PLASTIBLENDS INDIA LTD, MUMBAI V. DCIT RG 8(2), MUMBAI

ITA 4121/MUM/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7138 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 16-06-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: T A KHAN
• Keywords: Depreciation; Earning of tax free income
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F MUMBAI BEFORE SHRI JOGINDER SINGH (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 4121/MUM/2016 ASSESSMENT YEAR: 2012 - 13 PLASTIBLENDS INDIA LTD. KOLSITE HOUSE, 31 SHAH INDUSTRIAL ESTATE OFF VEERA DESAI ROAD, ANDHERI (W) MUMBAI - 400053. VS. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE - 8(2), MUMBAI. PAN NO. AAACP6287B APPELLANT RESPONDENT ASSESSEE BY : MR. NITESH JOSHI, AR REVENUE BY : MR. T.A. KHAN, DR DATE OF HEARING : 31 /0 5 /2018 DATE OF PRONOUNCEMENT: 31/05/2018 ORDER PER N.K. PRADHAN, AM THIS IS AN APPEAL FILED BY THE ASSESSEE. THE RELEVANT ASSESSMENT YEAR IS 2012 - 13. THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 17, MUMBAI [IN SHORT CIT(A) ]AND ARISES OUT OF THE ASSESSMENT COMPLETED U/S 143(3) OF T HE INCOME TAX ACT 1961, (THE ACT). PLASTIBLENDS INDIA LTD. ITA NO. 4121/MUM/2016 2 2. THE GROUNDS OF APPEALS FILED BY THE ASSESSEE READ AS UNDER: 1. THE CIT(A) OUGHT TO HAVE HELD THAT THE APPELLANT HAD DISCLAIMED DEDUCTION BY WAY OF DEPRECIATION UNDER SECTION 32(1) OF THE ACT IN THE EARLIER YEARS AND, THEREFORE, THE WRITTEN DOWN VALUE ON WHICH DEPRECIATION WAS TO BE ALLOWED FOR THE YEAR UNDER CONSIDERATION SHOULD HAVE BEEN HIGHER TO THAT EXTENT. 2. THE CI T(A) OUGHT TO HAVE HELD THAT THE APPELLANT HAD ALREADY DISALLOWED RS.32,341 AS BEING ALLOCABLE UNDER SECTION 14A AND NO FURTHER EXPENDITURE BY WAY OF ADMINISTRATIVE COST HAD BEEN INCURRED IN RELATION TO EARNING OF EXEMPT INCOME AND, HENCE, NO SUCH ADDITIONAL EXPENDITURE COULD NOT BE THE SUBJECT MATTER OF DISALLOWANCE UNDER SECTION 14A OF THE AC T . 3 . THE LD. COUNSEL OF THE ASSESSEE FAIRLY AGREES THAT THE 1 ST GROUND OF APPEAL HAS BEEN DECIDED AGAINST THE ASSESSEE BY THE DECISION OF THE HONBLE SUPREME COURT IN ASSESSEES OWN CASE I.E. PLASTIBLENDS INDIA LTD. V. ADDITIONAL CIT (2017) 86 TAXMANN.COM 137 (SC). THE LD. DR RELIES ON THE ABOVE DECISION. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. IN THE ABOVE DECISION, IT HAS BEEN HELD THAT QUANTUM OF DEDUCTION UNDER SECTION 80 - IA IS NOT DEP ENDENT UPON ASSESSEE CLAIMING OR NOT CLAIMING DEPRECIATION, BECAUSE UNDER SECTION 80 - IA QUANTUM OF DEDUCTION HAS TO BE DETERMINED BY COMPUTING TOTAL INCOME FROM BUSINESS AFTER DEDUCTING ALL DEDUCTIONS ALLOWABLE UNDER SECTIONS 30 TO 43D OF THE ACT. FOLLOW ING THE ABOVE DECISION, WE UPHOLD THE ORDER OF THE LD. CIT(A) . PLASTIBLENDS INDIA LTD. ITA NO. 4121/MUM/2016 3 5. NOW WE TURN TO THE 2 ND GROUND OF APPEAL. IN THE PROFIT AND LOSS ACCOUNT, THE ASSESSEE HAS CREDITED RS.22,74,670/ - AS DIVIDEND INCOME AND CLAIMED THE SAME AS EXEMPT U/S 10(34) IN THE COMPUT ATION OF INCOME. THE ASSESSEE HAS OFFERED RS.32,341/ - AS DISALLOWANCE U/S 14A IN RESPECT OF THE EXEMPT INCOME. THE ASSESSING OFFICER (AO) MADE A DISALLOWANCE OF RS.9,02,519/ - UNDER RULE 8D(2)(II) AND RS.1,92,535 UNDER RULE 8D(2)(III) OF THE INCOME TAX RULE S, 1962. THE AO THUS MADE A DISALLOWANCE OF RS.10,62,713/ - AFTER GIVING CREDIT OF RS.32,341/ - OFFERED BY THE ASSESSEE. 6. IN APPEAL, THE LD. CIT(A) RESTRICTED THE DISALLOWANCE TO RS.1,60,194/ - [RS.1,92,535/ - DISALLOWED BY THE AO UNDER RULE 8D(2)(III) MINU S RS.32,341/ - OFFERED BY THE ASSESSEE] . 7. WE FIND THAT THE ITAT C BENCH, MUMBAI IN ASSESSEES OWN CASE FOR THE AY 2008 - 09 (ITA NO. 4080/MUM/2012) HAS UPHELD SIMILAR DISALLOWANCE UNDER RULE 8D(2)(III). THE TRIBUNAL HELD: HOWEVER, COMING TO THE DISALLO WANCE OF OTHER DIRECT OR INDIRECT EXPENDITURE, THE ASSESSEE HAS COMPUTED THE DISALLOWANCE AT RS. 24,304/ - BY ALLOCATING THE SALARY PAID TO JUNIOR ACCOUNTANT. WE DO NOT AGREE WITH THIS COMPUTATION OF DISALLOWANCE BY THE ASSESSEE. IT IS AN UNDISPUTED FACT TH AT INVESTMENT IS A POLICY DECISION TAKEN BY THE BOARD OF DIRECTORS AT THE HIGHEST LEVEL WHICH REQUIRES LOT OF CONSULTANCY FROM VARIOUS EXPERTS. THEREFORE, THE DISALLOWANCE U/S. 14A R.W. RULE 8D(2)(III) BECOMES IMPERATIVE, AS THE DISALLOWANCE HAVE BEEN COMP UTED BY THE AO AS PER THE APPLICABLE PROVISIONS OF LAW. WE DO NOT FIND ANY REASON TO INTERFERE WITH THE DISALLOWANCE. PLASTIBLENDS INDIA LTD. ITA NO. 4121/MUM/2016 4 FACTS BEING IDENTICAL, WE FOLLOW THE ABOVE ORDER OF THE CO - ORDINATE BENCH AND UPHOLD THE ORDER OF THE LD. CIT(A). 8 . IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT 31/05/2018. SD/ - SD/ - ( JOGINDER SINGH ) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 31/05/2018 RAHUL SHARMA, SR. P.S. 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// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI