CREST VENTURES LTD, MUMBAI V. DCIT OSD 2(3), MUMBAI

ITA 3156/MUM/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7023 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-06-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 05-05-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: POOJA SWAROOP
• Assessee Lawyers: RAKESH MOHAN
• Keywords: Earning of tax free income
• Section: 143(3); 14A; 115JB

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL F BENCH MUMB AI BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.3156 & 3157/MUM/2016 (AYS 2011-12 & 2012-13 ) M/S CREST VENTURES LTD. (FORMERLY KNOWN AS SHARYANS RESOURCES LTD.), 4 TH FLOOR, KALPATARU HERITAGE, 127, M.G. ROAD, FORT, MUMBAI-400001 PAN: AABCS8634C VS. DCIT-OSD-2(3) ROOM NO. 552, AAYAKAR BHAVAN, M.K. MARG, MUMBAI-400020 APPELLANT RESPONDENT APPELLANT BY : SHRI RAKESH MOHAN (AR) RESPONDENT BY : SHRI POOJA SWAROOP (DR) DATE OF HEARING : 04.06.2018 DATE OF PRONOUNCEMEN T : 04.06.2018 ORDER PER PAWAN SINGH, JUDICIAL MEMBER; 1. THIS GROUP OF TWO APPEALS BY THE ASSESSEE UNDER SEC TION 253 OF INCOME- TAX ACT ARE DIRECTED AGAINST THE SEPARATE ORDERS OF COMMISSIONER (APPEALS)-6, MUMBAI DATED 16.02.2016 FOR ASSESSMENT YEAR 2011-12 AND 2012-13. THE ASSESSEE HAS RAISED IDENTICAL GROUNDS OF APPEAL FOR BOTH THE ASSESSMENT YEARS; THEREFORE BOTH THE APPEALS WERE H ARD TOGETHER AND ARE DECIDED BY COMMON ORDER FOR THE SAKE OF BREVITY. FO R APPRECIATION OF FACT WE ARE REFERRING THE FACT FOR ASSESSMENT YEAR 2011- 12. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEALS. (I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, HONOURABLE COMMISSIONER (APPEALS) ERRED IN SUSTAINING THE PART IAL DISALLOWANCE UNDER SECTION 14A READ WITH RULE 8D(III) MADE BY AS SESSING OFFICER, ON ACCOUNT OF EXPENSES ATTRIBUTABLE TO EARNING THE EXE MPT INCOME, UNDER ITA NO. 3156-57/M/2 016 CREST VENTURES L TD. 2 NORMAL PROVISION OF THE ACT, TO THE EXTENT OF CONSI DERING INVESTMENT WITH HOLDING LESS THAN 26%. THE APPELLANT PRAYS THAT THE SAME MAY KINDLY BE DELETED. (II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, HONOURABLE COMMISSIONER (APPEALS) ERRED IN SUSTAINING THE ADDI TION UNDER SECTION 14A READ WITH RULE8(III) MADE BY ASSESSING OFFICER, ON ACCOUNT OF EXPENSES ATTRIBUTABLE TO EARNING THE EXEMPT INCOME WHILE COMPUTING BOOK PROFIT UNDER MAT PROVISIONS OF THE ACT. THE AP PELLANT PRAYS THAT THE SAME MAY KINDLY BE DELETED. 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS A COMP ANY ENGAGED IN BUSINESS OF PROJECT MANAGEMENT, LEASING FINANCE AND IN REAL ESTATE FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2011-12 ON 26 SEPTEMB ER 2011 DECLARING TOTAL INCOME OF RS. 80,80,141/-. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) ON 26 TH OF MARCH 2014. THE ASSESSING OFFICER WHILE PASSING ASSESSMENT ORDER MADE DISALLOWANCE UNDER SECTION 14 A FOR RS.29,01,196/- IN ADDITION TO SUO MOTO DISALLOWANC E OF RS. 3,83,535/-, . THE ASSESSING OFFICER FURTHER ADDED THE AMOUNT OF D ISALLOWANCE UNDER SECTION 14A UNDER THE MAT PROVISIONS. ON APPEAL BEF ORE COMMISSIONER (APPEALS), THE ASSESSING OFFICER WAS DIRECTED TO EX CLUDE THE STRATEGIC INVESTMENT WHILE CALCULATING THE AVERAGE VALUE OF I NVESTMENT FROM THE AVERAGE INVESTMENT FOR THE PURPOSE OF DISALLOWANCE @.5% OF THE AVERAGE INVESTMENT AND ALLOWED THE RELIEF TO THE ASSESSEE. THE ASSESSING OFFICER WAS FURTHER DIRECTED TO RESTRICT EITHER SUO-MOTO DI SALLOWANCE MADE BY ASSESSEE OR THE DISALLOWANCE WHICH MAY ARRIVE AFTER EXCLUDING THE STRATEGIC INVESTMENT FOR THE PURPOSE OF CALCULATING THE AVERAGE VALUE OF INVESTMENT, WHICHEVER IS HIGHER. THE LD. COMMISSION ER (APPEALS) FURTHER ITA NO. 3156-57/M/2 016 CREST VENTURES L TD. 3 DIRECTED THE ASSESSING OFFICER FOR ADDING TO THE BO OK PROFIT UNDER CLAUSE (F) OF EXPLANATION 1 TO SECTION 115JB, THE ONLY DIS ALLOWANCE WHICH MAY ARRIVE WHILE GIVING EFFECT TO THE ORDER OF COMMISSI ONER (APPEALS). THEREFORE, FURTHER AGGRIEVED BY THE ORDER OF COMMIS SIONER (APPEALS) THE ASSESSEE HAS FILED PRESENT APPEAL BEFORE US. 3. WE HAVE HEARD LEARNED AUTHORISED REPRESENTATIVE (AR ) OF THE ASSESSEE AND LEARNED DEPARTMENTAL REPRESENTATIVE (DR) FOR TH E REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. AT THE OU TSET OF HEARING THE LEARNED AR OF THE ASSESSEE SUBMITS THAT HE IS NOT P RESSING GROUND NO.1 OF THE APPEAL IN BOTH ASSESSMENT YEARS. THEREFORE, CON SIDERING THE SUBMISSION OF LEARNED AR OF THE ASSESSEE GROUND NO. 1 OF THE APPEAL IS DISMISSED AS NOT PRESSED. GROUND NO.2 RELATES TO AD DITION OF DISALLOWANCE UNDER SECTION 14A TO THE BOOK PROFIT UNDER MAT PROV ISION. THE LEARNED AR OF THE ASSESSEE SUBMITS THAT THIS GROUND OF APPE AL IS COVERED IN FAVOUR OF ASSESSEE BY THE DECISION OF SPECIAL BENCH OF THE DELHI TRIBUNAL IN ACIT VERSUS VIREET INVESTMENTS (P) LTD REPORTED IN [2017] 82 TAXMANN.COM 41(DELHI-TRI) (SB). ON THE OTHER HAND T HE LEARNED DR FOR THE REVENUE SUBMITS THAT THIS GROUND MAY BE RESTORE D TO THE FILE OF ASSESSING OFFICER TO MAKE THE COMPUTATION UNDER CLA USE (F) OF EXPLANATION 1 TO SECTION 115JB IN ACCORDANCE WITH THE DIRECTION OF SPECIAL BENCH IN VIREET INVESTMENT (P) LTD (SUPRA). ITA NO. 3156-57/M/2 016 CREST VENTURES L TD. 4 4. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE HAVE NO TED THAT THE LEARNED COMMISSIONER (APPEALS) RESTRICTED THE DISALLOWANCE UNDER SECTION 14A TO SUO MOTO DISALLOWANCE OF RS. 3,83,535/- OR .5% OF A VERAGE INVESTMENT BY EXCLUDING THE STRATEGIC INVESTMENT FOR THE PURPOSE OF CALCULATING THE AVERAGE VALUE OF INVESTMENT FOR THE PURPOSE OF DISA LLOWANCE UNDER SECTION 14A READ WITH RULE 8D(2)(III), WHICHEVER IS HIGHER. THE SPECIAL BENCH OF DELHI TRIBUNAL IN ACIT VERSUS VIREET INVES TMENT (P) LTD(SUPRA) HELD THAT COMPUTATION UNDER CLAUSE (F) OF EXPLANATI ON 1 TO SECTION 115 JB(2) IS TO BE MADE WITHOUT RESORTING TO COMPUTATIO N AS CONTEMPLATED UNDER SECTION 14A READ WITH RULE 8D. THEREFORE, RE SPECTFULLY FOLLOWING THE DECISION OF SPECIAL BENCH THIS GROUND OF APPEAL IS RESTORED TO THE FILE OF ASSESSING OFFICER TO WORK OUT THE COMPUTATION UN DER SECTION 115 JB BY FOLLOWING THE DIRECTION OF SPECIAL BENCH IN VIREET INVESTMENT (P) LTD (SUPRA). NEEDLESS TO SAY THAT THE ASSESSING OFFICER SHALL GRANT OPPORTUNITY OF HEARING TO THE ASSESSEE BEFORE PASSING THE ORDER IN ACCORDANCE WITH LAW. IN THE RESULT GROUND OF APPEAL RAISED BY ASSES SEE IS ALLOWED FOR STATISTICAL PURPOSE. 5. IN THE RESULT APPEAL OF THE ASSESSEE IS PARTLY ALLO WED. ITA NO. 3157/M/2016 FOR AY 2012-13. 6. WE HAVE NOTED THAT ASSESSEE HAS RAISED IDENTICAL GR OUND OF APPEAL AS RAISED IN APPEAL FOR ASSESSMENT YEAR 2011-12. THE L EARNED AR OF THE ITA NO. 3156-57/M/2 016 CREST VENTURES L TD. 5 ASSESSEE HAS ALREADY SUBMITTED THAT GROUND NO.1 RAI SED BY ASSESSEE IS NOT PRESSED. WE HAVE FURTHER NOTED THAT THE GROUND NO.2 IS IDENTICAL TO THE GROUND NO. 2 IN APPEAL FOR ASSESSMENT YEAR 2011-12, WHICH WE HAVE RESTORED TO THE FILE OF ASSESSING OFFICER FOR FRESH COMPUTATION UNDER SECTION 115JB. THEREFORE, FOLLOWING THE PRINCIPLE O F CONSISTENCY THIS GROUND OF APPEAL IS ALSO RESTORED TO THE FILE OF AS SESSING OFFICER WITH SIMILAR DIRECTION. HENCE THE GROUND NO.2 OF THE APP EAL IS ALLOWED FOR STATISTICAL PURPOSE 7. IN THE RESULT THE APPEAL OF ASSESSEE FOR ASSESSMENT YEAR 2012-13 IS ALSO PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH JUNE 2018. SD/- SD/- B.R. BASKARAN PAWAN SINGH ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 04.06.2018 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR F BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI