Kopergaon Peoples Co-op Bank Ltd, Ahmednagar V. Assistant Commissioner of Income-tax, Ahmednagar Circle, , Ahmednagar

ITA 405/PUN/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 8122 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 27-02-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: IS DIRECTED AGAINS T PASSED
• Keywords: Earning of tax free income; Question of law; Rule 8D
• Section: 14A; 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH, B PUNE VIRTUAL COURT BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER . / ITA NO.405/PUN/2018 / ASSESSMENT YEAR : 2013-14 KOPERGAON PEOPLES COP. BANK LTD., BANK ROAD, KOPERGAON, AHMEDNAGAR 423601 PAN : AAAAK2255J VS. ACIT, AHMEDNAGAR CIRCLE, AHMEDNAGAR APPELLANT RESPONDENT / ORDER PER R.S.SYAL, VP : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PA SSED BY THE CIT(A)-2, PUNE ON 13-10-2017 IN RELATION TO THE AS SESSMENT YEAR 2013-14. 2. THE FIRST GROUND IS AGAINST THE PARTIAL RELIEF ALLOWED AGAINST THE DISALLOWANCE MADE U/S.14A OF THE INCOME-TAX ACT, 1961 (HE REINAFTER ALSO CALLED THE ACT). 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSE E EARNED AN EXEMPT INCOME OF RS.80,837/- IN THE FORM OF DIVIDEND ON MUTUAL FUNDS. NO DISALLOWANCE WAS OFFERED U/S.14A OF THE ACT. APPLYING THE MANDATE OF RULE 8D OF THE INCOME-TAX RULES, 1962, THE ASSESSING OFFICER (AO) COMPUTED THE DISALLOWANCE AT RS.5,27,069/-. THE LD. ASSESSEE BY SHRI C.H. NANIWADEKAR REVENUE BY SHRI SUDHENDU DAS DATE OF HEARING 31-08-2021 DATE OF PRONOUNCEMENT 31-08-2021 ITA NO.405/PUN/2018 KOPERGAON PEOPLES COOP. BANK LTD., 2 CIT(A) ALLOWED RELIEF IN PART AND SUSTAINED THE DISALLOWANCE AT RS.5,16,350/-. AGGRIEVED THEREBY, THE ASSESSEE HAS C OME UP IN APPEAL BEFORE THE TRIBUNAL. 4. HAVING HEARD BOTH THE SIDES THROUGH VIRTUAL COURT AND GO NE THROUGH THE RELEVANT MATERIAL ON RECORD, IT IS FOUND AS AN A DMITTED POSITION THAT THE ASSESSEE EARNED EXEMPT OF RS.80,837/-. T HE HON'BLE DELHI HIGH COURT IN CHEMINVEST LTD. VS. CIT (2015) 378 ITR 33 (DEL) HAS HELD THAT IF THERE IS NO EXEMPT INCOME, THERE CAN BE NO QUESTION OF MAKING ANY DISALLOWANCE U/S 14A OF THE ACT. SI MILAR VIEW HAS BEEN TAKEN BY THE HON'BLE DELHI HIGH COURT IN CIT VS. HOLCIM INDIA P. LTD. (2014) 90CCH 081-DEL-HC . TAKING THIS PROPOSITION FURTHER, THE HONBLE JURISDICTIONAL HIGH COURT IN PR. CIT VS. HSBC INVEST DIRECT (INDIA) LTD. (2020) 421 ITR 125 (BO M) HAS HELD THAT DISALLOWANCE U/S 14A CANNOT EXCEED THE AMOUNT OF EX EMPT INCOME. CONSIDERING THE RATIO LAID DOWN IN THE CASE OF HSBC INVEST DIRECT (INDIA) LTD. (SUPRA), WE ORDER TO SUSTAIN THE DISALLOWANCE AT RS.80,837/-. 5. THE SECOND GROUND IS AGAINST THE CONFIRMATION OF ADDITION OF INTEREST U/S.244A OF THE ACT AMOUNTING TO RS.3,30,210/-. 6. THE FACTS APROPOS THIS GROUND ARE THAT THE ASSESSEE RE CEIVED DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR U NDER CONSIDERATION INTEREST ON INCOME-TAX REFUND AMOUNTING TO ITA NO.405/PUN/2018 KOPERGAON PEOPLES COOP. BANK LTD., 3 RS.3,30,210/- U/S.244A OF THE ACT PERTAINING TO THE ASSESSM ENT YEAR 2010-11. THE SAME WAS NOT OFFERED TO TAX IN THE RETURN FILED FOR THE YEAR. ON BEING CALLED UPON TO EXPLAIN AS TO WHY SUCH INTER EST WAS NOT OFFERED, THE ASSESSEE SUBMITTED THAT NO INFORMATION ABOU T SUCH INTEREST WAS RECEIVED IN THIS REGARD. ON VERIFICATION OF THE R ECORD, THE ASSESSING OFFICER NOTICED THAT THE REFUND INCLUDING INTEREST OF RS.3,30,210/- WAS ADJUSTED AGAINST THE DEMAND. SINCE THE REFUND WAS ISSUED AND RECEIVED, THE AO INCLUDED THE INTEREST COMPON ENT OF RS.3,30,210/- IN THE TOTAL INCOME. NO RELIEF WAS ALLOWED IN THE FIRST APPEAL. 7. HAVING HEARD BOTH THE SIDES AND GONE THROUGH THE RELEVA NT MATERIAL ON RECORD, IT IS SEEN AS AN ADMITTED POSITION THAT THE A SSESSEE DID RECEIVE INCOME-TAX REFUND FOR THE ASSESSMENT YEAR 201 0-11 IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSID ERATION. THOUGH SUCH REFUND WAS NOT ACTUALLY PASSED ON TO THE ASS ESSEE BUT THE SAME WAS ADJUSTED AGAINST THE TAX DEMAND. THE FACT THA T THE ASSESSEE DID RECEIVE INTEREST ON INCOME-TAX REFUND DURING THE YEAR UNDER CONSIDERATION, THE SAME IS CHARGEABLE TO TAX. WE, THE REFORE, UPHOLD THE IMPUGNED ORDER ON THIS SCORE. THIS GROUND FA ILS. 8. THE ASSESSEE HAS RAISED AN ADDITIONAL GROUND READING A S UNDER: 1. THE LEARNED AO ERRED ON FACTS AND IN LAW IN MAKING ADDITION OF INPUT CREDIT OF SERVICE TAX WHICH IS WRITTEN OFF BY THE ASSESSEE AS INELIGIBLE AMOUNTING TO RS.6,04,871/- CONTENDING ITA NO.405/PUN/2018 KOPERGAON PEOPLES COOP. BANK LTD., 4 THE SAME AS PRIOR PERIOD EXPENSE WITHOUT APPRECIATING THE FAC TS AND SUBMISSIONS MADE IN THIS BEHALF. 9. THE HONBLE SUPREME COURT IN NATIONAL THERMAL POWER COMPANY LTD. VS. CIT (1998) 229 ITR 383 (SC) HAS OBSERVED THAT THE PURPOSE OF THE ASSESSMENT PROCEEDINGS BEFORE THE TAXING AUTHORITIES IS TO ASSESS CORRECTLY THE TAX LIABILITY OF AN ASSESSE E IN ACCORDANCE WITH LAW. IF, FOR EXAMPLE, AS A RESULT OF A JUDICIAL DECISION GIVEN WHILE THE APPEAL IS PENDING BEFORE THE TRIBUNAL, IT IS FOUND THAT A NON-TAXABLE ITEM IS TAXED OR A PERMISSIBLE DEDU CTION IS DENIED, WE DO NOT SEE ANY REASON WHY THE ASSESSEE SHOU LD BE PREVENTED FROM RAISING THAT QUESTION BEFORE THE TRIBUNAL FO R THE FIRST TIME, SO LONG AS THE RELEVANT FACTS ARE ON RECORD IN RESP ECT OF THAT ITEM. ANSWERING THE QUESTION POSED BEFORE IT IN AFFIRMATIVE , THEIR LORDSHIPS HELD THAT ON THE FACTS FOUND BY THE AUTHORITIES BELOW , IF A QUESTION OF LAW ARISES (THOUGH NOT RAISED BEFORE THE AUTHORITIE S) WHICH HAS BEARING ON THE TAX LIABILITY OF THE ASSESSEE, THE TRIB UNAL HAS JURISDICTION TO EXAMINE THE SAME. HAVING GONE THROUGH THE SUBJECT MATTER OF THE ADDITIONAL GROUND ESPOUSED BY THE AS SESSEE, IT IS DISCERNIBLE THAT THE SAME RAISES A PURE QUESTION OF LAW. WE, THEREFORE, ADMIT THE SAME AND TAKE IT UP FOR DISPOSAL ON MERITS. 10. ON GOING THROUGH THE DETAIL OF PRIOR PERIOD EXPENSES, THE AO OBSERVED THAT THE ASSESSEE DEBITED THE SERVICE TAX AND CENV AT CREDIT ITA NO.405/PUN/2018 KOPERGAON PEOPLES COOP. BANK LTD., 5 AMOUNTING TO RS.6,04,871/- PERTAINING TO F.Y. 2011-12. AS THIS AMOUNT PERTAINED TO THE PRECEDING YEAR, THE AO MADE DISALLOWA NCE. THE ASSESSEE DID NOT CHALLENGE SUCH DISALLOWANCE BEFORE THE LD. CIT(A). HOWEVER, IT IS THROUGH THIS ADDITIONAL GROUND THAT THE ASSESSEE HAS RAKED UP THIS ISSUE AT THE STAGE OF THE TRIBU NAL. IN VIEW OF THE FACT THAT THE DETAILS OF INPUT CREDIT OF SERVICE TAX ETC., WHICH WERE DISALLOWED BY THE AO, ARE NOT AVAILABLE BEFORE THE TRIB UNAL AND FURTHER THE ISSUE HAS NOT PASSED THROUGH THE EYES OF THE LD. CIT(A), THE LD. AR REQUESTED THAT THE MATTER MAY BE SENT BA CK TO THE FILE OF LD. CIT(A) FOR CONSIDERATION AND DECISION. NO SERIO US OBJECTION WAS TAKEN BY THE LD. DR TO THIS SITUATION. HAVING REG ARD TO THE RIVAL BUT COMMON SUBMISSION, WE REMIT THIS MATTER TO THE FILE OF LD. CIT(A) FOR DECIDING IT ON MERITS AS PER LAW AFTER ALLOWING REASONABLE OPPORTUNITY TO THE ASSESSEE. 11. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST AUGUST, 2021. SD/- SD/- ( S.S. VISWANETHRA RAVI ) (R.S.SYAL) JUDICIAL MEMBER VIC E PRESIDENT PUNE; DATED : 31 ST AUGUST, 2021 ITA NO.405/PUN/2018 KOPERGAON PEOPLES COOP. BANK LTD., 6 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE CIT(A)-2, PUNE 3. THE PR.CIT-1, PUNE 4. 5. DR, ITAT, B BENCH, PUNE / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR P RIVATE SECRETARY , / ITAT, PUNE DATE 1. DRAFT DICTATED ON 31-08-2021 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 31-08-2021 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *