ACIT - 2(3)(1), MUMBAI V. TATA REALTY & INFRASTRUCTURE LTD., MUMBAI

ITA 5263/MUM/2016

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 5316 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 24-08-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R MANJUNATHA SWAMY
• Keywords: Depreciation; Opportunity of being heard; Earning of tax free income
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E MUMBAI BEFORE SHRI MAHAVIR SINGH (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 5263/MUM/2016 ASSESSMENT YEAR: 2011 - 12 ACIT CIRCLE - 2(3)(1) R. NO. 552 5 TH FLOOR, AAYAKAR BAHVAN, M.K. ROAD, MUMBAI - 400020. VS. M/S TATA REALITY & INFRASTRUCTURE LTD., ELPHINSTON BUILDING, 2 ND FLOOR, VEER NARIMAN ROAD, MUMBAI - 400001. PAN NO. AACCT6242L APPELLANT RESPONDENT REVENUE BY : MR. R. MANJUNATHA SWAMY, CIT - DR ASSESSEE BY : MR. NEERAJ SHETH, AR DATE OF HEARING : 2 7 /09/2018 DATE OF PRONOUNCEMENT : 28/09/2018 ORDER PER N.K. PRADHAN, AM THIS IS AN APPEAL FILED BY THE R EVENUE . THE RELEVANT ASSESSMENT YEAR IS 2011 - 12 . THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISS IONER OF INCOME TAX (APPEALS) - 6 [IN SHORT CIT(A) ], MUMBAI AND ARISES OUT OF THE ASSESSMENT COMPLETED U/S 143(3) R.W.S. 144C OF THE INCOME TAX ACT 1961, (THE ACT). 2. IN A NUTSHELL, THE FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER (AO) MADE A DISALLOWANCE OF RS.4,66,96,227/ - U/S 14A R.W. RULE 8D(2)(III) OF THE INCOME TAX RULES, 1962 (THE RULES). DURING THE APPELLATE PROCEEDINGS BEFORE THE LD. CIT(A), THE ASSESSEE FI LED A CALCULATION FOR THE PURPOSE OF DISALLOWANCE WHICH INCLUDED PERSONNEL COSTS, SALARIES ETC. OF RS.9,09,320/ - , ADMINISTRATIVE AND OTHER EXPENSES M/S TATA REALITY ITA NO. 5263/MUM/2016 2 OF RS.1,88,275/ - AND DEPRECIATION OF RS.15,180/ - TOTALLING TO RS.11,12,776/ - . WITHOUT PREJUDICE TO THE ABOVE SUBMISSION, IT WAS SUBMITTED BEFORE THE LD. CIT(A) THAT EVEN IF FORMULA UNDER RULE 8D(2)(III) IS APPLIED, THEN THE STRATEGIC INVESTMENTS AS WELL AS THE INVESTMENTS WHICH HAVE NOT YIELDED TAX - FREE INCOME DURING THE YEAR, SHALL BE EXCLUDED WHILE WORKING OUT THE DISALLOWANCE. WE FIND THAT THE LD. CIT(A) , RELYING ON THE CASE - LAWS CITED BY THE ASSESSEE , DIRECTED THE AO TO EXCLUDE STRATEGIC INVESTMENTS AS CLAIMED, AFTER VERIFICATION. 3. BEFORE US, THE LD. DR SUBMITS THAT DISALLOWANCE U/S 14A IS APPLICABLE TO EXP ENDITURE IN RELATION TO EXEMPT INCOME FROM STRATEGIC INVESTMENT/STOCK - IN - TRADE, WHILE CALCULATING DISALLOWANCE UNDER RULE 8D(2)(III) , IN VIEW OF THE RECENT DECISION RENDERED BY THE HONBLE SUPREME COURT IN MAXOPP INVESTMENT LTD. V. CIT (2018) 91 TAXMANN.CO M 154 (SC) . ON THE OTHER HAND, THE LD. COUNSEL OF THE ASSESSEE SUBMITS THAT IN VIEW OF THE ORDER OF THE SPECIAL BENCH OF THE TRIBUNAL IN ACIT V. VIREET INVESTMENT (P) LTD . (2017) 165 ITD 27, ONLY THOSE INVESTMENTS ARE TO BE CONSIDERED FOR COMPUTING AVERA GE VALUE OF INVESTMENT WHICH YIELDED EXEMPT INCOME DURING THE YEAR. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. THE ISSUE HERE IS THE DISALLOWANCE MADE BY THE AO U/S 14A R.W. RULE 8D(2)(III) AND THE SAME HAS BEEN A DDRESSED IN MAXOPP INVESTMENT LTD . (SUPRA ) AND VIREET INVESTMENT (P) LTD. (SUPRA). WE FIND THAT I N THE INSTANT CASE NEITHER THE AO NOR THE LD. CIT(A) HAD THE BENEFIT OF THE ABOVE TWO DECISIONS. ALSO THE ASSESSEE WAS NOT HAVING THE BENEFIT OF THE ABOVE TWO DECISIONS WHILE SUBMITTING ITS CASE BEFORE THE ABOVE TWO AUTHORITIES. M/S TATA REALITY ITA NO. 5263/MUM/2016 3 IN VIEW OF THE ABOVE FACTS , WHICH ARE RELEVANT TO THE INSTANT CASE, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE AO TO RECOMPUTE THE DISALLOWANCE U/S 14A R.W. RULE 8D (2)(III), BY FOLLOWING THE DECISIONS DELINEATED ABOVE. WE DIRECT THE ASSESSEE TO FILE THE RELEVANT DOCUMENTS/EVIDENCE BEFORE THE AO. NEEDLESS TO SAY THE AO WOULD GIVE REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BEFORE FINALIZING THE ORDER. 5. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 28/09/2018. SD/ - SD/ - (MAHAVIR SINGH) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 28/09/2018 RAHUL SHARMA, 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// (SR. PRIVATE SECRETARY) ITAT, MUMBAI