OVIRA LOGISTICS LTD ( NOW MERGED WITH IL & FS MARITIME INFRASTRUCTURE CO. LTD), MUMBAI V. DCIT RG 8(2), MUMBAI

ITA 5353/MUM/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5769 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 13-01-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 24-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A C TEJPAL
• Assessee Lawyers: D V LAKHANI
• Keywords: Rectification of order
• Section: 14A; 115JB; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ./I.T.A. NO.5353/M/2012 ( / ASSESSMENT YEAR: 2006 - 2007 ) OVIRA LOGISTICS LIMITED, (NOW MERGED WITH IL&FS MARITIME INFRASTRUCTURE CO. LTD), PLOT NO.14, RAHEJA VIHAR, IL&FS HOUSE, CHANDIVALI, ANDHERI (E), MUMBAI. / VS. DCIT - RANGE - 8(2), MUMBAI. ./ PAN : AABC 17029 R ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI D.V. LAKHANI / RESPONDENT BY : SHRI A.C. TEJPAL, CIT / DATE OF HEARING : 13.1.2014 / DATE OF PRONOUNCEMENT : 17 .1.2014 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 24.8.2012 IS AGAINST THE ORDER OF THE CIT (A) - 17, MUMBAI DATED 20.06.2012 FOR THE ASSESSMENT YEAR 2006 - 2007. 2. AT THE OUTSET, BRINGING OUR ATTENTION TO THE GROUNDS RAISED IN THIS APPEAL, LD COUNSEL FOR THE ASSESSEE MENTIONED THAT THE ISSUE RELATES TO THE DISALLOWANCE U/S 14A OF THE ACT FOR THE PURPOSE OF COMPUTING THE BOOK PROFITS U/S 115JB OF THE ACT. IN THIS REGARD, LD COUNSEL MENTIONED THAT THIS ISSUE IS A DEBATABLE ONE AND FOR THIS PURPOSE, LD COUNSEL BROUGHT OUR ATTENTION TO THE DECISION OF THE COORDINATE BENCH OF ITAT, MUMBAI IN THE CASE OF ITO VS. RBK SHARE BROKING PVT. LTD VIDE ITA NO.7546/M/2011 & 6678/M/2011 DATED 24.7.2013, WHICH IS RELEVANT FOR TH E PROPOSITION THAT THE DISALLOWANCE U/S 14A IS REQUIRED TO BE COMPUTED AS PER RULE - 8DOF THE IT RULES, 1962 AND FURTHER, IT IS THIS AMOUNT WHICH HAS BEEN DISALLOWED ALSO TO BE ADDED TO THE BOOK PROFITS FOR THE PURPOSE OF COMPUTATION U/S 115JB OF THE ACT. BRINGING OUR ATTENTION TO THE ORDER OF THE TRIBUNAL IN THE CASE OF M/S. ESSAR 2 TELEHOLDINGS LTD VS. DCIT, VIDE ITA NO.3850/M/2010 (2005 - 2006), LD COUNSEL DEMONSTRATED THAT 14A DISALLOWANCES ARE IRRELEVANT FOR THE PURPOSE OF COMPUTING THE BOOK PROFITS U/S 1 15JB OF THE ACT. FURTHER, LD COUNSEL BROUGHT OUR ATTENTION TO PAGE 30 TO 34 OF THE PAPER BOOKS, WHEREIN THE SIMILAR PROPOSITION WAS LAID DOWN BY THE TRIBUNAL FOR THE AY 2008 - 2009 IN THE ASSESSEES OWN CASE VIDE ITA NO.3230/M/2012 AND ITA NO.2439/M/2012, D ATED 30.8.2013. THUS, THE DEBATABILITY OF THE ISSUE WAS HIGHLIGHTED AND DEMONSTRATED BEFORE US. WHEN THE ISSUE IS DEBATABLE AND WHEN CALLS FOR A INVESTIGATION INTO THE ISSUE, THE PROVISIONS OF SECTION 154 SHOULD NOT BE INVOKED. IN THAT SENSE OF THE MATTE R, THE RECTIFICATION ORDER PASSED BY THE AO IS NOT SUSTAINABLE IN LAW. LD COUNSEL BROUGHT OUR ATTENTION TO SUPPORT THE SAME. 3. ON THE OTHER HAND, LD DR ON THE ISSUE OF DEBATABILITY RELIED ON THE ORDER OF THE AO. 4. WE HAVE HEARD BOTH THE PARTIES ON THIS LIMITED ISSUE OF THE DEBATABILITY OF THE ISSUE IN QUESTION. IT IS A SETTLED PROPOSITION OF THE LAW THAT AO CAN ONLY RECTIFY U/S 154 THE MISTAKES APPARENT / PATENT FROM THE RECORDS. THEREFORE, THE ISSUES OF DEBATABLE NATURE ARE OUTSIDE THE SCOPE OF SECTION 154 OF THE ACT. WHETHER THE DISALLOWANCES U/S 14A CAN BE MADE AND ADDED TO THE BOOK PROFITS COMPUTED/S 115JB OF THE ACT IS A DEBATABLE ONE. THE ISSUE, BEING DEBATABLE IN NATURE AND THE SAME IS SUPPORTED BY THE EXISTENCE OF DIVERGENT DECISIONS CITED BY THE LD COUNSEL CANN OT BE RECTIFIED AS DONE BY THE REVENUE IN THIS CASE. 5. CONSIDERING THE ABOVE LEGAL PROPOSITION AND THE FACTS OF THE ISSUE WE ARE OF THE OPINION THAT THE ISSUE RAISED BY THE ASSESSEE SHOULD BE DECIDED IN THEIR FAVOUR WITHOUT GOING INTO THE OTHER ASPECTS OF THE ARGUMENT PUT FORWARD BY THE ASSESSEE . ACCORDINGLY, GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRON OUNCED IN THE OPEN COURT ON 1 7 T H JANUARY, 2014. S D / - S D / - (VIJAY PAL RAO) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 17 .1 .2014 . . ./ OKK , SR. PS 3 / 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 . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI