ACIT, New Delhi V. M/s ERA Landmarks Ltd, New Delhi

ITA 3243/DEL/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3652 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 21-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C, NEW DELHI BEFORE SH. R.S. SYAL, VICE PRESIDENT AND SMT. BEENA A. PILLAI, JUDICIAL MEMBER ITA NO. 3243/DEL/2015 : ASSTT. YEAR : 2010-11 ACIT ROOM NO. 356, ARA CENTRE, E-2, ARA CENTRE, JHANDEWALAN EXTN. NEW DELHI VS ERA LANDMARKS LTD. 153 OKHLA INDUSTRIAL AREA PHASE-II NEW DELHI PAN : AABCE4642C (APPELLANT) (RESPONDENT) PAN NO. AANCG7044A ASSESSEE BY : NONE REVENUE BY : SMT. SIMRAN BHULLAR, CIT- DR DATE OF HEARING : 30 . 0 1 .201 8 DATE OF PRONOUNCEMENT : . 0 1 .201 8 ORDER PER R.S.SYAL, VICE PRESIDENT :- THIS APPEAL BY THE REVENUE ARISES OUT OF THE ORDER DATED 25/02/2015 PASSED BY THE COMMISSIONER OF INCO ME- TAX (APPEALS) FOR THE ASSESSMENT YEAR 2010-11. THE ONLY ISSUE RAISED IN THIS APPEAL IS AGAINST THE RE-COMPU TATION OF DISALLOWANCE U/S 14A OF THE INCOME-TAX ACT, 1961 (HEREINAFTER ALSO REFERRED TO AS THE ACT). 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE IS ENGAGED IN THE BUSINESS OF REAL ESTATE, LAND DEVELOPMENT, CONSTRUCTION OF RESIDENTIAL FLATS, COM MERCIAL ITA NO. 3243/DEL/2015 2 SPACE AND INTEGRATED TOWNSHIPS AND RELATED ACTIVITI ES. DURING THE YEAR, IT EARNED DIVIDEND INCOME OF RS. 8 6,389/-. NO DISALLOWANCE WAS OFFERED U/S 14A OF THE ACT. THE ASSESSING OFFICER INVOKED THE PROVISIONS OF RULE 8D READ WITH SECTION 14A AND MADE DISALLOWANCE OF RS. 87,70 ,419/. THE LD. CIT(A) NOTICED THAT OUT OF TOTAL INVESTMENT OF RS. 29.33 CRORE AND ODD, A SUM OF RS. 29.08 CRORE AND O DD WAS INVESTED IN SUBSIDIARY COMPANIES FORMED BY THE ASSE SSEE FOR THE PURPOSE OF ITS REAL ESTATE BUSINESS. IT WAS , THEREFORE, HELD THAT SUCH INVESTMENT WAS MADE ON AC COUNT OF BUSINESS EXPEDIENCY AND ANY DIVIDEND EARNED FROM SUCH INVESTMENTS IN SUBSIDIARIES WAS INCIDENTAL TO ITS B USINESS AND HENCE THE PROVISIONS OF SECTION 14A WERE NOT AT TRACTED TO THAT EXTENT. IN HOLDING SO, HE RELIED ON CERTAIN DECISIONS AS RECORDED ON PAGE 12 OF THE IMPUGNED ORDER, SUCH AS, ASSOCIATED HOTELS LTD. (ITA NO. 1503/MDS./2012), CI T VS. KNORR BEAMSE INDIA (P) LTD. (ITA NO. 1676/DEL/2002) AND M/S. SPRAY ENGINEERING DEVICES LTD. (ITA NO.701/CHD./2009) ETC. HE, THEREFORE, DIRECTED THE ASSESSING OFFICER TO RECOMPUTE DISALLOWANCE U/S 14A BY IGNORING INVESTMENT MADE IN SUBSIDIARIES AMOUNTING TO RS. 29.08 CRORE. THIS IS HOW, THE REVENUE HAS COME UP I N APPEAL BEFORE THE TRIBUNAL. 3. WE HAVE HEARD THE LD. DR AND PERUSED THE RELEVAN T MATERIAL ON RECORD. THERE IS NO APPEARANCE FROM TH E SIDE ITA NO. 3243/DEL/2015 3 OF THE ASSESSEE DESPITE NOTICE. WE ARE THEREFORE, P ROCEEDING TO DISPOSE OF THE APPEAL EX PARTE QUA THE ASSESSEE. IT IS OBSERVED THAT THE ASSESSEE IS ENGAGED IN THE BUSINE SS OF PROCUREMENT OF LAND AND DEVELOPING THE SAME FOR THE PURPOSE OF RESIDENCE, COMMERCIAL AND INTEGRATED TOWNSHIPS. IT IS BORNE OUT FROM THE RECORD THAT INV ESTMENTS OF RS. 29.08 CRORE WAS MADE BY THE ASSESSEE IN ITS SUBSIDIARY COMPANIES FOR THE PURPOSES OF CARRYING O UT ITS BUSINESS OF REAL ESTATE. THE LD. CIT(A) HAS RELIED ON CERTAIN DECISIONS RENDERED BY VARIOUS BENCHES OF THE TRIBUN AL IN EACH OF WHICH IT HAS BEEN HELD THAT THE PROVISIONS OF SECTION 14A ARE NOT ATTRACTED WHEN INVESTMENTS ARE MADE IN SUBSIDIARIES FOR BUSINESS PURPOSE. THE LD. DEPAR TMENTAL REPRESENTATIVE COULD NOT POINT OUT ANY CONTRARY DEC ISION, WHICH IS IN FAVOUR OF REVENUE ON THE ISSUE BEFORE T HE BENCH. RESPECTFULLY FOLLOWING THE DECISIONS OF CO-O RDINATE BENCHES, RELIED BY THE LD. CIT(A), WE UPHOLD IMPUGN ED ORDER. 4. IN THE RESULT, APPEAL IS DISMISSED. (ORDER PRONOUNCED IN THE COURT ON 31/01/2018) SD/- SD/- (BEENA A. PILLAI) (R.S.SYAL) JUDICIAL MEMBER VICE PRESIDENT DATED: 31/01/2018 *BINITA* ITA NO. 3243/DEL/2015 4 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR DATE INITIAL 1. DRAFT DICTATED ON 30/01/2018 2. DRAFT PLACED BEFORE AUTHOR 30/01/2018 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 5. APPROVED DRAFT COMES TO THE SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON 31/01/2018 7. FILE SENT TO THE BENCH CLERK 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER. *