M/s. Dhandaai Investment Pvt. Ltd., New Delhi V. CIT, Faridabad

ITA 4630/DEL/2016

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 7603 (ITAT-DELHI)
• Duration Of Justice: 4 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 31-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIDHI SRIVASTAV
• Keywords: Revision of order; Earning of tax free income; Rule 8D
• Section: 143(3); 14A; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B, NEW DELHI BEFORE SH. AMIT SHUKLA, JUDICIAL MEMBER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER (E-COURT MODULE) ITA NO. 4630/DEL/2016 : ASSTT. YEAR : 2009-10 DHANDAAI INVESTMENT PVT. LTD., C/O M/S RRA TAXINDIA, D-28, SOUTH EXTENSION, PART-I, NEW DELHI-110049 VS COMMISSIONER OF INCOME TAX, FARIDABAD (APPELLANT) (RESPONDENT) PAN NO. A A CCD7191E ASSESSEE BY : SH. SOMIL AGARWAL, ADV. REVENUE BY : MS. NIDHI SRIVASTAV, SR. DR DATE OF HEARING: 04.08.2020 DATE OF PRONOUNCEMENT: 31.08.2020 ORDER PER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT, FARIDABAD DATED 31.03.201 4. 2. FOLLOWING GROUNDS HAVE BEEN RAISED BY THE ASSESS EE: 1. THAT HAVING REGARD TO FACTS & CIRCUMSTANCES OF THE CASE, LD. CIT HAS ERRED IN LAW AND ON FACTS IN ASSUMING JURISDICTION U/S 263 AND HAS FURTHER ERRED IN MAKING DISALLOWANCE U/S 14A AND THAT TOO RS.6,71,300/-. 2. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER, ORDER PASSED U/S 263 AND DISALLOWANCE U/S 14A AT RS.6,71,300/- IS BAD IN LAW AND AGAINST THE FACTS A ND CIRCUMSTANCES OF THE CASE. ITA NO. 4630/DEL/2016 DHANDAAI INVESTMENT PVT. LTD. 2 3. THE APPEAL HAS BEEN FILED WITH A DELAY OF 808 DA YS. IT WAS SUBMITTED THAT IN THE REVISION ORDER PASSED U/S 263 , DIRECTION WAS GIVEN BY LD. CIT- FARIDABAD TO THE AO PURSUANT TO WHICH ASSESSMENT ORDER WAS PASSED U/S 263/143(3) DATED 25 .03.2015, AGAINST WHICH ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT (A), GURGAON ON 20.04.2015. THE SAID APPEAL WAS HEARD AN D DECIDED BY THE LD. CIT (A) VIDE ORDER DATED 14.06.2016 WHER EIN IT WAS HELD THAT CIT (A) DID NOT HAVE JURISDICTION TO DEC IDE THIS APPEAL AS THE ISSUE WAS DECIDED BY LD. CIT IN ORDER U/S 26 3. THEN, THE ASSESSEE FILED APPEAL BEFORE THE TRIBUNAL ON 31.08. 2016. 4. THE LD. DR ARGUED THAT THIS IS NOT A FIT CASE FO R CONDONATION OF DELAY. 5. WE FIND THAT THE LD. CIT-FARIDABAD HAS NOT GIVEN ANY DIRECTION TO THE AO AS PLEADED BY THE LD. AR IN THE WRITTEN SUBMISSION. 6. THIS IS ONE OF THE RARE CASES WHERE THE LD. CIT HAS ENHANCED AND MODIFIED THE ORDER PASSED U/S 143(3) A ND DETERMINED TAX AND INTEREST PAYABLE IN THE ORDER PA SSED U/S 263 ITSELF. ON RECEIPT OF THE ORDER U/S 263, THE AO HAS AGAIN INITIATED PROCEEDINGS U/S 143(3) AND CONSEQUENTLY T HE PROCEDURE UNDER THE ACT HAVE BEEN DULY FOLLOWED BRI NGING THE SAME AMOUNT TO TAX WHICH HAS ALREADY STANDS MODIFIE D BY THE LD. CIT IN ORDER U/S 263. THE LD. CIT (A) DENIED TO ENTERTAIN THE APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER U/S 143(3) ON THE GROUNDS THAT THE APPEAL BEFORE HIM IS NOT MAINTAINA BLE. 7. SINCE, THE LD. CIT (A) DENIED TO ENTERTAIN THE A PPEAL FILED BY THE ASSESSEE AGAINST THE ORDER U/S 143(3) PASSED ITA NO. 4630/DEL/2016 DHANDAAI INVESTMENT PVT. LTD. 3 PURPORTEDLY GIVING EFFECT TO THE ORDER OF THE LD. C IT U/S 263, THE ONLY RECOURSE TO THE ASSESSEE IS TO FILE APPEAL BEF ORE THE TRIBUNAL AGAINST THE ORDER U/S 263. WE HAVE CONSIDE RED THE ENTIRE EVENTS HOLISTICALLY. SINCE, THE ASSESSEE HAS BONAFIDE REASONS TO PREFER APPEAL BEFORE THE LD. CIT (A) WHI CH WAS PREFERRED IN TIME, THE DELAY IN FILING THE APPEAL A GAINST THE ORDER U/S 263 IS HEREBY CONDONED OWING TO THE SEQUE NCE OF MYSTIFICATION OF THE ORDERS U/S 263 DATED 31.03.201 4, U/S 143(3) DATED 25.03.2015, U/S 250(6) DATED 14.06.201 6. SINCE, THE ASSESSEE FILED APPEAL ON 31.08.2016 AFTER PASSI NG OF THE ORDER U/S 250(6), WE HEREBY ADMIT THE APPEAL OF THE ASSESSEE. 8. DELAY CONDONED. 9. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY E- FILED ITS RETURN OF INCOME ON 22.10.2009 DECLARING TOTAL INCOME OF RS. 1,30,96,002/-. THE CASE WAS SELECTED FOR SCR UTINY UNDER CASS. AFTER ISSUE OF STATUTORY NOTICES AND HEARINGS , THE RETURNED INCOME WAS ACCEPTED U/S 143(3) OF THE INCO ME TAX ACT, 1961 ON 28.12.2011 BY ACIT CIRCLE-1(1), GURGAO N. 10. SUBSEQUENTLY, THE LD. PCIT, ON PERUSAL OF SCHED ULE 4 OF THE ACCOUNTS NOTICED THAT DURING THE YEAR THE ASSESSEE HAS INVESTED AN AMOUNT OF RS.13,42,60,000/- AND DETERMINED THE DISALLOWANCE AN AMOUNT OF RS.6,71,300/- @ 0.5% IN ACCORDANCE WITH THE PROVISIONS OF RULE 8D(2)(III) T O SECTION 14A. 11. BEFORE US, THE LD. AR ARGUED THAT OUT OF THE IN VESTMENT OF RS.13,42,60,000/- ONLY AN AMOUNT OF RS.18,00,000/- YIELDED PROFIT OF RS.21,93,755/- AND HENCE ONLY THE INVESTM ENTS YIELDED ITA NO. 4630/DEL/2016 DHANDAAI INVESTMENT PVT. LTD. 4 EXEMPT INCOME SHOULD BE CONSIDERED FOR COMPUTATION OF DISALLOWANCE UNDER RULE 8D(2)(III). 12. THE LD. DR ARGUED THAT THE ENTIRE INVESTMENTS H AVE TO BE CONSIDERED AS A SINGLE LOT FOR DETERMINATION OF DIS ALLOWANCE. 13. WE FIND THAT THE SPECIAL BENCH OF ITAT DELHI IN THE CASE OF ACIT VS. VIREET INVESTMENTS PVT. LTD. [2017 (6) TMI 1124] AUTHORED BY A MEMBER OF THIS BENCH HELD THAT ONLY T HOSE INVESTMENTS ARE TO BE CONSIDERED FOR COMPUTING THE AVERAGE VALUE OF INVESTMENT WHICH HAVE YIELDED EXEMPT INCOM E DURING THE YEAR. FOLLOWING THE SAID JUDGMENT, WE HEREBY HO LD THAT INTERESTS OF JUSTICE WOULD BE WELL SERVED BY COMPUT ING THE DISALLOWANCE @ 0.5% ON THE AVERAGE INVESTMENT OF RS.18,00,000/- (OPENING BALANCE NIL) MADE IN M/S LAKSHAYA INVESTMENT ONLY WHICH HAS YIELDED THE PROFITS. IN T HE RESULT, THE DISALLOWANCE DETERMINED BY THE LD. PCIT STANDS MODI FIED TO RS.45,000/-. 14. THE APPEAL OF THE ASSESSEE IS TREATED AS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 31/08/2020. SD/- SD/- (AMIT SHUKLA) (DR. B. R. R. KUMAR) JUDICIAL MEMBER ACCOUNT ANT MEMBER DATED: 31/08/2020 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR