DCIT - 14 (3)(1), MUMBAI V. WOCKHARDT HOSPITALS LTD., MUMBAI

ITA 3628/MUM/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 9414 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2006-2007
• Appeal Filed On: 25-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V VINOD KUMAR
• Assessee Lawyers: AMIT AGGARWAL
• Keywords: Capital asset; Tax effect
• Section: 14A; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G , MUMBAI BEFORE SHRI C.N. PRASAD , HONBLE JUDICIAL MEMBER AND SHRI MANOJ KUMAR AGGARWAL , HONBLE ACCOUNTANT MEMBER ITA NO . 3628 /MUM/201 8 ( A.Y: 2006 - 07) DY. CIT 14(3 ) (1) 4 TH FLOOR, ROOM NO. 455 AAYAKAR BHAVAN, M.K. ROAD MUMBAI 400 020 V. WOCKHARDT HOSPITALS LTD., WOCKHARDT TOWERS BANDRA KURLA COMPLEX, BANDRA (E) MUMBAI - 400051 PAN: AAACW3342G (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI AMIT AGGARWAL DEPARTMENT BY : SHRI V. VINOD KUMAR DATE OF HEARING : 18.08.2020 DATE OF PRONOUNCEMENT : 18.08.2020 O R D E R PER C.N. PRASAD (JM) THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 22 , MUMBAI [HEREINAFTER IN SHORT LD.CIT(A)] IN APPEAL NO. CIT(A) - 22 / IT /366/10829/2016 - 17 DATED 28.02.2018 FOR THE ASSESSMENT YEAR 2006 - 07. 2. REVENUE HAS RAISED THE FOLLOWING GROUND S IN ITS APPEAL : - 2 ITA NO. 3628/MUM/2018 (A.Y: 2006 - 07) WOCKHARDT HOSPITALS LTD., 1. WHETHER ON THE FACTS AND UNDER THE CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION MADE BY THE AO U/S 14A OF THE IT ACT ON ACCOUNT OF INTEREST OF RS. 72,48,280/ - PAID FOR ACQUISITION OF CONTROLLING STAKE IN THE SUBSIDIARY COMPANY WITHOUT APPRECIATING THAT THE PROVISIONS OF SECTION 14A ARE APPLICABLE EVEN IF THE INVESTMENT IS MADE TO ACQUIRE CONTROLLING STAKE IN THE SUBSIDIARY COMPANY AND EVEN THOUGH NO DIVIDEND HAS ACTUALLY BEEN RECEIVED, IN LIGHT OF THE DECISIO N OF THE SUPREME COURT IN THE CASE OF MAXOPP INVESTMENTS VS CIT 115 SC 2018 ? 2. WHETHER ON THE FACTS AND UNDER THE CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION MADE BY THE AO U/S 36(1)(III) OF THE IT ACT ON ACCOUNT OF INT EREST OF RS. 72,48,280/ - PAID ON THE CAPITAL BORROWED FOR PURCHASE OF A CAPITAL ASSET I.E. PLOT OF LAND UNDER THE GARB OF ACQUISITION OF CONTROLLING STAKE IN THE SUBSIDIARY COMPANY WITHOUT APPRECIATING TH AT THE PROVISO TO SECTION 36(1) (III) CATEGORICALLY P ROHIBITS THE ALLOWANCE OF INTEREST PAID ON THE CAPITAL BORROWED FOR ACQUISITION OF A CAPITAL ASSET TILL THE DATE ON WHICH SUCH CAPITAL ASSET WAS FIRST TO USE? 3. WHETHER ON THE FACTS AND UNDER THE CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) WAS JUSTIFIED IN D ELETING THE ADDITION MADE BY THE AO U/S 14A OF THE IT ACT ON ACCOUNT OF INTEREST OF RS. 30,20,046/ - PAID FOR ACQUISITION OF INVESTMENTS IN MUTUAL FUNDS OF RS. 14,00,90,000/ - FOR NON BUSINESS PURPOSE, PURELY ON PRESUMPTIVE BASIS WITH AN ASSUMPTION OF UTILIZ ATION OF OWN FUNDS OF RS. 55,77,17,592/ - FOR INVESTMENT IN MUTUAL FUNDS OF RS.14,00,90,000/ - AS THE OWN FUNDS ARE MORE THAN INVESTMENTS IN MUTUAL FUNDS, WITHOUT APPRECIATING THAT THE ASSESSEE HAS NOT SATISFACTORILY PROVED BEYOND DOUBT THE NEXUS AS TO WHETH ER THE INVESTMENTS MADE IN MUTUAL FUNDS HAVE BEEN MADE OUT OF THE OWN FUNDS OR THE LOANS BORROWED FOR BUSINESS PURPOSE? 3. AT THE TIME OF HEARING, AUTHORIZED REPRESENTATIVE OF THE ASSESSEE VIDE LETTER DATED 12.08.2020 SUBMITTED THAT TAX EFFECT ON THE ISSUE IN THE PRESENT APPEAL IS . 34,56,319 / - WHICH IS BELOW . 50 LACS AND IN VIEW OF THE CBDT CIRCULAR NO. 17/2019 DATED 08.08.2019 IN F.NO.279/MISC.142/2007 - ITJ (PT), THE APPEAL OF THE REVENUE IS NOT MAINTAINABLE. 3 ITA NO. 3628/MUM/2018 (A.Y: 2006 - 07) WOCKHARDT HOSPITALS LTD., 4. DEPARTMENTAL REPRESENTATIVE ALSO AGREED WITH THE ABOVE SUBMISSION OF THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE. 5. WE HAVE HEARD THE SUBMISSIONS AND PERUSED THE GROUNDS OF APPEAL IN THIS APPEAL. WE FIND THAT THE TAX EFFECT IN THIS APPEAL IS LESS THAN .50 LAKHS AND THEREFORE THE APPEAL OF THE REVENUE IS NOT MAINTAINABLE ON ACCOUNT OF LOW TAX EFFECT IN VIEW OF THE CBDT CIRCULAR NO. 17/2019 DATED 08.08.2019. HENCE THIS APPEAL IS DISMISSED. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 18 TH AUGUST , 2020 S D/ - S D/ - ( MANOJ KUMAR AGGARWAL ) (C.N. PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI / DATED 18 / 08 / 2020 GIRIDHAR, SR.PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// BY ORDER, (ASSTT. REGISTRAR) ITAT, MUM