M/s. Paramount Enterprises Ltd., New Delhi V. ITO, New Delhi

ITA 3367/DEL/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7280 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-10-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 23-09-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 27-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DEVI SHARAN SINGH
• Assessee Lawyers: DR T R TALWAL
• Keywords: Opportunity of being heard; Earning of tax free income
• Section: 142(1); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE SMT DIVA SINGH, JUDICIAL MEMBER AND SH. B.C.MEENA, ACCOUNTANT MEMBER I.T.A .NO. - 3367/ DEL/201 3 (ASSESSMENT YEAR - 2009 - 10 ) M/S PARAMOUNT ENTERPRISES LTD. , 7RTH FLOOR, KANCHENJUNGA BLDG., 18 BARAKHAMBA ROAD, NEW DELHI - 110001. P AN - AAACP0057F (APPELLANT) VS ITO , WARD - 14(4), NEW DELHI (RESPONDENT) APPELLANT BY DR. T.R.TALWAL , ADV. RESPONDENT BY SH. DEVI SHARAN SINGH, SR. DR ORDER PER DIVA SINGH, JM TH IS IS AN APPEAL FILED BY THE AS SESSEE AGAINST THE ORDER DATED 28 . 03 .201 3 OF THE CIT(A) - XVII, NEW DELHI PERTAINING TO 2009 - 10 ASSESSMENT YEAR ON THE FOLLOWING GROUNDS: - 1. IN NOT ACCEPTING THAT THE ASSESSEE IS CARRYING OUT BUSINESS ACTIVITY AND THEREBY EARNING INCOME FROM BUSINESS AS HELD BY THE ITAT IN THE ASS ESSM ENT YEAR 2008 -- 09. 2. IN HOLDING THAT THE ASSESSING OFFICER HAS NOT MADE ANY DISALLOWANCE U/S 14A FOR COMPUTING THE TOTAL INCOME UNDER THE NORMAL PROVISIONS BUT DISALLOWANCE WAS MADE ONLY FOR COMPUTING BOOK PROFIT U/S 115JB. 3. IN CONFIRMING INCOME ASSESSED BY THE ASSESSING OFFICER UNDER THE NORMAL PROVISIONS AT RS.66,64,139 AS AGAINST RS.55,OO,502 DECLARED BY THE APPELLANT IN ITS RETURN OF INCOME THEREBY DISALLOWING EXPENSES OF RS.14,63,637 U/S 14A OF THE ACT. 4. IN CONFIRMING TH E DISALLOWANCE OF RS.15,04,488/ - U/S 14A OF THE ACT MADE BY THE AO WITHOUT SPECIFICALLY POINTING OUT THE EXPENSES THAT HAS BEEN INCURRED FOR EARNING THE DIVIDEND INCOME AND LONG TERM CAPITAL GAINS (EXEMPTED INCOME) AS AGAINST NIL EXPENDITURE CLAIMED BY THE APPELLANT 5. IN NOT GIVING COGENT REASONS FOR NOT ACCEPTING THE CLAIM OF THE ASSESSEE THAT NO EXPENDITURE HAS BEEN INCURRED BY IT IN RELATION TO THE EXEMPT INCOME. 6. IN NOT ESTABLISHING NEXUS. OR PROXIMATE RELATIONSHIP BETWEEN THE EXPENSES DISALLOWED AN D THE EXEMPTED INCOME. 2 I.T.A .NO. - 3 367 /DEL/201 3 7. IN NOT ACCEPTING THAT IN THE CASE OF LONG TERM CAPITAL GAINS WHICH IS PAY BACK OR RETURN OF INVESTMENT THERE IS NO PROXIMATE CAUSE BETWEEN EXPENDITURE AND EXEMPT INCOME WHICH IS THE CONDITION PRECEDENT FOR DISALLOWANCE OF EXPENDITU RE U/S 14A OF THE ACT, AS HELD BY THE APEX COURT. 8. IN NOT EXAMINING THE CORRECTNESS OF THE CLAIM OF THE APPELLANT HAVING REGARD TO THE ACCOUNTS OF THE ASSESSEE OF THE PREVIOUS YEAR AS PER THE PROVISION OF SECTION 14A(2) R.W. RULE 8 0 OF THE INCOME TAX RULES . WITHOUT PREJUDICE TO THE ABOVE 9. IN NOT APPLYING RULE 8D OF THE INCOME TAX RULES AFTER BEING NOT SATISFIED WITH THE CLAIM OF THE ASSESSEE THAT NO EXPENDITURE HAS BEEN INCURRED IN RELATION TO THE EXEMPT INCOME AND RESORTING TO ARBITRARY ALLOCATION OF EXPENDITURE VIS - A - VIS INCOME IGNORING THE PRACTABILITY OF RUNNING A BUSINESS. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, MODIFY, SUBSTITUTE OR D ELETE ANY OF THE GROUNDS OF APPEAL ON OR BEFORE THE DATE OF HEARING. 2. THE RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE RETURNED AN INCOME OF RS. 52,00,502/ - BY WAY OF FILING A RETURN ON 15.09.2009. THE SAID RETURN WAS TAKEN UP FOR SCRUTINY UNDER C ASS BY WAY OF ISSUANCE OF NOTICE U/S 143(2) ALONGWITH 142(1) AND QUESTIONNAIRES ETC. AS A RESULT OF WHICH THE INCOME WAS ASSESSED AT RS. 66,64,139/ - UNDER THE NORMAL PROVISIONS AND A BOOK PROFIT OF RS.1,36,53,157/ - U/S 115JB. 3. AGGRIEVED BY THIS THE ASSESSEE WENT IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY WHEREIN THE ASSESSEE GOT PART RELIEF. STILL AGGRIEVED THE ASSESSEE IS BEFORE THE TRIBUNAL. THE LD. AR SUBMITTED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY VIRTUE OF THE ORDER OF T HE TRIBUNAL IN ASSESSEE S OWN CASE VIDE ITS ORDER DATED 06.11.2012 IN ITA NO. - 2717/DEL/2011 FOR 2008 - 09 ASSESSMENT YEAR COPY OF WHICH IS AVAILABLE AT PAGES 1 - 5 . REFERRING T O THE SAME IT WAS SUBMITTED THAT THE CO - ORDINATE BENCH WAS PLEASED TO RESTORE THE IS SUE TO THE CIT(A) WITH THE DIRECTION TO DECIDE THE ISSUE OF DISALLOWANCE U/S 14A TAKING INTO CONSIDERATION THE DECISION OF THE JURISDICTIONAL HIGH COURT IN MAXOPP INVESTMENT LTD. VS CIT (2011) 203 TAXMAN 364 (DELHI). REFERRING TO THE SAME IT WAS HIS SUBMIS SION THAT THE SAID CLAIM CAN BE CONSIDERED AND ALLOWED BY THE ITAT AND NEED NOT BE RESTORED AS THE ASSESSEE WOULD BE ABLE TO ARGUE THE FACTS BEFORE THE PRESENT FORUM . THE LD. SR. DR PLACES RELIANCE UPON THE IMPUGNED ORDER. HOWEVER THE FACT THAT THE 3 I.T.A .NO. - 3 367 /DEL/201 3 COORD INATE BENCH HAS CONSIDERED IDENTICAL ISSUES IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR IT WAS HIS SUBMISSION THAT THE ISSUE MAY BE RESTORED. 4. WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ON A CONSIDERATION THEREOF WE ARE OF THE VIEW THAT IN THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE IT WOULD BE APPROPRIATE TO RESTO RE THE ISSUE BACK TO THE FILE OF THE AO WHO SHALL TAKE CONSIDERATION THE ORDER OF THE TRIBUNAL IN ASSESSEE'S OWN CASE AND PASS A SPEAKING ORDER IN A CCORDANCE WITH LAW AFTER GIVING THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD. THE SAID ORDER WAS PRONOUNCED ON THE DATE OF THE HEARING ITSELF. 5. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. THE ORDER IS PRONOUNCED I N THE OPEN COURT ON 1 0 T H OF OCTOBER 2014. S D / - S D / - ( B.C.MEENA ) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 1 0 / 1 0/2014 *AMIT KUMAR/SUBODH KUMAR COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI