ACIT-11(1), MUMBAI V. QING AMBAY CITY DEVELOPERS CORPORATION PRIVATE LIMITED, MUMBAI

ITA 4659/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8866 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2014-2015
• Appeal Filed On: 31-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Earning of tax free income; Rule 8D
• Section: 14A; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI RAJESH KUMAR , ACCOUNTANT MEMBER ITA NO. 4659 / MUM . /201 8 ( ASSESSMENT YEAR : 20 1 4 15 ) ITA NO. 4660 /MUM. /2018 ( ASSESSMENT YEAR : 20 13 14 ) ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 11(1), MUMBAI . APPELLANT V/S QING AMBAY CITY DEVELOPERS CORPORATION PVT. LTD. HOTEL SAHARA STAR OPP. DOMESTIC AIRPORT VILE PARLE (E), MUMBAI 400 099 PAN AAJCA2307C . RESPONDENT ASSESSEE BY : NONE REVENUE BY : SMT. JOTHILAKSHMI NAYAK DATE OF HEARING 06.01.2020 DATE OF ORDER 15.01.20200 O R D E R PER SAKTIJIT DEY. J.M. THE AFORESAID APPEAL S FILED BY THE REVENUE ARISE OUT OF TWO SEPARATE ORDERS , BOTH DATED 30 TH MAY 2018, PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 18, MUMBAI, PERTAINING TO THE ASSESSMENT YEAR S 2013 14 AND 2014 15. 2 QING AMBAY CITY DEVELOPERS CORPORATION PVT. LTD. 2. THE GROUNDS RAISED IN BOTH THE APPEALS ARE IDENTICAL AND ON THE COMMON ISSUE OF DISALLOWANCE MADE UNDER SECTION 14A R/W RULE 8D. 3. BRIEF FACTS COMMON IN BOTH THE APPEALS ARE, DURING THE ASSESSMENT PROCEEDINGS FOR THE IMPUGNED ASSESSMENT YEARS , THE ASSESSING OFFICER ON VERIFYING THE BALANCE SHEET OF THE ASSESSEE FOUND THAT AS ON 31 ST MARCH 2013 ASSESSEES INVESTMENT IN EQUITY SHARES STOOD AT ` 16,00,15,03,965. SIMILARLY, AS ON 31 ST MARCH 2014 THE INVESTMENTS IN EQUITY SHARES STOOD AT ` 17,36,45,81,715. BEING OF THE VIEW TH AT THESE INVESTMENTS ARE CAPABLE OF YIELDING EXEMPT INCOME, WHEREAS , THE ASSESSEE HAS NOT DISALLOWED ANY EXPENDITURE ATTRIBUTABLE TO INVESTMENT IN EXEMPT INCOME YIELDING ASSET, THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO EXPLAIN WHY DISALLOWANCE UNDER SECTION 14A R/W RULE 8D SHOULD NOT BE MADE. THOUGH , THE ASSESSEE IN RESPONSE SUBMIT TED THAT NO DISALLOWANCE CAN BE MADE UNDER SECTION 14A R/W RULE 8D, HOWEVER, REJECTING THE EXPLANATION OF THE ASSESSEE, THE ASSESSING OFFICER DISALLOWED AMOUNT S OF ` 4,24,29,846 AND ` 8,36,24,954, IN ASSESSMENT YEAR S 2013 14 AND 2014 15 RESPECTIVELY UNDER SECTION 14A R/W RULE 8D. CONTESTING THE AFORESAID DISALLOWANCE S BEFORE LEARNED COMMISSIONER (APPEALS), THE ASSESSEE SUBMITTED THAT DURIN G THE RELEVANT ASSESSMENT YEARS THE ASSESSEE HAS NOT EARNED ANY EXEMPT INCOME, THEREFORE, NO DISALLOWANCE UNDER SECTION 14A R/W RULE 8D CAN BE MADE. HAVING FOUND SUBSTANTIAL MERIT IN THE AFORESAID 3 QING AMBAY CITY DEVELOPERS CORPORATION PVT. LTD. SUBMISSIONS OF THE ASSESSEE AND RELYING UPON THE RATIO LAID DOWN IN VARIOUS JUDICIAL PRECEDENTS, LEARNED COMMISSIONER (APPEALS) DELETED THE DISALLOWANCE S MADE BY THE ASSESSING OFF ICER UNDER SECTION 14A R/W RULE 8D IN BOTH THE ASSESSMENT YEARS UNDER DISPUTE. 4. WHEN THE APPEAL S WERE CALLED FOR HEARING, NO ONE WAS PRESENT TO REPRESENT THE CASE ON BEHALF OF THE ASSESSEE . EVEN , NO APPLICATION HAS BEEN FILED BY THE ASSESSE E SEEKING ADJOU RNMENT . IN SUCH CIRCUMSTANCES, WE CONSIDER IT APPROPRIATE TO DISPOSE OF THE APPEAL EX PARTE QUA THE ASSESSEE AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE AND ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. 5. WE HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE MATERIAL ON RECORD. IT IS AN UNDISPUTED FACT THAT DURING THE RELEVANT ASSESSMENT YEARS, THE ASSESSEE HAS NOT EARNED ANY EXEMPT INCOME. NOW, IT IS FAIRLY WELL SETTLED THAT IN THE ABSENCE OF ANY EXEMPT INCOME EARNED DURING THE YEAR, NO DISALLOWANCE UNDER SECTION 14A R/W RULE 8D CAN BE MADE , AS , PROVISIONS OF SECTION 14A WOULD COME INTO PLAY ONLY IN A CASE WHERE EXEMPT INCOME IS EARNED DURING THE RELEVANT YEAR. THE DECISIONS REFERRED TO BY LEARNED COMMISSIONER (APPEALS) IN PARA 5.3 OF HIS ORDER CLEARLY SUPPORT THE AFORESAID VIEW. THEREFORE, RELYING UPON THE CONSISTENT VIEW EXPRESSED BY THE DIFFERENT HIGH COURTS INCLUDING THE HON'BLE JURISDICTIONAL HIGH COURT IN PCIT V/S 4 QING AMBAY CITY DEVELOPERS CORPORATION PVT. LTD. BALLARPUR INDUSTRIES LTD., ITA NO.51/ 2016, JUDGMENT DATED 13 TH OCTOBER 2016, WE HOLD THAT LEARNED COMMISSIONER (APPEALS) WAS JUSTIFIED IN DELETING THE DISALLOWANCE S MADE BY THE ASSESSING OFFICER UNDER SECTION 14A R/W RULE 8D. GROUNDS ARE DISMISSED. 6. IN THE RESULT, BOTH THE A PPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN C OURT ON 15.01.2020 SD/ - RAJESH KUMAR ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMB AI, DATED: 15.01.2020 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY ASSISTANT REGISTRAR ITAT, MUMBAI