SKIL INFRASTRUCTURE LTD, MUMBAI V. DEPUTY COMMISSIONER OF INCOME TAX, RANGE CENTRAL CIRCLE 6(3), MUMBAI

ITA 5347/MUM/2019

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 8051 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-02-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2016-2017
• Appeal Filed On: 15-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Earning of tax free income
• Section: 142(1); 14A; 115JB; 143(1); 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “G” BENCH, MUMBAI BEFORE SHRI M. BALAGANESH, AM AND SHRI AMARJIT SINGH, JM आयकर अपील सं/ I.T.A. No. 5347/Mum/2019 (निर्धारण वर्ा / Assessment Year: 2016-17) Skill Infrastructure Ltd. 209, Skill House, Bank Street Cross Lane, Fort, Mumbai-400023. बिधम/ Vs. DCIT, Range Central Circle- 6(3) Room No. 1905, 19 th Floor, Air India Building, Nariman Point, Mumbai-400021. आयकर अपील सं/ I.T.A. No. 5656/Mum/2019 (निर्धारण वर्ा / Assessment Year: 2016-17) DCIT, Range Central Circle- 6(3) Room No.1905, 19 th Floor, Air India Building, Nariman Point, Mumbai-400021. बिधम/ Vs. Skill Infrastructure Ltd. 209, Skill House, Bank Street Cross Lane, Fort, Mumbai- 400023. स्थायी लेखा सं./जीआइआर सं./PAN/GIR No. : AAHCA5892 (अपीलाथी /Appellant) .. (प्रत्यथी / Respondent) सुनवाई की तारीख / Date of Hearing: 01/12/2021 घोषणा की तारीख /Date of Pronouncement: 24/02/2022 आदेश / O R D E R PER AMARJIT SINGH, JM: The assessee as well as revenue have filed the above mentioned appeals against the order dated 14.06.2019 passed by the Commissioner of Income Tax (Appeals) -54, Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the A.Y. 2016-17. ITA. NO.5347/Mum/2019 Revenue by: Shri Jayant Jhaveri (DR) Assessee by: None ITA Nos. 5347 & 5656/Mum/2019 A.Y. 2016-17 2 2. The assessee has filed the present appeal against the order dated 14.06.2019 passed by the CIT(A)-54, Mumbai relevant to the A.Y. 2016- 17. 3. The assessee has raised the following grounds: - "1 On facts and in circumstances of the case and in law, the CIT(A) has erred in including Long Term Capital Gain of Rs.9.02 crores on sale of listed securities as exempt income for the purposes of section 14A. In doing so the CIT(A) has further erred in rejecting the arguments of the appellant, that it being a corporate assessee, Long Term Capital Gain u/s. 10(38) though exempt in normal computation is includable for the purposes of book profits under section 115JB of the Income Tax Act. The Assessing Officer therefore be directed to restrict the 14A disallowance at Rs.1.92 lakhs, which is to the extent of dividend income earned. The appellant reserves his right to add, to amend, to alter, to withdraw, to modify and/or to substitute any or, all of the foregoing ground(s) of appeal.” 4. The brief facts of the case are that the assessee filed its return of income on 07.10.2016 declaring total loss to the tune of Rs.(-) 416,22,73,683/- for the A.Y.2016-17. The return was processed u/s 143(1) of the Act. The case was selected for scrutiny. Notices u/s 143(2) & 142(1) of the Act were issued and served upon the assessee. On verification, it was found that the assessee has earned the dividend income1,92,177/- and Long Term Capital Gain of Rs.9,02,71,940/- which was claimed as exempt. The notice was issued and after the reply of the assessee, the AO assessed the ITA Nos. 5347 & 5656/Mum/2019 A.Y. 2016-17 3 expenditure to earn the exempt income to the tune of Rs.131,54,01,380/-. The income of the assessee was assessed at loss to the tune of Rs.(-) 2,03,00,331/-. Feeling aggrieved, the assessee filed an appeal before the CIT(A) who restricted the addition to the extent of 9.02 crores but the assessee as well as revenue were not satisfied, therefore, filed the above mentioned appeals before us. ISSUE No. 1 5. Under this issue the assessee has challenged the restriction of addition to the extent of 9.02 crores. We find that the issue has duly been covered and is to be decided in view of the decision of Special Bench in the case of ACIT Vs. Vireet Investments Pvt. Ltd., ITA. No. 502/Del/2012 dated 16.06.2017. However, on the other hand, the Ld. Representative of the Department has refuted the said contention. It is not in dispute that the assessee has earned the dividend income to the tune of Rs.1.92 lacs however, received the capital gain to the tune of Rs. 9,02,71,940/-. The matter of controversy is liable to be viewed in the decision of Special Benches ITAT Delhi Vireet Investment Pvt. Ltd. (Supra). Accordingly, we set aside the finding of the CIT(A) on this issue and restored the issue before the AO to decide the matter of controversy afresh in view of the decision in the case of Vireet Investment Pvt. Ltd. (Supra). Needless to say that an opportunity of being heard is liable to be given to the assessee in accordance with law. ITA. NO.5656/Mum/2019 ITA Nos. 5347 & 5656/Mum/2019 A.Y. 2016-17 4 6. The revenue has filed the present appeal against the order dated 14.06.2019 passed by the CIT(A)-54, Mumbai relevant to the A.Y. 2016- 17. 7. The revenue has raised the following grounds: - “ I) "Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in restricting the disallowance to Rs 9,04,64,117/- from the addition of Rs 117,37,00,000/- made by the A.O u/s 14A of the Income Tax Act, 1961, thereby granting relief of Rs.108,32,35,883/-, ignoring that the provisions of Section 14A apply even if whether the motive of the assessee in acquiring shares is to obtain controlling interest in the company?" "Whether on the facts and in the circumstances of the ease and in law, the ld. CIT(A) has erred in restricting the addition u/s 14A of the Income Tax Act, 1961 by ignoring the CBDT Circular No. 5/2014 dated 11.02.2014 wherein, it has been clarified that Rule 8D r.w.s 14A provides for disallowance of expenditure even where the assessec in particulars has not earned exempt income.” 8. Since the facts of the present case are quite similar to the facts of the case mentioned above while deciding the appeal of the assessee bearing ITA. No.5347/Mum/2019, therefore, there is no need to repeat the facts of the case. In view of the above said finding, both the issues are hereby restore to the AO to decide the matter of controversy afresh in view of the decision in the case of Vireet Investment Pvt. Ltd. (Supra). ITA Nos. 5347 & 5656/Mum/2019 A.Y. 2016-17 5 9. In the result, the appeals filed by the assessee and revenue are allowed for statistical purposes. Order pronounced in the open court on 24/02/2022 Sd/- Sd/- (M. BALAGANESH) (AMARJIT SINGH) लेखध सदस्य / ACCOUNTANT MEMBER न्यधनिक सदस्य/JUDICIAL MEMBER मुंबई Mumbai; ददनांक Dated : 24/02/2022 Vijay Pal Singh (Sr. PS) आदेश की प्रनिनलनि अग्रेनर्ि/Copy of the Order forwarded to : 1. अपीलाथी / The Appellant 2. प्रत्यथी / The Respondent. 3. आयकर आयुक्त(अपील) / The CIT(A)- 4. आयकर आयुक्त / CIT 5. दवभागीय प्रदतदनदध, आयकर अपीलीय अदधकरण, मुंबई / DR, ITAT, Mumbai 6. गार्ड फाईल / Guard file. आदेशधिुसधर/ BY ORDER, सत्यादपत प्रदत //True Copy// उि/सहधिक िंजीकधर /(Dy./Asstt. Registrar) आिकर अिीलीि अनर्करण, मुंबई / ITAT, Mumbai