DCIT, Ludhiana V. M/s Cosmos Infra Engineering (India) Ltd., Delhi

ITA 486/CHANDI/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6721 (ITAT-CHANDIGARH)
• Duration Of Justice: 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2013-2014
• Appeal Filed On: 15-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH A, CHANDIGARH BEFORE MS.DIVA SINGH, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.486/CHD/2017 (ASSESSMENT YEAR : 2013-14) THE D.C.I.T., VS. M/S COSMOS INFRA ENGINEERING (INDIA)LTD., CC-1, LUDHIANA. 4-BATTERY LANE, CIVIL LINES, DELHI. PAN: AAACC0017C (APPELLANT) (RESPONDENT) APPELLANT BY : SMT.CHANDER KANTA, DR RESPONDENT BY : SHRI SUDHIR SEHGAL DATE OF HEARING : 11.10.2017 DATE OF PRONOUNCEMENT : 31.10.2017 ORDER PER ANNAPURNA GUPTA, A.M. : THIS APPEAL FILED BY THE REVENUE HAS BEEN PREFERRED AGAINST THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX(APPEALS)-5, LUDHIANA (HEREINAFTER REFERRED TO A S CIT(APPEALS)) DATED 6.1.2017 RELATING TO ASSESSME NT YEAR 2013-14. 2. THE ONLY ISSUE IN THE PRESENT APPEAL PERTAINS TO DISALLOWANCE MADE U/S 14A OF THE INCOME TAX ACT, 19 61 (IN SHORT THE ACT). 3. BRIEFLY STATED, THE ASSESSING OFFICER HAD MADE DISALLOWANCE OF RS.2,07,14,800/- ON ACCOUNT OF EXPE NSES INCURRED FOR THE PURPOSE OF MAKING INVESTMENTS IN S HARES AMOUNTING TO RS.64.11 CRORES WHICH WAS DELETED BY T HE LD.CIT(APPEALS) FOLLOWING THE ORDER OF THE I.T.A.T. IN THE CASE OF THE ASSESSEE ITSELF FOR ASSESSMENT YEAR 201 2-13 2 WHEREIN RELIEF WAS GRANTED FOR THE REASON THAT SINC E NO EXEMPT INCOME WAS EARNED DURING THE YEAR NO DISALLO WANCE U/S 14A WAS WARRANTED. THE LD.CIT(APPEALS) FINDING THE FACTS OF THE PRESENT CASE BEING IDENTICAL TO THAT I N ASSESSMENT YEAR 2012-13, AS IN NO DIVIDEND INCOME H AVING BEEN EARNED BY THE ASSESSEE IN THE YEAR UNDER CONSIDERATION, HE FOLLOWED THE ORDER OF THE I.T.A.T . IN THE CASE OF THE ASSESSEE FOR ASSESSMENT YEAR 2012-13 AN D DELETED THE DISALLOWANCE MADE. 4. AGGRIEVED BY THE SAME, THE REVENUE HAS COME UP I N APPEAL BEFORE US, RAISING THE FOLLOWING GROUNDS: 1. THAT CIT(A) WHILE HOLDING THAT NO DISALLOWANCE U/S 14ACANBE MADE IF THERE IS NO TAX FREE INCOME EARNED DURING THE YEAR, HAS ERRED BY IGNORING THE CBDT CIRCULAR NO.5/2014 DATED 1 ST FEB 2014 WHICH STATES THAT DISALLOWANCE OF EXPENSE FOR EARNING EXEMPT INCOME U/S 14A READ WITH RULE 8D WOULD BE ATTRACTED EVEN IF CORRESPONDING EXEMPT INCOME HAS NOT BEEN EARNED DURING THE YEAR. BESIDES AS HELD BY TH E HON'BLE BOMBAY HIGH COURT IN THE CASE OF GODREJ 85 BOYCE VS DCIT HELD, RULE 8D IS PROSPECTIVE AND SIMULTANEOUSLY UPHOLDING ITS CONSTITUTIONALITY. 2. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND THE GROUNDS OF APPEAL ON OR BEFORE IS HEARD AND DISPOSED OFF. 5. DURING THE COURSE OF HEARING BEFORE US, THE LD. DR STATED THAT ITS ONLY CONTENTION IN SUPPORT OF THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IS THAT THE CBDT VIDE ITS CIRCULAR NO.5/14 DATED 1.2.2014 HAS S TATED THAT THE DISALLOWANCE U/S 14A R.W.R. 8D WOULD BE AT TRACTED EVEN IF CORRESPONDING EXEMPT INCOME HAS NOT BEEN EA RNED DURING THE YEAR AND FURTHER THAT THE HON'BLE BOMBAY HIGH 3 COURT IN THE CASE OF GODREJ & BOYCE VS. DCIT HAS HE LD RULE 8D AS PROSPECTIVE UPHOLDING ITS CONSTITUTIONALITY. 6. THE LD. COUNSEL FOR ASSESSEE, ON THE OTHER HAND RELIED UPON THE ORDER OF THE LD.CIT(APPEALS). 7. WE HAVE HEARD BOTH THE PARTIES. WE FIND NO INFI RMITY IN THE ORDER OF THE LD.CIT(APPEALS). THE LD.CIT(APP EALS) HAS DELETED THE DISALLOWANCE FOLLOWING THE ORDER OF THE I.T.A.T. IN THE CASE OF THE ASSESSEE ITSELF FOR ASSESSMENT Y EAR 2012- 13 WHEREIN ON IDENTICAL SET OF FACTS, IN THE ABSENC E OF ANY EXEMPT INCOME, IT WAS HELD THAT NO DISALLOWANCE U/S 14A COULD BE MADE. THE I.T.A.T. HAD RELIED UPON THE DE CISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE O F CIT VS. LAKHANI MARKETING INC (2014) 272 ITR 265 AND HON'BL E DELHI HIGH COURT IN THE CASE OF CIT VS. HOLCIM INDI A PVT. LTD (2014) ITA NO.486 & 499/2014 DATED 5.9.2014. THE LD. DR HAS NOT BROUGHT TO OUR NOTICE ANY CONTRADICT ORY DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT. MOREOVER, THE CBDT CIRCULARS ISSUED ARE BINDING ON THE AUTHOR ITIES UNDER THE RESPECTIVE STATUTES AND ARE NOT BINDING O N COURTS AS HELD BY THE HONBLE APEX COURT IN THE CASE OF COMMISSIONER OF CENTRAL EXCISE VS RATAN MELTING AND WIRE INDUSTRIES REPORTED IN 220 CTR 98. THEREFORE, WE FIND NO MERIT IN THE CONTENTION OF THE LD. DR THAT THE DISA LLOWANCE IS TO BE MADE U/S 14A OF THE ACT IN VIEW OF THE CBD T CIRCULAR NO.5/2014. 4 IN VIEW OF THE ABOVE, WE SEE NO REASON TO INTERFE RE IN THE ORDER OF THE LD.CIT(APPEALS) AND, THEREFORE, GR OUNDS OF APPEAL RAISED BY THE REVENUE ARE DISMISSED. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (DIVA SINGH) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 31 ST OCTOBER, 2017 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A)S 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH