Deputy Commissioner of Income tax, Pune V. Balkrishan Shanmugham Chettiar, Pune

ITA 536/PUN/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 7913 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 11-07-2019
• Assessment Year: 2013-2014
• Appeal Filed On: 06-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N ASHOK BABU
• Keywords: Earning of tax free income; Rule 8D; Capital Gains
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE . , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.536/PUN/2017 / ASSESSMENT YEAR : 2013-14 DCIT, CENTRAL CIRCLE-1(1), PUNE. ....... / APPELLANT / V/S. BALKRISHAN SHANMUGHAM CHETTIAR ALIAS S. BALAN, 1133/5, NIRANKAR F.C. ROAD, SHIVAJI NAGAR, PUNE-411016. PAN : AALPC5158J / RESPONDENT REVENUE BY : SHRI N. ASHOK BABU ASSESSEE BY : NONE / DATE OF HEARING : 11.07.2019 / DATE OF PRONOUNCEMENT : 14.08.2019 / ORDER PER D. KARUNAKARA RAO, AM: THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A)-11, PUNE DATED 13.12.2016 FOR THE ASSESSMENT YEAR 2013-14. 2. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER :- 1) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE HON'BLE CIT(A) WAS JUSTIFIED IN RESTRICTING THE DISALLOWANCE UNDER RULE 8D(2)(III) TO THE EXEMPT INCOME EARNED ON ADHOC BASIS WITHOUT APPRECIATING THAT SECTION 14A(2) MANDATES THAT THE AMOUNT OF EXPENDITURE TO BE DISALLOWED IS TO BE DETERMINED AS PER THE METHOD PRESCRIBED IN RULE 8D OF THE I.T. RULES, 1962 AND WHEN RULE 8D(2) USES THE WORD SHALL AND THEREFORE COMPUTATION OF DISALLOWANCE IS ALSO MANDATORY? 2) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT(A) WAS JUSTIFIED IN ALLOWING DEDUCTION U/S 80IA(4)(III) IGNORING THE PROVISIONS OF SECTION 80IA(2) EVEN THOUGH THERE WAS DELAY COMPLETING THE ENTIRE PROJECT BY 31.03.2017 WITHOUT OBTAINING APPROVAL TO THE INDUSTRIAL PART FROM THE GOVERNMENT FOR AVAILING TAX BENEFITS? 2 ITA NO.536/PUN/2017 3) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT(A) WAS JUSTIFIED IN ALLOWING DEDUCTION U/S 80IA(4)(III) LIBERALLY INTERPRETING THE INCOME TAX RULES 18C AND THE INDUSTRIAL PARK SCHEME 2008 WHERE THE WORD SHALL HAS BEEN USED TO EMPHASISE STRICT COMPLIANCE OF THE CONDITIONS LET DOWN FOR CLAIMING DEDUCTION U/S 80IA(4)? 4) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED IN THE INTERPRETATION OF THE STATUTE WHEN THE HONBLE SUPREME COURT HAS HELD A CONTRARY VIEW IN THE CASE OF CIT VS. CALCUTTA KNIT WEARS 2014 43 TAX MANN.COM 446(SC)? 5) THE ORDER OF CIT(A) MAY BE VACATED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 6) THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER ANY OF THE ABOVE GROUNDS OF APPEAL. 3. FROM THE ABOVE EXTRACTED GROUNDS, IT IS EVIDENT THAT THE ISSUE RAISED IN GROUND NO.1 RELATES TO THE DISALLOWANCE MADE U/S 14A OF THE I.T. ACT READ WITH RULE 8D(2) OF THE I.T. RULES. THE ISSUE RAISED IN GROUNDS NO.2, 3 AND 4 RELATES TO THE ALLOWABILITY OF DEDUCTION U/S 80IB(4) OF THE ACT. THE GROUNDS NO.5 AND 6 ARE GENERAL IN NATURE. 4. THERE IS NONE TO REPRESENT THE ASSESSEE DESPITE SERVICE OF NOTICE BY THE TRIBUNAL. THEREFORE, THIS APPEAL IS BEING DECIDED ON THE BASIS OF MATERIAL AVAILABLE ON RECORD AND AFTER HEARING THE LD. DR FOR THE REVENUE. 5. REFERRING TO GROUND NO.1, LD. DR FOR THE REVENUE SUBMITTED THAT THE ASSESSING OFFICER INVOKING THE PROVISIONS OF SECTION 14A OF THE ACT READ WITH RULE 8D(2) OF THE RULES AND DISALLOWED A SUM OF RS.19,93,186/- INVOKING THE PROVISIONS OF CLAUSES (II) AND (III) OF THE SAID RULE 8D(2) OF THE I.T. RULES. THE UNDISPUTED FACT RELATING TO THIS ADDITION IS THAT THE ASSESSEE EARNED EXEMPT INCOME OF RS.3,69,772/- ON ACCOUNT OF DIVIDEND INCOME AND LONG TERM CAPITAL GAINS AND THE SAME FORMED PART OF THE TOTAL INCOME OF THE ASSESSEE. CONSIDERING THE ABOVE FACTS AND ON FINDING THE DISALLOWANCE EXCEEDED THE EXEMPT INCOME, LD. CIT(A) GRANTED PART RELIEF AND RESTRICTED 3 ITA NO.536/PUN/2017 THE DISALLOWANCE TO RS.3,69,772/- I.E. THE EXEMPT INCOME OF THE ASSESSEE. THE CONTENTS OF PARA 4 AND 5 OF THE ORDER OF THE CIT(A) ARE RELEVANT IN THIS REGARD. 6. ON HEARING LD. DR FOR THE REVENUE AND PERUSING THE ORDER OF THE CIT(A) IN RESTRICTING TO THE DISALLOWANCE TO THE EXEMPT INCOME OF THE ASSESSEE, WE ARE OF THE OPINION, THE DECISION OF THE CIT(A) IS IN TUNE WITH THE SETTLED LEGAL PROPOSITION ON THIS ISSUE. THEREFORE, THE ORDER OF THE CIT(A) IS FAIR AND REASONABLE ON THIS ISSUE AND IT DOES NOT CALL FOR ANY INTERFERENCE. THUS, THE RELEVANT GROUND NO.1 RAISED BY THE REVENUE IS DISMISSED . 7. THE NEXT ISSUE RELATING TO THE DEDUCTION U/S 80IA(4) OF THE ACT. THE CIT(A) DEALT WITH THIS ISSUE IN PARA 9 TO 12 OF HIS ORDER. THE LD. DR DEMONSTRATED THE FACT AND SUBMITTED THAT THE CIT(A) GRANTED RELIEF TO THE ASSESSEE RELYING ON THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2009-10 AND 2010-11 [PARA 11 AND 12 OF THE ORDER OF THE CIT(A)]. IN FACT, THE TRIBUNAL GRANTED THE RELIEF TO THE ASSESSEE RELYING ON THE DECISION OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF M/S KOLTE PATIL DEVELOPERS LTD. VS. DCIT IN ITA NO.1411 TO 1415/PN/2013 AND OTHERS. IT IS EVIDENT FROM THE ORDER OF THE CIT(A) THAT THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE RELYING ON THE EARLIER ASSESSMENT ORDERS FOR THE SAID ASSESSMENT YEAR. THE LD. DR FAIRLY SUBMITTED THAT SINCE THE RELIEF GRANTED BY THE TRIBUNAL FOR THE RELEVANT ASSESSMENT YEARS WHICH IS RELIED ON BY THE ASSESSING OFFICER, WE ARE OF THE OPINION, THE ORDER OF THE CIT(A) IS FAIR AND REASONABLE ON THIS ISSUE. FOR THE SAKE OF COMPLETENESS, THE SAID PARA 12 OF THE ORDER OF THE CIT(A) IS EXTRACTED HEREUNDER:- 4 ITA NO.536/PUN/2017 12. IT IS SEEN THAT MY PREDECESSORS ORDER IN THE ASST. YEAR 2011-12 CONFIRMING THE DISALLOWANCE IN THE APPELLANTS CASE WAS NOT BROUGHT TO THE NOTICE OF THE HONOURABLE TRIBUNAL AND THEREFORE THE ISSUES RAISED BY MY PREDECESSOR IN HIS ORDER HAVE NOT BEEN ADDRESSED BY THE HONOURABLE TRIBUNAL. BUT JUDICIAL PROPRIETY REQUIRES THAT THE DECISION OF THE HONOURABLE TRIBUNAL IS FOLLOWED AS THE FACTS AND CIRCUMSTANCES ESSENTIALLY ARE THE SAME AS WERE CONSIDERED BY THE TRIBUNAL IN THE ABOVE CITED ORDER. RESPECTFULLY FOLLOWING THE TRIBUNALS ORDER IN THE ASSESSEES OWN CASE IN ASST. YEAR 2009-10 ETC, THE AO IS DIRECTED TO ALLOW THE APPELLANTS CLAIM OF DEDUCTION U/S 80IA(4) OF THE ACT. THE GROUND OF APPEAL NO.4 IS ALLOWED. 8. CONSIDERING THE ABOVE SETTLED LEGAL NATURE ON THIS ISSUE, WE ARE OF THE OPINION, THE ORDER OF THE CIT(A) IS FAIR ANY REASONABLE ON THIS ISSUE AND IT DOES NOT CALL FOR ANY INTERFERENCE. THUS, THE GROUNDS NO.2 TO 4 RAISED BY THE REVENUE ARE DISMISSED . 9. GROUNDS NO.5 AND 6 BEING GENERAL IN NATURE ARE DISMISSED . 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON 14 TH DAY OF AUGUST, 2019. SD/- SD/- ( /VIKAS AWASTHY) ( . /D. KARUNAKARA RAO) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; / DATED : 14 TH AUGUST, 2019. SUJEET / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(A)-11, PUNE. 4. THE DGIT (INV.), PUNE. 5. , , , / DR, ITAT, A BENCH, PUNE. 6. / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE.