Haldiram Manufacturing Co. Pvt. Ltd., New Delhi V. ACIT, New Delhi

ITA 4580/DEL/2012

• Counselvise Citation: 458020114 RSA 2012
• Duration Of Justice: 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 28-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATPAL SINGH SR DR HEARING ON
• Keywords: Opportunity of being heard; Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: C NEW DELHI BEFORE SHRI I. C. SUDHIR, JUDICIAL MEMBER AND SHRI B. C. MEENA, ACCOUNTANT MEMBER I.T.A. NOS.4579 & 4580/DEL/2012 ASSESSMENT YEAR: 2009-10 HALDIRAM MANUFACTURING CO. PVT. LTD. VS. ACIT, B-1/H-3 MOHAN CO-OPERATIVE IND. ESTATE CIRCLE-12 (1), MATHURA ROAD, NEW DELHI NEW DELHI. PAN:-AAACH3170K (ASSESSEE) (REVENUE) ASSESSEE BY : SH. K.SAMPATH, ADV. REVENUE BY: SH.SATPAL SINGH, SR. DR HEARING ON : 30/10/2012 ORDER PRONOUNCED ON THE DATE: .. ORDER PER I.C.SUDHIR, JM: IN THESE APPEALS THE ASSESSEE HAS IMPUGNED FIRST A PPELLATE ORDER ON THE COMMON GROUND THAT THE LD. AUTHORITIES BELOW HAVE E RRED IN MAKING DISALLOWANCE OF RS.8,77,797/- IN A.Y. 2009-10 AND R S.4,85,988/- IN A.Y. 2008-09 U/S 14A OF THE IT ACT. ITA NOS. 4579 & 4580/DEL/2012 2 2. AT THE OUTSET OF HEARING THE LD. AR POINTED OUT THA T THE ISSUE RAISED IN THE GROUND IS FULLY COVERED BY THE DECISION OF HON BLE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF MAXOPP INVESTMENTS LT D. VS. CIT, 64 DTR 122 (DEL) AS PER WHICH THE ISSUE IS REQUIRED TO BE SET ASIDE TO THE AO FOR HIS FRESH CONSIDERATION AND TO DECIDE IT AS PER THE VIE W EXPRESSED BY THE HONBLE HIGH COURT IN THE SAID CASE, SINCE THE AO HAS NOT R ECORDED HIS SATISFACTION BEFORE MAKING DISALLOWANCE IN QUESTION U/S 14A OF T HE ACT, READ WITH RULE 8D OF IT RULES. 3. THE LD. DR ON THE OTHER HAND TRIED TO JUSTIFY THE F IRST APPELLATE ORDER. 4. HAVING GONE THROUGH THE ORDERS OF THE AUTHORITIES B ELOW AS WELL AS THE DECISION CITED, WE FIND THAT THE ISSUE RAISED IN TH E GROUND REGARDING APPLICABILITY OF SECTION 14A OF THE ACT HAS TO BE D ECIDED IN VIEW OF THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT O F DELHI IN THE CASE OF MAXOPP INVESTMENTS LTD. VS. CIT (SUPRA). IN THAT CA SE THE HONBLE HIGH COURT WAS PLEASED TO HOLD THAT IT IS ONLY IF THE AS SESSING OFFICER IS NOT SATISFIED WITH THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE IN RESPECT OF THE EXPENDITURE CLAIMED TO HAVE BEEN INCURRED, THE ASSE SSING OFFICER GETS JURISDICTION TO DETERMINE THE AMOUNT OF EXPENDITURE INCURRED IN RELATION TO SUCH INCOME WHICH DOES NOT FORM PART OF THE TOTAL I NCOME UNDER THE SAID ACT IN ACCORDANCE WITH THE PRESCRIBED METHOD. THE PRESC RIBED METHOD IS THE ITA NOS. 4579 & 4580/DEL/2012 3 METHOD STIPULATED IN RULE 8D OF THE I.T. RULES WHIC H IS APPLICABLE FROM A.Y. 2008-09. THUS THE NECESSARY PRECONDITION FOR I NVOKING SECTION 14A (2) READ WITH RULE 8D IS SATISFACTION OF THE AO. BEFORE THE LD. CIT (A) THE ASSESSEE CONTENDED THAT THE AO HAS INVOKED PROVISIO NS U/S 14A (2) OF THE ACT READ WITH RULE 8D OF THE IT RULES WITHOUT RECOR DING HIS SATISFACTION WITH THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE. THE LD. CIT (A) DID NOT AGREE WITH THIS CONTENTION, WITH THIS OBSERVATION T HAT POWERS OF THE FIRST APPELLATE AUTHORITY ARE CO-TERMINUS WITH THAT OF TH E AO AND THE ASSESSEE WAS GIVEN ANOTHER OPPORTUNITY BY HIM TO EXPLAIN AS TO W HY DISALLOWANCE U/S 14A READ WITH RULE 8D BE NOT MADE. THE CONTENTION OF TH E ASSESSEE ALSO REMAINED THAT NO DISALLOWANCE IS WARRANTED IN ITS C ASE AS NO ORGANIZED INVESTMENT ACTIVITY WAS BEING CARRIED ON BY THE ASS ESSEES STAFF, MEMBERS AND DIRECTORS. THE LD. CIT (A) DID NOT ACCEPT THIS CONTENTION ON THE BASIS THAT THERE IS NO EVIDENCE IN SUPPORT. WE ARE OF THE VIEW THAT THE APPROACH OF THE LD. CIT (A) IN IGNORING CONTENTION OF THE ASSESSEE THAT THE AO HAS NOT RECORDED HIS SATISFACTION WITH THE CORRECTNESS OF T HE CLAIM OF THE ASSESSEE BEFORE INVOKING PROVISIONS OF SECTION 14A (2) READ WITH RULE 8D, IS NOT IN THE SPIRIT OF THE DECISION OF THE HONBLE JURISDICT IONAL HIGH COURT OF DELHI IN THE CASE OF MAXOPP INVESTMENTS LTD. VS. CIT (SUPRA) . WE THUS WHILE SETTING ASIDE THE ORDERS OF THE AUTHORITIES BELOW ON THE IS SUE REMAND THE MATTER TO ITA NOS. 4579 & 4580/DEL/2012 4 THE FILE OF THE AO TO DECIDE THE ISSUE AFRESH AFTER RECORDING HIS SATISFACTION, IF ANY, WITH THE CORRECTNESS OF THE CLAIM OF THE ASSES SEE IN RESPECT OF THE EXPENDITURE CLAIMED TO HAVE NOT BEEN INCURRED TO EA RN THE EXEMPT INCOME TO MAKE DISALLOWANCE U/S 14A (2) READ WITH RULE 8D. IT IS NEEDLESS TO MENTION HERE THAT WHILE DECIDING THE ISSUE AFRESH HE WILL A FFORD OPPORTUNITY OF BEING HEARD TO THE ASSESSEE IN THIS REGARD. THE GROUND IS THUS ALLOWED FOR STATISTICAL PURPOSES. 5. IN RESULT APPEALS ARE ALLOWED FOR STATISTICAL PURPO SES. 6. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON THE DAY 30/10/2012. SD/- SD/- ( B. C. MEENA ) (I.C.S UDHIR) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 30/10/2012 *AK VERMA* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR