TATA MOTORS LIMITED(successor to TML DRIVELINES LTD), MUMBAI V. DEPUTY COMMISSIONER OF INCOME TAX 2(1)(2), MUMBAI

ITA 4914/MUM/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 5600 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-07-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2013-2014
• Appeal Filed On: 21-08-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN
• Keywords: Earning of tax free income; Rule 8D
• Section: 14A; 115JB; 201

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI SHRI SHAMIM YAHYA (AM) & SHRI AMARJIT SINGH (JM) I.T.A. NO. 4914/MUM/2018 (ASSESSMENT YEAR 2013-14 ) TATA MOTORS LIMITED (SUCCESSOR TO TML DRIVELINES LTD.) BOMBAY HOUSE, 24 HOMI MODY STREET HUTATMA CHOWK MUMBAI-400 001. PAN : AAACT2727Q VS . DCIT 2(1)(2) AAYAKAR BHAVAN M.K. ROAD MUMBAI-400020. (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI SHRIHARI IYER DEPARTMENT BY SHRI V. JUSTIN DATE OF HEARING 02.03.2020 DATE OF PRONOUNCEMENT 14.07.2020 O R D E R PER SHAMIM YAHYA (AM) :- THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST OR DER OF LEARNED CIT(A) DATED 17.5.2018 AND PERTAINS TO ASSESSMENT YEAR 201 3-14. 2. THE ISSUE RAISED IS THAT LEARNED CIT(A) ERRED IN SUSTAINING THE DISALLOWANCE OF RS.12,55,853/- UNDER SECTION 14A. I T IS FURTHER CONTENDED THAT LEARNING CIT(A) ERRED IN SUSTAINING THE ADJUSTMENT UNDER SECTION 115 JB OF THE DISALLOWANCE UNDER SECTION 14A. 3. BRIEF FACTS OF THE CASE ARE THAT ASSESSING OFFIC ER NOTED THAT ASSESSEE HAS NOT MADE ANY DISALLOWANCE UNDER SECTION 14A. ON ENQ UIRY IN THIS REGARD ASSESSEE RESPONDED THAT ASSESSEE HAS NOT EARNED ANY EXEMPT INCOME. HOWEVER THE ASSESSING OFFICER DID NOT ACCEPT THIS CONTENTIO N. HE MADE A DISALLOWANCE OF RS. 12,55,853/- UNDER RULE 8D(III). 4. BEFORE THE LEARNED CIT(APPEALS) ASSESSEE ALSO GA VE AN ALTERNATIVE WITHOUT PREJUDICE WORKING FOR DISALLOWANCE OF AN AMOUNT OF RS. 1,00,747/- IN THIS TATA MOTORS LIMITED (SUCCESSOR TO TML DRIVELINES LTD.) 2 REGARD. THE LEARNED CIT(A) NOTED THAT ASSESSEE HAS EARNED EXEMPT INCOME AND HAS NOT MADE ANY DISALLOWANCE UNDER SECTION 14A. HE REJECTED THE ASSESSEE'S RELIANCE UPON ASSESSEE'S OWN CASE FOR EARLIER YEARS ON THE GROUND THAT RULE 8D WAS NOT HELD, TO BE MANDATORY IN THOSE YEARS. THE L EARNED CIT(A) ALSO REJECTED THE ASSESSEES WORKING OF DISALLOWANCE OF RS. 1,00, 747/- ON THE GROUND THAT THE SAME WAS AD HOC AND HAD NOT BEEN SUBMITTED EARL IER BEFORE THE ASSESSING OFFICER. 5. AGAINST THIS ORDER ASSESSEE IS IN APPEAL BEFORE US. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORDS. WE FIND THAT THERE IS CONTRADICTORY FINDING IN THE ORDERS OF THE AUTHORITIES BELOW. WHILE THE ASSE SSING OFFICER IS REJECTING THE ASSESSEE'S CONTENTION THAT IT HAS NOT EARNED ANY EX EMPT INCOME BY HOLDING THAT NEVERTHELESS DISALLOWANCE UNDER SECTION 14A IS REQUIRED. THE LEARNED CIT(A) ON THE OTHER HAND IS FINDING THAT ASSESSEE H AS EARNED EXEMPT INCOME. IN THE RECORDS BEFORE US THIS FACT IS NOT CLEAR. AS HELD BY HONOURABLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. DELITE ENTERPRISES (2012) 047 (I) ITCL 0282, WHEREIN HONOURABLE JURISDICTIONAL HIGH C OURT HAS AGREED WITH THE VIEW OF THE HONOURABLE DELHI HIGH COURT IN THE CASE OF CHEMINVEST LTD (ITA 749/2014) THAT THE DISALLOWANCE UNDER SECTION 14A S HOULD BE LIMITED TO THE EXEMPT INCOME EARNED. 6. FURTHERMORE WE NOTE THAT THE LEARNED CIT(A) HAS RIGHTLY REJECTED THE CONTENTION OF THE ASSESSEE THAT NO DISALLOWANCE UND ER SECTION 14A IS REQUIRED. AS REGARDS THE ALTERNATIVE WORKING OF DISALLOWANCE OF RS. 1,00,747/- GIVEN BY THE ASSESSEE, WE FIND THAT LEARNED CIT(APPEALS) HAS REJECTED THE SAME WITHOUT COGENT FINDINGS. HE HAS ALSO NOT ASKED FOR REMAND R EPORT FROM THE ASSESSING OFFICER. IN OUR CONSIDERED OPINION IF THE ASSESSEE HAS EARNED EXEMPT INCOME THEN THE ASSESSEES WORKING OF THE DISALLOWANCE OF RS. 1,00,747/- SHOULD BE EXAMINED BY THE ASSESSING OFFICER. ACCORDINGLY, WE REMIT THE ISSUE TO THE FILE OF ASSESSING OFFICER. IF THE ASSESSEE HAS NOT EARNED A NY EXEMPT INCOME, NO DISALLOWANCE UNDER SECTION 14A IS REQUIRED AS PER T HE DECISION OF HONOURABLE TATA MOTORS LIMITED (SUCCESSOR TO TML DRIVELINES LTD.) 3 JURISDICTIONAL HIGH COURT REFERRED ABOVE. IF THE AS SESSEE HAS EARNED EXEMPT INCOME THE ASSESSEES SUBMISSION OF THE WORKING OF DISALLOWANCE OF RS. 1,00,747/- SHALL BE EXAMINED BY THE ASSESSING OFFIC ER, AND THEREAFTER THE ASSESSING OFFICER SHALL TAKE A DECISION AS PER LAW. 7. AS REGARDS THE ADJUSTMENT UNDER SECTION 115JB WI TH REGARD TO THE DISALLOWANCE UNDER SECTION 14A, WE NOTE THAT THE SA ME IS NOT WARRANTED AS PER THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL I N THE CASE OF VIREET INVESTMENTS PVT. LTD. (ITA NO. 502/DEL/20132 AND CO . 68/DEL/2014 DT. 16.6.2017). WE DIRECT ACCORDINGLY. 8. IN THE RESULT, THE APPEAL BY THE ASSESSEE STANDS PARTLY ALLOWED. ORDER HAS BEEN PRONOUNCED UNDER RULE 34(4) OF THE I TAT RULES ON 14.7.2020. SD/- SD/- (AMARJIT SINGH) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTAN T MEMBER MUMBAI; DATED : 14/07/2020 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR) PS ITAT, MUMBAI