M/s Topscore Tradevariety Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 3839/DEL/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6598 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 29-11-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 14-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: UMESH CHAND DUBEY
• Keywords: Opportunity of being heard; Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: D: NEW DELHI BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SHRI LALIET KUMAR, JUDICIAL MEMBER ITA NO. 3839/DEL/2013 ASSESSMENT YEAR: 2009-10 TOPSCORE TRADEVARIETY PVT. LTD., (NOW MERGED WITH AVANTHA REALTY LTD.), THAPAR HOUSE, 124, JANPATH, NEW DELHI-110001. PAN: AABCT 8787 B VS. INCOME TAX OFFICER, WARD-16(3), C.R. BUILDING, NEW DELHI. APPELLANT RESPONDENT ASSESSEE BY SHRI P.C. YADAV, ADV. DEPARTMENT BY SHRI UMESH CHAND DUBEY, SR. DR DATE OF HEARING 30/11/2016 DATE OF PRONOUNCEMENT 30/11/2016 O R D E R PER: LALIET KUMAR, J.M.: THIS IS AN APPEAL FILED BY THE ASSESSEE ARISES AGA INST THE ORDER DATED 12/03/2013 PASSED BY THE LD. CIT(A)-19, NEW DELHI F OR THE A.Y. 2009-10, WHEREIN THE ASSESSEE HAS RAISED FOLLOWING GROUNDS O F APPEAL: 1. LEARNED COMMISSIONER OF INCOME TAX (APPEALS) WA S WRONG IN REJECTING APPEAL FILED BY THE APPELLANT COMPANY AND ORDER PASSED BY THE CIT(A) WAS BAD IN LAW. 2 ITA NO. 3839 /DEL/2013 TOPSCORE TRADEVARIETY PVT. LTD. VS ITO 2. LEARNED CIT(A) PRECIPITATELY DISMISSING THE APPE AL OF THE ASSESSEE WITHOUT PROVIDING ADEQUATE AND REASONABLE OPPORTUNITY OF BEING HEARD. 3. THAT THE LEARNED CIT(A) WAS ERRED IN NOT CONSIDE RING THE GROUND RELATING TO DISALLOWANCE OF RS. 702, 204 /- U/S 14A READ WITH RULE 8D OF THE RULES IN PLACE OF RS. 292,974 REPRESENTING THE TOTAL ACTUAL EXPENDITURE CLAIMED BY THE APPELLANT COMPANY IN ITS RETURN OF INCOME. 2. IN THIS CASE, THE A.O. HAS DISALLOWED U/S 14A OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) READ WITH RULE 8D OF THE IN COME TAX RULES, 1962 (IN SHORT THE RULES) TO THE TUNE OF RS. 7,02,204/- AS A GAINST THE AMOUNT OF RS. 2,92,974/- (COMPUTATION RESTRICTED BY THE ASSESSEE ITSELF). 3. AGAINST THE ORDER OF THE A.O., THE ASSESSEE PREF ERRED APPEAL BEFORE THE LD. CIT(A), WHO HAD DISMISSED THE APPEAL OF THE ASSESSEE BY OBSERVING AS UNDER:- IN THE FORM NO., 35 FILED ON 16/2/2012, THE NAME A ND ADDRESS OF THE APPELLANT IS GIVEN AS M/S TOPSCORE TRADEVARIET Y PVT. LTD. (NOW MERGED WITH AVANTHA REALTY LTD.). THE ASSESSM ENT ORDER DATED 23/11/2011, THE NAME OF THE ASSESSEE IS GIVEN AS M/S TOPSCORE TRADEVARIETY (P) LTD.. AS PER THE COPY O F RETURN FILED, THE RETURN WAS FILED ON 08/09/2009 IN THE NAME OF M /S TOPSCORE TRADEVARIETY PVT. LTD. IT, THEREFORE, APPEARS THAT AFTER THE ASSESSMENT U/S 143(3), M/S TOPSCORE TRADEVARIETY PV T. LTD. MERGED WITH M/S AVANTHA REALTY LTD. IN THAT CASE, M /S TOPSCORE 3 ITA NO. 3839 /DEL/2013 TOPSCORE TRADEVARIETY PVT. LTD. VS ITO TRADEVARIETY PVT. LTD. IS NO LONGER IN EXISTENCE. T HE APPELLANT HAS NOT FURNISHED DETAILS OF MERGER SUCH AS THE DATE OF MERGER, ETC. AND HAS FAILED TO EXPLAIN WHY THE APPEAL SHOULD BE ADMITTED IF THE APPELLANT COMPANY HAS CEASED TO EXIST. IN VIEW OF T HESE FACTS, THE APPEAL IS NOT ADMITTED. 4. NOW THE ASSESSEE IS IN APPEAL BEFORE US. AS IS C LEAR FROM THE ORDER PASSED BY THE LD. CIT(A) THAT THE ASSESSEE HAS FAIL ED TO BRING ON RECORD THE DETAILS OF MERGER OF M/S TOPSCORE TRADEVARIETY PVT. LTD. WITH M/S AVANTHA REALTY LTD., THEREFORE, FIRST APPELLATE AUTHORITY H AS DISMISSED THE APPEAL ONLY ON THE GROUND THAT THE ASSESSMENT WAS FRAMED IN THE NAME OF M/S TOPSCORE TRADEVARIETY PVT. LTD. AND THE APPEAL WAS ALSO PREFERRED IN THE NAME OF M/S TOPSCORE TRADEVARIETY PVT. LTD. (NOW ME RGED WITH M/S AVANTHA REALTY LTD BUT NO DOCUMENT IN SUPPORY OF ME RGER WAS FILLED . 4.1 THE LD AR HAS DRAWN OUR ATTENTION TO THE ORDER PASSED BY THE HONBLE DELHI HIGH COURT DATED 18/10/2011 WHEREBY THE SCHEM E OF AMALGAMATION WAS APPROVED FROM THE POINTED DATE I.E. 01/4/2010. FURTHER, THE LD AR HAS SUBMITTED THAT IN TERMS OF THE ORDER PASSED BY THE TRIBUNAL IN THE CASE OF M/S GILLETTE GROUP INDIA PVT. LTD. IN ITA NO. 267/D EL/2012 FOR A.Y. 2008-09. THE DISALLOWANCE IS REQUIRED TO BE RESTRICTED TO TH E EXTENT OF ACTUAL EXPENDITURE CLAIMED BY THE ASSESSEE. FOR THAT PURPO SES, THE LD AR HAS 4 ITA NO. 3839 /DEL/2013 TOPSCORE TRADEVARIETY PVT. LTD. VS ITO DRAWN OUR ATTENTION TO PARAGRAPH NO. 6 OF THE ORDER PASSED IN ITA NO. 267/DEL/2012, WHICH IS AS UNDER:- 6. FROM THE ABOVE, IT IS EVIDENT THAT AS PER SUB-S ECTION (1) OF SECTION 14A, NO DEDUCTION IS TO BE ALLOWED IN RESPE CT OF EXPENDITURE INCURRED BY THE ASSESSEE IN RELATION TO INCOME WHICH DOES NOT FORM PART OF TOTAL INCOME. SUB-SECTI ON (2) OF SECTION 14A PROVIDES THE PROCEDURE FOR DETERMINATIO N OF SUCH EXPENDITURE BY THE ASSESSING OFFICER. THE BOARD HA S ALSO PRESCRIBED RULE 8D FOR DETERMINING THE EXPENDITURE INCURRED BY THE ASSESSEE FOR EARNING OF EXEMPT INCOME. THUS, THE DISALLOWANCE CAN BE MADE UNDER SUB-SECTION (1) FOR THE EXPENDITURE INCURRED FOR EARNING OF EXEMPT INCOME. IN THE CASE UNDER APPEAL BEFORE US, FROM THE PERUSAL OF TH E ASSESSEES PROFIT & LOSS ACCOUNT, IT IS EVIDENT THA T THE TOTAL EXPENDITURE INCURRED WAS RS. 49,04,028/- ONLY. THUS , THE