DY. COMMISSIONER OF INCOME TAX 1(1)(1), MUMBAI V. M/S. GCIL FINANCE LTD., MUMBAI

ITA 3092/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8176 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 02-05-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M V RAJGURU
• Keywords: Revised return
• Section: 143(3); 14A

Judgement Text

IN THE INC OME TAX APPELLATE TRIBUNAL L BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA , AM & SHRI SANDEEP GOSAIN, JM ./ I.T.A. NO . 3092 / MUM/ 2016 , ( / ASSESSMENT YEAR: 2012 - 13 ) D CIT - 1(1 ) (2 ) 579 , AAYAKARBHAVAN, M. K. ROAD, MUMBAI. / VS. M/S GCIL FINANCE LTD. 209 - 210, ARCADIA BLDG, 2 ND FLOOR, 195, NARIMAN POINT, MUMBAI - 4000 21 . ./ ./ PAN/GIR NO. A ADCG 0600 Q ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI M. V. RAJGURU / RESPONDENTBY : NONE / DATE OF HEARING : 2 5/10 /201 7 / DATE OF PRONOUNCEMENT : 07/12/2017 / O R D E R PER SANDEEP GOSAIN, J UDICIAL MEMBER : THE P RESENT APPE AL FILED BY THE REVENUE IS AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 2 , MUMBAI DATED 28.01.16 FOR AY 20 12 - 13 ON THE GROUND MENTIONED HEREIN BELOW: - 2 I.T.A. NO. 3092 /MUM/201 6 M/S GCIL FINANCE LTD WHETHER ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN RESTRICTING THE DISALLOWANCE TO RS. 4,59,998/ - AS AGAINST RS. 1,54,62223/ - MADE BY THE AO, WITHOUT APPRECIATING THE FACT THAT SECTION 14A R.W. RULE 8D IS SQUARELY APPL ICABLE IN THIS CASE AND DISALLOWANCE HAS TO BE MADE AS PER THE FORMULA GIVEN IN RULE SD THE APPELLANT CRAVES LEAVE TO ADD TO, AMEND OR WITHDRAW THE AFORESAID GROUND OF APPEAL 2. AT THE VERY OUTSET, IT IS NOTICED THAT NONE HAS APPEARED ON BEHALF OF ASSESSE E IN SPITE OF SEVERAL CALLS AND EVEN NO APPLICATION FOR ADJOURNMENT WAS MOVED. ON THE OTHER HAND L D. DR IS PRESENT IN THE COURT AND IS READY WITH ARGUMENTS. THEREFORE WE HAVE DECIDED TO PROCEED WITH THE HEARING OF THE CASE EX - PA RTE WITH THE ASSISTANCE OF T HE L D. DR AND THE MATERIAL PLACED ON RECORD. 3. AS PER THE FACTS OF THE PRESENT CASE, THE ASSESSEE IS ENGAGED AS NON - BANKIN G FINANCE COMPANY. THE ASSESSEE HAS E - FILED ITS REVISED RETURN OF INCOME ON 02.09.2013, DECLARING A TOTAL INCOME OF RS,2,58,70,110/ - . THE ASSESSMENT WAS COMPLETED U/ S, 143(3) OF THE I.T. ACT, 1961 ON 13.02,2015 AND THE TOTAL INCOME WAS 3 I.T.A. NO. 3092 /MUM/201 6 M/S GCIL FINANCE LTD DETERMINED AT RS. 4 ,08, 72,330/ - THEREBY MAKING DISALLOWANCE U/S. 14A AT RS 1, 50,02,225/ - 4. AGGRIEVED BY THE ORDER OF AO, ASSESSEE PREFERRED APPEAL BEFO RE LD. CIT(A) AND LD. CIT(A) AFTER CONSIDERING THE CASE OF BOTH THE PARTIES PARTLY ALLOWED THE APPEAL OF THE ASSESSEE AND DELETED THE ADDITION OF RS. 1,50,00,25/ - MADE BY AO U/S 14A R.W.R. 8D. NOW BEFORE US, THE REVENUE HAS PREFERRED THE APPEAL BY RAISING THE ABOVE GROUNDS. 5 . THE SOLE GROUND RAISED BY THE REVENUE IS AGAINST CHALLENGING THE ORDER OF LD. CIT(A) IN RESTRICTING THE DISALLOWANCE OF RS. 4,59,998 AS AGAINST RS. 1,54, 62,223/ - MADE BY THE A.O. U/S. 14A R.W.R . 8D OF I.T. ACT. 6 . WE HAVE HEARD LD. DR AT LENGTH AND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD AS WELL AS THE ORDERS PASSED BY REVENUE AUTHORITIES. WE FIND THAT ALTHOUGH THE ASSESSEE HAS TAKEN SPECIFIC PLEA BEFORE THE LD. CIT(A) THAT THE ASSESSEE IS ENGAGED IN NON - BANKING FINANCE COMPA NY AND IS INTO BUSINESS OF TRADING IN SECURITIES , SHARES, DEBENTURES, PROPERTIES, MUTUAL FUNDS AND GROWTH RELATED SCHEME FOR THE PURPOSE OF EARNING INTER EST INCOME. 4 I.T.A. NO. 3092 /MUM/201 6 M/S GCIL FINANCE LTD IT WAS ALSO SUBMITTED BY THE ASSESSEE BEFORE THE LD. CIT(A) THAT THE INTENTION OF MAKING IN VESTMENT IN EQUITY SHARES IS NOT FOR GETTING TAX FREE DIVIDEND. HOWEVER THE AO WHILE RELYING UPON THE JUDGMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF M/S GODREJ & BOYCE MFG. CO. LTD , HAD MADE THE DISA LLOWANCE U/S 14A R.W.R. 8D BY CONSIDERING THE FACT THAT THE ASSESSEE HAD EARNED TOTAL DIVIDEND OF RS. 83,47,575. ALTHOUGH THE LD. CIT(A) HAS REPRODUCED THE CONTENTIONS OR THE SPECIFIC STAND TAKEN BY THE ASSESSEE IN HIS ORDER BUT WHILE RELYING UPON THE JUDGMENT OF CIT VRS. R ELIANCE UTILITIES AND POWER LTD , DELETED THE DISALLOWANCE MADE BY THE AO BY HOLDING THAT THE ASSESSEE POSSESSED INTEREST FREE FUNDS OF ITS OWN GENERATED IN THE COURSE OF RELEVANT FINANCIAL YEAR. BE THAT AS IT MAY, THE AO HAS NOT LOOKED INTO OR VERIFY THE FACTUAL POSITION IN THE PRESENT CASE AS TO WHETHER THE ASSESSEE WAS ENGA GED INTO SHARE BUSINESS OR NOT AS THIS STAND OF THE ASSESSEE WAS NOT BEFORE THE AO. HONBLE APEX COURT IN THE CASE OF KAPURCHAND SHRIMAL VRS . CIT 1981 131(ITR) PAGE 451 HAS HELD THAT T HE DUTY OF THE TRIBUNAL DOES NOT END WITH MAKING A DECLARATION THAT THE 5 I.T.A. NO. 3092 /MUM/201 6 M/S GCIL FINANCE LTD ASSESSMENTS ARE ILLEGAL AND IT IS DUTYBOUND TO ISSUE FURTHER DIRECTIONS. THE APPELLATE AUTHORITY HAS THE JURISDICTION AS WELL AS THE DUT Y TO CORRECT ALL ERRORS IN THE PROCEEDINGS UNDER APPEAL AND TO ISSUE, IF NECESSARY, APPROPRIATE DIRECTIONS TO THE AUTHORITY AGAINST WHOSE DECISION THE APPEAL IS PREFERRED TO DISPOSE OF THEWHOLE OR ANY PART OF THE MATTER AFRESH UNLESS FORBIDDEN FR OM DOING SO BY THE STATUTE AND T HE STATUTE DOES NOT SAY THAT SUCH DIRECTION CANNOT BE ISSUED BY THE APPELLATE AUTHORITY IN A CASE OF THIS NATURE. THEREFORE, C ONSIDERING THE ABOVE JUDGMENT AND KEEPING IN VIEW THE INTEREST OF JUSTICE, WE SET ASIDE THE ORDE R OF LD. CIT(A) AND REMIT THE MATTER BACK TO THE FILE OF AO WITH A DIRECTION TO VERIFY THE FACTUAL POSITION AS TO WHETHER THE ASSESSEE WAS ENGAGED INTO SHARE BUSINESS OR NOT AND THEREAFTER PASS AFRESH ORDER OF ASSESSMENT. IT IS NEEDLESS HERE TO MENTION THA T BEFORE PASSING THE ORDER OF ASSESSMENT, THE AO SHALL PROVIDE SUFFICIENT OPPORTUNITY OF HEARING TO THE ASSESSE. BEFORE PARTING, WE MAY MAKE IT CLEAR THAT OUR DECISION TO RESTORE THE MATTER BACK TO THE FILE OF AO SHALL IN NO WAY BE CONSTRUED AS HAVING ANY REFLECTION OR EXPRESSION ON THE MERITS OF 6 I.T.A. NO. 3092 /MUM/201 6 M/S GCIL FINANCE LTD THE DISPUTE, WHICH SHALL BE ADJUDICATED BY THE AO INDEPENDENTLY IN ACCO RDANCE WITH LAW. WITH THESE DIRECTIONS, THIS GROUND OF APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 7 . IN THE NET RESULT, THE APPEAL FILED BY THE REVENUE STANDS ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH DEC . , 2017 SD/ - SD/ - (SHAMIMYAHYA ) (SANDEEP GOSAIN) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 07 . 12 .201 7 SR.PS . DHANANJAY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F I LE / BY ORDER, . / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI