Inox Leisure Ltd., Baroda V. DCIT, Circle-1(1)(1), Vadodara

ITA 554/AHD/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 6124 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 09-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SU RENDRA KUMAR
• Assessee Lawyers: S N SOPARKAR
• Keywords: Earning of tax free income; Rule 8D
• Section: 143(3); 14A; 115JB; 263

Judgement Text

- , - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI PRADIPKUMAR KEDIA, ACCOUNTANT MEMBER ./ ITA NO.554/AHD/2018 [ASSTT.YEAR: 2011-12] INOX LEISURE LTD. 2 ND FLOOR, ABS TOWERS OLD PADRA ROAD BARODA. VS. DCIT, CIR.1(1)(1) VADODARAS. ( APPLICANT ) (RESPONDENT) ASSESSEE BY : SHRI S.N. SOPARKAR, AR REVENUE BY : SHRI SURENDRAKUMAR, CIT-DR ! '#$ % &' / DATE OF HEARING : 06/08/2019 ()* % &' / DATE OF PRONOUNCEMENT: 07/08/2019 +, / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST O RDER OF THE LD.CIT(A)-I, VADODARA DATED 22.1.2018 PASSED FOR AS STT.YEAR 2011-12. 2. SOLE GRIEVANCE OF THE ASSESSEE IS THAT THE LD.CI T(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF RS.1,76,86, 000/- WHICH WAS MADE BY THE AO UNDER SECTION 14A R.W. RULE 8 OF THE INCOME TAX ACT, 1961/RULES 1962. ITA NO.554/AHD/2018 2 IN THE NEXT GROUND OF APPEAL, IT HAS BEEN PLEADED T HAT THE LD.CIT(A)HAS ERRED IN CONFIRMING THE ADDITION OF RS .7,70,75,000/- DISALLOWED BY THE AO UNDER SECTION 14A R.W. RULE 8D FOR THE PURPOSE OF COMPUTING BOOK PROFIT UNDER SECTION 115J B OF THE ACT. 3. THE LD.COUNSEL FOR THE ASSESSEE AT THE VERY OUTS ET SUBMITTED THAT THE IMPUGNED ASSESSMENT ORDER WAS PASSED IN PU RSUANCE OF THE ORDER OF THE CIT PASSED UNDER SECTION 263 OF TH E ACT. THAT ORDER OF THE LD.CIT HAS BEEN QUASHED BY THE ITAT IN ITA NO.847/AHD/2016, HENCE, THE VERY JURISDICTION TO PA SS THE PRESENT ASSESSMENT ORDER HAS BEEN VACATED AND CONSEQUENTLY IT IS NOT SUSTAINABLE. IF THE ASSESSMENT ORDER IS NOT SUSTAI NABLE, THEN THE APPEAL OF THE ASSESSEE DESERVES TO BE ALLOWED. HE PLACED ON RECORD COPY OF THE TRIBUNALS ORDER DATED 13.2.2018 PASSED IN ITA NO.847/AHD/2016. THE LD.DR WAS UNABLE TO CONTROVER T THIS CONTENTION OF THE LD.COUNSEL FOR THE ASSESSEE. 4. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAS FILED ITS RETURN OF INCOME ON 29.9.2011 DECLARING TOTAL LOSS UNDER NORMAL PROVISIONS OF THE ACT AT RS.7,88,09,637/- AND COMPU TED BOOK PROFIT UNDER SECTION 115JB AT RS.9,86,67,830/-. THE ASSESSMENT ORDER WAS PASSED UNDER SECTION 143(3) ON 18.3.2014 DETERMINING TOTAL INCOME UNDER NORMAL PROVISION OF THE ACT AT N IL AFTER SETTING OFF OF BROUGHT FORWARD LOSS TO THE EXTENT OF RS.8,8 9,21,638/-. THE LD.CIT-1, BARODA TOOK COGNIZANCE UNDER SECTION 263 O F THE ACT AND PASSED AN ORDER ON 15.2.2016. THE LD.CIT(A) HAS SE T ASIDE THE ASSESSMENT ORDER AND DIRECTED THE AO TO PASS DE NOVO ORDER AFTER DUE VERIFICATIONS FOR MAKING APPROPRIATE ADDITIONS/ DISALLOWANCE. THIS ORDER OF THE LD.COMMISSIONER DATED 15.2.2016 P ASSED UNDER ITA NO.554/AHD/2018 3 SECTION 263 OF THE ACT WAS CHALLENGED BEFORE THE IT AT IN ITA NO.847/AHD/2016. THE APPEAL OF THE ASSESSEE WAS AL LOWED AND ORDER OF THE LD.COMMISSIONER WAS QUASHED. THE FIND ING OF THE TRIBUNAL READS AS UNDER: 3. THE LD.COUNSEL FOR THE ASSESSEE AT THE VERY OUT SET SUBMITTED THAT THERE WAS NO EXEMPT INCOME IN THE HANDS OF THE ASSE SSEE. IT HAS CHALLENGED THE ADDITION MADE UNDER SECTION 14A UNDE R THE REGULAR PROVISION IN APPEAL BEARING NO.3330/AHD/2015. AFTE R PUTTING RELIANCE UPON THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CORRETCH ENERGY LTD., 372 ITR 97, ITAT DELETED THE ADDITION VIDE ORDER DATED 5.1.2018. SINCE NO ADDITIONS ARE AVAIL ABLE FOR THE PURPOSE OF SECTION 14A, THEREFORE, THERE COULD NOT ANY ADJU STMENT IN THE BOOK PROFIT. HENCE, THERE COULD NOT BE ANY ACTION UNDER SECTION 263. 4. ON THE OTHER HAND, THE LD.DR CONTENDED THAT THE LD.PR.COMMISSIONER HAS EXAMINED THE RECORD AND FORM ED AN OPINION THAT THE AO DID NOT INVESTIGATE THIS ISSUE, HENCE, HIS ORDER WAS ERRONEOUS AND RIGHTLY TERMED SO BY THE LD.PR.COMMSS IONER. 5. ON DUE CONSIDERATION OF THE FACTS AND CIRCUMSTAN CES, WE ARE OF THE OPINION THAT ACTION UNDER SECTION 263 COULD BE TAKEN WHEN TWIN CONDITIONS VIZ. ERRONEOUS PROCEEDINGS BEFORE THE AO AND PREJUDICE CAUSED TO THE REVENUE ARE FULFILLED. IN THE PRESEN T CASE, FOR THE SAKE OF ARGUMENTS, EVEN THE ASSESSMENT ORDER IS CONSIDERED AS ERRONEOUS THERE WILL BE NO PREJUDICE CAUSED TO THE REVENUE BECAUSE ULTIMATELY NO DISALLOWANCE IS BEING UPHELD UNDER SECTION 14A WHIC H CAN BE ADJUSTED IN THE BOOK PROFIT. THEREFORE, 263-ORDER IS NOT SU STAINABLE IN LAW. ACCORDINGLY, WE ALLOW APPEAL OF THE ASSESSEE AND QU ASH ORDER OF LD.PR.COMMISSIONER PASSED UNDER SECTION 263 OF THE ACT. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . 5. IN PURSUANCE OF CITS ORDER DATED 15.2.2016 PRES ENT ASSESSMENT ORDER WAS PASSED ON 9.11.2016 UNDER SECT ION 143(3) R.W. SECTION 263 R.W. SECTION 153(3) OF THE ACT. A PPEAL AGAINST THIS ASSESSMENT ORDER HAS BEEN DECIDED BY WAY OF IM PUGNED ORDER ITA NO.554/AHD/2018 4 DATED 22.1.12018. IT IS PERTINENT TO OBSERVE THAT JURISDICTION IN THE AO TO PASS THE IMPUGNED ASSESSMENT ORDER WAS IN FUSED BY VIRTUE OF THE ORDER OF THE LD.COMMISSIONER PASSED U NDER SECTION 263. THE ORDER OF THE LD.COMMISSIONER HAS ALREADY BEEN QUASHED AND VACATED. THEREFORE, THERE IS NOTHING WHICH HAS BEEN GIVEN EFFECT BY THE AO. CONSEQUENTLY, HIS ORDER DESERVES TO BE VACATED AND ALL PROCEEDINGS THEREAFTER WOULD BECOME REDUNDA NT. IN VIEW OF THE ABOVE DISCUSSION, WE ALLOW THE APPEAL OF THE ASSESSEE AND QUASH THE IMPUGNED ORDER OF THE LD.CIT(A) DATED 22. 1.2018 AND ORDER OF THE AO DATED 9.11.2016; BOTH THE ORDERS AR E QUASHED. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE COURT ON 7 TH AUGUST, 2019. SD/- SD/- (PRADIPKUMAR KEDIA) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER