CHANAKYA INTERNATIONAL PVT. LTD., MUMBAI V. DCIT 5(1)(2), MUMBAI

ITA 3779/MUM/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 3682 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-11-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 30-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Rule 8D
• Section: 14A

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL C BENCH MUMB AI BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH JUDICIAL MEMBER ITA NO. 3779/MUM/2018 (ASSESSMENT YEAR 2013-14 ) ITA NO. 3780/MUM/2018 (ASSESSMENT YEAR 2014-15 ) CHANAKYA INTERNATIONAL PVT. LTD. 101, RAHEJA ZION, DR. BABASAHEB AMBEDKAR ROAD, BYCULLA (E), MUMBAI- 400027. PAN: AAACC4592Q VS. DCIT- 5(1)(2) AAYAKAR BHAWAN, M. K. ROAD, MUMBAI-400020. APPELLANT RESPONDE NT APPELLANT BY : SHRI PARESH SHAPARIA (AR) RESPONDENT BY : SHRI CHAUDHARY ARUN KUMAR SINGH (DR) DATE OF HEARING : 27.08.2019 DATE OF PRONOUNCEMEN T : 04.11.2019 ORDERUNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. THESE TWO APPEALS BY ASSESSEE ARE DIRECTED AGAINST THE COMMON ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-10 (LD CI T (A), MUMBAI DATED 22.11.2017 FOR ASSESSMENT YEAR 2013-14 & 2014 -15. THE FACTS FOR BOTH THE YEARS ARE IDENTICAL, THE ASSESSEE HAS RAISED IDENTICAL GROUNDS OF APPEAL FOR BOTH THE ASSESSMENT YEARS, EXCEPT VAR IATIONS OF FIGURE OF DISALLOWANCES UNDER SECTION 14A AND COMPUTATION OF BOOKS PROFIT UNDER SECTION 115JB. THUS, BOTH THE APPEAL WERE HEARS TOG ETHER AND ARE DECIDED BY A CONSOLIDATED ORDER FOR THE SAKE OF CON VENIENCE. FOR APPRECIATION OF FACT, THE FACTS IN APPEAL FOR ASSES SMENT YEAR 2013-14 IS ITA NO. 3779 & 3780 MUM 2018-CHANAKYA INTERNATIONAL PVT. LT D. 2 TREATED AS LEAD CASE. THE ASSESSEE HAS RAISED THE F OLLOWING GROUNDS OF APPEAL: 1. THE LD. CIT(A) ERRED IN CONFIRMING DISALLOWANCE OF RS. 6,27,047/- U/S 14A RW RULE 8D OVER AND ABOVE DISALLOWANCE ALREADY MADE BY THE APPELLANT OF RS. 11,63,100/-. 2. THE LD CIT(A) OUGHT NOT TO HAVE CONFIRMED ADDITI ONAL DISALLOWANCE OF RS. 6,27,047/- AFTER APPLYING SECTION 14A. 3. THE DISALLOWANCE OF RS. 6,27,047/- U/S 14A RW RU LE 8D REQUIRES TO BE DELETED. 2. BRIEF FACTS OF THE CASE ARE THAT DURING THE ASSESSM ENT, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS SHOWN THE EXEMP T INCOME OF RS. 49,88,980/-. THE ASSESSEE HAS MADE SUO-MOTO DISALLOWANCE UNDER SECTION 14A OF RS. 11,63,096/-. DURING THE ASSESSME NT, THE ASSESSEE WAS ASKED TO SUBSTANTIATE THE SUO-MOTO DISALLOWANCE UNDER SECTION 14A. THE ASSESSEE SUBMITS THAT THE ASSESSEE-COMPANY IS IN GA RMENTS BUSINESS AND MOST OF THE EXPENSES WERE INCURRED FOR THE BUSINESS OF GARMENTS, NO FURTHER DISALLOWANCE WAS REQUIRED AS THE SUO-MOTO D ISALLLWANCE MADE BY THE ASSESSEE IS MORE THAN REASONABLE. THE CONTEN TION OF ASSESSEE WAS NOT ACCEPTED BY THE ASSESSING OFFICER. THE ASSESSIN G OFFICER INVOKED THE PROVISION OF RULE 8D AND MADE A DISALLOWANCE OF RS. 17,90,415/-. THE ASSESSING OFFICER MADE A DISALLOWANCE UNDER RUL E 8D(2)(I) OF RS. 2,83,977/- AND UNDER RULE 8D(2)(III) OF RS. 15,06,1 69/-. THE ASSESSEE HAS ALREADY DISALLOWED RS. 11,63,100/-. THEREFORE, THE ASSESSING OFFICER AFTER MAKING SET OFF OF SUO MOTO DISALLOWANCE MADE ADDITION OF RS. ITA NO. 3779 & 3780 MUM 2018-CHANAKYA INTERNATIONAL PVT. LT D. 3 6,27,047/- (RS. 17,90,147 RS. 11,63,200). THE ASS ESSING OFFICER ALSO ADDED THE DISALLOWANCE OF SECTION 14A TO THE COMPUT ATION OF BOOK PROFIT UNDER SECTION 115JB. ON APPEAL BEFORE THE LD. CIT(A ), THE ACTION OF ASSESSING OFFICER WAS CONFIRMED. THUS, FURTHER AGGR IEVED, THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. 3. WE HAVE HEARD THE SUBMISSION OF LD. AUTHORIZED REPR ESENTATIVE (AR) OF THE ASSESSEE AND LD. DEPARTMENTAL REPRESENTATIVE (D R) FOR THE REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. AT TH E OUTSET OF HEARING, THE LD. AR OF THE ASSESSEE SUBMITS THAT THE GROUNDS OF APPEAL WITH READ TO DISALLOWANCES UNDER SECTION 14A, RAISED BY ASSES SEE IS COVERED IN FAVOUR OF ASSESSEE BY THE DECISION OF TRIBUNAL IN A SSESSEES OWN CASE FOR ASSESSMENT YEAR 2008-09 TO 2012-13. THE LD. AR OF T HE ASSESSEE FURNISHED THE COPY OF ORDER OF TRIBUNAL FOR ALL ASS ESSMENT YEARS. 4. THE LD. AR OF THE ASSESSEE FURTHER SUBMITS THAT THE LD. CIT(A) DECIDED THE APPEAL FOR ASSESSMENT YEAR 2012-13 TO 2014-15, THE ASSESSEE CHALLENGED THE ORDER OF LD. CIT(A) BY FILING SEPARA TE APPEAL BEFORE THE TRIBUNAL. HOWEVER, THE APPEAL FOR ASSESSMENT YEAR 2 012-13 WAS DECIDED BY SMC BENCH OF THIS TRIBUNAL VIDE ORDER DA TED 15.04.2019 IN ITA NO. 3778/MUM/2018, WHEREIN THE APPEAL OF THE AS SESSEE ON IDENTICAL GROUND WAS ALLOWED. ITA NO. 3779 & 3780 MUM 2018-CHANAKYA INTERNATIONAL PVT. LT D. 4 5. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE AFTER GOING THROUGH THE ORDER OF TRIBUNAL FOR ASSESSMENT YEAR 2008-09 TO 20 12-13 RELIED UPON THE ORDER OF LOWER AUTHORITIES. 6. WE HAVE CONSIDERED THE SUBMISSION OF BOTH THE PARTI ES AND FIND THAT ON IDENTICAL GROUNDS OF APPEAL, THE APPEAL FOR ASSESSM ENT YEAR 2012-13 IN ITA NO.3778/MUM/2018 DATED 15.04.2019, THE SMC BENC H OF THIS TRIBUNAL, ON IDENTICAL SET OF FACT PASSED THE FOLLO WING ORDER: 8. I HAVE HEARD RIVAL SUBMISSIONS AND PERUSED MATE RIAL ON RECORD. UNDISPUTEDLY, IN THE RELEVANT PREVIOUS YEAR, THE AS SESSEE HAS EARNED DIVIDEND INCOME OF RS. 1,52,94,700, WHICH WAS CLAIM ED TO BE EXEMPT. IT IS ALSO A FACT THAT THE ASSESSEE HAS VOLUNTARILY DISAL LOWED AN AMOUNT OF RS.15,09,846 UNDER SECTION 14A R/W RULE 8D. THE ASS ESSEE HAS ALSO MADE SUBMISSIONS BEFORE THE ASSESSING OFFICER JUSTIFYING THE COMPUTATION OF DISALLOWANCE UNDER SECTION 14A OF THE ACT. ON A PER USAL OF THE IMPUGNED ASSESSMENT ORDER, IT APPEARS, THE ASSESSING OFFICER HAS NOT SHOWN ANY VALID REASON WHY THE DISALLOWANCE COMPUTED BY THE ASSESSE E UNDER SECTION 14A R/W RULE 8D IS NOT CORRECT HAVING REGARD TO THE BOO KS OF ACCOUNT MAINTAINED BY HIM. WITHOUT DEMONSTRATING THAT THE DISALLOWANCE COMPUTED BY THE ASSESSEE HAVING REGARD TO THE BOOKS OF ACCOUNT IS I NCORRECT, THE DISALLOWANCE MADE BY THE ASSESSING OFFICER MECHANICALLY UNDER RU LE 8D(2) IS UNSUSTAINABLE. THE RATIO LAID DOWN IN VARIOUS JUDIC IAL PRECEDENTS INCLUDING THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COU RT IN GODREJ & BOYCE MFG. CO. LTD. V/S DCIT, [2010] 328 ITR 81 (BOM.), A LSO SUPPORT THIS VIEW. IN FACT, IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 200809, 200910 AND 201112, THE TRIBUNAL HAS STRUCK DOWN THE DISAL LOWANCE MADE BY THE ASSESSING OFFICER UNDER SECTION 14A OF THE ACT R/W RULE 8D FOR THE AFORESAID REASON. THOUGH, A CONTRARY VIEW WAS TAKEN BY THE TR IBUNAL IN ASSESSMENT YEAR 201011, HOWEVER, IT WAS ON THE BASIS OF FACTS INVOLVED IN THAT ASSESSMENT YEAR. IN VIEW OF THE AFORESAID, I HOLD T HAT THE ADDITIONAL ITA NO. 3779 & 3780 MUM 2018-CHANAKYA INTERNATIONAL PVT. LT D. 5 DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDER SE CTION 14A OF THE ACT DESERVES TO BE DELETED. ACCORDINGLY, I DO SO. GROUN D IS ALLOWED. 7. CONSIDERING THE AFORESAID ORDER OF TRIBUNAL, WHEREI N NO VARIATION OF FACT IS BROUGHT TO OUR NOTICE. THEREFORE, RESPECTFULLY F OLLOWING THE ORDER OF TRIBUNAL, WE DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITIONAL DISALLOWANCE OF RS.6,27,047/- UNDER SECTION 14A THE GROUNDS OF APPEAL RAISED BY ASSESSEE ARE ALLOWED. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ITA NO. 3780/MUM/2018 FOR A.Y. 2014-15 9. THE ASSESSEE HAS RAISED IDENTICAL GROUNDS OF APPEAL AS RAISED IN APPEAL FOR AY 2013-14, WHICH WE HAVE ALLOWED BY FOLLOWING THE DECISION OF TRIBUNAL FOR AY 2012-13, THEREFORE, FOLLOWING THE P RINCIPAL OF CONSISTENCY THE APPEAL FOR THIS YEAR (AY 2014-15) I S ALSO ALLOWED WITH SIMILAR DIRECTIONS. TO MAKE IT MORE CLEAR THE ASSES SING OFFICER IS DIRECTED TO DELETE THE ADDITIONAL DISALLOWANCES UNDER SECTIO N 14A OF RS. 7,80,726/- . 10. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 04/11/2019. SD/- SD/- R.C. SHARMA PAWAN SINGH ACCOUNTANT MEMBER J UDICIAL MEMBER MUMBAI, DATE: 04.11.2019 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) ITA NO. 3779 & 3780 MUM 2018-CHANAKYA INTERNATIONAL PVT. LT D. 6 4. THE CONCERNED CIT 5. DR C BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI