BAIJANATH MANIRAM, MUMBAI V. DCIT CENT. CIR. 6, MUMBAI

ITA 5212/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0642 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Next Hearing Date: 13-04-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 18-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANJU GORADIA
• Keywords: Earning of tax free income
• Section: 143(3); 153A; 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH J MUMBAI BEFORE SHRI C.N. PRASAD (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 5212/MUM/2016 ASSESSMENT YEAR: 2009-10 M/S. BAIJNATH MANIRAM VS. DCIT CENT CIR 6 51-53, A WING, MITTAL COURT MUMBAI. J.B. MARG, NARIMAN POINT MUMBAI - 400021 PAN NO. AAEFB8365P (APPELLANT) (RESPONDENT) ASSESSEE BY : MR. GAURAV KABRA, AR REVENUE BY: MS. ANJU GORADIA, DR DATE OF HEARING : 13/0 4/2017 DATE OF PRONOUNCEMENT: 12/05/2017 ORDER PER N.K. PRADHAN, AM THIS IS AN APPEAL FILED BY THE ASSESSEE. THE RELEVA NT ASSESSMENT YEAR IS 2009-10. THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) 47, MUMBAI A ND ARISES OUT OF THE ORDER U/S 143(3) R.W.S. 153A OF THE INCOME T AX ACT, 1961 (THE ACT). 2. THE GROUND OF APPEAL FILED BY THE ASSESSEE READS AS UNDER: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LEARNE D ASSESSING OFFICER IN DISALLOWING OF EXPENSES U/S. 14A OF THE INCOME T AX ACT, 1961 OF RS. 36,93,307/- WITHOUT CONSIDERING THE FACTS AND CIRCU MSTANCES OF THE CASE. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE- COMPANY FILED ITS ORIGINAL RETURN OF INCOME FOR THE IMPUGNED ITA NO. 5212/MUM/2016 2 ASSESSMENT YEAR ON 28.09.2009 DECLARING TOTAL LOSS OF RS. 90,21,270/-. ORIGINAL ASSESSMENT U/S 143(3) WAS COMPLETED VIDE O RDER DATED 23.12.2011 DETERMINING TOTAL LOSS AT RS. 53,27,960/ - BECAUSE OF DISALLOWANCE OF RS. 36,93,307/- U/S 14A OF THE ACT. THEREAFTER, SUBSEQUENT TO SEARCH OPERATION CONDUCTED ON 29.04.2 011 ON THE ARYA GROUP OF COMPANIES, NOTICE U/S 153A WAS ISSUED TO T HE ASSESSEE- COMPANY. THE ASSESSEE-COMPANY FILED RETURN OF INCOM E ON 18.07.2017 DECLARING TOTAL LOSS AT RS. 84,29,185/- . DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER (A.O. ) NOTED THAT THE INCOME ASSESSED AS A CONSEQUENCE OF THE ORIGINAL SC RUTINY PROCEEDINGS WAS LOSS OF RS. 53,27,960/- AND THAT TH E SAID ORDER WAS PENDING BEFORE THE CIT(A). ACCORDINGLY, THE A.O. DI D NOT ACCEPT THE LOSS OF RS. 84,29,185/- SHOWN IN THE RETURN OF INCO ME AND COMPLETED THE ASSESSMENT U/S 143(3) R.W.S. 153A VIDE ORDER DA TED 27.03.2014 AT THE ORIGINALLY ASSESSED LOSS OF RS. 53,27,960/-. TH E ASSESSEE FILED APPEAL BEFORE THE CIT(A) AGAINST THE ASSESSMENT ORD ER PASSED BY THE A.O. U/S 143(3) R.W.S. 153A VIDE ORDER DATED 27.03 .2014. THE LEARNED CIT(A) DISMISSED THE APPEAL FILED BY THE ASSESSEE O N THE GROUND THAT THE SAID DISALLOWANCE DID NOT EMANATE FROM THE ORD ER U/S 143(3) R.W.S. 153A DATED 27.03.2014. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. AS MENTIONED HERE-IN-ABOVE, THE A.O. HAS MADE THE DISALLOWANCE OF RS. 36,93,307/- U/S 14A IN THE ORIGINAL ORDER DATED 23.12.2011 PASSED U/S 143(3) OF THE ACT. IN T HE ASSESSMENT MADE U/S 143(3) R.W.S. 153A OF THE ACT VIDE ORDER D ATED 27.03.2014 THE A.O. HAS ASSESSED THE INCOME AS PURSUANT TO THE ERSTWHILE ASSESSMENT ORDER DATED 23.12.2011 U/S 143(3) AT RS. 53,27,960/-. SIMILAR ISSUE AROSE BEFORE THE CO-ORDINATE BENCH IN THE ASSESSEES ITA NO. 5212/MUM/2016 3 OWN CASE FOR THE A.Y. 2009-10 (ITA NO. 6340/MUM/201 2). THE TRIBUNAL HELD AS UNDER: WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PERUS ED THE RELEVANT FINDING GIVEN IN THE IMPUGNED ORDER. FROM THE PERUS AL OF P&L ACCOUNT OF THE ASSESSEE, IT IS EVIDENT THAT ASSESSEE HAS DE BITED TOTAL EXPENSES OF RS.6,83,066/-. OUT OF THE SAID EXPENSES, THERE ARE CERTAIN EXPENSES WHICH ARE DIRECTLY ATTRIBUTABLE TO THE BUSINESS OF THE ASSESSEE. SOME OF THE EXPENSES CAN BE SAID TO BE ATTRIBUTABLE FOR THE EARNING OF THE EXEMPT INCOME. ASSESSING OFFICER IS REQUIRED TO EXA MINE THE ACCOUNT OF THE ASSESSEE AND HAVING REGARD TO SUCH ACCOUNTS AND THE EXPENDITURE CLAIMED, HE IS REQUIRED TO SATISFY HIMSELF ABOUT TH E CORRECTNESS OF THE CLAIM AND THEN ONLY HE CAN PROCEED TO MAKE A DISALL OWANCE. IN ANY CASE WHILE MAKING A DISALLOWANCE ON ACCOUNT OF INDIRECT EXPENSES, THE DISALLOWANCE U/S 14A CANNOT BE EXCEED OVERALL EXPEN SES CLAIMED BY THE ASSESSEE IN ITS P&L ACCOUNT. THE PURPOSE OF SECTION 14A AS PROVIDED IN SUB-SECTION 1 IS THAT, WHILE COMPUTING THE TOTAL IN COME, NO DEDUCTION SHOULD BE ALLOWED IN RESPECT OF EXPENDITURE INCURRE D BY THE ASSESSEE IN RELATION TO THE EXEMPT INCOME. THE PHRASE EXPENDIT URE INCURRED HAS TO BE RECKONED WITH THE EXPENDITURE CLAIMED BY THE ASSESSEE. THUS THE ENTIRE MATTER IS RESTORED BACK TO THE FILE OF THE A O, TO EXAMINE THE ACCOUNTS OF THE ASSESSEE AND THEN AFTER HAVING BEEN SATISFIED ON THE NATURE OF EXPENDITURE SHOULD PROCEED TO MAKE THE DI SALLOWANCE U/S 14A. IT IS MADE CLEAR THAT WHILE MAKING THE DISALLO WANCE, THE SAME SHOULD NOT EXCEED THE OVERALL OF INDIRECT EXPENDITU RE DEBITED BY THE ASSESSEE. THUS, THE GROUND RAISED BY THE ASSESSEE I S TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 5. FACTS BEING SIMILAR AND ASSESSED LOSS BEING SAME , WE FOLLOW THE ORDER OF THE CO-ORDINATE BENCH AND SET ASIDE THE OR DER OF THE LEARNED CIT(A) AND RESTORE THE SAME TO THE FILE OF THE A.O. TO MAKE A FRESH ASSESSMENT IN THE LIGHT OF THE DIRECTION MENTIONED AT PARA 4 HERE-IN- ABOVE AFTER GIVING A REASONABLE OPPORTUNITY OF BEIN G HEARD TO THE ASSESSEE. 6. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATIST ICAL PURPOSES. ITA NO. 5212/MUM/2016 4 ORDER PRONOUNCED IN THE OPEN COURT ON 12/05/2017 SD/- SD/- (C.N. PRASAD) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBE R MUMBAI: DATED: 12/05/2017 BISWAJIT, SR. P.S. 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// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI