ACIT 8(1)(1), MUMBAI V. R.R. KABEL LTD, MUMBAI

ITA 3129/MUM/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3798 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 25-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K KARDA M
• Assessee Lawyers: NEELAM C JADHAV; K SHIVRAM A DITYA R AJGAONKAR
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH I, MUMBAI BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH, JUDICIAL MEMBER ITA NO. 3129/MUM/2015 (ASSESSMENT YEAR : 2010-11) THE ACIT 8(1)(1), ROOM NO.624, 6 TH FLOOR, AAYKAR BHAVAN,M.K.ROAD, MUMBAI 400 020 ...... APPELLANT VS. M/S.R.R. KABEL LTD., RAM RATNA HOUSE, VICTORIA MILL COMPOUND, PANDURANG BUDHKAR MARG, WORLI,MUMBAI -71 PAN:AABCR 3352C .... RESPONDENT APPELLANT BY : SHRI A.K.KARDAM RESPONDENT BY : S/SHRI K.SHIVRAM, A DITYA R. AJGAONKAR & NE ELAM C. JADHAV DATE OF HEARING : 19/07/2016 DATE OF PRONOUNCEMENT : 10/08/2016 ORDER PER G.S.PANNU,A.M: THE CAPTIONED APPEAL FILED BY THE REVENUE PERTAININ G TO ASSESSMENT YEAR 2010-11 IS DIRECTED AGAINST AN ORD ER PASSED BY CIT(A)- 14, MUMBAI DATED 30/03/2015, WHICH IN TURN ARISES O UT OF AN ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3 ) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 18/03/2013. 2 ITA NO. 3129/MUM/2015 (ASSESSMENT YEAR : 2010-11) 2. IN THIS APPEAL, REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. 'THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN DELETING ADDITION U/ S. 14A R.W. RULE 8D WITHOUT APPRECIATING THE FACT THAT RUL E 8D PRESCRIBES THE METHOD OF DETERMINING AMOUNT OF EXPENDITURE IN RELA TION TO INCOME NOT INCLUDIBLE IN TOTAL INCOME AND WAS INSERTED BY INCO ME TAX 5TH AMENDMENT RULE, 2008 W.E.F. 24.03.2018. 2. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN DELETING THE ADDITION OF RS. 92,27,642/ - UNDER SECTION 145A OF THE ACT MADE ON ACCOUNT OF NON INCLUSION OF EXCISE DUTY IN THE VALUATION OF CLOSING STOCK BY IGNORING THE PROVISIONS OF SECTION 145A OF THE ACT WHICH STATES THAT ALL TAXES AND DUTIES PAID ARE TO BE INCLUDED FOR THE PURPOSE OF VALUATION UNDER SECTION 145A OF THE ACT. 3. AT THE OUTSET, IT MAY BE STATED THAT AT THE TIME OF HEARING, IT WAS A COMMON POINT BETWEEN THE PARTIES THAT BOTH THE IS SUES RAISED HEREIN HAD BEEN DECIDED BY THE CIT(A) IN FAVOUR OF THE ASS ESSEE BY INVOKING THE PRECEDENTS IN THE ASSESSEES OWN CASE BY WAY OF THE ORDERS OF THE TRIBUNAL FOR EARLIER ASSESSMENT YEARS. IT WAS ALSO NOTICED THAT SO FAR AS ISSUE RAISED IN GROUND OF APPEAL NO.2 IS CONCERNED, THE CIT(A) FOLLOWED THE EARLIER PRECEDENT FOR ASSESSMENT YEAR 2006-07, AND THE SAID ISSUE HAS ALSO BEEN AFFIRMED BY THE HON'BLE BOMBAY HIGH C OURT IN FAVOUR OF THE ASSESSEE VIDE ITA NO.795 OF 2012 DATED 19 TH SEPTEMBER, 2014. IN THIS BACKGROUND, IN ORDER TO IMPART COMPLETENESS TO THE ORDER, THE FOLLOWING DISCUSSION IS RELEVANT. 4. IN SO FAR AS, GROUND NO.1 IS CONCERNED, THE SAME ARISES FROM THE ACTION OF THE ASSESSING OFFICER IN MAKING A DISALLO WANCE UNDER SECTION 14A OF THE ACT OF RS.7,97,817/- BY APPLYING THE FOR MULA CONTAINED IN RULE 8D(2) OF THE INCOME TAX RULES, 1962 ( IN SHORT THE RULES). THE CIT(A) NOTICED THAT SIMILAR ISSUE IN ASSESSMENT YEA R 2011-12 IN THE CASE OF THE ASSESSEE CAME UP BEFORE THE TRIBUNAL AND VID E ITA NO.7205/MUM/2014 DATED 4/7/2016, THE DISALLOWANCE M ADE OUT OF 3 ITA NO. 3129/MUM/2015 (ASSESSMENT YEAR : 2010-11) INTEREST EXPENDITURE BY APPLYING RULE 8D(2)(II) OF THE RULES HAS BEEN DELETED. THE TRIBUNAL HAD DELETED THE DISALLOWANC E BY NOTICING THAT THE INTEREST-FREE FUNDS OWNED BY THE ASSESSEE WERE IN EXCESS OF THE INVESTMENTS, WHICH HAD GENERATED TAX FREE DIVIDEND INCOME AND, THEREFORE, NO DISALLOWANCE OUT OF INTEREST IS PERMI SSIBLE UNDER SECTION 14A OF THE ACT. IN THIS MANNER, THE CIT(A) DELETED THE ADDITIONAL DISALLOWANCE MADE BY THE ASSESSING OFFICER WHILE RE TAINING THE SUO- MOTU DISALLOWANCE MADE BY THE ASSESSEE IN THE RETUR N OF INCOME. 5. BEFORE US, THERE IS NO MATERIAL TO SAY THAT THER E IS CHANGE IN THE FACTS AND CIRCUMSTANCES IN THIS YEAR AS COMPARED TO THE ASSESSMENT YEAR 2011-12, WHICH WAS THE SUBJECT MATTER OF CONSI DERATION BY THE TRIBUNAL. AS A CONSEQUENCE, WE FIND NO REASON TO I NTERFERE WITH THE DECISION OF THE CIT(A), WHICH IS BASED ON THE PRECE DENT IN THE ASSESSEES OWN CASE WHICH CONTINUES TO HOLD THE FIELD. THUS, ON THIS ASPECT REVENUE FAILS. 6. IN SO FAR AS, THE ISSUE IN GROUND OF APPEAL NO.2 IS CONCERNED, THE SAME RELATES TO THE WORKING OF ADJUSTMENTS UNDER SE CTION 145A OF THE ACT. AS PER THE ASSESSEE, THE WORKING SPECIFIED IN SECTION 145A OF THE ACT DOES NOT RESULT IN ANY ADJUSTMENT OF INCOME, WH EREAS THE ASSESSING OFFICER DETERMINED A NEGATIVE ADJUSTMENT OF RS.92,2 7,642/- IN THE CURRENT YEAR BECAUSE OF THE INCREASED VALUE OF CLOS ING STOCK TAKEN IN THE EARLIER YEARS. THE ASSESSING OFFICER NOTED THAT TH E EARLIER YEARS ASSESSMENT WERE THE SUBJECT MATTER OF APPEAL AND TH AT THE INSTANT ASSESSMENT WOULD BE SUITABLY RECTIFIED IN ACCORDANC E WITH THE DECISION OF THE APPELLATE AUTHORITIES IN THE EARLIER ASSESSM ENT YEARS. THE CIT(A) NOTED THAT THE ACTION OF THE ASSESSING OFFICER WAS NOT JUSTIFIED 4 ITA NO. 3129/MUM/2015 (ASSESSMENT YEAR : 2010-11) INASMUCH AS THE ADJUSTMENTS WORKED OUT BY THE ASSES SEE IN THE EARLIER YEARS IN TERMS OF SECTION 145A OF THE ACT HAVE BEEN AFFIRMED. IN THIS CONTEXT, OUR ATTENTION WAS ALSO INVITED TO THE JUDG MENT OF THE HON'BLE BOMBAY HIGH COURT IN ASSESSEES OWN CASE FOR ASSESS MENT YEAR 2006-07 DATED 19/9/2014, WHEREIN THE STAND OF THE ASSESSEE HAS BEEN UPHELD. FOLLOWING THE AFORESAID PRECEDENT AND ALSO THE DECI SION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2011-12 (SUPRA) AND ASSESSMENT YEAR 2007-08 VIDE ITA NO.1292/MUM/2011 D ATED 18/09/2013, THE DECISION OF THE CIT(A) CANNOT BE FA ULTED AND REVENUE HAS TO FAIL. THUS, ON THIS GROUND ALSO REVENUE FAI LS. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 10/08/2016 SD/- SD/- (AMARJIT SINGH) (G.S. PANNU) JUDICIAL MEMBER ACCOCUNTANT MEMBER MUMBAI, DATED 10/08/2016 VM , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT , 2. THE RESPONDENT. 3. THE CIT(A)- 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI