ACIT, New Delhi V. M/s. Cellphone Credit & Securities Pvt. Ltd., New Delhi

ITA 4336/DEL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 3335 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2011-2012
• Appeal Filed On: 03-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: U C DUBEY SR DR PAGE OF
• Keywords: Earning of tax free income
• Section: 14A; 15

Judgement Text

ITA NO S . 4436, 4437, 4438 AND 44 39 /DEL/201 5 ASSESSMENT YEAR: 201 1 - 1 2 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E BENCH NEW DELHI) BEFORE SHRI G.D. AGARWAL, PRESIDENT & SHRI KULDIP SINGH , JUDICIAL MEMBER IN ITA NO S . 4336, 4337, 4338 AND 4 3 39 /DEL/201 5 ASSESSMENT YEARS: 20 1 1 - 1 2 ACIT CENTRAL CIRCLE - 26, ROOM NO. 323, 3 RD FLOOR, ARA CENTRE, JHANDEWALAN EXTN. NEW DELHI VS. CELLPHONE CREDIT & ECURITIES PVT. LTD. A - 60, NARAINA INDL. AREA, PHASE - 1, NEW DELHI (APPLICANT) (RESPONDENT) (PAN: AAACC4101D ) ACIT CENTRAL CIRCLE - 26, ROOM NO. 323, 3 RD FLOOR, ARA CENTRE, JHANDEWALAN EXTN. NEW DELHI VS. SHYAM BASIC INFRASTRUCTURE PROJECT PVT. LTD. A - 60, NARAINA INDL. AREA, PHASE - 1, NEW DELHI (APPLICANT) (RESPONDENT) (PAN: AABCS3455R ) ACIT CENTRAL CIRCLE - 26, ROOM NO. 323, 3 RD FLOOR, ARA CENTRE, JHANDEWALAN EXTN. NEW DELHI VS. INTEL INVOFIN INDIA PVT. LTD. A - 60, NARAINA INDL. AREA, PHASE - 1, NEW DELHI (APPLICANT) (RESPONDENT) (PAN: AAACI2366J ) ACIT CENTRAL CIRCLE - 26, ROOM NO. 323, 3 RD FLOOR, ARA CENTRE, JHANDEWALAN EXTN. NEW DELHI VS. A.T. INVOFIN INDIA PVT. LTD. A - 60, NARAINA INDL. AREA, PHASE - 1, NEW DELHI (APPLICANT) (RESPONDENT) (PAN: AAACA8248B ) REVENUE BY: SHRI U.C. DUBEY, SR. DR PAGE 2 OF 8 ASSESSEE BY: SHRI ARVIND KUMAR , ADVOCATE DATE OF HEARING 0 9 / 11 /2017 DATE OF PRONOUNCEMENT 2 1 / 1 1 /2017 ORDER PER BENCH : SINCE THE COMMON QUESTIONS OF FACTS AND LAW AS TO THE DELETION OF DISALLOWANCE U/S 14A READ WITH RULE 8D OF THE RULES MADE BY THE ASSESSING OFFICER HAVE BEEN RAISED IN THE AFORESAID APPEALS THE SAME ARE BEING DISPOSED OFF BY WAY OF CONSOLIDATED ORDER TO AV OID REPETITION OF DISCUSSION . 2. THE APPELLANT, DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 2, NEW DELHI (HEREINAFTER REFERRED TO AS THE REVENUE ) BY FILING THE PRESENT APPEAL S BEARING ITA NOS. 4336, 4337, 4338 AND 4339 ALL ASSESSMENT YEARS 2011 - 12 SOUGHT TO SET ASIDE THE IMPUGNED ORDER S DATED 24.4.2015 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 29, NEW DELHI QUA THE ASSESSMENT YEARS 2011 - 12 RESPECTIVELY DELETING THE DISALLOWANCE UNDER SECTION 14A READ WITH RULE 8D OF THE I.T. ACT, 1961 (FOR SHORT THE ACT ), QUA THE ASSESSMENT YEAR 201 1 - 1 2 ON THE GROUND S THAT : ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT (A) HAS ERRED IN DELETING THE DISALLOWANCE U/S 14A READ WITH RULE 8D OF THE INCOME TAX RULES, 1962 AMOUNTING TO RS. 81,57,398/ - , 86,77,669/ - , 46,69,226/ - AND 1,89,28,395/ - PAGE 3 OF 8 , IN ITA NOS. 4336, 4337, 4338 AND 4339, IN ALL ASSESSMENT YEARS 2011 - 12 RESPECTIVELY. 3 . SINCE ALL THE AFORESAID APPEALS ARE AS TO THE DELETION OF ADDITION MADE BY THE ASSESSING OFFICER U/S 14A READ WITH RULE 8D HAVE EMA NATED FROM SIMILAR SET OF FACTS, T HE COMPOSITE FACTS OF APPEAL NOS. 4336 , 4337, 4338 AND 4339 ARE TAKEN TO ADJUDICATE THE CONTROVERSY AT HAND FOR THE SAKE OF BREVITY. 4. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICATION OF THE CONTROVERSY AT HAND ARE : THE ASSESSEE IS ENGAGED IN THE BUSINESS OF NON BANKING FINANCE COMPANY AND ITS MAIN OBJECT IS TO MAKE INVESTMENT IN TELECOM SECTOR, A RENTED VENTURE TO PROMOTE THE FORMATION AND MOBILIZATION AND CAPITAL INVESTMENT ON BEHALF OF ITS PROMOTERS. FROM THE PERUSAL OF THE P&L ACCOUNT THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS DISALLOWED ON ACCOUNT OF EXPENSES INCURRED IN RELATION TO THE INCOME NOT INCLUDABLE IN TOTAL INCOME AN EXPENDITURE OF RS. 2,20,047/ - , 3,95,510/ - , 1,45,8 98/ - AND 12,71,477/ - IN ITA NO. 4336 TO 4339 ALL ASSESSMENT YEARS 2011 - 12 RESPECTIVELY . 5. THE ASSESSING OFFICER REJECTED THE SUBMISSION OF THE ASSESSEE THAT THE DISALLOWANCE U/S 14A READ WITH RULE 8D IS AS PER THE CALCULATION MADE BY THE TAX AUDITOR. THE ASSESSING OFFICER PROCEEDED TO COMPUTE THE DISALLOWANCE AS PER THE SECTION 14A(2), 14(3) WITH AMENDED RULE (II) AND (III) AND THEREBY MADE THE DISALLOWANCE TO THE TUNE OF RS. PAGE 4 OF 8 81,57,398/ - , 86,77,669/ - , 46,69,226/ - AND 1,89,28,395/ - IN ITA NO. 4336 TO 4339 ALL ASSESSMENT YEARS 2011 - 12 RESPECTIVELY. 6. THE ASSESSEE CARRIED THE MATTER BEFORE THE LEARNED CIT(APPEALS) BY WAY OF FILING THE APPEAL S WHO HAS DELETED THE ADDITION MADE BY THE ASSESSING OFFICER VIDE ORDER DATED 24.4.2015. FEELING AGGRIEVED THE REVENUE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEAL. 7 . WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS RELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN THE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 8 . UNDISPUTEDLY, THE ASSESSEE HAD MADE SUO MOTO DISALLOWANCE ON ACCOUNT OF EXPENDITURE TO THE TUNE OF RS. 2,20,047/ - , 3,95,510/ - , 1,45,898/ - AND 12,71,477/ - IN ITA NO S . 4336 , 4337, 4338 AND 4339 ALL A.Y. 2011 - 12 QUA THE INCOME NOT INCLUDABLE IN TOTAL INCOME U/S 14A READ WITH RULE 8D AND FILED AS PER THE CALCULATION MADE BY THE TAX AUDITOR BEFORE THE ASSESSING OFFICER. IT IS ALSO NOT I NDISPUT E THAT THE ASSESSEE CLAIMED EXEMPT INCOME OF RS. 25,58,731/ - , RS. 87,73,7 12/ - , RS. 5,05,679/ - AND RS. 76,78,130/ - ON ACCOUNT OF DIVIDEND EARNED. 9. IN BACK DROP OF THE AFORESAID FA C TS AND CIRCUMSTANCES OF THE QUESTIONS ARISES IN THIS CASE IS : AS TO WHETHER THE ASSESSING OFFICER HAS RECORDED HIS DISSATISFACTION QUA THE SUO MOTO DISALLOWANCE MADE BY THE ASSESSEE U/S 14A READ WITH RULE 8D . PAGE 5 OF 8 10 . THE HON'BLE HIGH COURT OF DELHI HAS DE AL T WITH THE IDENTICAL ISSUE IN THE CASES CITED AS MAXOPP INVESTMENT LTD. VS. COMMISSIONER OF INCOME TAX [2011] 15TAXMANN.COM 390 (DELHI) AND DECI DED IN FAVOUR OF THE ASSESSEE BY HOLDING THAT U/S 14A(2) THE CONDITION PRECEDENT FOR ASSESSING OFFICER IS TO DETERMINE AN AMOUNT OF EXPENDITURE IN RELATION TO THE EXEMPT INCOME IS THAT HE MUST RECORD HIS DISSATISFACTION WITH THE CORRECTNESS OF THE CLAIM OF EXPENDITURE SUO MOTO MADE BY THE ASSESSING OFFICER. 1 1 . THE HON'BLE HIGH COURT OF DELHI IN THE CASE OF COMMISSIONER OF INCOME TAX - VI VS. TAIKISHA ENGINEERING INDIA LTD. [2015] 54 TAXMANN.COM 109 (DELHI) HAS HELD AS UNDER: - SECTION 14A OF THE INCOME TAX ACT, 1961, READ WITH RULE 8D OF THE INCOME TAX RULES, 1962 EXPENDITURE INCURRED IN RELATION TO INCOME NOT INCLUDIBLE IN TOTAL INCOME (RULE 8D) ASSESSMENT YEARS 2008 - 09 AND 2009 - 10. WHETHER IT IS ONLY WHEN COMPUTATION OR DISALLOWANCE MADE BY THE ASSESSEE OR CLAIM THAT NO EXPENDITURE WAS INCURRED TO EARN EXEMPT INCOME IS FOUND NOT SATISFACTORY WITH REFERENCE TO ACCOUNTS, THAT COMPUTATION UNDER SUB - RULE (2) OF THE RULE 8D IS TO BE MADE HELD, YES. 1 2 . THE LD. DR FOR THE REVENUE BY RELYING UPON THE JUDGMENT CITED AS IN THE CASE OF INDIABULLS FINANCIAL SERVICES LTD. VS. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE - 11(1) [2016] 76 TAXMANN.COM 268 (DELHI) CONTENDED THAT M ERELY BECAUSE THE ASSESSING OFFICER HAS NOT RECORDED HIS DISSATISFACTION ABOUT THE ASSESSEE S CALCULATION, HIS CALCULATIONS COULD NOT BE REJECTED. THE LD. DR FURTHER RELIED UPON THE PAGE 6 OF 8 DECISION RELIED UPON BY THE HON'BLE SUPREME COURT IN THE CASE CITED AS GODREJ & BOYCE MANUFACTURING COMPANY LTD. VS. DEPUTY COMMISSIONER OF INCOME TAX [2017] 81 TAXMANN.COM111(SC) . 1 3 . NOW ADVERTING TO THE FACTS AND CIRCUMSTANCES OF THE WHEN WE PERUSED THE PARA 5 AND 6 OF THE ASSESSMENT ORDER, THERE IS NO DISSATISFACTION EXPRESSED BY THE ASSESSING OFFICER AS TO WHY AND UNDER WHAT CIRCUMSTANCES THE CALCULATION MADE BY THE ASSESSEE TO DISALLOW SUO MOTO EXPENDITURE IS NOT CORRECT. RATHER THE ASSESSING OFFICER PROCEEDED TO COMPUTE THE DISALLOWANCE AS PER THE PROVISIONS OF SECTION 14A(2)(3) READ WITH RULE 8D(2)(3) BY DISC USSING THE LEGAL POSITION ONLY. 14. IN GODREJ & BOYCE MANUFACTURING COMPANY LTD. VS. DEPUTY COMMISSIONER OF INCOME TAX (SUPRA) THE HON'BLE SUPREME COURT IN PARA 37 ALSO HELD THAT IT IS ONLY AFTER RECORDING DISSATISFACTION BY THE ASSESSING OFFICER AS TO THE CALCULATION MADE BY THE ASSESSEE TO MAKE SUO MOTO DISALLOWANCE OF EXPENDITURE , SECTION 14A (2)(3) READ WITH RULE 8D IS ATTRACT ED . S O IN THE GIVEN CIRCUMSTANCES THE DECISION OF THE HON'BLE HIGH COURT IN INDIABULLS FINANCIAL SERVICES LTD. VS. DEPUTY COMMISSIONER OF INCOME TAX (SUPRA) AND THE DECISION OF THE GODREJ & BOYCE MANUFACTURING COMPANY LTD. VS. DEPUTY COMMISSIONER OF INCOME TAX (SUPRA) TO THE EXTENT OF APPLICABILITY OF SECTION 14A READ WITH SECTION RULE 8D OF THE ACT IS NOT APPLICABLE TO THE FA C TS AND CIRCUMSTANCES OF THE CASE. PAGE 7 OF 8 1 5 . SO WHEN THE ASSESSING OFFICER HAS F AI LED TO ELUCIDATE AND EXPLAIN AS TO HOW THE SUO MOTO DISALLOWANCE A S MADE BY THE ASSESSEE IS NOT CORRECT OR UNREASONABLE , PROVISION CONTAINED U/S 14(2) READ WITH RULE 8D ARE NOT ATTRACTED . S O FINDING NO ILLEGALITY OR PERVERSITY IN THE FINDING RE TURNED BY THE LEARNED CIT(APPEALS) IN THE IMPUGNED ORDERS CHALL ENGED IN THE ITA NOS. 4336 , 4337, 4338 AND 4339 FOR ASSESSMENT YEARS 2011 - 12 , ALL THE APPEALS PREFERRED BY THE REVENUE ARE HEREBY DISMISSED. 1 6 . IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 1 . 1 1 .2017. S D / - S D / - ( G.D. AG AR WAL ) ( KULDIP SINGH ) PRESIDENT, ITAT JUDICIAL MEMBER DATED: 2 1 / 1 1 /201 7 NARENDER COPY FORWARDED TO 1 . APPLICANT 2 . RESPONDENT 3 . CIT 4 . CIT (A) 5 . DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI DATE 1. DRAFT DICTATED ON 13 . 11 .2017 2. DRAFT PLACED BEFORE AUTHOR 13 .11 .2017 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER PAGE 8 OF 8 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 5. APPROVED DRAFT COMES TO THE SR.PS/PS 2 1 .1 1 .2017 6. KEPT FOR PRONOUNCEMENT ON 7. FILE SENT TO THE BENCH CLERK 2 1 .11.2017 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.