SAMARPAN FABRICATORS P.LTD, MUMBAI V. ACIT/ DCIT 2(3), MUMBAI

ITA 544/MUM/2015

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7031 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 4 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-06-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2007-2008
• Appeal Filed On: 23-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN
• Section: 143(3); 14A; 115JB; 15

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL E BENCH MUMB AI BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.544/MUM/2015 (ASSESSMENT YEAR 2007 -08 ) M/S SAMARPAN FABRICATORS PVT. LTD. C/O JAYESH SANGHRAJKA & CO. LLP, 405-408, HIND RAJASTHAN CENTER, D. S. PHALKA ROAD, DADAR (E), MUMBAI-400014. PAN: AABCS9672C VS. ACIT -2(3), MUMBAI. A PPELLANT RESPONDENT APPELLANT BY : SHRI MARGAV SHUKLA (AR) RESPONDENT BY : SHRI V. JUSTIN (DR) DATE OF HEARING : 05.06.2018 DATE OF PRONOUNCEMEN T : 05.06.2018 ORDERUNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORD ER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-6, MUMBAI [LD. CIT(A)] DATE D 24.10.2014 FOR ASSESSMENT YEAR 2007-08. THE ASSESSEE HAS RAISED TH E FOLLOWING GROUNDS OF APPEAL: 1) ON FACTS, CIRCUMSTANCES AND JUDICIAL PRONOUNCEM ENTS, PROVISIONS OF RULE 8D R.W.S. 14A ARE NOT APPLICABLE WHILE COMPUTING THE B OOK PROFITS U/S 115JB, INVOKING SUCH RULE TO EFFECT THE ADDITION BY HON AS SESSING OFFICER AND ITS CONFIRMATION BY HON. CIT A IS BAD IN LAW AND ERRONE OUS IN FACTS AND LIABLE TO BE DELETED. 2) ON THE GIVEN FACTS, CIRCUMSTANCES AND JUDICIAL P RONOUNCEMENTS; HON. CIT (A) ERRED IN FRAMING THE ORDER IN ABSENCE OF REASON ABLE OPPORTUNITY OF MAKING THE SUBMISSIONS TO THE ASSESSEE IN PRINCIPLES OF NA TURAL JUSTICE AND SUCH ASSESSMENTS ARE IN VIOLATION OF PRINCIPLES OF NATUR AL JUSTICE AND LIABLE TO BE QUASHED. ITA NO. 544 MUM 15-M/S SAMARPAN FABRICATORS PVT. LTD. 2 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSMENT FOR ASSESSMENT YEAR 2007- 08 WAS COMPLETED UNDER SECTION 143(3) ON 07.12.2009 . THE ASSESSING OFFICER WHILE PASSING THE ASSESSMENT ORDER MADE THE DISALLOWANCE OF RS. 2,60,727/- UNDER SECTION 14A AND ALSO ADDED THE DI SALLOWANCE TO THE BOOK PROFIT UNDER SECTION 115JB. ON APPEAL BEFORE THE LD . CIT(A), THE APPEAL OF THE ASSESSEE WAS DISMISSED VIDE ORDER DATED 17.05.2 010. HOWEVER, ON FURTHER APPEAL BEFORE THE TRIBUNAL, THE APPEAL WAS RESTORED TO THE FILE OF LD. CIT(A) FOR FRESH ADJUDICATION. THEREAFTER, THE LD. CIT(A) PASSED FRESH ORDER UNDER SECTION 143(3) RWS 254 DATED 24.10.2014 , AGAIN CONFIRMING THE ACTION OF ASSESSING OFFICER IN UPHOLDING THE AD DITION OF DISALLOWANCE UNDER SECTION 14A OF RS. 2,60,727/- IN COMPUTATIO N OF BOOK PROFIT UNDER SECTION 115JB. THEREFORE, FURTHER AGGRIEVED BY THE ORDER OF LD. CIT(A) THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. 3. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVE (AR ) OF THE ASSESSEE LD. AND DEPARTMENTAL REPRESENTATIVE (DR) FOR THE REVENU E AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. AR OF THE ASS ESSEE SUBMITS THAT THE GROUND OF APPEAL RAISED BY ASSESSEE IS COVERED IN F AVOUR OF ASSESSEE BY THE DECISION OF HONBLE BOMBAY HIGH COURT IN CASE OF CI T VS. M/S BENGAL FINANCE & INVESTMENTS PVT. LTD. (ITA NO. 337 OF 201 3 DATED 10.02.2015, DECISION OF SPECIAL BENCH OF DELHI TRIBUNAL IN ACIT VS VIREET INVESTMENT (P.) LTD. 82 TAXMANN.COM 415 & IN DCIT VS MORGAN ST ANLEY (ITA NO. 5289 & 5290/MUM/2015 DATED 29.01.2018. THE LD. AR O F THE ASSESSEE ITA NO. 544 MUM 15-M/S SAMARPAN FABRICATORS PVT. LTD. 3 FURTHER SUBMITS THAT NO ADDITION OF DISALLOWANCE UN DER SECTION 14A IN COMPUTING BOOK PROFIT UNDER SECTION 115JB AND CAN B E MADE. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SUBMITS THAT IN VI EW OF THE DECISION OF SPECIAL BENCH OF DELHI TRIBUNAL, THE ISSUE MAY BE R ESTORED TO THE FILE OF ASSESSING OFFICER FOR FRESH COMPUTATION UNDER CLAUS E (F) OF EXPLANATION-1 TO SECTION 115JB OF THE ACT. 1. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE HAVE NO TED THAT THE ASSESSEE HAS NOT DISPUTED THE DISALLOWANCE UNDER SECTION 14A R.W. RULE 8D FOR RS. 2,60,727/-. THE ONLY GRIEVANCE OF ASSESSEE IS THAT WHILE COMPUTING THE BOOK PROFIT UNDER SECTION 115JB, THE DISALLOWANCE U NDER SECTION 14A BE NOT ADDED TO THE BOOK PROFIT UNDER SECTION 115JB. T HE HONBLE JURISDICTIONAL HIGH COURT IN CIT VS M/S BENGAL FINA NCE & INVESTMENTS PVT. LTD. (SUPRA) ALSO HELD THAT AMOUNT DISALLOWED UNDER SECTION 14A CANNOT BE ADDED TO THE BOOK PROFIT FOR THE PURPOSE OF SECTION 115JB. THE SPECIAL BENCH OF DELHI TRIBUNAL IN ACIT VS VIREET I NVESTMENT (P.) LTD. (SUPRA) ALSO HELD THAT COMPUTATION UNDER CLAUSE (F) OF EXPLANATION 1 TO SECTION 115JB TO BE MADE WITHOUT RESORTING TO THE C OMPUTATION AS CONTEMPLATED UNDER SECTION 14A R.W. RULE 8D. THE CO ORDINATE BENCH IN DCIT V/S MORGAN STANLEY (SUPRA), TOOK A SIMILAR AS EXPRESSED BY HONBLE BOMBAY HIGH COURT IN CIT VS M/S BENGAL FINANCE & IN VESTMENTS PVT. LTD. (SUPRA) AND BY SPECIAL BENCH IN VIREET INVESTM ENT (P.) LTD. THE ONLY ITA NO. 544 MUM 15-M/S SAMARPAN FABRICATORS PVT. LTD. 4 ISSUE INVOLVE IN THE PRESENT CASE AS TO WHETHER THE DISALLOWANCE OF SECTION 14A BE ADDED TO THE COMPUTATION OF 115JB OR NOT. TH E SPECIAL BENCH OF DELHI TRIBUNAL IN ACIT VERSUS VIREET INVESTMENT (P) LTD(SUPRA) HELD THAT COMPUTATION UNDER CLAUSE (F) OF EXPLANATION 1 TO SE CTION 115 JB(2) IS TO BE MADE WITHOUT RESORTING TO COMPUTATION AS CONTEMPLAT ED UNDER SECTION 14A READ WITH RULE 8D. THEREFORE, RESPECTFULLY FOLLOWIN G THE DECISION OF SPECIAL BENCH THIS GROUND OF APPEAL IS RESTORED TO THE FILE OF ASSESSING OFFICER TO WORK OUT THE COMPUTATION UNDER SECTION 1 15 JB BY FOLLOWING THE DIRECTION OF SPECIAL BENCH IN VIREET INVESTMENT (P) LTD (SUPRA). NEEDLESS TO SAY THAT THE ASSESSING OFFICER SHALL GRANT OPPOR TUNITY OF HEARING TO THE ASSESSEE BEFORE PASSING THE ORDER ON COMPUTATION UN DER CLAUSE (F) OF EXPLANATION 1 TO SECTION 115JB. IN THE RESULT GROUN D OF APPEAL RAISED BY ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. 4. IN THE RESULT, APPEAL FILED BY ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 05.06.2018. SD/- SD/- B.R. BASKARAN PAWAN SINGH ACCOUNTANT MEMBER JUDIC IAL MEMBER MUMBAI, DATE: 05 .06.2018 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR E BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI