DCIT CENT. CIR. 8(3) ERSTWHILE DCIT CENT. CIR. - 46, MUMBAI V. ROSY BLUE (INDIA) PVT. LTD., MUMBAI

ITA 4093/MUM/2018

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 3479 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-03-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 07-06-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJITKUMAR SRIVASTAVA
• Keywords: Bogus purchase; Business income; Depreciation; Earning of tax free income; Tax effect; Rule 8D
• Section: 14A

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI SHRI SHAMIM YAHYA (AM) & SHRI AMARJIT SINGH (JM) I.T.A. NO. 4093/MUM/2018 (ASSESSMENT YEAR 2009-10) DCIT, CC-8(3) ERSTWHILE DCIT,CC-46 ROOM NO. 659 6 TH FLOOR AAYAKAR BHAVAN M.K. ROAD MUMBAI - 400 020 . VS. M/S. ROSY BLUE (INDIA) PVT. LTD. 1608-09, PRASAD CHAMBERS OPERA HOUSE MMBAI-400 004. PAN : AACCR2413B (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI NITESH JOSHI DEPARTMENT BY SHRI AJIT KUMAR SRIVASTAVA DATE OF HEARING 02.03.2021 DATE OF PRONOUNCEMENT 02.03.2021 O R D E R PER SHAMIM YAHYA (AM) :- THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST ORDE R OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) [IN SHORT LEAR NED CIT(A)] DATED 26.3.2018 AND PERTAINS TO ASSESSMENT YEAR 2009-10. 2. THE GROUNDS OF APPEAL READ AS UNDER :- 1. 'WHETHER IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) IS JUSTIFIED IN DELETING THE DISALLOWANCE OF RS. 97,22,965/-ON ACCOUNT OF DEPRECIATION ON KANDIVALI FACTORY PREMISES WHEN THE SAID PREMISES ALONG WITH ALL ITS FIXTURES IS BEING USED BY AGENCIES TO WHOM J OB WORK IS OUTSOURCED BY THE ASSESSEE?' 2. 'WHETHER IN THE FACTS AND THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) IS JUSTIFIED TREATING RECEIPTS FROM JOB CONTRAC TORS AMOUNTING TO RS. 24.000/- AS BUSINESS INCOME INSTEAD OF INCOME FROM HOUSE PROPERTY CONSIDERING THE SAID PREMISES AT KANDIVALI ALONG WIT H ALL ITS FIXTURES HAVE BEEN LEASED TO THE OUTSOURCING AGENTS (JOB CONTRACTORS)?' 3. 'WHETHER IN THE FACTS AND THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. C1T(A) HAS ERRED IN RESTRICTING THE DISALLOWANCE U/S 14A R.W.RULE 8D(2)(III) MADE BY THE ASSESSING OFFICER TO RS. 1,30,000/- WITHO UT APPRECIATING THE FACT THAT THE DISALLOWANCE U/S 14A OF THE ACT HAS BEEN CARR IED OUT AS PER THE FORMULA LAID DOWN IN RULE 8D OF THE INCOME TAX RULES AND BY FOLLOWING THE M/S. ROSY BLUE (INDIA) PVT. LTD. 2 CBDT CIRCULAR NO. 5/2014 DATED 11/02/2014 WHEREIN I T HAD BEEN HELD THAT DISALLOWANCE U/S 14A R.W.R 8D CAN BE EVEN MADE WHEN THE ASSESSEE HAD NOT EARNED ANY EXEMPT INCOME DURING THE YEAR.' 4. 'WHETHER IN THE FACTS AND THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE U/S 1 4A R.W.RULE 8D(2)(II) OF RS. 12,16,993/- MADE BY THE ASSESSING OFFICER BY RELYIN G ON DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF RELIANCE UTILITIES & POWER LTD (313 ITR 340) WITHOUT APPRECIATING THE FACT THAT THE SAID RATIO IS LAID DOWN PRIOR TO THE INTRODUCTION OF RULE 8D FOR COMPLETION OF DISALLOWANC E AND HENCE NO PRESUMPTION WITH REGARDS TO THE SAME REMAINS?' 5. 'WHETHER IN THE FACTS AND THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE DISALLOWANC E OF RS. 16.188/- ON ACCOUNT OF BOGUS PURCHASES AND RESTRICTING THE DISALLO WANCE TO 5% IGNORING THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF N.K. PROTEINS LTD. VS. DCIT IN WHICH UPTO 100% OF BOGUS PURCHASES W ERE DISALLOWED AND IN WHICH SLP OF THE ASSESSEE IS DISMISSED?' 3. AT THE OUTSET IT IS NOTED THAT THAT THE TAX EFFE CT IN THIS CASE IS BELOW THE LIMIT OF RS. 50,00,000/- FIXED BY CBDT VIDE CIRCULA R NO. 17/2019 DATED 8/8 2019 FOR FILING APPEAL BEFORE THE ITAT. HENCE THIS APPEAL BY THE REVENUE IS NOT MAINTAINABLE. 4. LEARNED DEPARTMENTAL REPRESENTATIVE COULD NOT DI SPUTE THAT THE TAX EFFECT IS BELOW THE SAID LIMIT. HE COULD NOT POINT OUT THAT THE APPEAL FALLS IN ANY OF THE EXCEPTIONS CARVED IN SAID CIRCULAR. 5. UPON CAREFUL CONSIDERATION WE FIND THAT AS THE T AX EFFECT IS BELOW THE LIMIT FIXED BY CBDT FOR FILING APPEALS BEFORE THE I TAT, THIS APPEAL BY THE REVENUE IS LIABLE TO BE DISMISSED IN LIMINE. THE RE VENUE WILL HAVE LIBERTY TO SEEK RESTORATION OF THE APPEAL IF THE TAX EFFECT IS FOUND TO BE BEYOND THE ABOVE LIMIT. 6. ACCORDINGLY THE APPEAL STANDS DISMISSED AS SUCH. PRONOUNCED IN THE OPEN COURT ON 2.3.2021. SD/- SD/- (AMARJIT SINGH) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUN TANT MEMBER MUMBAI; DATED : 02/03/2021 M/S. ROSY BLUE (INDIA) PVT. LTD. 3 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR) PS ITAT, MUMBAI