ASSESSEE CLAIMED THE DEDUCTION FOR THE EXPENDITURE OF RS. 49,04,028/- WHICH IS DEBITED TO THE PROFIT & LOSS A CCOUNT. THE DISALLOWANCE CANNOT EXCEED THE EXPENDITURE ACTUALLY CLAIMED BY THE ASSESSEE. WE, THEREFORE, ACCEPT THE ASSESSEE S CONTENTION THAT THE DISALLOWANCE MADE BY THE ASSESS ING OFFICER AND SUSTAINED BY THE LEARNED CIT(A) IN EXCE SS OF TOTAL EXPENDITURE DEBITED TO PROFIT & LOSS ACCOUNT WAS UN JUSTIFIED. ACCORDINGLY, WE RESTRICT THE DISALLOWANCE TO THE EX TENT OF EXPENDITURE ACTUALLY CLAIMED BY THE ASSESSEE I.E. R S. 49,04,028/-. 5 ITA NO. 3839 /DEL/2013 TOPSCORE TRADEVARIETY PVT. LTD. VS ITO 5. AT THE OUTSET, THE LD SR. DR HAS SUBMITTED THAT THE APPEAL IS NOT FILED BY THE MANAGING DIRECTOR OF THE COMPANY AND FURTHER IN VIEW OF THE FAILURE OF THE ASSESSEE TO PROVIDE THE DETAILS OF MERGER TO THE CIT(A), THE MATTER IS REQUIRED TO BE REMANDED BACK. IN REBUTTAL, TODAY I. E. 30/11/2016, THE LD AR OF THE ASSESSEE HAS FILED E-MAIL COMMUNICATION FROM THE COMPANY DATED 29/11/2016 STATING THAT THERE IS NO PROVISION OF MA NAGING DIRECTOR IN THE COMPANY. 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. SINCE THE BAS IS OF DISMISSAL OF THE APPEAL BY THE LD. CIT(A) WAS NON-FURNISHING OF THE DETAILS OF MERGER. THE LD AR HAS ALREADY PLACED ON RECORD THE COPY OF THE ORD ER PASSED BY THE HONBLE DELHI HIGH COURT DATED 18/10/2011 ON THE PA PER BOOK FROM PAGE 65 TO 105 AND HAS ALSO DRAWN OUR ATTENTION TO THE ORDE R PASSED BY THE TRIBUNAL IN ITA NO. 267/DEL/2012 (SUPRA), IT WOULD BE IN THE INTEREST OF JUSTICE, IF THE MATTER IS REMANDED BACK TO THE FILE OF THE LD. CIT( A) WITH A DIRECTION TO EXAMINE THE DOCUMENTS, NOW PLACED BEFORE US IN THE FORM OF ORDER OF HONBLE HIGH COURT AS WELL AS OF THE TRIBUNAL IN TH E CASE OF ITA 267/DEL/2012 (SUPRA). WHILE DECIDING THE APPEAL THE LD CIT(A) SHALL HAVE THE DUE REGARD TO THE JUDGMENT OF THE COORDINATE BE NCH IN THE CASE OF M/S GILLATTE GROUP INDIA PVT. LTD. (SUPRA) AND SHALL DE CIDE THE CASE ON THE BASIS 6 ITA NO. 3839 /DEL/2013 TOPSCORE TRADEVARIETY PVT. LTD. VS ITO OF THE FINDING GIVEN BY THE TRIBUNAL IN THE SAID MA TTER . IN THE LIGHT OF THE ABOVE, THE CASE IS RESTORED BACK TO THE FILE OF THE LD. CIT(A) TO DECIDE THE MATTER IN LIGHT OF THE OBSERVATIONS MADE HEREINABOV E. THUS, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES ON LY. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES ONLY. THE ORDER PRONOUNCED IN THE OPEN COURT ON 30/11/201 6. SD/- SD/- [N.K. SAINI] [LALIET KUMAR] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, 30 TH NOVEMBER, 2016. *RANJAN COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.