M/s. DLF Universal Limited, Gurgaon V. ACIT, Gurgaon

ITA 5618/DEL/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2864 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 29-06-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 17-10-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ASHIMA NEB
• Keywords: Earning of tax free income; Question of law
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : B : NEW DELHI BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND MS SUCHITRA KAMBLE, JUDICIAL MEMBER ITA NO.5618/DEL/2014 ASSESSMENT YEAR : 2010-11 DLF UNIVERSAL LIMITED, 3 RD FLOOR, SHOPPING MALL, ARJUN MARG, DLF CITY, PHASE-I, GURGAON. PAN: AAACJ1655P VS. ACIT, CIRCLE-1(1), GURGAON. ITA NO.5670/DEL/2014 ASSESSMENT YEAR : 2010-11 ACIT, CIRCLE-1(1), GURGAON. VS. DLF UNIVERSAL LIMITED, 3 RD FLOOR, SHOPPING MALL, ARJUN MARG, DLF CITY, PHASE-I, GURGAON. PAN: AAACJ1655P (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SATYAJIT GOEL, CA DEPARTMENT BY : MS ASHIMA NEB, SR. DR ITA NOS.5618 & 5670/DEL/2014 2 DATE OF HEARING : 20.03.2018 DATE OF PRONOUNCEMENT : 21.03.2018 ORDER PER R.S. SYAL, VP: THESE TWO CROSS APPEALS ONE BY THE ASSESSEE AND THE OTHER BY THE REVENUE ARE DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) ON 01.08.2014 IN RELATION TO THE ASSESSMENT YEAR 2010- 11. 2. THE ONLY ISSUE RAISED BY THE REVENUE AS WELL AS THE ASSESSEE IN THEIR RESPECTIVE APPEALS IS AGAINST REDUCTION/SUSTENANCE OF DISALLOWANCE U/S 14A OF THE INCOME-TAX ACT, 1961 (HEREINAFTER ALSO CALLE D THE ACT). 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE DECLARED INVESTMENTS OF RS.53.51 CRORE IN ITS BALANCE SHEET AS AT THE END OF THE YEAR AND EXEMPT DIVIDEND INCOME OF RS.4,30,621/-. NO DI SALLOWANCE WAS OFFERED U/S 14A. INVOKING THE PROVISIONS OF RULE 8 D READ WITH SECTION 14A, THE ASSESSING OFFICER COMPUTED DISALLOWANCE AT RS.3,80,01,842/- IN THREE PARTS, NAMELY, RS.1,76,617/- UNDER RULE 8D(2) (I); RS.3,29,10,530/- UNDER RULE 8D(2)(II); AND RS.49,14,695/- UNDER RULE 8D(2)(III). THE LD. CIT(A) REDUCED THE AMOUNT OF DISALLOWANCE TO RS.63, 48,133/- BY ALLOWING ITA NOS.5618 & 5670/DEL/2014 3 RELIEF AMOUNTING TO RS.3,16,53,701/-. BOTH THE SID ES ARE IN APPEAL IN RESPECT OF THEIR RESPECTIVE STANDS. 4. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE REL EVANT MATERIAL ON RECORD. IT IS AN ADMITTED POSITION THAT THE ASSESSE E EARNED EXEMPT DIVIDEND INCOME OF RS.4,30,621/- AS HAS BEEN RECORDED ON PAG E 2 OF THE ASSESSMENT ORDER. THE HON'BLE JURISDICTIONAL HIGH COURT IN PRINCIPAL CIT VS. EMPIRE PACKAGE PVT. LTD. (2016) 286 CTR 457 (P&H), CONSIDERED THE FOLLOWING QUESTION RAISED BY THE REVENUE :- WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE , THE HON'BLE ITAT IS JUSTIFIED IN LAW TO HOLD THAT THE DISALLOWANCE MADE U/S 14A READ WITH RULE 8D CANNOT EXCEED THE EXEMPT INCOME IN THE ABSE NCE OF ANY SUCH RESTRICTION BEING THERE IN THE RELEVANT SECTION OR RULE? 5. THE HON'BLE HIGH COURT DID NOT ADMIT THE APPEAL OF THE REVENUE BY HOLDING THAT THE AFORESAID QUESTION IS NOT A SUBSTA NTIAL QUESTION OF LAW. ACCORDINGLY, THE APPEAL OF THE DEPARTMENT WAS DISMI SSED. 6. WE FIND THAT THE HON'BLE DELHI HIGH COURT ALSO I N THE CASE CHEMINVEST LTD. VS. CIT (2015) 378 ITR 33 (DEL) HAS HELD THAT IF THERE IS NO EXEMPT INCOME, THERE CAN BE NO QUESTION OF MAKIN G ANY DISALLOWANCE ITA NOS.5618 & 5670/DEL/2014 4 U/S 14A. SIMILAR VIEW HAS BEEN TAKEN BY THE HON'BL E DELHI HIGH COURT IN CIT VS. HOLCIM INDIA P. LTD. (2014) 90CCH 081-DEL- HC . THE NET EFFECT OF THESE DECISIONS IS THAT THE DISALLOWANCE U/S 14A GETS RESTRICTED TO THE EXTENT OF EXEMPT INCOME, EVEN IF THE PROVISIONS OF THE SECTION ARE ATTRACTED. IN VIEW OF THE ABOVE PRECEDENTS, WHICH ARE SQUARELY APPLICABLE TO THE FACTS OF THE INSTANT CASE, WE LIMIT THE DISALLOWANCE TO T HE EXTENT OF EXEMPT INCOME OF RS.4,30,621/-. THE IMPUGNED ORDER IS MODI FIED PRO TANTO. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED AND THAT OF THE ASSESSEE IS PARTLY ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 21.03.201 8. SD/- SD/- [SUCHITRA KAMBLE] [R.S. SYAL] JUDICIAL MEMBER VICE PRESIDENT DATED, 21 ST MARCH, 2018. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.