EXPRESS GLOBAL LOGISTICS P.LTD, MUMBAI V. ASST CIT (2)I, MUMBAI

ITA 5415/MUM/2013

• Counselvise Citation: 541519914 RSA 2013
• Duration Of Justice: 1 year(s) 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-01-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2005-2006
• Appeal Filed On: 07-08-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SACHIDANAND DUBE
• Keywords: Opportunity of being heard; Earning of tax free income
• Section: 143(3); 14A; 154

Judgement Text

, , ,, , , ,, , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E MUMBAI , . . , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C.SHARMA, ACCOUNTANT MEMBER . / ITA NOS.5414 & 5415/MUM/2013 ! ! ! ! ' ' ' ' / ASSESSMENT YEAR: 2005-06 M/S EXPRESS GLOBAL LOGISTICS PVT. LTD. FORMERLY M/S EXPRESS TRANSPORT PVT. LTD. 17, WESTERN INDIA HOUSE, 2 ND FLOOR, SIR P.M. ROAD, MUMBAI-400001 VS. ASST. COMMISSIONER OF INCOME TAX-(2) I, MUMBAI ( !#$ / ASSESSEE) ( % / REVENUE) P.A. NUMBER : AAACE2632F !#$ & ' / ASSESSEE BY: SHRI VIJAY MEHTA % & ' / REVENUE BY SHRI SACHIDANAND DUBE ! & $( / DATE OF HEARING : 17/12/2014 )*' & $( / DATE OF PRONOUNCEMENT : 01/01/2015 O R D E R PER JOGINDER SINGH, JM: THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DAT ED 27/05/2013 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI. A. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS IN IT A NO.5414/MUM/2013. 2 M/S EXPRESS GLOBAL LOGISTICS PVT. LTD. 1. BEING AGGRIEVED BY THE ORDER U/ S 154 OF THE IT ACT , 1961 PASSED BY CIT (A) 4, MUMBAI DATED 27 TH MAY, 2013 RECEIVED BY US ON 11 TH JUNE, 2013, THIS APPEAL PETITION IS SUBMITTED ON THE FOLLOWING AMONGST OTHER GROUNDS OF APPEAL, WHIC H, IT IS PRAYED BE CONSIDERED WITHOUT PREJUDICE TO EACH OTHE R: GROUND 1: UNJUST, UNFAIR AND UNLAWFUL AFFIRMATION O F ADDITION OF RS. 5,88,669/- UNDER SECTION14A A. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS GROSSLY FAILED IN NOT COMPREHENDING THE MISTAKE LOU D AND APPARENT IN THE ORDER DATED 27 TH MAY, 2013 WHEREIN HE GAVE DIRECTIONS TO MAKE DISALLOWANCE AS PER RULE 8D. B. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) GROSSLY FAILED TO COMPREHEND THAT THE HONORABLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG CO. LTD VS CIT 32 8 ITR 81 DATED 12 TH AUGUST, 2010 STATED THAT RULE 8D IS PROSPECTIVE AND CANNOT BE APPLIED TO A.Y 2005-2006. C. IT IS SUBMITTED THAT HIS DIRECTION THAT DISALLO WANCE COMPUTED AS PER RULE 8D HAS BEEN FOUND REASONABLE I S A SUMMARY, UNJUST, UNFAIR AND UNLAWFUL CONCLUSION TOT ALLY IGNORING THE FACTS OF THE CASE. D. WE HUMBLY SEEK THAT THE 15% DISALLOWANCE OF RS. 96,269/- ON THE EXEMPT INCOME OF RS.6,41,795/ - EAR NED IN THE FORM OF DIVIDENDS FROM MUTUAL FUNDS AND SHARES AS MADE BY THE ASSESSING OFFICER SHOULD BE REDUCED TO 10% I.E RS. 64,180/-. B. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS IN I TA NO.5415/MU/2013 U/S 250(6) OF THE INCOME TAX ACT, 1 961: 1. BEING AGGRIEVED BY THE ORDER U/ S 250(6) OF THE I T ACT, 1961 PASSED BY CIT (A) 4, MUMBAI DATED 27 TH MAY, 2013 RECEIVED BY US ON 11 TH JUNE, 2013, THIS APPEAL PETITION IS SUBMITTED ON THE FOLLOWING AMONGST OTHER GROUNDS OF APPEAL, WHIC H, IT IS PRAYED BE CONSIDERED WITHOUT PREJUDICE TO EACH OTHE R: 3 M/S EXPRESS GLOBAL LOGISTICS PVT. LTD. GROUND 1: UNJUST, UNFAIR AND UNLAWFUL AFFIRMATION O F ADDITION OF RS. 5,88,669/- UNDER SECTION14A A. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-4 HAS GROSSLY ERRED IN NOT COMPREHENDING THE ERROR COMMIT TED BY THE ASSESSING OFFICER WHILE PASSING ORDER DATED 11 TH APRIL, 2012 TO GIVE EFFECT TO THE CIT(A) APPELLATE ORDER D ATED 26 TH NOVEMBER, 2008 OF APPLYING RULE 8D TO A.Y. 2005-06 IGNORING DECISION OF THE HONORABLE JURISDICTIONAL HIGH COURT NAMELY BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG CO. LTD. VS CIT 328 ITR 81 DATED 12 TH AUGUST, 2010 WHEREIN IT WAS HELD THAT RULE 8D WAS NOT RETROSPECTIVE AND IS PROS PECTIVE FROM A.Y. 2008-09 ONWARDS. B. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S TOTALLY IGNORED THE FACTS ALREADY ON RECORD VIDE AS SESSEES LETTER DATED 15 TH OCTOBER, 2007 AND 29 TH NOVEMBER, 2007 WHEREIN THE ASSESSEE HAD SUBMITTED WITH CIRCUMSTANT IAL EVIDENCE AND REASONS THAT NO INTEREST OR EXPENSE HA D BEEN INCURRED FOR EARNING THE EXEMPT INCOME. HE SUMMARI LY IN AN UNJUST, UNFAIR AND UNLAWFUL MANNER CONCLUDED THAT IN MY OPINION, THE DISALLOWANCE COMPUTED UNDER RULE 8D IS MOST REASONABLE IN THIS CASE AND, THE DISALLOWANCE IS CO NFIRMED. C. WE HUMBLY SEEK THAT THE 15% DISALLOWANCE OF RS. 96, 269/- ON THE EXEMPT INCOME OF RS.6,41,795/ - EARNED IN TH E FORM OF DIVIDENDS FROM MUTUAL FUNDS AND SHARES AS MADE BY T HE ASSESSING OFFICER SHOULD BE REDUCED TO 10% I.E RS. 64,180/-. 2. FIRST, WE SHALL TAKE UP THE APPEAL IN ITA NO.5414/MUM/2013. AT THE TIME OF HEARING, SHRI VIJAY MEHTA , LD. COUNSEL FOR THE ASSESSEE, CONTENDED THAT APPLICATIO N U/S154 OF THE ACT WAS FILED BY THE ASSESSEE AND THE DECISION IN T HE CASE OF GODEREZ BOYCE FROM HONBLE JURISDICTIONAL HIGH COUR T CAME LATER. IT WAS PLEADED BY THE LD. COUNSEL THAT THE ISSUE MA Y BE RESTORED TO THE FILE OF THE LD. COMMISSIONER OF INCOME TAX (APP EALS). ON THE 4 M/S EXPRESS GLOBAL LOGISTICS PVT. LTD. OTHER HAND, THE LD. COUNSEL FOR THE REVENUE, SHRI S ACHIDANAND DUBEY, THOUGH DEFENDED THE CONCLUSION ARRIVED AT BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS), BUT HAD NO OB JECTION IF THE FILE IS SENT BACK TO THE LD. COMMISSIONER OF INCOME TAX (APPEALS). 2.1. NOW, WE SHALL DEAL WITH THE ORDER OF THE LD. COMMIS SIONER OF INCOME TAX (APPEALS) CONFIRMING THE DISALLOWANCE MA DE BY THE ASSESSING OFFICER U/S 14A R.W. RULE 8D OF THE RULE S. ON CONSIDERATION OF THE RIVAL SUBMISSIONS AND PERUSAL OF THE MATERIAL AVAILABLE ON RECORD, THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY, ENGAGED IN THE BUSINESS OF LOGISTICS ADVISOR AND SERVICE PROVISIONS. THE ASSESSEE RENDE RED SERVICES TO ITS CLIENTS AND WAS REQUIRED TO DISBURSE FREIGHT, C USTOMS DUTY, PORT CHARGES, CFS CHARGES, FOR AND ON BEHALF OF ITS CLIE NTS TO VARIOUS SERVICE PROVIDERS. THE CLAIM OF THE ASSESSEE IS THA T ON VARIOUS OCCASIONS SUCH PAYMENTS WERE PAID TO SUCH SERVICE P ROVIDERS IN ANTICIPATION. BEFORE US, IT WAS CLAIMED THAT NECES SARY DETAILS OF INVESTMENTS MADE DURING ASSESSMENT YEAR 2005-06 ALO NGWITH ITS SOURCE WERE FURNISHED BEFORE THE ASSESSING OFFICER VIDE LETTER DATED 15/10/2007. PLEA WAS ALSO RAISED THAT VIDE L ETTER DATED 29/11/2007, THE DETAILS OF DEPLOYMENT OF FUNDS FOR EARNING DIVIDEND INCOME WERE ALSO FURNISHED BEFORE THE ASSE SSING OFFICER FOR WHICH OUR ATTENTION WAS INVITED TO VARIOUS PAGE S OF ASSESSMENT ORDER. THE CRUX OF THE ARGUMENT IS THAT THE ASSESSM ENT ORDER WAS FRAMED U/S 143(3) OF THE ACT WORKING OUT THE DISALL OWANCE AT 15% OF THE DIVIDEND INCOME ON ESTIMATED BASIS AND THUS ADDITION WAS MADE. IT IS FURTHER SEEN THAT THE LD. COMMISSIONER OF INCOME TAX 5 M/S EXPRESS GLOBAL LOGISTICS PVT. LTD. (APPEALS) PASSED THE IMPUGNED ORDER APPLYING RULE 8 D FOR THE PURPOSES OF DISALLOWANCE U/S 14A OF THE ACT CONSIDE RING THE DECISION IN ITO VS DAGA CAPITAL MANAGEMENT PVT. LTD . & ORS. (ITA NO.8057/MUM/2003) ORDER DATED 20 TH OCTOBER, 2008. THE ASSESSEE FILED APPLICATION FOR RECTIFICATION U/S 15 4 DATED 16/05/2012 BEFORE THE LD. COMMISSIONER OF INCOME TA X (APPEALS) MAKING RECTIFICATION IN THE ORDER DATED 26/11/2008 FOR CONSIDERATION OF THE DECISION DATED 12/08/2010 FROM HONBLE JURISDICTIONAL HIGH COURT IN GODREJ & BOYCE MANUFAC TURING COMP. LTD. (328 ITR 81) WHEREIN IT WAS HELD THAT RULE 8D IS PROSPECTIVE WITH EFFECT FROM ASSESSMENT YEAR 2008-09. IN VIEW OF THESE FACTS, WE ARE OF THE VIEW THAT THE WHOLE ISSUE NEEDS AFRES H ADJUDICATION, IN THE LIGHT OF THE AFORESAID DECISION FROM HONBLE JURISDICTIONAL HIGH COURT, BY THE LD. FIRST APPELLATE AUTHORITY. THE ASSESSEE BE GIVEN OPPORTUNITY OF BEING HEARD WITH FURTHER LIBER TY TO FURNISH EVIDENCE, IF ANY, IN SUPPORT OF ITS CLAIM/CONTENTIO N. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS DIRECTED TO EXAMINE THE CLAIM OF THE ASSESSEE IN ACCORDANCE WITH LAW AND TH E RELEVANT CASE LAWS, MORE SPECIFICALLY, FROM HONBLE JURISDICTIONA L HIGH COURT. THUS, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STA TISTICAL PURPOSES ONLY. SINCE, ON MERITS, WE HAVE SENT BACK THE APPE AL TO THE FILE OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) FOR FR ESH ADJUDICATION IN TERMS DISCUSSED HEREINABOVE, THERE FORE, ITA NO.5415/MUM/2013, AS AGREED FROM BOTH SIDES, WILL N OT SURVIVE. 6 M/S EXPRESS GLOBAL LOGISTICS PVT. LTD. FINALLY, THE APPEALS OF THE ASSESSEE U/S.154 OF THE ACT IS DISMISSED, WHEREAS, THE APPEAL ON MERITS U/S 143(3) OF THE ACT IS ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 17/12/2014. SD/- SD/- (R.C.SHARMA) (JOGINDER S INGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED - 01/01/2015 F{X~{T? P.S/. ! . . & && & +$, +$, +$, +$, -,'$ -,'$ -,'$ -,'$ / COPY OF THE ORDER FORWARDED TO : 1. ./ / THE APPELLANT 2. +0./ / THE RESPONDENT. 3. 1 ( ) / THE CIT(A)- 4. 1 / CIT 5. ,23 +$! , , / DR, ITAT, MUMBAI 6. 34 5 / GUARD FILE. ! ! ! ! / BY ORDER, 0,$ +$ //TRUE COPY// 6 66 6 / 7 7 7 7 % % % % (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI