CONTINENTAL CARRIERS PVT. LTD., NEW DELHI V. ITO, WARD- 6(3), NEW DELHI

ITA 5404/DEL/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 2010 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 23-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAGDISH SINGH
• Assessee Lawyers: RAJAN MALIK
• Keywords: Rule 8D; Capital Gains
• Section: 14A; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B NEW DLEHI BEFORE SHRI G.S. PANNU, VICE PRESIDENT AND SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER ITA NO. 5404/ DEL/2017 ASSESSMENT YE AR: 2013-14 CONTINENTAL CARRIERS PVT. LTD 76-77, KAPASHERA, BIJWASAN ROAD, NEW DELHI-110037. PAN:AAACC 0136E VS. INCOME TAX OFFICER, WARD-6(3), NEW DELHI. (APPLICANT) (RESPONDENT) APPELLANT BY: SH . RAJAN MALIK, ADV. RESPONDENT BY: SH. JA GDISH SINGH, SR. DR DATE OF HEARING: 16/3/2020 DATE OF ORDER : 20/3/2020 ORDER PER K. NARASIMHA CHARY, J.M. AGGRIEVED BY THE ORDER DATED 23/3/2017 IN APPEAL NO.335/15-16 OF CIT(A)-2 PASSED BY THE LEARNED COMM ISSIONER OF INCOME TAX (APPEALS)-2, NEW DELHI (LD.CIT(A)), FO R THE ASSESSMENT YEAR: 2013-14, M/S CONTINENTAL CARRIERS PVT. LTD ( THE ASSESSEE) FILED THIS APPEAL STATING THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 24,66,846/-MADE BY THE LEARNED ASSE SSING OFFICER 2 ITA NO.540 4/DEL/2017 ASST. YEAR: 2013-14 WHILE COMPUTING BOOK PROFIT UNDER SECTION 115 JB OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT). 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF INTERNATIONAL FREIGHT FO RWARD AND CUSTOMHOUSE AGENT. FOR THE ASSESSMENT YEAR 2013-14 THEY HAVE FILED THEIR RETURN OF INCOME ON 27/9/2013 DECLARING NIL TAXABLE INCOME, BUT CLAIMING LOSS OF RS.24,72,462/-. LEARNE D ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD DIVIDEND INCO ME AND LONG TERM CAPITAL GAINS EXEMPT UNDER SECTION 10(38) OF T HE ACT AND MATTER DISALLOWANCE OF RS. 24, 66, 846/-WHILE COMPU TING THE TAXABLE INCOME. LEARNED ASSESSING OFFICER FURTHER NOTICED T HAT THE SAME WAS NOT DISALLOWED WHILE COMPUTING THE BOOK PROFIT UNDER SECTION 115JB OF THE ACT AND STATING THAT NO JUSTIFIABLE RE PLY WAS GIVEN BY THE ASSESSEE IN THAT RESPECT, HE ADDED IT BACK TO T HE BOOK PROFITS UNDER SECTION 115 JB OF THE ACT. 3. IN APPEAL, LD. CIT(A) HELD THAT THE DISALLOWANCE MADE UNDER SECTION 14A OF THE ACT BY THE ASSESSEE WHILE COMPUT ING ITS NORMAL INCOME AT THE TIME OF FILING ITS RETURN ALSO NEEDS TO BE ADDED BACK TO ITS NET PROFIT AS PER PROFIT AND LOSS ACCOUNT SO AS TO ARRIVE AT THE CORRECT BOOKABLE OF IT UNDER SECTION 115JB OF THE AC T, THE ONLY CONDITION BEING THAT THE DISALLOWANCE UNDER SECTION 14 A OF THE ACT FORMS PART OF THE EXPENSES CLAIMED IN THE PROFIT AN D LOSS ACCOUNT. LD. CIT(A) ACCORDINGLY DISMISSED THE APPEAL OF THE ASSESSEE. 3 ITA NO.540 4/DEL/2017 ASST. YEAR: 2013-14 4. AGGRIEVED BY SUCH FINDING OF THE LD. CIT(A), ASS ESSEE PREFERRED THIS APPEAL. ONLY ISSUE ARGUED BEFORE US BY THE LD. AR IS WHETHER THE DISALLOWANCE UNDER SECTION 14 A OF THE ACT SO MOTO MADE BY THE ASSESSEE TO ITS NORMAL PROFITS HAS ALSO TO BE ADDED TO THE BOOK PROFITS UNDER SECTION 115 JB OF THE ACT, AN D BASING ON THE DECISION OF THE SPECIAL BENCH OF THIS TRIBUNAL IN T HE CASE OF ACIT VS. VIREET INVESTMENT (P) LTD REPORTED IN (2017) 82 TAX MANN.COM 415 (DELHI-TRIB.) (SB) IT IS SUBMITTED BY THE LD. AR THAT THE DISALLOWANC E UNDER SECTION 14A OF THE ACT READ WITH RULE 8D OF T HE RULES CANNOT BE ADDED WHILE COMPUTING PROFIT AS PER SECTION 115 JB AS EXPLANATION -2 THAT SECTION DOES NOT SPECIFICALLY M ENTIONS SECTION 14A OF THE ACT, AND THEREFORE, NO DISALLOWANCE CAN BE MADE UNDER SECTION 14 A OF THE ACT WHILE COMPUTING BOOK PROFIT S UNDER MAT PROVISIONS. LD. DR DOES NOT CONTROVERT THE DECISION IN THE VIREET INVESTMENT PRIVATE LIMITED (SUPRA). 5. IN VIREET INVESTMENT (P) LTD (SUPRA), THE SPECIA L BENCH DEALT WITH THIS ASPECT AT LENGTH AND HELD THAT THE COMPUT ATION UNDER CLAUSE (F) OF EXPLANATION 1 TO SECTION 115 JB (2) I S TO BE MADE WITHOUT RESORTING TO THE COMPUTATION AS CONTEMPLATE D UNDER SECTION 14A OF THE ACT READ WITH RULE 8D OF THE RUL ES. THERE IS NO DISPUTE ON THIS PROPOSITION. WE THEREFORE, WHILE RE SPECTFULLY FOLLOWING THE SAID ADDITION ANSWER THE ISSUE IN FAV OUR OF THE ASSESSEE. 4 ITA NO.540 4/DEL/2017 ASST. YEAR: 2013-14 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . PRONOUNCED IN OPEN COURT ON THIS THE 20 TH MARCH, 2020. SD/- SD/- (G.S. PANNU) (K. NARASIMHA CHA RY) VICE PRESIDENT JUDICIAL MEMBER DATED: 20/3/2020 VJ COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI