIED UPON BY THE LD. CIT(A) IN HIS IMPUGNED ORDER. ON THIS ISSUE THE AO HAS NOT ALL OWED THE CARRY FORWARD LONG TERM CAPITAL LOSS, BECAUSE THE ASSESSEE HAS NOT CLAI MED IT IN ITS RETURN OF INCOME. HOWEVER, THE ASSESSEE HAD FILED THE REVISED COMPUTATION OF INCOME CLAIMING THE CARRY FORWARD OF LONG TERM CAPITAL LOSS DURING THE ASS ESSMENT PROCEEDINGS. WE FURTHER NOTE THAT AO HAS APPLIED THE RATIO OF THE HONBL E SUPREME COURT OF INDIA IN ITA NO.2815/DEL/2012 5 THE CASE OF GOETZE INDIA LTD. VS. CIT REPORTED IN 284 ITR 323. WE FIND FORCE IN THE FINDING OF THE LD. CIT(A) THAT THE HONBLE HIGH COURT O F PUNJAB AND HARYANA IN ITS JUDGMENT IN THE CASE OF CIT VS. RAMCO INTERNATIONAL 3 32 ITR 306 HAS ELABORATED THE RATIO OF THE JUDGMENT OF THE HONBLE SUPREME COURT OF INDIA IN THE CASE OF GEOTZE INDIA LTD. (SUPRA) AND HAS HELD THAT THERE IS NO NEED OF FILING OF REVISED RETURN IF THE APPELLANT HAD DULY FURNISHED THE DOCUMENTS AND SUBMI TTED THE SAME ALONGWITH THE RETURN OF INCOME AND IS NOT MAKING A FRESH CLAIM; IN THAT SITUATION THE LETTER FILED DURING ASSESSMENT PROCEEDINGS MAY BE ACCEPTED WITHOU T INSISTING FOR A REVISED RETURN. FROM THE RECORDS, IT REVEALS THAT THE ASSESSEE H AD NOT CLAIMED THE C/F OF LOSS IN THE RETURN OF INCOME AND NEITHER IN THE COMPUTATION O F INCOME FILED WITH THE RETURN OF INCOME; THERE WAS NO PAPERS PERTAINING TO THIS ITEM FILED WITH THE RETURN OF INCOME. WHEN THE AO POINTED OUT THAT NO SECURITY TRANSAC TION TAX WAS PAID BY THE ASSESSEE; THE ASSESSEE FILED A REVISED COMPUTATION OF INCOME ALONGWITH LETTER DATED 19.12.2008 CLAIMING A C/F OF LOSS ON SALE OF LONG TE RM SHARES. FROM THE ABOVE, IT HAS BEEN OBSERVED THAT THERE WERE NO PAPERS PERTAINING TO THE LONG TERM SALE OF SHARES FILED WITH THE RETURN OF INCOME AND THE ASSESSEE HAD N OT CLAIMED LONG TERM CAPITAL LOSS C/F. THEREFORE, THE LD. CIT(A) HAS RIGHTLY HE LD THAT THE RATIO OF THE HONBLE HIGH COURT OF PUNJAB AND HARYANA IN THE CASE OF CIT VS. RA MCO INTERNATIONAL 332 ITR 306 (SUPRA) IS APPLICABLE IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT APPEAL AND HENCE, RIGHTLY OBSERVED THAT THE AOS ACTION IN DISALLOWING OF CARRY FORWARD OF LOSS WAS NOT IN ORDER AND ACCORDINGLY DIRECTED THE AO TO ALLOW TH E CARRY FORWARD OF LOSS, WHILE PASSING A WELL REASONED ORDER, WHICH IN OUR OPINION , DOES NOT NEED ANY INTERFERENCE ITA NO.2815/DEL/2012 6 ON OUR PART, HENCE, WE UPHOLD THE ORDER OF THE LD. CIT (A) ON THIS ISSUE AND DISMISS THE GROUND NO. 2 RAISED BY THE REVENUE. 9. IN THE RESULT, THE REVENUES APPEAL STANDS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27/04/2016. SD/ SD/ SD/ SD/- -- - SD/ SD/ SD/ SD/- -- - [ [[ [N.K. SAINI N.K. SAINI N.K. SAINI N.K. SAINI] ]] ] [ [[ [H.S. SIDHU H.S. SIDHU H.S. SIDHU H.S. SIDHU] ]] ] ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER DATE 27/04/2016 SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES