Addl.CIT, Range-4, New Delhi V. HT Media Ltd., New Delhi

ITA 4697/DEL/2017

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 2647 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2021
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 20-07-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VED PRAKASH MISHRA
• Keywords: Opportunity of being heard; Earning of tax free income; Question of law; Rule 8D; Set aside
• Section: 14A; 22; 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C, NEW DELHI BEFORE SH. AMIT SHUKLA, JUDICIAL MEMBER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER (THROUGH VIDEO CONFERENCING) ITA NO. 4583/DEL/2017 : ASSTT. YEAR : 2012-13 HT MEDIA LTD., 18-20, KASTURBA GANDHI MARG, NEW DELHI-110001 VS ADDL. CIT, RANGE-4, NEW DELHI-110002 (APPELLANT) (RESPONDENT) PAN NO. AABCH3165P ITA NO. 4697/DEL/2017 : ASSTT. YEAR : 2012-13 ADDL. CIT, RANGE-4, NEW DELHI - 110002 VS HT MEDIA LTD., 18-20, KASTURBA GANDHI MARG, NEW DELHI - 110001 (APPELLANT) (RESPONDENT) PAN NO. AABCH3165P ASSESSEE BY : SH. V. P. GUPTA, ADV. REVENUE BY : SH. VED PRAKASH MISHRA, SR. DR DATE OF HEAR ING: 11 . 0 1 .20 2 1 DATE OF PRONOUNCEMENT: 22 .02 .20 2 1 ORDER PER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEALS HAVE BEEN FILED BY THE ASSESSE E AND THE REVENUE AGAINST THE ORDER OF LD. CIT(A)-39, NEW DELHI DATED 25.04.2017. 2. IN ITA NO. 4583/DEL/2017, FOLLOWING GROUNDS HAVE BEEN RAISED BY THE ASSESSEE: 1 . THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN SUSTAINING ITA NOS. 4583 & 4697/DEL/2017 HT MEDIA LTD. 2 DISALLOWANCE OF RS.26,70,000/- MADE BY THE ASSESSING OFFICER TOWARDS ADMINISTRATIVE EXPENSES UNDER CLAUSE (III) OF RULE 8D OF THE INCOME TAX RULES WITHOUT APPRECIATING THAT MAKING A DISALLOWANCE AS PER RULE 8D RESULTS IN ARBITRARY, UNREASONABLE AND UNJUSTIFIED DISALLOWANCE. 2. THAT THE CIT(A) ERRED IN NOT APPRECIATING THE FA CT THAT THE APPELLANT HAD ADDED AN AMOUNT OF RS.100,000/- IN THE RETURN OF INCOME ON ACCOUNT OF DISALLOWANCE U/S 14A OF THE ACT FOR ADMINISTRATIVE EXPENSES WHICH OUGHT TO HAVE BEEN ACCEPTED BY THE ASSESSING OFFICER, BEING REASONABLE AND JUSTIFIED CONSIDERING FACT ON THE CASE. 3. THAT THE CIT(A) ERRED IN NOT APPRECIATING THE FA CT THAT THE ASSESSING OFFICER HAS NOT DISCUSSED AND RECORDED SATISFACTION TO THE EFFECT THAT DISALLOWAN CE OF RS.100,000/- MADE BY THE APPELLANT IN THE RETURN OF INCOME U/S 14A OF THE ACT WAS NOT APPROPRIATE IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. IN ITA NO. 4697/DEL/2017, FOLLOWING GROUNDS HAVE BEEN RAISED BY THE REVENUE: 1 . WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER OF COMMISSIONER OF INCOME TAX (APPEAL) IS ERRONEOUS AND BAD IN LAW AS APPLICATION OF RULE 8D FOR COUNTING QUANTUM OF DISALLOWANCE U/S 14A OF THE I.T. ACT, 1961 IS MANDATORY. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) WAS CORRECT IN DELETING THE DISALLOWANCE OF RS.3,98,08,092/- U/S 14A R.W. RULE 8D BY RESTRICTING IT TO RS.26,70,000/- OUT OF TOTAL OF DISALLOWANCE MADE BY THE AO OF RS.4,24,78,092/-. ITA NOS. 4583 & 4697/DEL/2017 HT MEDIA LTD. 3 4. FACTS RELEVANT FOR THE ADJUDICATION OF THE CASE ARE THAT, A. DIVIDEND RECEIVED AND CLAIMED AS EXEMPT U/S 14A RS.5,80,00,000/ - B. AMOUNT DISALLOWED ON ESTIMATE BASIS BY THE ASSESSEE RS.1,00,000/ - C. THE AVERAGE VALUE OF INVESTMENT OF THE ASSESSEE RS.2,89,70,00,000/- D. AMOUNT DISALLOWED BY THE AO RS.4,24,78,000/ - E. DISALLOWANCE DETERMINED BY THE LD. CIT (A) RS.26,70,000/- 5. AGGRIEVED WITH THE CURTAILMENT OF THE DISALLOWAN CE, THE REVENUE AND AGGRIEVED WITH THE CONFIRMATION OF A PA RT DISALLOWANCE, THE ASSESSEE FILED APPEALS BEFORE THI S TRIBUNAL. 6. AT THE OUTSET, THE COUNSELS FAIRLY BROUGHT TO TH E NOTICE OF THE BENCH, THE ORDER OF THE HONBLE JURISDICTIONAL HIGH COURT CLARIFYING THE EXCLUSION OF INCOME DERIVED FROM STR ATEGIC INVESTMENTS FOR THE PURPOSE OF COMPUTATION OF DISAL LOWANCE. THE ORDER OF THE HONBLE HIGH COURT IS AS UNDER: IN THE HIGH COURT OF DELHI AT NEW DELHI ITA 281/2019 & CM APPL. 14304/2019 THE PR. COMMISSIONER OF INCOME TAX -4 APPELLAN T THROUGH : MR. RUCHIR BHATIA, SR. STANDING COUNSEL. VERSUS H.T. MEDIA LTD. ..RESPONDENT THROUGH : MR. V.P. GUPTA AND MR. ARUNAV KUMAR, ADVS . CORAM: HON'BLE MR. JUSTICE S. RAVINDRA BHAT HONBLE MR. JUSTICE PRATEEK JALAN O R D E R 29.03.2019 ITA NOS. 4583 & 4697/DEL/2017 HT MEDIA LTD. 4 THE QUESTION URGED BY THE REVENUE IN ITS APPEAL IS WITH RESPECT TO THE CORRECTNESS OF THE REMAND MADE BY THE ITAT I N ITS IMPUGNED ORDER; THE REMAND WAS ON TWO ASPECTS I.E. THE CALCULATION OF AVERAGE INVESTMENTS (CONFINED TO THE INCOME GENERATING PART THEREOF) AND THE EXCLUSION OF TAX E XEMPT INCOME DERIVED FROM STRATEGIC INVESTMENTS. THE OBSERVATION OF THE ITAT ON THE LATTER ASPECT, I .E. EXCLUSION OF TAX EXEMPT INCOME DERIVED FROM A STRATEGIC INVESTMENTS, IS NOT A CORRECT VIEW IN THE LIGHT OF THE DECISION OF THE SUPREME COURT IN MAXOPP INVESTMENT LTD. VS. COMMISSIONER OF INCOME TAX, (2018) 402 ITR 640. ACCORDINGLY, THE OBSERVATIONS OF THE ITAT ON THIS A SPECT ARE SET ASIDE. HOWEVER, ITS OBSERVATIONS WITH RESPECT TO THE CALCULATION OF DISALLOWANCE UNDER SECTION 14A BEING CONFINED TO INVESTMENTS THAT DERIVED TAX EXEMPT INC OME ARE VALID IN THE LIGHT OF THE DIVISION BENCH RULING IN ACB I NDIA LTD. V. ACIT, (2015) 374 ITR 108 (DEL). IN VIEW OF THE ABOVE CLARIFICATION, THE ITATS ORDE R, TO THE EXTENT THAT IT MAKES OBSERVATIONS WITH RESPECT TO E XCLUSION OF INCOME DERIVED FROM STRATEGIC INVESTMENTS, IS HEREB Y SET ASIDE. 7. FOLLOWING THE ORDER OF THE HONBLE HIGH COURT, T HE REVISED DISALLOWANCE IS COMPREHENSIVELY DETERMINED AS UNDER : CIT(A) VIDE PARA 5.1D OF THE ORDER UPHELD THE DISA LLOWANCE TO THE EXTENT OF RS. 26,70,000/-, WHICH WAS DETERMINED AS UNDER FOLLOWING THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF ACB INDIA LTD. V. ACIT, 374 ITR 108 (DEL.). ITA NOS. 4583 & 4697/DEL/2017 HT MEDIA LTD. 5 PARTICULARS INVESTMENT AS ON 31.03.2011 (CRORES) INVESTMENT AS ON 31.03.2012 (CRORES) AVERAGE INVESTMENT (CRORES) INVESTMENTS ON WHICH DIVIDEND INCOME WAS RECEIVED DURING THE YEAR. 117.75 102.75 110.25 LESS : INVESTMENT IN SUBSIDIARY COMPANY. 56.85 56.85 56.85 REMAINING INVESTMENT 60.90 45.90 53.40 DISALLOWANCE AT 0.5% RS. 26,70,000 IN VIEW OF JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF MAXOPP INVESTMENT LTD. (2018) 402 ITR 640 (SC), INV ESTMENT IN SUBSIDIARY COMPANY IS ALSO TO BE CONSIDERED FOR THE PURPOSE OF DISALLOWANCE. ACCORDINGLY, THE ORDER OF CIT(A) I S TO BE REVERSED TO THE EXTENT HE HAD EXCLUDED AVERAGE INVE STMENT OF RS. 56.85 CRORES IN THE SUBSIDIARY COMPANY. ACCORDI NGLY, DISALLOWANCE FOLLOWING THE JUDGMENT OF HONBLE DELH I HIGH COURT IN THE CASE OF ACB INDIA LTD. V. ACIT, 374 ITR 108 (DEL.) AND TAKING INTO CONSIDERATION THE AFORESAID JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF MAXOPP INVESTMENT LTD. DISALLOWANCE AS PER RULE 8D WOULD WORK OUT AS UNDER :- PARTICULARS INVESTMENT AS ON 31.03.2011 (CRORES) INVESTMENT AS ON 31.03.2012 (CRORES) AVERAGE INVESTMENT (CRORES) INVESTMENTS ON WHICH DIVIDEND INCOME WAS RECEIVED DURING THE YEAR. 117.75 102.75 110.25 DISALLOWANCE AT 0.5% - RS. 55,12,500 ITA NOS. 4583 & 4697/DEL/2017 HT MEDIA LTD. 6 8. WITH REGARD TO THE GROUND NO. 3 OF THE ASSESSEE REGARDING THE SATISFACTION, WE FIND THAT THE AO HAS DULY CONS IDERED THIS ISSUE AS CAN BE DECIPHERED AT PARA 3.2 OF THE ASSES SMENT ORDER. 9. THE ASSESSEE HAS FILED APPLICATION UNDER RULE 11 OF THE INCOME TAX(APPELLATE TRIBUNAL) RULES, 1963 FOR ADMI SSION OF ADDITIONAL GROUNDS OF APPEAL. THE ADDITIONAL GROUND S READ AS UNDER: ON THE FACTS AND CIRCUMSTANCES OF THE CASE & IN LA W, THE LD. AO, WHILE COMPUTING THE INCOME OF THE APPELLANT UNDER THE HEAD PROFITS AND GAINS FROM BUSINESS AND PROFESSION, OUGHT TO HAVE ALLOWED THE DEDUCTION IN RESPECT OF EDUCATION CESS AND SECONDARY AND HIGHER EDUCATION CESS OF RS.1,93,84,058/- AS DETERMINED BY HIM VIDE ORDER OF ASSESSMENT. 10. THE LD. AR RELIED ON THE JUDGMENT OF HONBLE AP EX COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. VS CIT (1998) 22 9 ITR 383. ADMISSION OF THE ADDITIONAL GROUND HAS BEEN OPPOSED IN PRINCI PLE BY THE LD. DR. THE RELEVANT PORTION OF THE SAID JUDGMENT IS AS UNDER: 5. UNDER SECTION 254 OF THE INCOME-TAX ACT, THE APPELL ATE TRIBUNAL MAY, AFTER GIVING BOTH THE PARTIES TO THE APPEAL AN OPPORTUNITY OF BEING HEARD, PASS SUCH ORDERS THEREO N AS IT THINKS FIT. THE POWER OF THE TRIBUNAL IN DEALING WI TH APPEALS IS THUS EXPRESSED IN THE WIDEST POSSIBLE TERMS. THE PU RPOSE OF THE ASSESSMENT PROCEEDINGS BEFORE THE TAXING AUTHOR ITIES IS TO ASSESS CORRECTLY THE TAX LIABILITY OF AN ASSESSE E IN ACCORDANCE WITH LAW. IF, FOR EXAMPLE, AS A RESULT O F A JUDICIAL DECISION GIVEN WHILE THE APPEAL IS PENDING BEFORE T HE TRIBUNAL, IT IS FOUND THAT A NON-TAXABLE ITEM IS TA XED OR A PERMISSIBLE DEDUCTION IS DENIED, WE DO NOT SEE ANY REASON WHY THE ASSESSEE SHOULD BE PREVENTED FROM RAISING T HAT QUESTION BEFORE THE TRIBUNAL FOR THE FIRST TIME, SO LONG AS THE RELEVANT FACTS ARE ON RECORD IN RESPECT OF THAT ITE M. WE DO NOT SEE ANY REASON TO RESTRICT THE POWER OF THE TRI BUNAL UNDER SECTION 254 ONLY TO DECIDE THE GROUNDS WHICH ARISE FROM THE ORDER OF THE COMMISSIONER OF INCOME-TAX (A PPEALS). BOTH THE ASSESSEE AS WELL AS THE DEPARTMENT HAVE A RIGHT TO ITA NOS. 4583 & 4697/DEL/2017 HT MEDIA LTD. 7 FILE AN APPEAL/CROSS-OBJECTIONS BEFORE THE TRIBUNAL . WE FAIL TO SEE WHY THE TRIBUNAL SHOULD BE PREVENTED FROM CONSI DERING QUESTIONS OF LAW ARISING IN ASSESSMENT PROCEEDINGS ALTHOUGH NOT RAISED EARLIER. 6. IN THE CASE OF JUTE CORPORATION OF INDIA LTD. V. C.I.T. THIS COURT, WHILE DEALING WITH THE POWERS OF THE APPELLA TE ASSISTANT COMMISSIONER OBSERVED THAT AN APPELLATE A UTHORITY HAS ALL THE POWERS WHICH THE ORIGINAL AUTHORITY MAY HAVE IN DECIDING THE QUESTION BEFORE IT SUBJECT TO THE REST RICTIONS OR LIMITATIONS, IF ANY, PRESCRIBED BY THE STATUTORY PR OVISIONS. IN THE ABSENCE OF ANY STATUTORY PROVISION, THE APPELLA TE AUTHORITY IS VESTED WITH ALL THE PLENARY POWERS WHI CH THE SUBORDINATE AUTHORITY MAY HAVE IN THE MATTER. THERE IS NO GOOD REASON TO JUSTIFY CURTAILMENT OF THE POWER OF THE APPELLATE ASSISTANT COMMISSIONER IN ENTERTAINING AN ADDITIONAL GROUND RAISED BY THE ASSESSEE IN SEEKING MODIFICATION OF THE ORDER OF ASSESSMENT PASSED BY T HE INCOME-TAX OFFICER. THIS COURT FURTHER OBSERVED THA T THERE MAY BE SEVERAL FACTORS JUSTIFYING THE RAISING OF A NEW PLEA IN AN APPEAL AND EACH CASE HAS TO BE CONSIDERED ON ITS OWN FACTS. THE APPELLATE ASSISTANT COMMISSIONER MUST BE SATISFIED THAT THE GROUND RAISED WAS BONA FIDE AND THAT THE SAME COULD NOT HAVE BEEN RAISED EARLIER FOR GOOD RE ASONS. THE APPELLATE ASSISTANT COMMISSIONER SHOULD EXERCIS E HIS DISCRETION IN PERMITTING OR NOT PERMITTING THE ASSE SSEE TO RAISE AN ADDITIONAL GROUND IN ACCORDANCE WITH LAW A ND REASON. THE SAME OBSERVATIONS WOULD APPLY TO APPEAL S BEFORE THE TRIBUNAL ALSO. 7. THE VIEW THAT THE TRIBUNAL IS CONFINED ONLY TO I SSUES ARISING OUT OF THE APPEAL BEFORE THE COMMISSIONER O F INCOME- TAX (APPEALS) TAKES TOO NARROW A VIEW OF THE POWERS OF THE APPELLATE TRIBUNAL [VIDE, E.G., C.I.T, V. ANAND PRA SAD (DELHI), C.I.T. V. KARAMCHAND PREMCHAND P. LTD. AND C.I.T. V . CELLULOSE PRODUCTS OF INDIA LTD. . UNDOUBTEDLY, THE TRIBUNAL WILL HAVE THE DISCRETION TO ALLOW OR NOT ALLOW A NE W GROUND TO BE RAISED. BUT WHERE THE TRIBUNAL IS ONLY REQUIRED TO CONSIDER A QUESTION OF LAW ARISING FROM THE FACTS WHICH ARE ON RECORD IN THE ASSESSMENT PROCEEDINGS WE FAIL TO SEE WHY SU CH A QUESTION SHOULD NOT BE ALLOWED TO BE RAISED WHEN IT IS NECESSARY TO CONSIDER THAT QUESTION IN ORDER TO COR RECTLY ASSESS THE TAX LIABILITY OF AN ASSESSEE. 8. THE REFRAMED QUESTION, THEREFORE, IS ANSWERED IN THE AFFIRMATIVE, I.E., THE TRIBUNAL HAS JURISDICTION TO EXAMINE A ITA NOS. 4583 & 4697/DEL/2017 HT MEDIA LTD. 8 QUESTION OF LAW WHICH ARISES FROM THE FACTS AS FOUN D BY THE AUTHORITIES BELOW AND HAVING A BEARING ON THE TAX L IABILITY OF THE ASSESSEE. WE REMAND THE PROCEEDINGS TO THE TRIB UNAL FOR CONSIDERATION OF THE NEW GROUNDS RAISED BY THE ASSE SSEE ON THE MERITS. 11. RESPECTFULLY, FOLLOWING THE ABOVE JUDGMENT OF T HE HONBLE APEX COURT, THE ADDITIONAL GROUNDS TAKEN UP BY THE ASSES SEE ARE HEREBY ADMITTED. 12. WITH REGARD TO THE ISSUE OF EDUCATION CESS TA KEN UP BY THE LD. AR, WE FIND THAT THIS ISSUE HAS BEEN ADJUDI CATED IN THE FOLLOWING CASES: CHAMBAL FERTILISERS AND CHEMICALS LTD. VS JCIT IN I TA NO.52/2018 DATED 31.07.2018 (RAJ. HC) ITC VS ACIT IN ITA NO. 685/KOL/2014 DATED 27.11.201 8 PEERLESS GENERAL FINANCE & INVESTMENT CO. LTD. VS D CIT IN ITA NO.937 & 938/KOL/2018 DATED 24.03.2019 DCIT VS M/S. AGRAWAL COAL CORPORATION PVT. LTD ITA NOS. 801 TO 803/INDORE/2018. ATLAS COPCO INDIA LTD. VS ACIT IN ITA NO. 736/PUNE/2011 TATA AUTOCOMP HENDRICKSON VS DCIT IN ITA NO. 2486/PUNE/2017 SYMANTEC SOFTWARE INDIA PVT. LTD. VS DCIT IN ITA NO . 1824/PUNE/2018 SICPA INDIA PVT. LTD. VS ACIT IN ITA NO. 704/KOL/20 15 PHILIPS INDIA LTD. VS ACIT IN ITA NO. 2612/KOL/2019 DCIT VS THE PEERLESS GENERAL FINANCE & INVESTMENT & CO. LTD. IN ITA NO. 1469/KOL/2019. ACIT VS ITC INFOTECH IN ITA NO. 220/KOL/2017 RECKITT BENCKISER INDIA PVT. LTD. VS DCIT (2020) 11 7 TAXMANN.COM 519 (KOL.) CRYSTAL CROP. PROTECTION PVT. LTD. VS JCIT IN ITA N O. 1539/DEL/2016 MIDLAND CREDIT MANAGEMENT INDIA VS ACIT IN ITA NO. 3892/DEL/2017 VOLTAS LTD. VS ACIT IN ITA NO. 6612/MUM/2018 SESA GOA LTD. VS JCIT (2020) 117 TAXMANN.COM 96 (BOM.) ITA NOS. 4583 & 4697/DEL/2017 HT MEDIA LTD. 9 13. HENCE, KEEPING IN VIEW THE PROVISIONS OF THE AC T PERTAINING TO SECTION 40(A)(II) AND SECTION 115JB, CIRCULAR OF TH E CBDT NO. 91/58/66- ITJ(19), THE ORDERS OF CO-ORDINATE BENCHES OF ITAT AND JUDICIAL PRONOUNCEMENTS OF THE HONBLE HIGH COURT OF BOMBAY AND HONBLE HIGH COURT OF RAJASTHAN, WE HEREBY DIRECT THE REVENUE TO CONSIDER THE CLAIM OF DEDUCTION OF THE EDUCATION CESS AS PER THE PROVIS IONS OF SECTION 37 OF THE INCOME TAX ACT. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED AND THE APPEAL OF THE REVENUE IS ALLOWED FOR STATIS TICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 22/02/2021. SD/- SD/- (AMIT SHUKLA) (DR . B. R. R. KUMAR) JUDICIAL MEMBER ACCOU NTANT MEMBER DATED: 22/02/2021 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR