DCIT, Ludhiana V. M/s Basant Colonisers and Builders (P) Ltd., Ludhiana

ITA 563/CHANDI/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9726 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 25-07-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 22-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Keywords: Earning of tax free income
• Section: 14A; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO. 563/CHD/2015 ASSESSMENT YEAR: 2010-11 THE DCIT, VS M/S BASANT COLONISERS & CENTRAL CIRCLE-1, BUILDERS (P) LTD., SCO-1, LUDHIANA . EXTN. 1, BASANT AVENUE, ADJ. URBAN ESTATE, PHASE-II, DUGRI ROAD, LUDHIANA. PAN: AABCB6506E (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.K.MITTAL RESPONDENT BY : SHRI ASHWANI KUMAR DATE OF HEARING : 25.07.2016 DATE OF PRONOUNCEMENT : 27.07.2016 O R D E R PER BHAVNESH SAINI,JM THIS APPEAL BY REVENUE HAS BEEN DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS)-5, LUDHIANA DATED 25.02.2015 FOR ASSESSMENT YEAR 2010.11. 2. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. 3. ON GROUND NOS. 1 & 2, REVENUE CHALLENGED THE ORDER OF LD. CIT(APPEALS) IN ALLOWING EXPENSES UNDE R THE HEAD MAINTENANCE CLAIMED AT RS. 34,03,860/-. THE ASSESSEE CHALLENGED THIS ADDITION BEFORE LD. CIT(AP PEALS) 2 FOR DISALLOWANCE OF MAINTENANCE EXPENDITURE. THE ASSESSEE SUBMITTED BEFORE LD. CIT(APPEALS) THAT ITA T CHANDIGARH BENCH IN THE CASE OF M/S DAMINI RESORTS & BUILDERS (P) LTD. IN ITA 404/2012 HAD ALLOWED THE APPEAL OF THE ASSESSEE AGAINST REVISION ORDER UNDER SECTION 263 OF THE INCOME TAX ACT FOR ASSESSMENT YE AR 2007-08. THE TRIBUNAL HELD IN THIS CASE THAT METHO D OF ACCOUNTING ADOPTED BY THE ASSESSEE HAD BEEN REGULAR LY FOLLOWED AND THEREFORE, NO ERROR HAD BEEN COMMITTED BY THE ASSESSING OFFICER FOR THE ASSESSMENT YEAR BY ALLOWING THE SAID EXPENDITURE AS CLAIMED. THE LD. CIT(APPEALS) FOUND THAT THE FACTS OF THIS CASE ARE IDENTICAL WITH THE CASE OF SISTER CONCERN NAMELY M/ S DAMINI RESORT & BUILDERS (P) LTD., THEREFORE, FOLLO WING THE ORDER OF THE TRIBUNAL, DISALLOWANCE WAS DELETED . 4. AFTER HEARING RIVAL CONTENTIONS, WE DO NOT FIND ANY MERIT IN THIS GROUND OF THE DEPARTMENTAL APPEAL. T HE ASSESSEE IS BUILDER AND COLONIZER AND PRODUCED THE BOOKS OF ACCOUNT AND DETAILS BEFORE ASSESSING OFFIC ER AT ASSESSMENT STAGE. IT WAS CLAIMED THAT SAME METHOD OF ACCOUNTING IS FOLLOWED FOR BOOKING THESE EXPENDITUR ES. THE ORDER OF THE TRIBUNAL IN THE CASE OF M/S DAMINI RESORTS & BUILDERS PVT. LTD. (SUPRA) DATED 31.10.20 14 IS PLACED ON RECORD. THE LD. CIT(APPEALS) WAS, THEREF ORE, JUSTIFIED IN FOLLOWING THE DECISION OF THE TRIBUNAL FOR THE PURPOSE OF DELETING THE ADDITION. NO INFIRMITY IN THE ORDER OF THE LD. CIT(APPEALS) HAVE BEEN POINTED OUT . 3 THEREFORE, THESE GROUNDS OF APPEAL OF REVENUE HAVE NO MERIT AND ARE ACCORDINGLY, DISMISSED. 5. ON GROUND NO. 3, REVENUE CHALLENGED THE DELETION OF DISALLOWANCE OF RS. 67,052/- UNDER SECTION 14A OF T HE INCOME TAX ACT. THE ASSESSING OFFICER HAS HIGHLIGH TED THAT THE ASSESSEE COMPANY HAD MADE INVESTMENT OF RS . 80 LACS WHICH WAS CAPITAL IN NATURE AND INCOME EARNED, IF ANY, FROM SUCH INVESTMENTS WOULD BE EXEMPT FROM THE TAXATION AND THEREFORE, ANY EXPENDITURE INCURRED FO R PURCHASE OF SUCH INVESTMENTS SHOULD BE DISALLOWED U NDER SECTION 14A OF THE INCOME TAX ACT. THE ASSESSEE CL AIMED BEFORE ASSESSING OFFICER THAT NO EXPENDITURE HAD BE EN INCURRED TO MAKE THE IMPUGNED INVESTMENTS BUT ASSES SING OFFICER PROCEEDED TO APPLY RULE 8D TO WORK OUT THE DISALLOWANCE. 6. THE ASSESSEE SUBMITTED BEFORE LD. CIT(APPEALS) T HAT IT HAS NOT EARNED ANY DIVIDEND OR ANY EXEMPT INCOME THEREFORE, NO DISALLOWANCE IS WARRANTED. EVEN THE INVESTMENT MADE OF RS. 80 LACS IS NOT OUT OF BORROW ED FUNDS, RATHER SAME HAS BEEN MADE FROM THE COMPANYS OWN FUNDS. AS THE ASSESSEE COMPANY DID NOT EARN ANY EX EMPT INCOME, NO DISALLOWANCE SHOULD BE MADE UNDER SECTIO N 14A OF THE ACT. THE LD. CIT(APPEALS) ACCEPTED THE CONTENTION OF THE ASSESSEE THAT ASSESSEE HAS NOT EA RNED ANY DIVIDEND OR EXEMPT INCOME DURING THE YEAR UNDER CONSIDERATION THEREFORE NO DISALLOWANCE SHOULD BE M ADE. THE LD. CIT(APPEALS) ALSO NOTED THAT IT HAS NOT BEE N SHOWN 4 THAT INVESTMENTS OF RS. 80 LACS WERE MADE OUT OF BO RROWED FUNDS, THEREFORE, ADDITION WAS DELETED. 7. AFTER CONSIDERING RIVAL SUBMISSIONS, WE DO NOT F IND ANY MERIT IN THIS GROUND OF APPEAL OF THE REVENUE. HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF DEEPAK M ITTAL 361 ITR 131 CONSIDERED THE ISSUE IN WHICH ASSESSEE CLAIMED NO EXPENDITURE INCURRED TO EARN EXEMPTED IN COME. IT WAS, THEREFORE, DIRECTED THAT ASSESSING OFFICER SHOULD PROCEED UNDER SECTION 14A(2) OF THE ACT TO COLLECT MATERIAL AND EVIDENCE TO DETERMINE THE EXPENSES BUT NOTHING HAS BEEN DONE IN THIS CASE. HON'BLE PUNJAB & HARYANA H IGH COURT IN THE CASE OF WINSOME TEXTILE INDUSTRIES LTD . 319 ITR 204 CONSIDERED THAT ASSESSEE DID NOT MAKE CLAIM OF EXEMPTION, 14A WOULD NOT APPLY. FURTHER, OWN FUNDS USED TO ACQUIRE SHARES AND NO EXPENSES INCURRED, THEREFO RE, DISALLOWANCE WAS FOUND NOT JUSTIFIED. 8. CONSIDERING THE ABOVE DECISIONS, WE DO NOT FIND ANY MERIT IN THESE GROUNDS OF APPEAL OF REVENUE. SAME ARE, ACCORDINGLY DISMISSED. 9. IN THE RESULT, DEPARTMENTAL APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- ( ANNAPURNA GUPTA) (BHAVNESH S AINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 27 TH JULY, 2016. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT/CHD