Dy. Commissioner of Income Tax , Circle-16(2), Hyderabad V. Progressive Constructions Limited, Hyderabad

ITA 288/Hyd/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 0627 (ITAT-HYDERABAD)
• Duration Of Justice: 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 03-09-2018
• Assessment Year: 2013-2014
• Appeal Filed On: 09-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DEEPAK REPOTE
• Assessee Lawyers: V RAGHAVENDRA RAO
• Keywords: Depreciation; Earning of tax free income; Revenue expenditure
• Section: 43B; 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO.288/HYD/2018 ASSESSMENT YEAR: 2013 - 14 DY. COMMISSIONER OF INCOME TAX, CIRCLE - 16(2), HYDERABAD. VS. M/S. PROGRESSIVE CONSTRUCTIONS LIMITED, HYDERABAD. PAN: AABCP 2274 M (APPELLANT) (RESPONDENT) C.O. NO.35/HYD/2018 (ARISING OUT OF ITA NO.288/HYD/2018) M/S. PROGRESSIVE CONSTRUCTIONS LIMITED, HYDERABAD. PAN: AABCP 2274 M VS. DY. COMMISSIONER OF INCOME TAX, CIRCLE - 16(2), HYDERABAD. (CROSS OBJECTOR) (APPELLANT IN APPEAL) ASSESSEE BY: SRI V. RAGHAVENDRA RAO REVENUE BY: SRI DEEPAK REPOTE, DR DATE OF HEARING: 03.09.2018 DATE OF PRONOUNCEMENT: 07 .09.2018 ORDER PER SMT. P. MADHAVI DEVI, JM: THE CAPTIONED APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A) - 4, HYDERABAD FOR THE ASSESSMENT YEAR 2013 - 14 BY RAISING THE FOLLOWING GROUNDS OF APPEAL: - 1. THE LD. CIT(A) ERRED N ALLOWING DEPRECIATION ON BOT PROJECT INSTEAD OF AMORTIZATI ON OF EXPENDITURE OVER THE PERIOD OF AGREEMENT. 2 2. THE LD. CIT(A) ERRED IN IGNORING THE FACT THAT REVENUES APPEAL ON IDENTICAL ISSUE IN THE ASSESSEES OWN CASE FOR A.Y. 2011 - 12 IS PENDING BEFORE THE HONBLE HIGH COURT. 3. THE LD. CIT(A) ERRED IN DIRECTING (SIC) THE A.O. TO REDUCE AN AMOUNT OF RS. 79,78,59,534/ - ADDED BACK TO THE TOTAL INCOME BY THE ASSESSEE U/S 43B OF THE IT ACT, AND REWARD OUT THE DISA LLOWANCE U/S 14A, IGNORING THE FACT THAT THE ASSESSEE WILL BE CLAIMING THE SAME AS DEDUCTION IN THE SUBSEQUENT YEARS IN WHICH THE SAID AMOUNT WAS ACTUALLY PAID BY IT. 2. AS SEEN FROM THE GROUNDS ITSELF, THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY T HE DECISION OF THE ITAT, SPECIAL BENCH IN ITA NO.1845/HYD/2014, DT 14.02.2017 FOR THE ASSESSMENT YEAR 2011 - 12. THE CIT(A) IN PARA 5.3 OF HIS ORDER HAS REPRODUCED THE RELEVANT PORTION OF THE ORDER AND HAS ACCORDINGLY ALLOWED THE ASSESSEES CLAIM OF DEPRECI ATION. FOR THE SAKE OF READY REFERENCE AND CONVENIENCE, PARA 5.3 OF THE CIT(A)S ORDER IS REPRODUCED HERE UNDER: - 5.3. I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDER AND SUBMISSIONS OF THE APPELLANT. WITH REGARD TO ABOVE ISSUE, THE HONBLE ITAT, SPECI AL BENCH, HYDERABAD, IN ITA NO.1845/HYD/2014, DT 14.02.2017 FOR THE ATY 2011 - 12, IN THE APPELLANTS OWN CASE HAS HELD AS UNDER: - TAKING INTO CONSIDERATION THE AFORESAID FACT, THE TRIBUNAL HAD REFRAMED THE QUESTION BY LIMITING THE ISSUE ONLY TO THE DETERMI NATION OF NATURE OF ASSET, WHETHER TANGIBLE OR INTANGIBLE. IN FACT, THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS ALSO ACCEPTED THE AFORESAID FACTUAL POSITION. IN ANY CASE OF THE MATTER, THE ASSESSEE NEITHER IN THE PRECEDING ASSESSMENT YEARS NOR IN THE IMP UGNED ASSESSMENT YEAR HAS CLAIMED IT AS DEFERRED REVENUE EXPENDITURE, HENCE, THERE IS NO SCOPE TO EXAMINE WHETHER THE EXPENDITURE COULD HAVE BEEN AMORTIZED OVER THE CONCESSION PERIOD IN TERMS OF CBDT CIRCULAR NO.9. MOREOVER, THE AFORESAID CBDT CIRCULAR IS FOR THE BENEFIT OF THE ASSESSEE. THEREFORE, THE BENEFIT IN TERMS OF THE CIRCULAR CAN BE GRANTED, PROVIDED, ASSESSEE MAKES A CLAIM IN TERMS OF IT. THE BENEFIT OF THE CIRCULAR CANNOT BE THRUST UPON THE ASSESSEE IF IT IS NOT CLAIMED. THEREFORE, SINCE THE ISSUE, AS RAISED DOES NOT ARISE OUT OF THE ORDERS OF THE DEPARTMENT AUTHORITIES, IT CANNOT BE THE SUBJECT MATTER OF ADJUDICATION IN THE PRESENT APPEAL. ACCORDINGLY, WE DISMISS THE GROUND RAISED BY THE DEPARTMENT. 3. SINCE THE CIT(A) HAS ONLY FOLLOWED THE DECISION OF THE ITAT, SPECIAL BENCH IN THE ASSESSEES OWN CASE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE SAME. EVEN IF THE APPEAL OF THE REVENUE FOR THE A.Y. 3 2011 - 12 IS PENDING BEFORE THE HONBLE HIGH COURT, I T HAS NOT BEEN BROUGHT TO OUR NOTICE THAT THE HONBLE HIGH COURT HAS SUSPENDED THE ORDER OF THE ITAT AND THEREFORE, THE REVENUES APPEAL IS DISMISSED. C.O. NO.35/HYD/2018 (BY ASSESSEE) 4. THE ASSESSEE HAS FILED THE CROSS OBJECTION WITH A DELAY OF 105 DAYS. THE ASSESSEE HAS EXPLAINED THE REASONS FOR DELAY IN THE AFFIDAVIT FILED ALONG WITH THE APPLICATION FOR CONDONATION OF DELAY. ACCORDING TO THE SAID AFFIDAVIT, THE APPEAL FILED BY THE REV ENUE WAS RECEIVED BY THE ASSESSEE ON 18.04.2018 AND THE LAST DATE FOR FILING OF THE CROSS OBJECTION WAS 17.05.2018. IT IS SUBMITTED THAT THE ASSESSEE HAD FORWARDED THE APPEAL MEMO FILED BY THE DEPARTMENT TO ITS COUNSEL ON 31.07.2018 WHO THEREAFTER CALLED FOR THE APPEAL RECORD AND FILED THE CROSS OBJECTION. IT IS FURTHER SUBMITTED THAT THE CROSS OBJECTION IS AGAINST THE DISALLOWANCE U/S 14A OF THE ACT AND THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE ON MERITS BY VARIOUS DECISIONS OF THE ITAT. LEARNED COUNSEL FOR THE ASSESSEE THEREFORE PRAYED FOR CONDONATION OF THE DELAY. 5. LEARNED DEPARTMENTAL REPRESENTATIVE, HOWEVER, OPPOSED THE CONDONATION OF DELAY. 6. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE EXPLANATION GIVEN BY THE ASSESSEE FOR FILING OF THE CROSS OBJECTION BELATEDLY, WE ARE INCLINED TO CONDONE THE DELAY OF 105 DAYS. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF CROSS OBJECTIONS: - 1. THE ON LY EXEMPT INCOME BEING DIVIDEND INCOME OF RS. 1,04,00,000/ - , THE DISALLOWANCE U/S 14A READ WITH RULE 8D IN EXCESS OF THE EXEMPT INCOME IS NOT CORRECT IN LAW. 2. THE LEARNED CIT(A) OUGHT TO HAVE FOLLOWED THE RATIO LAID DOWN BY THE JURISDICTIONAL BENCH AT HY DERABAD AND HELD THAT THE 4 DISALLOWANCE U/S 14A READ WITH RULE 8D SHOULD NOT EXCEED THE EXEMPT INCOME. 7. AS REGARDS THE MERITS OF THE ISSUE IS CONCERNED, WE FIND THAT IT IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF MUMBAI BENCH OF THE TRIBUNA L IN THE CASE OF M/S. DAGA GLOBAL CHEMICALS PVT. LTD VS. ACIT (ITA NO.5592/MUM/2012, DT. 01.01.2015) WHEREIN IT WAS HELD THAT THE DISALLOWANCE U/S 14A READ WITH RULE 8D CANNOT EXCEED THE EXEMPT INCOME AND ALSO THE DECISION OF THE HONBLE DELHI HIGH COURT I N THE CASE OF JT. INVESTMENTS (P) LTD VS. CIT (ITA NO.117/2015, DT 25.02.2015). RESPECTFULLY FOLLOWING THE SAME, THE CROSS OBJECTION FILED BY THE ASSESSEE IS ALLOWED. 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED AND THE CO FILED BY THE ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 07 TH SEPTEMBER, 2018. S D/ - SD/ - (S. RIFAUR RAHMAN) (P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 07 TH SEPTEMBER, 2018 OKK COPY TO: - 1) M/S. PROGRESSIVE CONSTRUCTIONS LIMITED, 7 TH FLOOR, RAGHAVA RATNA TOWERS, CHIRAG ALI LANE, HYDERABAD - 500001. 2) DCIT, CIRCLE16(2), 2 ND FLOOR, B BLOCK, I.T. TOWERS, A.C. GUARDS, MASAB TANK, HYDERABAD. 3) THE CIT(A) - 4 , HYDERABAD 4) THE PR. CIT - 4 , HYDERABAD 5) THE DR, ITAT, HYDERABAD 6) GUARD FILE