ACIT, New Delhi V. M/s. Info Edge India Ltd., New Delhi

ITA 2968/DEL/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 9600 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 12-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Earning of tax free income; Revised return; Revenue expenditure; Rule 8D
• Section: 14A; 201; 13; 145; 37

Judgement Text

PAGE | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C : NEW DELHI BEFORE SHRI BHAVNESH SAINI , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 2968/DEL/2017 (ASSESSMENT YEAR: 2012 - 13 ) ACIT, CIRCLE - 12(1), NEW DELHI VS. INFO EDGE INDIA LTD, GF - 12A, 94, MEGHDOOT BUILDING, NEHRU PLACE, NEW DELHI PAN: AAACI1838D (APPELLANT) (RESPONDENT) REVENUE BY : MS. RAKHI VIMAL, SR. DR ASSESSEE BY: SHRI DEEPESH JAIN, CA DATE OF HEARING 10/10 / 201 9 DATE OF PRONOUNCEMENT 0 8 / 01/2020 O R D E R PER PRASHANT MAHARISHI, A. M. 1. THIS IS AN APPEAL FILED BY LD AO AGAINST THE ORDER OF THE LD CIT(A) - 18, NEW DELHI DATED 23.02.2017 FOR THE ASSESSMENT YEAR 2012 - 13. 2. THE AO HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN DELETING THE ADDITION ON ACCOUNT OF EMPLOYEE STOCK OPTION SCHEME COMPENSATION, AMOUNTING TO RS. 1,49,78,084/ - . 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE U/S 14A R.W. RULE 8D, AMOUNTING TO RS. 56,09,080/ - . 3. FACT SHOWS THAT ASSESSEE IS A PUBLIC LIMITED COMPANY ENGAGED IN THE BUSINESS OF PROVIDING ONLINE RECRUI TMENT , MATRIMONIAL AND REAL ESTATE CLASSIFIEDS SERVICES IN INDIA. 4. IT FILED ITS RETURN OF INCOME ON 29/9/2012 DECLARING INCOME OF 1579187820/ AS PER THE NORMAL COMPUTATION . IT FILED A REVISED RETURN ON 31 /3/2014 DECLARING AN INCOME OF RS. 1 572900160 / - . THE ASSESSMENT UNDER SECTION 143 ( 3 ) OF THE INCOME TAX ACT [ THE ACT] WAS PASSED ON 10/3/2015 WHEREIN THE INCOME OF THE ASSESSEE WAS ASSESSED AT RS. 1 594165910 / - . THE LEARNED ASSESSING OFFICER MADE AN ADDITION OF ACIT VS INFO EDGE INDIA LTD ITA NO. 2968/DEL/2017 (ASSESSMENT YEAR: 2012 - 13) PAGE | 2 1497084/ IN RESPECT OF DISCOUNT OFFERED TO EMPLOYEES ON ALLOTMENT OF THE EMPLOYEES STOCK OPTION PLAN [ ESOP] AND ALSO DISALLOWANCE UNDER SECTION 14 A OF THE ACT OF 12665812/ AGAINST THE ALREADY DISALLOWED EXPENDITURE OF 6418148/ MAKING THE FURTHER DI SALLOWANCE OF RS. 6 247664/ . 5. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LEARNED CIT A , WHO PARTLY ALLOWED THE APPEAL OF THE ASSESSEE DELETING THE DISALLOWANCE OF RS. 14978084 / - BEING THE EXPENDITURE CLAIMED BY THE ASSESSEE ON ACCOUNT OF EMPLOYEE STOC K OPTION SCHEME COMPENSATION AND FURTHER DISALLOWANCE UNDER SECTION 14 A READ WITH RULE 8D WAS DELETED TO THE EXTENT OF 5609080/ . THEREFORE THE LEARNED ASSISTANT COMMISSIONER OF INCOME TAX , CIRCLE 12 ( 1), NEW DELHI [THE LEARNED ASSESSING OFFICE R ] HA S PREFERRED THIS APPEAL BEFORE US RAISING TWO GROUNDS STATED ABOVE. 6. THE FIRST GROUND OF APPEAL IS WITH RESPECT TO THE DISALLOWANCE ON ACCOUNT OF EMPLOYEE STOCK OPTION SCHEME COMPENSATION OF 1 4978084/ DELETED BY THE LEARNED CIT (A) . FACTS SHOW THAT MS HAS DEBITED ME ABOUT SOME IN THE PROFIT AND LOSS ACCOUNT AND CLAIMED AS EXPENDITURE. WE ARE MORE EXPENDITURE HAS BEEN DISALLOWED IN EARLIER YEARS FOR THE REASON THAT EXPENDITURE WAS NOT ACTUALLY INCURRED BY THE COMPANY, THEREFORE THE ASSESSEE WAS QUESTIONED T HE CLAIM. THE ASSESSEE COMPANY FILED A REPLY DATED 30/12/2014 STATING THAT SAME IS ALLOWABLE AS A DEDUCTIBLE EXPENDITURE UNDER SECTION 37 (ONE) OF THE ACT DURING THE YEARS OF VISITING ON THE BASIS OF PERCENTAGE OF MISSING DURING SUCH PERIOD SUBJECT AT THE TIME OF EXERCISE OF OPTION. THE ASSESSEE ALSO RELIED UPON THE DECISION OF BANGALORE BENCH IN CASE OF BIOCON LTD 35 TAXMAN.COM 335. THE LEARNED ASSESSING OFFICER DISALLOWED THE ABOVE EXPENDITURE HOLDING THAT ABOVE EXPENDITURE IS NOT A REVENUE EXPENDITURE, I T IS NOT AN ACTUAL EXPENDITURE INCURRED BY THE ASSESSEE COMPANY, SEBI GUIDELINES ARE NOT THE PREROGATIVE FOR DETERMINING THE ELIGIBILITY OR OTHERWISE OFTEN ITEM FOR INCOME TAX PURPOSES, THE SHARES WERE THE CAPITAL OF THE ASSESSEE COMPANY AND LOSS TO THE CA PITAL CAN BE CONSIDERED AS A CAPITAL LOSS AND NOT REVENUE EXPENDITURE, PROVISIONS OF SECTION 145 OF THE INCOME TAX ACT IS MANDATORY IN THE CASE OF THIS TRANSACTION NO ACCOUNTING STANDARDS HAVE BEEN ISSUED, THE EXPENDITURE IS NOT RELATED TO THE PREVIOUS YEA R AND THE DECISION OF THE COORDINATE BENCH IN ACIT VS INFO EDGE INDIA LTD ITA NO. 2968/DEL/2017 (ASSESSMENT YEAR: 2012 - 13) PAGE | 3 CASE OF BIOCON LTD HAS NOT BEEN ACCEPTED BY THE DEPARTMENT AND APPEAL IS PENDING BEFORE THE HONOURABLE KARNATAKA HIGH COURT. THEREFORE HE DISALLOWED THE SUM. ASSESSEE PREFERRED APPEAL BEFORE THE LEARNED CIT (A) . HE ALLOWED THE CLAIM OF THE ASSESSEE IS FOLLOWING THE DECISION IN ASSESSEES OWN CASE BY HIS PREDECESSOR FOLLOWING THE DECISION OF THE HONOURABLE MOTHER HIGH COURT IN CASE OF PVP VENTURES LTD WHICH HELD THAT SUCH A LIABILITY IS AN ASCERTAINED LIABILITIES AND THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE COORDINATE BENCH IN CASE OF BIOCON LTD. 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE REITERATED THE ARGUMENTS RAISED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. 8. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE IN ASSESSEES OWN CASE WHEREIN THE COORDINATE BENCH HAS DECIDED THE ABOVE ISSUE FOR ASSESSMENT YEAR 2007 - 08 , 2009 - 10 AND 2010 - 11. HE FURTHER REFERRED THAT IN 2011 - 12 ALSO THIS ISSUE IS DE CIDED IN FAVOUR OF THE ASSESSEE BY THE COORDINATE BENCH. THUS, ACCORDING TO HIM THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE COORDINATE BENCH IN ASSESSEES OWN CASE. 9. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTION AND PE RUSED THE ORDERS OF THE LOWER AUTHORITIES. ON CAREFUL ANALYSIS OF THE FACTS PLACED BEFORE US IT IS APPARENT THAT COORDINATE BENCH IN ITA NOS. 1896, 2444 AND 2445/ DEL /2013 IN CASE OF THE ASSESSEE FOR ASSESSMENT YEAR 2007 - 08 TO 2009 - 10 AND IN ITA NO. 2031/ DE L /2014 FOR ASSESSMENT YEAR 2010 - 11 AS WELL AS IN ITA NO. 3837/ DEL /2015 FOR ASSESSMENT YEAR 2011 - 12 HAS CONSIDERED IDENTICAL ISSUE IN CASE OF THE ASSESSEE AND ALLOWED THE CLAIM. THEREFORE THERE IS NO REASON TO DEVIATE FROM THE SAME. THUS RESPECTFULLY FOLLO WING THE DECISION OF THE COORDINATE BENCH FOR PAST YEARS IN CASE OF THE ASSESSEE ITSELF, WE CONFIRMED THE ORDER OF THE LEARNED CIT (A) IN DELETING THE ABOVE DISALLOWANCE ON ACCOUNT OF EMPLOYEE STOCK OPTION SCHEME. THUS, GROUND NUMBER ONE OF THE APPEAL IS DI SMISSED. 10. SECOND GROUND OF APPEAL RELATES TO DISALLOWANCE UNDER SECTION 14 A OF THE INCOME TAX ACT DELETED BY THE LEARNED CIT (A) TO THE EXTENT OF RS. 5609080/ . FROM THE RECORD IT IS GATHERED THAT BASED ON THE INVESTMENT MADE BY THE ASSESSEE IN THE SHARES AND MUTUAL FUND AT THE BEGINNING OF THE YEAR AND AT ACIT VS INFO EDGE INDIA LTD ITA NO. 2968/DEL/2017 (ASSESSMENT YEAR: 2012 - 13) PAGE | 4 THE END OF THE YEAR, ASSESSEE ON DIVIDEND INCOME AND LONG - TERM CAPITAL GAIN WHICH WAS AN EXEMPT INCOME AND THEREFORE THE LEARNED ASSESSING OFFICER ASKED TO FILE THE WORKING OF THE DISALLOWANCE UNDER SECTI ON 14 A OF THE ACT. THE ASSESSEE SUBMITTED DETAILED WORKING OF THE DISALLOWANCE AND STATED THAT ASSESSEE HAS DISALLOWED A SUM OF RS. 6418148/ AT THE TIME OF FILING OF THE REVISED RETURN WHICH WAS EARLIER DISALLOWED TO THE EXTENT OF 12665812 / - IN THE ORI GINAL RETURN. THE AO NOTED THAT ASSESSEE IN THE ORIGINAL RETURN HAS DISALLOWED RS. 12665812/ WHICH WAS REVISED IN REVISED RETURN. IN THE REVISED RETURN IT HAS NOT CONSIDERED ALL ELIGIBLE INVESTMENT AND INCOME FROM WHICH THE EXEMPT INCOME WOULD BE YIELDED . THEREFORE HE RECOMPUTE THE DISALLOWANCE ORIGINALLY DISALLOWED BY THE ASSESSEE IN THE ORIGINAL RETURN OF INCOME AND REINSTATED THE SAME REJECTING THE REVISED COMPUTATION OF THE ASSESSEE RESTRICTING THE DISALLOWANCE TO 6418148/ . 11. THE ASSESSEE PREFERRED A PPEAL BEFORE THE LEARNED CIT (A) . WHERE HE NOTED THAT THE ASSESSEE HAS COMPUTED THE DISALLOWANCE IN REVISED RETURN ONLY TAKING THOSE INVESTMENTS WHICH HAD EARNED EXEMPT INCOME DURING THE YEAR. HE FOUND SAME TO BE IN ORDER AND RESTRICTED THE DISALLOWANCE TO THE EXTENT OF RS. 7056732/ REJECTING THE DISALLOWANCE WORKED OUT BY THE ASSESSEE OF 6418148/ AND DISALLOWANCE MADE BY THE LEARNED ASSESSING OFFICER OF RS. 12665812/ . AO IS IN APPEAL AS PER GROUND NUMBER TWO. 12. THE LEARNED DEPARTMENTAL REPRESENTATIVE REL IED UPON THE ORDER OF THE ASSESSING OFFICER AND THE LEARNED AUTHORISED REPRESENTATIVE RELIED UPON THE ORDER OF THE LEARNED CIT (A) . 13. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTION AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES. ON CAREFUL CONSIDERATION O F THE ORDER OF THE LEARNED CIT (A) , IT IS NOTED THAT HE HAS HELD THAT ONLY THOSE INVESTMENTS ON WHICH DIVIDEND INCOME IS RECEIVED DURING THE YEAR SHOULD BE CONSIDERED FOR THE PURPOSE OF WORKING OUT AVERAGE INVESTMENT FOR COMPUTATION OF DISALLOWANCE UNDER RU LE 8D IN ACCORDANCE WITH SECTION 14 A OF THE ACT. THE ABOVE VIEW HAS BEEN UPHELD BY THE HONOURABLE DELHI HIGH COURT IN CASE OF ACB INDIA LTD VERSUS A CIT 374 ITR 108 (DELHI) (2015). IN VIEW OF THIS WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED C IT A ACCORDINGLY, GROUND NUMBER TWO OF THE APPEAL IS DISMISSED. ACIT VS INFO EDGE INDIA LTD ITA NO. 2968/DEL/2017 (ASSESSMENT YEAR: 2012 - 13) PAGE | 5 14. IN THE RESULT APPEAL OF THE AO IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 0 8 / 01/2020 - SD/ - - SD/ - ( BHAVNESH SAINI ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 0 8 / 01/2020 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI