M/s. Torrent Pvt. Ltd., Ahmedabad V. The DCIT, Circle-4(1)(2), Ahmedabad

ITA 32/AHD/2018

• Counselvise Citation: [2019] 111 COUNSELVISE.COM (IT) 9766 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 03-12-2019
• Assessment Year: 2013-2014
• Appeal Filed On: 02-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: BIREN SHAH
• Keywords: Earning of tax free income; Rule 8D
• Section: 143(3); 14A; 115JB; 201; 43; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH BEFORE: SHR I MAHAVIR PRASAD , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER TORRENT PVT. LTD. 1, TORRENT HOUSE, NR. DINESH HALL, OFF ASHRAM ROAD, AHMEDABAD - 380009 PAN: AAACT5459R (APPELLANT) VS THE DCIT, CIRCLE - 4(1)(2), AHMEDABAD (RESPONDENT) REVENUE BY : S H RI VINOD TANWANI , SR. D . R. ASSESSEE BY: SHRI BIREN SHAH , A.R. DATE OF HEARING : 03 - 12 - 2 019 DATE OF PRONOUNCEMENT : 17 - 12 - 2 019 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THIS ASSESSEE S APPEAL FOR A.Y. 2013 - 14 , ARI SES FROM ORDER OF THE CIT(A) - 8, AHMEDABAD DATED 1 8 - 10 - 2 017 , IN PROCEEDINGS UNDER SECTION 1 4 3(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2 . THE FACT IN BRIEF IS THAT ASSESSEE HAS FILED RETURN OF INC OME DECLARING INCOME AT RS. 1 , 18 , 83 , 990/ - ON 30 TH SEP, 2013 . THE ASSESSMENT U/S. 143(3) I T A NO . 32 / A HD/20 18 A SS ESSMENT YEAR 2013 - 14 I.T.A NO. 3 2 /AHD/20 18 A.Y. 2013 - 14 PAGE NO TORRENT PVT. LTD. VS. DCIT 2 OF THE ACT WAS FINALIZED ON 31 ST DECEMBER, 2015 AND TOTAL INCOME WAS ASSESSED AT RS. 3 , 37 , 47 , 637/ - AFTER MAKING VARIOUS ADDITIONS. 3. A T THE OUTSET THE LD. COUNSEL HA S BROUGHT TO OUR NOTICE THAT ALL THE ISSUES IN THE APPEAL ARE ADJUDICATED BY THE CO - ORDINATE BENCHES IN FAVOUR OF THE ASSESSEE IN THE CASE OF THE ASSESSEE ITSELF FOR ASSESSMENT YEAR 2011 - 12 AND 2012 - 13 VIDE ITA NO. 2594 & 2587/AHD/2014 AND ITA NO. 3569/AHD /2015. THE LD. DEPARTMENTAL REPRESENTATIVE IS FAIR ENOUGH NOT TO CONTRADICT THIS UNDISPUTED FACT THAT IDENTICAL ISSUE VIDE ABOVE CITED DECISION OF THE CO - ORDINATE BENCHES WAS ADJUDICATED IN FAVOUR OF THE ASSESSEE. THEREFORE , ALL THE ISSUES CONTESTED IN T HE INSTANT APPEAL ARE ADJUDICATED AFTER FOLLOWING THE ABOVE CITED DECISION OF THE CO - ORDINATE BENCH AS FOLLOWS. 4. GROUND NO. 1.1 TO 1.2: - THESE GROUNDS OF APPEALS ARE PERTAINED TO THE ISSUE OF DISALLOWANCE U/S. 14A R.W.R. 8D TO THE EXTENT OF RS. 1,72,56 ,662/ - AND SUSTAINED BY THE LD. CIT(A). 5. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US, THE LD. COUNSEL HAS SUBMITTED THAT IN THE CASE OF THE ASSESSEE ITSELF THE CO - ORDINATE BENCH OF THE ITAT VIDE ITA 2594/AHD2014 ASSESSMENT YEAR 2011 - 12 HAS AD JUDICATED THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE AND IN ASSESSMENT YEAR 2012 - 13 THE CO - ORDINATE BENCH OF THE ITAT VIDE ITA NO. 3 427/AHD/2015 HAS ALSO ADJUDICATED THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE. WE HAVE GONE THROUGH THE ABOVE REFERRED DECISION OF THE I TAT AND RELEVANT PARA FROM ITA 3 427/AHD/2015 DATED 24 TH JUNE, 2009 IS REPRODUCED AS UNDER: - 5. THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAS EARNED EXEMPT INCOME TO THE AMOUNT OF RS. 2,73,56,63,248/ - . HOWEVER, IT HAS MADE DISALLOWANCE U/S. 14A TO THE AMOUNT OF RS. I.T.A NO. 3 2 /AHD/20 18 A.Y. 2013 - 14 PAGE NO TORRENT PVT. LTD. VS. DCIT 3 15,15,867/ - ONLY. THEREFORE, THE ASSESSEE WAS SHOW CAUSED TO EXPLAIN WHY NOT THE DISALLOWANCE U/S. 14A SHOULD BE MADE AS PER PROVISION OF RULE 8D OF IT RULE, 1962. THE ASSESSEE EXPLAINED THAT NO BORROWED FUNDS WERE UTILIZE D FOR MAKING INVESTMENT, THEREFORE, NO INTEREST EXPENDITURE WAS ATTRIBUTABLE TOWARDS EARNING OF ANY EXEMPT INCOME. THE ASSESSEE ALSO EXPLAINED THAT INVESTMENT TO THE EXTENT OF RS. 84.45% WAS MADE IN THE SUBSIDIARY COMPANIES OF THE ASSESSEE AS A STRATEGIC INVESTMENT WHICH DID NOT REQUIRE ANY MONITORING OR CONSTANT ADMINISTRATION. THE ASSESSING OFFICER HAS NOT ACCEPTED THE EXPLANATION OF THE ASSESSEE AND COMPUTED THE DISALLOWANCE U/S. 14A R.W. RULE 8D TO THE AMOUNT OF RS. 1,88,45,888/ - AND ADDED TO THE TOT AL INCOME OF THE ASSESSEE. 6. AGGRIEVED ASSESSEE HAS FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE. 7. DURING THE COURSE OF THE APPELLATE PROCEEDINGS BEFORE US, IT WAS BROUGHT TO OUR NOTICE THAT IDENTICAL ISSUE ON SIMILAR FACTS HAS BEEN ADJUDICATED IN FAVOUR OF THE ASSESSEE BY THE CO - ORDINATE BENCH OF THE ITAT VIDE ITA NO. 2594/AHD/2014 DATED 1 ST FEB, 2019 WHEREIN THE ADDITION WAS DELETED AFTER FOLLOWING THE DECISION OF CO - ORDINATE BENCH OF THE ITAT IN THE CASE OF THE ASSESSEE ITSELF ADJUDICATED BY ITA NO. 1777 AND 2028/AHD/2019. RELEVANT PART OF THE DECISION OF THE CO - ORDINATE BENCH OF THE ITAT IS REPRODUCED AS UNDER: - 12. AS WE CAN SEE, ASSESSEE HAS RAISED THE ISSUE REGARDING CONFIRMING THE DI SALLOWANCE U/S. 14A OF RS. 1,89,32,077/ - MADE BY A.O. BY FOLLOWING RULE 8D. LD. C1T(A) HAS FOLLOWED THE PRECEDING ASSESSMENT YEAR OF ORDER OF HIS PREDECESSOR FOR ASSESSMENT YEAR 2010 - 11 AND ITAT IN SIMILAR CIRCUMSTANCES, IN ASSESSEE S OWN CASE GRANTED RELIEF TO THE ASSESSEE IN ITA NO. 1777 & 2028/AHD/2009 AND DELETED THE ADDITION MADE BY THE LOWER AUTHORITIES. THEREFORE, IN PARITY WITH THE BENCH ORDERS, WE ALLOW THIS GROUND OF APPEAL BY THE ASSESSEE AND DIRECTED TO DELETE THE ADDITION OF RS. 1, 89,32,077/ - . RESPECTFULLY FOLLOWING THE DECISION OF THE CO - ORDINATE BENCH AS DIRECTED ABOVE, WE ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE. RESPECTFULLY FOLLOWING THE DECISION OF CO - ORDINATE BENCH AS CITED ABOVE O N SIMILAR ISSUE AND FACTS, THIS GROUND OF APP EAL OF THE ASSSESSE IS ALLOWED . 6. GROUND NO . 2.1 & 2.2 : - THIS GROUND OF APPEAL OF THE ASS ESSEE IS AGAINST THE ADDITION OF R S. 38 , 21 , 121/ - ON THE GROUND OF UNDERVALUED THE SHARES O F GLFL. THE LD. COUNSEL HAS SUBMITTED THAT SIMILAR ISSUE ON ID ENTICAL FACTS HAS BEEN ADJUDICATED BY THE CO - ORDINATE BENCH OF THE ITAT IN THE CASE OF THE ASSESSEE ITSELF VIDE ITA NO.2594/AHD/2014 FOR ASSESSMENT YEAR 2011 - 12. WE HAVE GONE THROUGH THE ABOVE CITED DECISION OF ITAT AND THE RELEVANT PART OF DECISION IS RE PRODUCED AS UNDER: - I.T.A NO. 3 2 /AHD/20 18 A.Y. 2013 - 14 PAGE NO TORRENT PVT. LTD. VS. DCIT 4 13. NOW WE COME NEXT: GROUND RELATING TO UPHOLDING THE ADDITION BY THE LD. CIT(A) OF RS. 1,2137,680/ - MADE BY THE A.O, ALLEGING THAT ASSESSEE CLOSING STOCK OF SHARES TO THE EXTENT IT CONSISTED OF 4495437 SHARES OF GLFL HAD NOT UNDER VA LUED BY THAT AMOUNT AN D LD. CIT(A) HAS NOT CONSIDERED THE FACT THAT SHA RE IN QUESTION HAD NOT VALUED AT THE SAME PRICE OF R S. 1 PER SHARE AT WHICH THEY HAVE BEEN V ALUED CONSISTENTLY FROM YEAR TO Y EAR FOR WHICH REASON, THEY HAD ALSO COME TO BE VALUED AT THE VARY RATE OF RS. 1 PER SHARE IN THE OPENING STOCK FOR THE PRESENT ASSESSMENT YEAR. RESPECTFULLY FOLLOWING THE DECISION OF CO - ORDINATE BENCH OF THE ITAT O N SIM ILAR ISSUE AND FACT , THE APPEAL OF THE ASSESSEE IS ALLOWED. 7. GROUND NO. 3 OF THI S APPEAL IS PERTAINED TO ADDITION U/S. 1,72,72,292/ - U/S. 115JB OF THE AMOUNT DISALLOWED AS PER THE PROVISION OF SECTION 14A . DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US, THE LD. COUNSEL HAS SUBMITTED THAT IDENTICAL ISSUE ON SIMILAR FACT IN THE C ASE OF THE ASSESSEE ITSELF HAS BEEN ADJUDICATED BY THE CO - ORDINATE BENCHES OF THE ITAT IN FAVOUR OF THE ASSESSEE VIDE ITA NO. 2587/AHD/2017 FOR ASSESSMENT YEAR 2010 - 11 VIDE ITA 3427/AHD/2015 FOR ASSESSMENT YEAR 2012 - 13. WE HAVE GONE THROUGH THE ABOVE CITE D DECISION OF THE CO - ORDINATE BENCHES OF THE ITAT AND NOTICED THAT ITAT VIDE ITA NO. 3427/AHD/2015 HAS ADJUDICATED THE IDENTICAL ISSUE ON SIMILAR FACT IN FAVOUR OF THE ASSESSEE. THE RELEVANT PART OF THE DECISION IS AS UNDER: - 9. DURING THE COURSE OF APPE LLATE PROCEEDINGS BEFORE US, THE LD. COUNSEL HAS BROUGHT TO OUR NOTICE THAT CO - ORDINATE BENCH OF THE ITAT VIDE ITA NO. 2587/AHD/2014 FOR ASSESSMENT YEAR 2011 - 12 IN THE CASE OF THE ASSESSEE ITSELF HAS DECIDED THE SIMILAR ISSUE ON SIMILAR FACTS IN THE CASE O F THE ASSESSEE. WITH THE ASSISTANCE OF LD. REPRESENTATIVES, WE HAVE GONE THROUGH THE ABOVE CITED DECISION OF THE CO - ORDINATE BENCH OF THE ITAT AND NOTICED THAT THE ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE BY THE CO - ORDINATE BENCH AFTER FOLLOWING THE D ECISION OF THE SPECIAL BENCH OF THE ITAT, DELHI IN THE CASE OF VINEET INVESTMENT REPORTED IN 165 ITD 27. RELEVANT PART OF THE DECISION OF THE CO - ORDINATE BENCH IS REPRODUCED AS UNDER: - 8. LD. CIT(A) HAS DELETED THE ADDITION VIDE PARA 5.4 ON PAGES 43 AND 44 OF HIS ORDER. AT THE TIME OF HEARING, LD. A.R. POINTED OUT THAT OVER AND ABOVE DECISION RELIED UPON BY LD. CIT(A) THE ISSUE IS NOW WELL SETTLED BY THE SPECIAL BENCH DECISION IN THE CASE OF VINEET INVESTMENT REPOTTED IN 165 ITD 27. AND IN SIMILAR CIRCUM STANCES, CO - ORDINATE BENCH GRANTED RELIEF IN ASSESSEE S OWN CASE FOR THE ASSESSMENT YEAR 2010 - 11 IN 1TA NO. 1718 & 1648/AHD/2014. THEREFORE, HAVING PARITY WITH THE SAID ORDER, WE DISMISS THIS GROUND OF APPEAL OF THE REVENUE. I.T.A NO. 3 2 /AHD/20 18 A.Y. 2013 - 14 PAGE NO TORRENT PVT. LTD. VS. DCIT 5 RESPECTFULLY FOLLOWING THE DECISION OF THE CO - ORDINATE BENCH OF THE ITAT AS CITED ABOVE ON SIMILAR FACTS AND SIMILAR ISSUE, THIS GROUND OF APPEAL IS ALLOWED. RESPECTFULLY FOLLOWING THE DECISION OF CO - ORDINATE BENCH AS CITED AB OVE ON SIMILAR ISSUE AND FACT, THIS GROUND OF AP PEAL IS ALLOWED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 17 - 12 - 201 9 SD/ - SD/ - ( MAHAVIR PRASAD ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 17 /12 /2019 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,