ACIT, New Delhi V. M/s. Oriental Structural Engineers Pvt. Ltd., New Delhi

ITA 5319/DEL/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1842 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 09-12-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 25-09-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJANA
• Assessee Lawyers: K V S S KRISHNAN
• Keywords: Opportunity of being heard; Additional evidence
• Section: 14A; 80G

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : E : NEW DELHI BEFORE SHRI R.S. SYAL, AM & SHRI C.M. GARG, JM ITA NO.5319/DEL/2013 ASSESSMENT YEAR : 2009-10 ACIT, CENTRAL CIRCLE-2, 3 RD FLOOR, ARA CENTRE, JHANDEWALAN EXTN., NEW DELHI. VS. ORIENTAL STRUCTURAL ENGINEERS PVT. LTD., 21/48, COMMERCIAL COMPLEX, DIPLOMATIC ENCLAVE, MALCHA MARG, NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K.V.S.S. KRISHNAN, CA DEPARTMENT BY : SHRI P. DAM KANUNJANA, SR. DR DATE OF HEARING : 09.12.2015 DATE OF PRONOUNCEMENT : 10.12.2015 ORDER PER R.S. SYAL, AM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) ON 28.3.2013 IN RELATION TO THE ASSESSME NT YEAR 2009-10. ITA NO.5319/DEL/2013 2 2. THE FIRST ISSUE RAISED IN THIS APPEAL IS AGAINST RESTRICTING THE ADDITION MADE BY THE AO U/S 14A READ WITH RULE 8D. 3. BRIEFLY STATED, THE FACTS APROPOS THIS ISSUE ARE THAT THE THE ASSESSEE EARNED DIVIDEND AMOUNTING TO RS.74,92,207/- ON MUTU AL FUNDS. SINCE THE ASSESSEE HAD NOT OFFERED ANY DISALLOWANCE U/S 1 4A, THE AO, AFTER TAKING OBJECTIONS FROM THE ASSESSEE, APPLIED RULE 8 D FOR MAKING DISALLOWANCE OF RS.1,07,62,385/-. WHEN THE MATTER CAME UP BEFORE THE LD. CIT(A), HE NOTICED THAT OUT OF TOTAL INVESTMENT OF RS.175.50 CRORE, THE ASSESSEE MADE INVESTMENT IN SPVS/SUBSIDIARIES/S ISTER CONCERNS AMOUNTING TO RS.164.51 CRORE. IN THIS REGARD, IT WA S OBSERVED THAT THE ASSESSEE WAS A MEMBER OF A CONSORTIUM CALLED ORIENT AL STRUCTURAL ENGINEERS PVT. LTD., WHO WAS AWARDED CONTRACTS BY N HAI FOR CONSTRUCTION OF ROAD OF AGRA-BHARATPUR, INDORE-KHAL GAT AND KONDHALI- TALEGOAN ON BOT BASIS. SINCE THE ASSESSEE EARNED I NCOME CHARGEABLE TO TAX FROM SUCH INVESTMENTS, THE LD. CIT(A) HELD THAT INVOCATION OF SECTION 14A TO THAT EXTENT WAS NOT JUSTIFIED. HE, THEREFOR E, DELETED THE DISALLOWANCE U/S 14A PRO TANTO . IN DOING SO, HE RELIED ON HIS ORDER ITA NO.5319/DEL/2013 3 PASSED IN THE ASSESSEES OWN CASE FOR THE IMMEDIATE LY PRECEDING ASSESSMENT YEAR. AS REGARDS THE REMAINING INVESTME NT OF RS.6.05 CRORE, THE LD. CIT(A) HELD THAT THERE WAS NO COMMERCIAL EX PEDIENCY INVOLVED IN THE INVESTMENT IN SHARES AND MUTUAL FUNDS. APPL YING THE PRESCRIPTION OF RULE 8D, HE SUSTAINED DISALLOWANCE TO THE TUNE O F RS.2,98,950/-. THE ASSESEE HAS ACCEPTED THE ADDITION SUSTAINED IN THE IMPUGNED ORDER. THE REVENUE IS AGGRIEVED AGAINST THE REDUCTION IN ADDIT ION. 4. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD, WE FIND THAT THE LD. CIT(A) HAS DELETED THE ADDITION MADE BY THE AO ON ACCOUNT OF INVESTMENTS MADE IN SP VS AND SUBSIDIARIES, ETC. WHICH YIELDED TAXABLE INCOME. IN DOING SO, HE RELIED ON HIS ORDER PASSED FOR THE AY 2008-09. THE SAID ORDE R CAME UP FOR CONSIDERATION BEFORE THE TRIBUNAL. VIDE ITS ORDER DATED 2.12.2011, THE TRIBUNAL, IN ITA NO.4245/DEL/2011, HAS UPHELD THE V IEW TAKEN BY THE LD. CIT(A). THE ORDER SO PASSED BY THE TRIBUNAL HAS BE EN AFFIRMED BY THE HONBLE DELHI HIGH COURT VIDE ITS JUDGMENT DATED 15 .1.2013, A COPY OF WHICH HAS BEEN PLACED ON RECORD. THE LD. DR COULD NOT POINT OUT ANY ITA NO.5319/DEL/2013 4 DISTINGUISHING FEATURE BETWEEN THE FACTS OF THE INS TANT YEAR VIS--VIS THOSE FOR THE IMMEDIATELY PRECEDING ASSESSMENT YEAR WHICH HAS FORMED BEDROCK FOR THE LD. CIT(A) TO DELETE THE ADDITION. IN VIEW OF THE FACT THAT THE ADDITION SO DELETED BY THE TRIBUNAL HAS BEEN AF FIRMED BY THE HONBLE HIGH COURT IN THE ASSESSEES OWN CASE FOR THE EARLI ER YEAR AND ADMITTEDLY THE FACTS ARE SIMILAR FOR THE EXTANT YEAR, WE REFUS E TO INTERFERENCE IN THE IMPUGNED ORDER ON THIS SCORE. THIS GROUND IS NOT A LLOWED. 5. THE ONLY OTHER GROUND IS AGAINST THE DELETION OF ADDITION OF RS.57,103/- MADE BY THE AO ON ACCOUNT OF DONATIONS U/S 80G OF THE ACT. THE FACTS APROPOS THIS GROUND ARE THAT THE ASSESSEE CLAIMED DEDUCTION U/S 80G TOWARDS DONATIONS MADE, WHICH THE AO REFUSED TO GRANT BECAUSE SUCH EXPENSES WAS NOT SUBSTANTIATED. THE LD. CIT(A ) ENTERTAINED ADDITIONAL EVIDENCE FILED BEFORE HIM AND DELETED TH E ADDITION, AGAINST WHICH THE REVENUE HAS COME UP IN APPEAL BEFORE US. 6. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD, WE FIND THAT THE LD. CIT(A) HAS CHOSEN TO DELETE THE ADDITION BY ALLOWING DEDUCTION U/S 80G ON ACCOUNT O F DONATIONS ON THE ITA NO.5319/DEL/2013 5 BASIS OF CERTAIN EVIDENCE FILED BEFORE HIM WHICH WE RE INDISPUTABLY NOT FILED BEFORE THE AO. THIS IS A CLEAR-CUT CASE OF V IOLATION OF RULE 46A BY THE LD. CIT(A), WHO DID NOT CONSIDER IT EXPEDIENT TO SEEK REMAND REPORT FROM THE AO ON SUCH ADDITIONAL EVIDENCE. WE, THEREF ORE, SET ASIDE THE IMPUGNED ORDER ON THIS SCORE AND SEND THE MATTER TO THE FILE OF THE AO FOR DECIDING THIS ISSUE AFRESH IN ACCORDANCE WITH T HE LAW, AFTER ALLOWING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. 7. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. THE ORDER PRONOUNCED IN THE OPEN COURT ON 10.12.201 5. SD/- SD/- [C.M. GARG] [R.S. SYAL] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED, 10 TH DECEMBER, 2015. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.