TATA ADVANCED SYSTEMS LIMITED, HYDERABAD V. DCIT-1(3), MUMBAI

ITA 2908/MUM/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9803 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 04-07-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 20-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M C OMI NINGSHEN
• Keywords: Capital expenditure
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE S/ SHRI B.R. BASKARAN (AM) & SANDEEP GOSAIN (JM) I.T.A. NO. 2908 /MUM/20 16 (ASSESSMENT YEAR 20 11 - 12 ) TATA ADVANCED SYSTEMS LTD. SURVEY NO. 64, UNIT NO. 1 BUILDING NO. 9, 6 TH FLOOR RAHEJA MIND SPACE MADHAPUR HYDERABAD - 500 081. PAN NO. AACCT5245K VS. DCIT - 1(3) AAYAKAR BHAVAN M.K. ROAD MUMBAI - 400020. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHRI AJIT SHAH DEPARTMENT BY SHRI M.C.OMI NINGSHEN DATE OF HEARING 24 .7 . 201 7 DATE OF PRONOU NCEMENT 24 . 7 . 201 7 O R D E R PER B.R. BASKARAN (AM) : - THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 15.2.2016 PASSED BY THE LEARNED CIT(A) - 3, MUMBAI AND IT RELATES TO A.Y. 2011 - 12. THE ASSESSEE IS AGGRIEVED BY THE DECISION O F THE LEARNED CIT(A) IN CONFIRMING THE ADDITION OF ` 28,57,528/ - MADE BY THE ASSESSING OFFICER U/S. 14A OF THE ACT. 2. WE HEARD THE PARTIES AND PERUSED THE RECORD. THE ASSESSEE IS ENGAGED IN THE B USINESS OF MANUFACTURE OF DEFENC E EQUIPMENTS, AERO STRUCTUR ES ETC. T HE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS HELD INVESTMENTS AT ` 1.05 CRORES AND 191.59 CRORES RESPECTIVELY AT THE BEGINNING AND AT THE END OF THE YEAR. THE ASSESSING OFFICER ALSO NOTICED THAT THE ASSESSEE DID NOT MAKE ANY DISALLOWANCE U/ S. 14A OF THE ACT. ACCORDINGLY, BY PLACING RELIANCE ON THE DECISION OF HON'BLE JURISDICTIONAL BOMBAY HIGH COURT RENDERED IN THE CASE OF GODREJ AND BOYCE MANUFACTURING CO. LTD. VS. DCIT [234 CTR (BOM)1] , HE TOOK THE VIEW THAT THE DISALLOWANCE HAS TO BE COM PUTED AS PER RULE 8D OF THE I.T. TATA ADVANCED SYSTEMS LTD. 2 RULES. THE ASSESSING OFFICER FURTHER NOTICED THAT THE AUDITORS HAVE COMPUTED THE DISALLOWANCE U/S. 14A OF THE ACT AT ` 1,42,88,641/ - U/S. 14A OF THE ACT IN THE FORM 3CEB. ACCORDINGLY, THE ASSESSING OFFICER DISALLOWED THE AB OVE SAID AMOUNT U/S. 14A OF THE ACT. 3. BEFORE THE LEARNED CIT(A), THE ASSESSEE SUBMITTED THAT A PORTION OF INTEREST EXPENDITURE HAS ALREADY BEEN DISALLOWED AS CAPITAL EXPENDITURE AND HENCE THE DISALLOWANCE MADE U/S 14A HAS RESULTED IN DOUBLE DISALLOWANCE OF SAME ITEM OF EXPENDITURE. THE LEARNED CIT(A) ACCEPTED THE SAID CONTENTION OF THE ASSESSEE. BEFORE THE LEARNED CIT(A) THE ASSESSEE WORK ED THE DISALLOWANCE TO BE MADE U/S. 14A OF THE ACT AT ` 28,57,728/ - . ACCORDINGLY, THE LEARNED CIT(A) SUSTAINED THE D ISALLOWANCE TO THE EXTENT OF ` 28,57,728/ - . STILL AGGRIEVED, THE ASSESSEE HAS FILED THIS APPEAL BEFORE US. 4. LEARNED AR SUBMITTED THAT THE ASSESSEE DID NOT RECEIVE ANY DIVIDEND INCOME DURING THE YEAR UNDER CONSIDERATION AND HENCE NO DISALLOWANCE IS CALLE D FOR U/S. 14A OF THE ACT AS PER DECISION RENDERED BY HON'BLE DELHI HIGH COURT IN THE CASE OF CHEMINVEST LTD. VS. CIT (378 ITR 33) AND CIT VS. SHIVAM MOTOR (P) LTD. (2014)111 DTR 153 (ALL). HE SUBMITTED THAT IDENTICAL VIEW HAS BEEN EXPRESSED BY HON'BLE BO MBAY HIGH COURT IN THE CASE OF CIT VS. M/S. DELITE ENTERPRISES (ITA NO. 110 OF 2009). LEARNED AR ALSO SUBMITTED THAT THE ASSESSEE HAS MADE ENTIRE INVESTMENTS ONLY IN ITS SUBSIDIAR Y COMPAN IES. ACCORDINGLY, HE SUBMITTED THAT THE ENTIRE AMOUNT OF INVESTMENT S QUALIFY AS STRATEGIC INVESTMENTS AND HENCE THEY HAVE TO BE EXCLUDED FROM THE AVERAGE VALUE OF INVESTMENTS FOR THE PURPOSE OF COMPUTING DISALLOWANCE UNDER RULE 8D OF THE I.T. RULES. LEARNED AR INVITED OUR ATTENTION TO PAGE NO. 11 OF THE PAPER BOOK IN ORDE R TO SHOW THAT THE ASSESSEE HAS MADE INVESTMENTS IN ITS SUBSI DIARY COMPANIES. IN SUPPORT OF THIS PROPOSITION, THE LEARNED AR PLACED RELIANCE ON THE DECISION R E NDERED BY THE COORDINATE BENCH IN THE CASE OF GARWARE WALL ROPES LTD. VS. ADD.CIT (46 TAXMANN.COM 18). ACCORDINGLY HE SUBMITTED THAT NO DISALLOWANCE U/S 14A IS CALLED FOR ON THIS GROUND ALSO. TATA ADVANCED SYSTEMS LTD. 3 5. ON THE CONTRARY, LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE HIMSELF HAS COMPUTED THE DISALLOWANCE AT ` 28,57,728/ - BY FILING COMPUTATIO N OF STATEMENT BEFORE THE LEARNED CIT(A). ACCORDINGLY HE SUBMITTED THAT THE ORDER OF LD CIT(A) SHOULD BE SUSTAINED. 6. HAVING HEARD THE RIVAL CONTENTIONS, WE ARE OF THE VIEW THAT NO DISALLOWANCE IS REQUIRED TO BE MADE U/S. 14A OF THE ACT , SINCE THE ASSES SEE HAS MADE ENTIRE AMOUNT OF INVESTMENTS IN ITS SUBSIDIARY COMPANIES AS ITS STRATEGIC INVESTMENTS , WHICH ARE REQUIRED TO BE EXCLUDED FOR THE PURPOSE OF 14A OF THE ACT AS PER DECISION RENDERED BY THE COORDINATE BENCH IN THE CASE OF GARWARE WALL ROPES LTD. (SUPRA). IF THE ENTIRE AMOUNT OF STRATEGIC INVESTMENTS IS EXCLUDED, THEN THERE IS NO REQUIREMENT TO MAKE ANY DISALLOWANCE U/S 14A OF THE ACT. WE NOTICE THAT THE LD CIT(A) DID NOT CONSIDER THE ISSUE OF STRATEGIC INVESTMENTS IN HIS ORDER, EVEN THOUGH THE A SSESSEE HAS SUBMITTED THE SAME BEFORE LD CIT(A). SINCE IT IS A LEGAL CONTENTION, WHICH FINDS SUPPORT FROM THE ORDER OF THE CO - ORDINATE BENCH, WE HAVE CONSIDERED THE SAME. ACCORDINGLY, WE MODIFY THE ORDER PASSED BY THE LEARNED CIT(A) ON THIS ISSUE AND DIR ECT THE ASSESSING OFFICER NOT TO MAKE ANY DISALLOWANCE U/S. 14A OF THE ACT. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER HAS BE E N PRONOUNCED IN THE COURT ON 24 .7 .201 7. SD/ - SD/ - (SANDEEP GOSAIN ) (B.R.BASKARAN) JU DICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 24 / 7 / 20 1 7 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBA I TATA ADVANCED SYSTEMS LTD. 4 6. GUARD FILE. BY ORDER, //TRUE COPY// ( DY./ASSTT. REGISTRAR) PS ITAT, MUMBAI