JT. CIT (OSD), CC-6(4), MUMBAI V. J.M.BAXI & CO., MUMBAI

ITA 3491/MUM/2018

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 5232 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-05-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2013-2014
• Appeal Filed On: 22-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANPREET SINGH DUGGAL SR
• Assessee Lawyers: Y P TRIVEDI SENIOR
• Keywords: Earning of tax free income
• Section: 14A; 37(1); 201

Judgement Text

1 I.T.A. NO.3491/MUM/2018 IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI PRAMOD KUMAR (VICE PRESIDENT) AND SHRI SAKTIJIT DEY (JUDICIAL MEMBER) I.T.A. NO. 3491 /MUM/201 8 (ASSESSMENT YEAR 20 1 3 - 1 4 ) JT.CIT(OSD), CC - 6(4), MUMBAI VS M/S J.M. BAXI & CO 16, BANK STREET, FORT MUMBAI - 400 001 PAN : AAAFJ5198E APPELLANT RESPONDENT APPELLANT BY SHRI MANPREET SINGH DUGGAL, SR AR RESPONDENT BY S HRI Y.P. TRIVEDI , SENIOR COUNSEL DATE OF HEARING 30 - 0 3 - 2021 DATE OF PRONOUNCEMENT 0 3 - 0 5 - 2021 O R D E R PER SAKTIJIT DEY (JM): THIS IS AN APPEAL BY THE REVENUE AGAINST ORDER DATED 06 - 0 3 - 201 8 OF L EARNED COMMISSIONER OF INCOME - TAX (APPEALS) - 5 4, MUMBAI FOR THE ASSESSMENT YEAR 201 3 - 1 4 . 2. IN GROUND 1, THE REVENUE HAS CHALLENGED THE DELETION OF DISALLOWANCE OF RS.1,73,95,853 / - MADE U NDER SECTION 37(1) OF THE ACT. 3. BRIEFLY THE FACTS ARE, THE ASSESSEE IS A RESIDENT COMPANY STATED TO BE THE LARGEST SHIPPING AGENCY HOUSE IN INDIA AND PROVIDES VARIOUS SHIPPING SUPPORT SERVICES. IT IS STATED THAT 200 NATIONAL AND INTERNATIONAL SH IPPING COMPANIES AVAIL 2 I.T.A. NO.3491/MUM/2018 THEIR SERVICES. FOR THE ASSESSMENT YEAR UNDER DISPUTE , ASSESSEE FILED ITS RETURN OF INCOME ORIGINALLY ON 29 - 11 - 2013 DECLARING LOSS OF RS. 16,86,07,939/ - . THE RETURN OF INCOME SO FILED WAS SUBSEQUENTLY REVISED BY DECLARING LOSS OF RS.1 9,83,96,143/ - . AS OBSERVED BY THE ASSESSING OFFICER , THE ASSESSEE OPERATES AS LICENSED CUSTOMS HOUSE AGENTS AT MOST INDIAN PORTS AND ASSESSEE AND ITS GROUP COMPANIES PROVIDE CLEARING AND FREIGHT FORWARDING SERVICES INCLUDING CUSTOM CLEARANCE, COMPLIANCE W ITH IMPORT / EXPORT REGULATIONS AND COMPREHENSIVE MULTI NODAL POINT TO POINT SERVICE COMPRISING LAND, RAIL, AIR AND SEA TRANSPORT AND WAREHOUSING. IN COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS DEBITED CERTAIN EXPENDITURE FOR MAKING PAYMENTS TO PORT EMPLOYEES AND SOME OTHER EXPENDITURE, WHICH ARE OTHERWISE NOT SANCTIONED AS PER LAW OF THE LAND. HE FURTHER OBSERVED, THE AMOUNT CLAIMED AS EXPENDITURE W AS NEITHER CREDITED NOR DEBITED TO THE P&L ACCOUNT, BU T WERE ROUTED THROUGH THE BALANCE - SHEET. FURTHER, HE OBSERVED, THE ASSESSEE, ON ITS OWN HAS DISALLOWED 25% OUT OF SUCH EXPENDITURE AND CLAIMED DEDUCTION OF THE BALANCE AMOUNT. WHILE DOING SO, THE ASSESS EE HAS REFERRED TO A DECISION OF THE TRIBUNAL IN CASE OF A GROUP COMPANY. THE ASSESSING OFFICER, HOWEVER, DID NOT ACCEPT THE CLAIM OF THE ASSESSEE AND CONCLUDED THAT THE EXPENDITURE CLAIMED NOT BEING SANCTIONED BY LAW, CANNOT BE ALLOWED. SINCE , THE ASSESSEE ITSELF HAD DISALLOWED AN AMOUNT OFRS.57,98,617/ - , THE ASSESSING OFFICER DISALLOWED THE BALANCE AMOUNT OF RS.1,73,95,853/ - . ASSESSEE CONTESTED THE ABOVE DISALLOWANCE BEFORE L EARNED COMMISSIONER OF INCOME - TAX (APPEALS). AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND TAKING NOTE OF THE FACT THAT HIS P REDECESSOR IN OFFICE, HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE IN ASSESSMENT YEAR 2012 - 13, FOLLOWED THE SAME AND DELETED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. 3 I.T.A. NO.3491/MUM/2018 4. SHRI Y.P. TRIVEDI, LEARNED SENIOR COUNSEL APPEARING FOR THE ASSESSEE , AT THE OUTSET, SUBMITTED THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2014 - 15. HE ALSO DREW OUR ATTENTION TO THE RELEVANT OBSERVATIONS OF THE TRIBUNAL IN THE SAID ORDER. 5. SHRI MANPREET SINGH DUGGAL APPEARING FOR THE REVENUE , THOUGH , AGREED THAT THE ISSUE IS COVERED BY THE DECISION OF THE TRIBUNAL; HOWEVER, HE RELIED UPON THE OBSERVATIONS OF THE ASSESSING OFFICER. 6. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIALS ON RECORD. AS COULD BE SEEN FROM THE MATERIALS PLACED BEFORE US, IDENTICAL ISSUE CAME UP FOR CONSIDERATION BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2014 - 15. WHILE DEALING WITH THE ISSUE, THE TRIBUNAL IN ITA NO.3492/MUM/2018 AND OTHERS DATED 25 - 06 - 2019, HAVING FOUND THAT IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2012 - 13, THE TRIBUNAL HAS DELETED SIMILAR ADDITION MADE BY ASSESSING OFFICER, FOLLOWED THE SAME AND UPHELD THE DECISION OF L EARNED COMMISSIONER OF INCOME - TAX (APPEALS) IN DELETING THE ADDITIONAL DISALLOWANCE MADE BY THE ASSESSING OFFICER. FACTS BEING IDENTICAL, RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE, WE UPHOLD THE ORDER OF L EARNED COMMISSIONER OF INCOME - TAX (APPEALS) ON THE ISSUE. GROUND RAISED IS DISM ISSED. 7. IN GROUND 2, REVENUE HAS CHALLENGED THE DELETION OF DISALLOWANCE OF RS.13,54,609/ - U NDER SECTION 14A OF THE INCOME - TAX ACT, 1961. 8. BEFORE US, THE LEARNED SENIOR COUNSEL FOR THE ASSESSEE AS WELL AS LEARNED D EPARTMENTAL R EPRESENTATIVE HAVE AGREED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBUNAL IN ASSESSMENT YEAR 2013 - 14. HAVING CONSIDERED RIVAL CONTENTIONS, WE FIND FROM MATERIALS ON RECORD THAT IN THE YEAR 4 I.T.A. NO.3491/MUM/2018 UNDER DISPUTE, THE ASSESSEE HAD NOT ACTUALLY EARNED ANY EXEMPT INCOME. THAT BEING THE CASE, THE QUESTION OF DISALLOWANCE U NDER SECTION 14A R.W.R.8D WOULD NOT ARISE. IN FACT, WHILE CONSIDERING IDENTICAL ISSUE IN ASSESSEES OWN CASE IN ASSESSMENT YEAR 2014 - 15, THE TRIBUNAL IN THE ORDER REFERRED TO ABOVE, DELETED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IN ABSENCE OF ANY EXEMPT INCOME EARNED DURING THE YEAR. IN VIEW OF THE AFORESAID, WE UPHOLD THE DECISION OF L EARNED COMMISSIONER OF INCOME - TAX (APPEALS) BY DISMISSING THE GROUND. 9. IN THE RESULT, APPEAL IS DISMISSED. ORDER PRONOUNCED ON 0 5 /0 5 /2021. S D / - S D / - ( PRAMOD KUMAR ) ( SAKTIJIT DEY ) VICE PRESIDENT JUDICIAL MEMBER MUMBAI, DT : 0 3 /0 5 /2021 PAVANAN COPY TO : 1. APPELLANT 2. RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) 5. THE DR, ITAT, MUMBAI 6. GUARD FILE BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI