Sh. Amrit Sagar Mittal, Hoshiarpur V. The Asstt. Commissioner of Income-tax, Hoshiarpur

ITA 490/ASR/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0559 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 11 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 27-06-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 25-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHAWANI SHANKER
• Assessee Lawyers: VINAY MALHOTRA
• Keywords: Business income; Salary income
• Section: 143(3); 14A; 80G; 148; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. (CAMP AT JALANDHAR) BEFORE SH. A.D. JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER ITA NO.490(ASR)/2014 ASSESSMENT YEAR:2009-10 PAN: AASPM1102D SH. AMRIT SAGAR MITTAL, VS. ASSTT. COMMR. OF INCOM E TAX, C/O SONALIKA AGRO INDS. HOSHIARPUR. HOSHIARPUR. (APPELLANT) (RESPONDENT) APPELLANT BY: SH.VINAY MALHOTRA, CA RESPONDENT BY: SH.BHAWANI SHANKER, DR DATE OF HEARING: 27/06/2016 DATE OF PRONOUNCEMENT: 11/07/2016 ORDER PER A.D. JAIN, JM: THIS IS THE ASSESSEES APPEAL FOR THE ASSESSMENT Y EAR 2009-10 AGAINST THE ACTION OF THE LD. CIT(A), JALANDHAR, CO NFIRMING THE AOS ORDER PASSED UNDER SECTION 154/155 OF THE ACT, FOR RESTRI CTING THE DEDUCTION U/S 80G OF THE ACT. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S AN INDIVIDUAL, WHO FILED HIS RETURN OF INCOME FOR THE YEAR UNDER C ONSIDERATION, DECLARING THEREIN AN INCOME OF RS.4,50,74,028/- + AGRICULTURE INCOME OF RS.3,50,000/-. THE ASSESSEE, FOR THE YEAR UNDER CON SIDERATION, EARNED SALARY INCOME FROM M/S INTERNATIONAL TRACTORS LIMIT ED, BUSINESS INCOME FROM TRADING IN SHARES AND SECURITIES, RENTAL INCOM E FROM LET OUT ITA NO.490(ASR)/2014 A.Y. 2009-10 2 PROPERTY, SALARY AND INTEREST INCOME FROM THE FIRM NAMELY M/S SONALIKA AGRO IND. CORPORATION, HOSHIARPUR AND INCOME FROM O THER SOURCES, ETC. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSING OFFICER HAD NOTICED THAT THE ASSESSEE HAD MADE INVESTMENT IN SH ARES, SECURITIES AND MUTUAL FUNDS, THE INCOME FROM WHICH DID NOT FORM PA RT OF HIS TOTAL INCOME. IN OTHER WORDS, THE INCOME EARNED BY WAY OF INVESTMENT IN SHARES, SECURITIES AND MUTUAL FUNDS WAS EXEMPT FROM TAX. THE ASSESSING OFFICER HAD, THEREFORE, INVOKED THE PROVI SIONS OF SECTION 14A OF THE ACT READ WITH RULE 8D(2)(III) OF THE INCOME TAX RULES, 1962 AND MADE DISALLOWANCE OF EXPENSES TO THE EXTENT OF RS.32,18, 590/- AND THE RETURNED INCOME OF THE ASSESSEE WAS INCREASED TO TH E EXTENT OF THE DISALLOWANCE MADE. THE ASSESSMENT IN THIS CASE WAS, THEREFORE, COMPLETED BY THE ASSESSING OFFICER VIDE ORDER UNDER SECTION 143(3) OF THE ACT, DATED 28.12.2011, AT AN ASSESSED INCOME OF RS. 4,82,92,620/- + AGRICULTURE INCOME OF RS.3,50,000/-. THE ADDITION M ADE BY THE ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE OF EXPENSES U/S 14A OF THE ACT WAS DELETED BY LD. CIT(A), VIDE HIS ORDER DATED 14.06.2 012 AND THE ORDER OF THE LD. CIT(A), JALANDHAR WAS ALSO UPHELD BY THE IT AT, AMRITSAR, VIDE ORDER DATED 17.10.2012 IN ITA NO. 339(ASR)/2012. TH E ORDER ITAT, AMRITSAR WAS ALSO UPHELD BY THE HONORABLE PUNJAB & HARYANA HIGH COURT, VIDE ORDER DATED 03.09.2013 (FOR THE A.YS. 2 007-08, 2008-09 AND 2009-10) IN IT APPEAL NOS. 105 TO 110 OF 2013 (O&M) [2013] 38 TAXMAN.COM 83 (PUNJAB & HARYANA). ITA NO.490(ASR)/2014 A.Y. 2009-10 3 2.1 SUBSEQUENTLY, IT WAS NOTICED BY THE ASSESSING O FFICER THAT THE ASSESSEE HAD CLAIMED EXCESS DEDUCTION U/S 80G OF TH E ACT, KEEPING IN VIEW THE PROVISIONS OF SECTION 80G(4) OF THE ACT. H E, THEREFORE, ISSUED A SHOW CAUSE NOTICE U/S 154 OF THE INCOME TAX ACT, 19 61 TO THE ASSESSEE, PROPOSING DISALLOWANCE OF EXCESS CLAIM OF DEDUCTION OF RS.5,96,299/- U/S 80G OF THE ACT. IN RESPONSE THERETO, THE ASSESSEE F ILED HIS REPLY VIDE LETTER DATED 23.05.2013, WHEREIN, IT HAD BEEN CONTENDED TH AT THE MATTER WAS DISCUSSED IN DETAIL DURING THE ASSESSMENT PROCEEDIN GS AND AFTER APPLICATION OF MIND AND CONSIDERING THE FACTS AND P ROVISIONS OF SECTION 80G OF THE ACT, THE DEDUCTION WAS RIGHTLY ALLOWED B Y THE ASSESSING OFFICER. IT HAD ALSO BEEN CONTENDED THAT THE ASSESS EE HAD PAID DONATION OF RS.60,00,000/-, WHICH WAS ELIGIBLE FOR 50% DEDUC TION AND THE GROSS TOTAL INCOME OF THE ASSESSEE WAS RS.4,81,74,028/-, WITHOUT ANY DEDUCTION UNDER CHAPTER VI-A. IT HAD FURTHER BEEN S UBMITTED THAT THE ASSESSEE CLAIMED THE DEDUCTION OF RS.30,00,000/-, B EING 50% OF THE AMOUNT OF DONATION, WHICH WAS WITHIN THE CEILING OF 10% OF GROSS TOTAL INCOME. IT HAS AGAIN BEEN CONTENDED THAT NO RECTIFI CATION U/S 154/155 OF THE ACT CAN BE MADE IF THE MATTER IS DEBATABLE. IT HAD ALSO BEEN SUBMITTED BY THE ASSESSEE THAT THE MISTAKE APPARENT FROM RECORD MUST BE AN OBVIOUS AND PATENT MISTAKE AND NOT SOMETHING WHICH CAN BE ESTABLISHED BY A LONG DRAWN PROCESS OF REASONING ON POINTS, ON WHICH THERE MAY CONCEIVABLY BE TWO OPINION. IN THIS REGAR D, THE ASSESSEE ALSO RELIED ON VARIOUS JUDGMENTS DELIVERED BY THE VARIOU S HONBLE COURTS. ITA NO.490(ASR)/2014 A.Y. 2009-10 4 2.2. THE SUBMISSIONS MADE BY THE ASSESSEE WERE RE JECTED BY THE ASSESSING OFFICER IN VIEW OF THE REASONS MENTIONED IN THE ASSESSMENT ORDER. AFTER REJECTION OF THE SUBMISSIONS OF THE AS SESSEE, THE ASSESSING OFFICER PROCEEDED TO DISALLOW THE EXCESS CLAIM AMOU NTING TO RS.5,96,300/- MADE BY THE ASSESSEE UNDER SECTION 8 0G OF THE ACT BY PASSING AN ORDER UNDER SECTION 154 OF THE ACT DATED 21.11.2013. 3. THE AO, THUS, DENIED THE ASSESSEES CLAIM OF DED UCTION U/S 80G OF THE ACT TO THE EXTENT OF RS.5,96,300/- BY INVOKING THE PROVISIONS OF SECTION 154 OF THE ACT. THE LD. CIT(A) DISMISSED TH E ASSESSEES APPEAL, OBSERVING AS FOLLOWS: 5.2 I HAVE CONSIDERED THE OBSERVATIONS OF THE ASSESSING OFFICER AS MADE BY HIM IN THE ORDER UNDER DISPUTE A S WELL AS THE WRITTEN SUBMISSIONS FILED BY THE ASSESSEE VIDE LETT ER DATED 12.05.2014. I HAVE ALSO CONSIDERED VARIOUS JUDICIAL - PRONOUNCEMENTS RELIED UPON BY THE ASSESSING OFFICER AS WELL AS BY THE ASSESSEE. ON CAREFUL CONSIDERATION OF THE RIVAL CONTENTIONS, I AM OF THE CONSIDERED OPINION THAT THE ASSESSING OFFICE R HAS CORRECTLY INTERPRETED THE PROVISIONS OF SECTION 80G OF THE AC T IN DENYING EXCESS CLAIM MADE BY THE ASSESSEE UNDER SECTION 80G OF THE ACT. I AM ALSO OF THE OPINION THAT THERE IS NO AMBIGUITY IN THE PR OVISIONS OF LAW AND THE EXCESS CLAIM MADE UNDER SECTION 80G OF THE ACT AND CAN RECTIFIED UNDER THE PROVISIONS OF SECTION 154 OF THE ACT BEIN G A NON-DISPUTABLE ISSUE. IN MY FURTHER OPINION, THE ASSESSING OFFICER HAS PASSED A WELL REASONED ORDER AND DO NOT REQUIRE ANY INTERFERENCE AS THE SAME HAS BEEN PASSED IN ACCORDANCE WITH THE PROVISIONS OF TH E ACT. THE JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE ASSESSEE HAVE ALTOGETHER DIFFERENT FACTS FROM THE FACTS OF THE CA SE OF THE ASSESSEE. MOREOVER, IT HAS NOT BEEN DEMONSTRATED DURING APPEL LATE PROCEEDINGS THAT AS TO HOW THE FACTS OF THE CASE OF THE ASSESSEE ARE SIMILAR TO THE FACTS OF THE CASES WHICH HAVE BEEN R ELIED UPON. 5.3. IN VIEW OF ABOVE SATED FACTS AND IN THE CIRCUM STANCES OF THE CASE, I UPHOLD THE ACTION OF THE ASSESSING O FFICER IN WITHDRAWING THE EXCESS CLAIM MADE BY THE ASSESSEE U NDER SECTION 80G OF THE ACT BY INVOKING THE PROVISIONS OF SECTIO N 154 OF THE ACT. ITA NO.490(ASR)/2014 A.Y. 2009-10 5 IN THE RESULT, GROUNDS NO. 1 AND 2 OF APPEAL TAKEN BY THE ASSESSEE ARE DISMISSED. 4. THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED B EFORE US THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE AOS ORDER O N AN ISSUE WHICH IS CLEARLY DEBATABLE AND THAT WHILE DOING SO, THE LD. CIT(A) ERRED IN NOT APPRECIATING THE DECISION OF THE HONBLE CALCUTTA H IGH COURT IN THE CASE OF CIT VS. LUKWAH TEA CO. LTD., 107 CTR 11 (CAL.) . 5. THE LD. DR, ON THE OTHER HAND, HAS SUBMITTED THA T THE LD. CIT(A) HAS RIGHTLY DISMISSED THE ASSESSEES APPEAL; THAT T HE ASSESSEE HAS WRONGLY TRIED TO EQUATE THE FACTS OF ITS CASE WITH THOSE OF LUKWAH TEA CO. LTD,, (SUPRA); THAT LUKWAH TEA CO. LTD, (SUPRA) , IS BASED ON THE PROVISIONS OF SECTION 80G(4), AS THE PERTAINED TO T HE ASSESSMENT YEAR 1978-79, WHEREAS THE CASE OF THE ASSESSEE PERTAINS TO THE ASSESSMENT YEAR 2009-10; AND THAT THE PROVISIONS, AS APPLICABL E TO BOTH THE YEARS, ARE MATERIALLY DIFFERENT INTER SE; THAT THE EXTENT OF THE DONATIONS MADE REFERRED TO IN SECTION 80G(2), CLAUSES (A) (IV), (V ), (VIA), (VII) AND CLAUSES (B) & (C) REQUIRES TO BE FIRST ADDED AND THE EXCESS OF 10% OF GROSS TOTAL INCOME IS TO BE IGNORED AND IT IS ON THE BALANCE, T HAT THE DEDUCTION IS TO BE ALLOWED, AS PER SECTION 80G(4); THAT THE REQUIRE MENT OF 50% OF THE AGGREGATED OF THE SUMS SPECIFIED IN SECTION 80G(2) IS LAID DOWN IN SECTION 80G(1); AS SUCH, THERE IS NOTHING DEBATABLE IN TH E CASE OF THE ASSESSEE, AND THAT AS SUCH, THE APPEAL OF THE ASSESSEE, BEING WITHOUT MERIT, REQUIRES TO BE DISMISSED. ITA NO.490(ASR)/2014 A.Y. 2009-10 6 6. HAVING HEARD THE RIVAL CONTENTIONS IN THE LIGHT OF THE MATERIAL PLACED ON RECORD, WE FIND THAT THE ISSUE IS AS TO W HETHER THE PROVISIONS OF SECTION 80G(4), AS APPLICABLE TO ASSESSMENT YEAR 2 009-10, I.E., THE YEAR UNDER CONSIDERATION, ARE, OR ARE NOT ANY DIFFERE NT FROM THOSE APPLICABLE FOR THE ASSESSMENT YEAR 1978-79. ACCORDING TO THE A SSESSEE, THERE IS NO MATERIAL DIFFERENCE, WHEREAS THE DEPARTMENT MAINTAI NS THERE TO BE ONE. 7. THE PROVISION OF SECTION 80G(4), AS APPLICABLE T O ASSESSMENT YEAR 1978-79, READS AS FOLLOWS: (4) WHEREAS THE AGGREGATE OF THE SUMS REFERRED TO I N SUB-CLAUSES (IV), (V), (VI) AND (VII) OF CLAUSE (A) AND IN CL AUSE (B) OF SUB-SECTION (2) EXCEEDS THE SMALLER OF THE FOLLOWING AMOUNTS, THAT IS TO SAY; (I) TEN PER CENT OF THE GROSS TOTAL INCOME (AS REDU CED BY ANY PORTION THEREOF ON WHICH INCOME-TAX IS NOT PAYABLE UNDER ANY PROVISION OF THIS ACT AND BY ANY AMOUNT IN RESPECT OF WHICH THE ASSESSEE IS ENTITLED TO A DEDUCTION UNDER ANY O THER PROVISION OF THIS CHAPTER), AND (II) FIVE HUNDRED THOUSAND RUPEES. (III) THEN, THE AMOUNT IN EXCESS OF TEN PER CENT OF THE G ROSS TOTAL INCOME SHALL BE IGNORED FOR THE PURPOSE OF COMPUTIN G THE AGGREGATE OF THE SUMS IN RESPECT OF WHICH DEDUCTION IS TO BE ALLOWED UNDER SUB-SECTION (1). THERE IS NO MATERIAL CHANGE IN THE PROVISION OF SEC TION 80G(4) AND ONLY THE FIXED AMOUNT HAS BEEN DELETED AS EXPLAINED ABOVE. IN THE LIGHT OF THE FACTS STATED ABOVE THE MATTER INVOLVED IS SQUARELY COVERED BY THE CASE LAWS AS MENTIONED ABOVE. THE IS SUE INVOLVED HAS DIFFERENT VIEWS OF THE DIFFERENT HIGH COURTS. H ENCE, THE MATTER IS DEBATABLE AND THE ORDER PASSED U/S 154 MAY PLEASE BE QUASHED. 8. THE PROVISIONS OF SECTION 80G(4) AS APPLICABLE T O THE YEAR UNDER CONSIDERATION READ AS UNDER: (4) WHERE THE AGGREGATE OF THE SUMS REFERRED TO IN SUB-CLAUSES (IV), (V), (VI), (VIA)] AND (VII) OF CLAUSE (A) AND IN [C LAUSES (B) AND (C)] OF SUB- SECTION (2) EXCEEDS TEN PER CENT OF THE GROSS TOTAL INCOME (AS REDUCED ITA NO.490(ASR)/2014 A.Y. 2009-10 7 BY ANY PORTION THEREOF ON WHICH INCOME-TAX IS NOT P AYABLE UNDER ANY PROVISION OF THIS ACT AND BY ANY AMOUNT IN RESP ECT OF WHICH THE ASSESSEE IS ENTITLED TO A DEDUCTION UNDER ANY OTHER PROVISION OF THIS CHAPTER), THEN THE AMOUNT IN EXCESS OF TEN PER CENT OF THE GROSS TOTAL INCOME SHALL BE IGNORED FOR THE PURPOSE OF COMPUTIN G THE AGGREGATE OF THE SUMS IN RESPECT OF WHICH DEDUCTION IS TO BE ALLOWED UNDER SUB-SECTION (1). 9. A PERUSAL OF BOTH THE ABOVE PROVISION SHOWS THAT INDEED, AS CONTENDED ON BEHALF OF THE ASSESSEE, THERE IS NO MA TERIAL CHANGE IN THE PROVISIONS OF SECTION 80G(4), AS APPLICABLE TO ASSE SSMENT YEAR 1978-79 AND THOSE RELEVANT TO THE ASSESSMENT YEAR 2009-10. THE ISSUE INVOLVED IS AS TO WHETHER AGGREGATE AMOUNT OF DONATION IS TO BE CALCULATED AS PER THE PROVISIONS OF SECTION 80G(2) AND AS SUCH THE AGGREG ATE AMOUNT IS TO BE CONSIDERED AS PER SECTION 80G(4) FOR THE CEILING OF 10% OF GTI OR WHETHER FIRST THE TOTAL AMOUNT OF DONATION IS CALCULATED AS PER SECTION 80G(4) AND THEN AGGREGATE AMOUNT OF AS PER SECTION 80G(2) IS TO BE CALCULATED FOR THE DEDUCTION U/S 80G(1) ONLY. THE AO MADE CALCULA TION FOLLOWING THE PROVISIONS OF THE SAID SECTION. THIS CALCULATION W AS CONSIDERED BY THE AO AND OUT OF A TOTAL DEDUCTION OF RS.60 LACS, DEDUCTI ON OF RS. 30 LACS WAS ALLOWED. 10. THE MATTER WAS CONSIDERED BY THE HONBLE CALCUT TA HIGH COURT IN THE CASE OF CIT VS. LUKWAH TEA CO. LTD., (SUPRA) AND BY THE HONBLE ANDHRA PRADESH HIGH COURT IN THE CASE OF HYDERABAD CLUB VS. ADDL. CIT, 120 ITR 185 (AP). IN VIEW OF THE FACT THAT TH ERE IS NO MATERIAL CHANGE IN THE PROVISIONS OF SECTION 80G(4) FOR THE ASSESSMENT YEAR 1978- 79 AND ASSESSMENT YEAR 2009-10, THE DECISION IN LU KWAH TEA CO. LTD. ITA NO.490(ASR)/2014 A.Y. 2009-10 8 (SUPRA) IS DIRECTLY APPLICABLE. THE ISSUE BEING DE BATABLE IN THE LIGHT OF THE DECISION THEREIN, THE LD. CIT(A) OBVIOUSLY ERRE D IN HOLDING IT TO BE A NON-DISPUTABLE ISSUE. THUS, AS THERE IS MISTAKE AP PARENT IN THE ASSESSMENT ORDER, IT WOULD NOT BE RECTIFIABLE UNDE R SECTION 154 OF THE ACT. RELIANCE BY THE LD. DR ON ITO, ALWAYE VS. THE ASOK TEXTILES LTD., 1961 AIR 699, SCR: 41 ITR 732 (SC) IS OF NO AVAIL. 11. ON THE OTHER HAND, EVEN IN HYDERABAD CLUB VS . ADDL. CIT (SUPRA), THE ISSUE AT HAND HAS HELD TO BE DEBATABL E. IT IS NOTEWORTHY THAT THE AO ALSO PLACE RELIANCE ON CIT VS. MAFATLAL FIN E SPINNING CO., 263 ITR 140 (BOM.) AND SCINDIA STEAM NAVIGATION CO. LT D., 211 ITR 247 (BOM.). THE FIRST CASE PERTAINED TO ASSESSMENT YEAR 1979-80, WHEREAS THE SECOND ONE RELATED TO ASSESSMENT YEARS 1972-73 & 19 73-74. THUS, THE AO WAS WELL APPRISED AND AWARE OF THE RELEVANT PR OVISIONS OF SECTION 80G(4) OF THE ACT. 12. IN CIT VS. RAJESH TALKIES, 220 ITR 107 (P&H), THE QUESTION WAS AS TO WHETHER INTEREST WAS PAYABLE OR NOT DEPENDING U PON THE INTERPRETATION OF THE PROVISIONS OF SECTION 148 REA D WITH SECTION 139(2). IT WAS OBSERVED THAT THERE WAS DIVERGENCE OF JUDICIAL OPINION ON THE ISSUE AS TO WHETHER THE RETURN FILED IN RESPONSE TO NOTIC E ISSUED U/S 148 IS A RETURN UNDER SECTION 139(2). IT WAS, IN THESE FACTS HELD THAT THE ISSUE WAS A DEBATABLE ONE. 13. LIKEWISE, AS OBSERVED, THE ISSUE IN THE PRESENT CASE ALSO BEING DEFINITELY A DEBATABLE ISSUE, IT IS NOT RECTIFIABLE UNDER THE PROVISIONS OF ITA NO.490(ASR)/2014 A.Y. 2009-10 9 SECTION 154 OF THE ACT. THEREFORE, THE ORDER OF THE LD. CIT(A) IS REVERSED AND AS SUCH, THE GRIEVANCE OF THE ASSESSEE IS ACCEP TED. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11/07/ 2016. SD/- SD/- (T.S. KAPOOR) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER /SKR/ DATED: 11/07/2016 COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:SH. AMRIT SAGAR MITTAL, HOSHIARPUR. 2. THE ACIT, HOSHIARPUR. 3. THE CIT(A), JLR 4. THE CIT, JLR 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.