DLF Projects Ltd.(formerly known as DT Projectsd Ltd), Gurgaon V. DCIT, Gurgaon

ITA 339/DEL/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 6866 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 9 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 20-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Rule 8D
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: B, NEW DELHI BEFORE SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTNAT MEMBER ITA NO.339/DEL/2017 ASSESSMENT YEAR: 2012-13 M/S. DLF PROJECTS LTD.(FORMERLY KNOWN AS DT PROJECT LTD.), 3 RD FLOOR, SHOPPING MALL, ARJUN MARG, DLF CITY, PHASE- 1, GURGAON. VS. DCIT, CIRCLE-1(1), GURGAON PAN :AACCD3093R (APPELLANT) (RESPONDENT) ORDER PER O.P. KANT, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST OR DER DATED 08/11/2016 PASSED BY THE LEARNED COMMISSIONER OF IN COME-TAX (APPEALS)-1, GURGAON [IN SHORT THE LD. CIT(A)] FO R ASSESSMENT YEAR 2012-13 RAISING FOLLOWING GROUNDS: 1. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANTS CASE, THE LEARNED COMMISSIONER OF INCOM E TAX (APPEALS) HAS ERRED IN CONFIRMING THE DISALLOWANCE TO THE EXTENT OF RS.6,56,264/- U/S 14A READ WITH RULE 8D(2 )(III) OF APPELLANT BY SHRI R.S. SINGHVI, CA RESPONDENT BY MS. ASHIMA NEB, SR.DR DATE OF HEARING 17.10.2019 DATE OF PRONOUNCEMENT 31.10.2019 2 ITA NO.339/DEL/2017 THE INCOME TAX ACT, 1961, DISREGARDING THE FACTUAL POSITION SUPPORTED BY JUDICIAL DECISIONS, SUBMITTED BY THE APPELLANT DURING THE COURSE OF APPELLATE PROCEEDING S. ACCORDINGLY, THE IMPUGNED ADDITION NEEDS TO BE DELE TED. 2. THAT THE APPELLANT CRAVES, LEAVE TO ADD, ALTER, AMEND, FORGO, SUBSTITUTE, ANY OR ALL THE GROUND(S) OF APPE AL BEFORE OR AT THE TIME OF HEARING. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSE SSEE FILED RETURN OF INCOME ON 29/09/2012 DECLARING LOSS OF 53,58,69,434/-. THE CASE WAS SELECTED FOR THE SCRUT INY AND THE SCRUTINY ASSESSMENT WAS COMPLETED ON 27/03/2015 UND ER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHOR T THE ACT) AFTER MAKING CERTAIN ADDITION/DISALLOWANCES. THE ASSESSEE PREFERRED APPEAL BEFORE THE LEARNED CIT(A), WHO PARTLY ALLOWE D THE APPEAL OF THE ASSESSEE. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL RAISING THE SOLE GROUND OF THE APPEAL, CHA LLENGING THE DISALLOWANCE UNDER SECTION 14A READ WITH RULE 8D(2) (III) OF THE INCOME-TAX RULES, 1962 (IN SHORT THE RULES) . 3. BEFORE US, THE LD. COUNSEL OF THE ASSESSEE SUBMITT ED THAT WHILE UPHOLDING THE DISALLOWANCE UNDER RULE 8D(2)(I II) OF RULES, THE LOWER AUTHORITIES HAVE NOT CONSIDERED THAT THER E WAS NO OPENING OR CLOSING STOCK OF THE VALUE OF THE EXEMPT ED INVESTMENT AND THUS THE AVERAGE VALUE OF THE INVESTMENT FOR TH E PURPOSE OF RULE 8D(2)(III) OF THE RULES, BEING NIL, NO DISALLO WANCE WAS WARRANTED. IN SUPPORT OF THE CONTENTION, THE LD. CO UNSEL RELIED ON THE DECISION OF THE HONBLE HIGH COURT OF DELHI IN THE CASE OF ACB INDIA LTD VS ACIT REPORTED IN (2015) 62 TAXMANN.COM 71 (DELHI). 4. ON THE OTHER HAND, LD. DR RELIED ON THE ORDER OF T HE LOWER AUTHORITIES. 3 ITA NO.339/DEL/2017 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED TH E RELEVANT MATERIAL ON RECORD. THE ONLY DISPUTE IS RE GARDING AMOUNT OF DISALLOWANCE COMPUTED UNDER RULE 8D(2)(III) OF T HE RULES. THE CONTENTION OF THE ASSESSEE THAT AVERAGE VALUE OF TH E EXEMPTED INVESTMENT FOR THE PURPOSE OF THE RULE 8D(2)(III) O F THE RULES IS NIL AS THERE WAS NO OPENING AND CLOSING STOCK OF SUCH E XEMPTED INVESTMENT IN THE CASE OF THE ASSESSEE. ACCORDING T O THE ASSESSEE, IN VIEW OF THE DECISION IN THE CASE OF ACB INDIA LT D (SUPRA), NO DISALLOWANCE UNDER RULE 8D(2)(III) OF THE RULES IS WARRANTED. THE FINDING OF THE HONBLE DELHI HIGH COURT IN THE CASE OF ACB INDIA LTD (SUPRA) IS REPRODUCE AS UNDER: 8. THE ASSESSING OFFICER, INSTEAD OF ADOPTING THE AVERAGE VALUE OF INVESTMENT OF WHICH INCOME IS NOT PART OF TOTAL INC OME, I.E., THE VALUE OF TAX EXEMPT INVESTMENT, CHOSE TO FACTOR IN THE TO TAL INVESTMENT ITSELF. EVEN THOUGH THE COMMISSIONER OF INCOME TAX (APPEALS) NOTICES THE EXACT VALUE OF THE INVESTMENT WHICH YIELDED TAX ABLE INCOME HE DID NOT CORRECT THE ERROR BUT CHOSE TO APPLY HIS OW N EQUITY. GIVEN THE RECORD THAT HAD TO BE DONE SO TO SUBSTITUTE TO FIGU RE OF RS.38,61,09,287/- WITH THE FIGURE OF RS.3,53,26,800 /- AND, THEREAFTER, ARRIVE AT THE EXACT DISALLOWANCE OF .05 PER CENT. 6. AS FAR AS THE ABOVE DECISION OF THE HONBLE DELHI HIGH COURT IS CONCERNED, THAT BEING A BINDING PRECEDENT, INCOM E-TAX AUTHORITIES IN THE JURISDICTION OF THE HONBLE DELHI HIGH COURT ARE BOUND TO FOLLOW. BUT IN THE CASE OF THE ASSESSEE, T HE CONTENTION OF THE ASSESSEE THAT, THE AVERAGE VALUE OF THE INVESTM ENT, INCOME FROM WHICH SHALL NOT FORM PART OF THE TOTAL INCOME IS NIL, NEED VERIFICATION BY THE ASSESSING OFFICER, IN ABSENCE O F ANY SUCH INFORMATION FILED BEFORE US. IN VIEW OF THE ABOVE, WE FEEL IT APPROPRIATE TO RESTORE THE MATTER TO THE ASSESSING OFFICER WITH THE DIRECTION TO COMPUTE THE DISALLOWANCE UNDER RULE 8D (2)(III) OF THE RULES IN ACCORDANCE WITH LAW AFTER VERIFICATION OF THE OPENING AND 4 ITA NO.339/DEL/2017 CLOSING VALUE OF THE INVESTMENT (INCOME FROM WHICH DOES NOT/SHALL NOT FORM PART OF THE TOTAL INCOME) AS APP EARING IN THE BALANCE SHEET OF THE ASSESSEE ON THE FIRST DAY AND ON THE LAST DAY OF THE PREVIOUS YEAR. THE GROUND OF THE APPEAL OF T HE ASSESSEE IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 7. IN RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED F OR STATISTICAL PURPOSES. ORDER IS PRONOUNCED IN THE OPEN COURT ON 31 ST OCTOBER, 2019. SD/- SD/- (SUDHANSHU SRIVASTAVA) (O.P. KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 31 ST OCTOBER, 2019. RK/-(D.T.D.) COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI