Jaypee Development Corporation Ltd., Noida V. DCIT, Circle-13(2), New Delhi

ITA 3966/DEL/2018

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 4415 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 23-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 6; 63; 10; 2; 72; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “C” DELHI BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER I.T.A. No.3480/DEL/2018 Assessment Year 2013-14 DCIT, Circle-13(2), New Delhi. v. M/s. Jaypee Development Corporation Pvt. Ltd., Sector-128, Noida. TAN/PAN: AABCJ9515H (Appellant) (Respondent) I.T.A. No.3966/DEL/2018 Assessment Year 2013-14 M/s. Jaypee Development Corporation Pvt. Ltd., Sector-128, Noida. v. DCIT, Circle-13(2), New Delhi. TAN/PAN: AAJCS1850N (Appellant) (Respondent) Appellant by: Shri Parveen Kumar, Adv. Respondent by: Shri Anuj Garg, Sr.D.R. Date of hearing: 03 08 2022 Date of pronouncement: 22 08 2022 O R D E R PER PRADIP KUMAR KEDIA, A.M.: Th e cap tio n ed cro ss ap p eals h av e b ee n fi led b y th e Rev en u e an d th e Assessee resp ect iv ely ag a in st th e o rd er o f th e CIT(A), certa in face ts o f ap p licab i l ity o f Se ct i o n 1 4A h as b een c h allen g ed . 2 . Th e g ro u nd s o f ap p eal ra ised b y th e assesse e read s as u n d er: “ 1 . T h a t o n t h e f a c t s a n d l a w i n v o l v e d , t h e L d . Co mm i s si o n e r I.T.A. No.3480 & 3966/DEL/2018 2 o f I n c o m e - t a x (A p p e a l s ) [ L d . CI T (A )] h a s e r r e d i n re st ri c t i n g t h e d i sa l l o wa n c e u / s. 1 4 A t o t h e e x t e n t o f d i v i d e n d i n co m e o f R s. 5 7 , 6 0 , 3 0 3 / - a n d n o t t o R s. 4 2 , 8 1 , 1 0 9 / - a s c o m p u t ed a n d c l a i m e d b y t h e a s se s se e . 2 . T h a t o n t h e f a c t s a n d l a w i n v o l v e d , t h e L d . CI T (A ) h a s e r r e d i n n o t a c c e p t i n g t h e c l a i m o f d i s a l l o w a n c e u /s 1 4 A a t R s . 4 2 , 8 1 , 1 0 9 / - a s c o m p u t e d a n d c l a i m e d b y t h e a s se s s e e d u r i n g a p p e l l a t e p ro c e e d i n g s o n c o rr e c t a p p l i c a t i o n o f R u le 8 D (i i i ) b a se d o n b i n d i n g d e c i si o n s o f j u ri s d i c t i o n a l H i g h Co u rt o f D e l h i i n t h e c a se o f A CB I n d i a P v t . L t d . v . A CI T r e p o rt e d i n [ 2 01 5] 3 7 4 I T R 1 0 8 (D e l h i )a s p e r wh i c h i n v e s t m e n t s o n w h i ch n o e x e m p t i n c o m e i s re c e i v e d a r e n o t t o b e c o n si d e r e d wh i l e c o m p u t i n g a v e ra g e i n v e s t m e n t s . 3 . T h a t wi t h o u t p re j u d i c e t o t h e G ro u n d No . 3 a b o v e, L d . CI T (A ) h a s e r r e d i n n o t c o n si d e ri n g t h e c l a i m o f t he a s s e s s e e t h a t R u l e 8 D i s n o t m a n d a t o r y a n d t h e d i sa l l o w a n c e u / s 1 4 A c o m p u t e d b y t h e a s se s s e e c a n n o t b e r e j e c t e d b y t h e A s s e s si n g O f f i c e s wi t h o u t a n y c o g e n t r e a so n . 4 . T h a t o n t h e f a c t s a n d l a w i n v o l v e d t h e L d . CI T (A) h a s e r r e d i n c o n f i rm i n g t h e a d d i t i o n o f R s . 4 , 6 4 , 7 2 0 b ei n g t h e a m o u n t o f d i f f e r e n c e i n re c e i p t s a s p e r F o r m 2 6 A S an d r e c e i p t s a s p e r P r o f i t & L o s s A c c o u n t w i t h o u t a p p r e c i a t i n g th e su b m i s s i o n s o f t h e a s s e s se e a n d o n t h e m e r e g r o u n d t h a t t h e e x p l a n a t i o n o f f e r e d b y t h e A s se s s e e i s n o t a c c e p t a bl e . ” 3 . Th e g ro u nd s o f ap p eal ra ised b y th e Rev en u e reads as u n d er: “ 1 . T h a t o n t h e f a c t s a n d c i rc u m s t a n c e s o f t h e c a se a n d i n l a w, t h e o r d e r o f Co m m i s si o n e r o f i n c o m e T a x (A p p e a l ) i s e r r o n e o u s a n d b a d i n l a w. , I.T.A. No.3480 & 3966/DEL/2018 3 2 . T h a t o n t h e f a c t s a n d c i rc u m s t a n c e s o f t h e c a se a n d i n l a w, t h e L d . CI T (A ) h a s e r r e d i n d e l e t i n g t h e d i sa l l o w a n ce s o f R s . 1 , 7 1 , 8 9 , 6 6 3 / - u / s 1 4 A r . w . R u l e 8 D m a d e b y t h e A O . ” 4 . Brie fly st ated , th e assessee is en g a g ed in th e bu sin ess o f p ro du ctio n o f co nstru ct io n an d sup ply in g in d u strial s e cu rity an d med i cal man p o wer. Th e retu rn fi led b y th e assessee wa s su b jected to scru tin y asse ss men t . In th e co u rse o f th e scru t in y assess men t , th e Assessin g Offi cer in ter a l ia n o ted th at th e assess ee h as mad e su o mo tu d isallo wan ce o f Rs.4 7 , 9 2 ,0 00 /- to ward s est i ma ted ex p en d itu re g iv in g rise to o r h ave p o ten tia l to ea rn ex emp t in co me . Th e Asses sin g Officer in v o ked p ro v isio n s o f Sect io n 1 4A an d rewo rk ed th e d isallo wan ce o f Rs.2 ,2 9 ,4 9 ,9 6 6 /- as ag ain st ex emp t in co me c la imed at Rs .5 7 ,6 0 ,3 0 3 /-. Th e Assessi n g Offi cer th u s mad e ad d i tio n al d isa llo wan ce o f Rs.1 ,8 1 ,5 7 ,9 6 6/- o v er and ab o v e th e d isa llo w an ce o f Rs .4 7 ,9 2 ,0 0 0 /- mad e b y the a ssessee . 5 . Ag g riev ed , th e ass essee p re ferred ap p eal b e fo re th e CI T(A). Th e CIT(A) n o ted th at th e to ta l ex e mp t in co me (d iv id en d in co me) stan d s at Rs.5 7 ,6 0 ,3 0 3 /- receiv ed o n ly fro m o n e co mp an y M/s. Jay p ee In frat ech L td . No d iv id en d was rece iv ed fro m i n v estmen t s in an y o th er co mp an y . Th e CIT(A) p laced re li an ce u po n th e d ecisio n o f th e Ho n ’b le Delh i Hig h Co u rt in Jo in t In vestmen ts Pvt. Ltd . vs. CIT, 3 7 2 ITR 6 94 (Del) an d h eld th at d isal lo wan ce mad e u n d er Sectio n 1 4A o f th e Act can n o t ex ceed ex emp t in co me. It was fu rth er n o ted th at th e ass ess ee h as su o mo tu co mp u ted d isal lo wan ce u n d er Sect io n 1 4 A at Rs.4 7 ,9 2 ,0 0 0 /-. Co n seq u en tly , th e CIT(A) u ph eld th e ad d itio n u n d er Sectio n 1 4 A amo u n tin g to Rs.9 ,6 8 ,3 0 3 /- b ein g th e d ifferen c e b etween ex emp t in co me an d d isal lo wan ce a lrea d y carried o u t. I.T.A. No.3480 & 3966/DEL/2018 4 6 . Ag g riev ed by th e p artia l rel ie f g ran t ed b y th e CIT(A), b o th assesse e as wel l as Rev en u e are in p r esen t ap p eals. 7 . Wh ile i t is th e c a se o f th e asses see th at th e d isa l lo wan ce p ermiss ib le in th e lig h t o f t h e ju d icia l p reced en ts is Rs.4 2 ,8 1 ,1 0 9 /- whereas th e assess ee its el f h as mad e d i sal lo wan ce o f Rs.4 7 ,9 2 ,0 0 0 /- an d th erefo re n o fu rth er d isallo wan c e is c al led fo r. Th e Rev en u e h as ch allen g ed t h e actio n o f th e CIT(A) in rev ersin g th e d isa l lo wan ce co mp u ted b y th e Assess ing Officer in ter ms o f Ru l e 8 D o f th e In co me Tax Ru les. 8 . We h av e care fu l ly co n sid ered th e riv a l su b miss ion s. 8 .1 Th e Ho n ’b le Delh i Hig h Co u rt in Jo in t In vestmen ts Pv t. Ltd . vs. CIT (2 0 1 5 ) 3 72 ITR 6 9 4 (Del. ); Ash ish Es ta te & Pro mo ters Pvt. Ltd . vs . CIT (2 0 18 ) 2 5 7 Ta xman 5 8 5 (Bo m) an d o t h er p leth o ra o f ju d g men ts h av e h eld th at d isa ll o wan ce u nd er Sectio n 1 4A can n o t ex ceed ex emp t in co me. Th u s, th e actio n o f the CIT(A) is n o t fo u n d to b e in c o n sisten t with th e j u d icial p reced en ts . 8 .2 Ho wev er, th e Ho n’b le Delh i Hig h Co u rt in PCIT vs. Ca ra f Bu ild ers a n d Co n stru ct io n Pvt. L td . (2 0 1 9 ) 1 0 1 ta xma nn .co m 1 67 (Del ) (S LP Dismis sed ) (2 0 1 9 ) 1 1 2 ta xma nn .co m 3 22 (SC); ABC In d ia Pvt. Ltd . vs . ACIT in ITA No .6 1 5 /2 0 14 (Del) an d Sp ecia l Ben ch in ACIT vs. Viree t In vestmen ts (2 0 1 7 ) 1 65 ITD 27 (S B Delh i ITAT) h av e a lso s tat ed th a t fo r th e assess men t y ear i n q uestio n th o se in v est men ts wh ich h av e n o t y ield ed an y ex emp t in co me can n o t b e tak en in to ac co u n t fo r th e p u rp o ses o f calcu lat in g d isal lo wan ce u n d er Sect io n 1 4 A o f th e Act read wi th Ru le 8 D o f In co me Tax Ru les, 1 96 3 . Th e assessee in th e in stan t c ase cl ai ms th at wh ere th e i n v estmen t s n o t y ield in g ex emp t i n come are I.T.A. No.3480 & 3966/DEL/2018 5 ex clu d ed , th e d i s allo wan ce wo rk s o u t to Rs.4 2 ,8 1 ,1 09 /- wh ich ex ceed s th e su o mo tu d isallo wan ce o f Rs.4 7 ,9 2 ,0 0 0 /- an d th u s th e CIT(A) was n o t ju sti fied in en h an cin g th e d isa l lo wan ce fro m Rs.4 7 ,9 2 ,0 0 0 /- to Rs.5 7 ,6 0 ,3 0 3 /-. 8 .3 In th e lig h t o f th e b in d in g preced en ts n o ted abo v e, we fin d wh o leso me meri t i n th e p le a o f th e a ssessee . Co n sequ en tly , wh i le th e cla i m o f asses see d eserv es accep tan ce, th e Rev en u e ap p eal is fo u n d to b e d ev o id o f an y mer it . 9 . In th e resu lt, th e ap p eal o f th e ass e ssee is a l lo wed wh ereas th e ap p eal o f th e R ev en u e is d i smisse d . Order pronounced in the open Court on 22/08/2022. Sd /- Sd /- [KUL BHARAT] [PRADIP KUMAR KEDIA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: /08/2022 Prabhat