M/s Gowrishankar and Company , Bangalore V. The Assistant Commissioner of Income Tax Circle-7(2)(1), Bangalore

ITA 573/BANG/2018

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5429 (ITAT-BANGALORE)
• Duration Of Justice: 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 01-03-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: L V BHASKAR REDDY
• Assessee Lawyers: NARENDRA KUMAR JAYANTILAL JAIN
• Keywords: Earning of tax free income; Agreed addition
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC-B BENCH : BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER ITA NO. 573 / BANG/201 8 ASSESSMENT YEAR : 20 13 - 14 M/S. GOWRISHANKAR & COMPANY, NO. 263/42, SANKLAP, 5 TH MAIN, 4 TH BLOCK, JAYANAGAR, BANGALORE 560 011. PAN: AACFG7571Q VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 7 (2) (1), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI NARENDRA KUMAR JAYANTILAL JAIN, ADVOCATE RESPONDENT BY : SHRI L.V. BHASKAR REDDY, ADDL. CIT (DR) DATE OF HEARING : 20 . 0 3 .2018 DATE OF PRONOUNCEMENT : 23 . 0 3 .201 8 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE ASSESSEE WHICH IS DIREC TED AGAINST THE ORDER OF LD. CIT(A) 7, BANGALORE DATED 02.01.2018 FOR ASSE SSMENT YEAR 2013-14. 2. AT THE VERY OUTSET, IT WAS SUBMITTED BY LD. AR O F ASSESSEE THAT ONLY GROUND NO. 7 OF APPEAL IS PRESSED AND OTHER GROUNDS ARE NOT PRES SED AND ACCORDINGLY ALL GROUNDS EXCEPT GROUND NO. 7 ARE REJECTED AS NOT PRE SSED. GROUND NO. 7 READS AS UNDER. 7. WITHOUT PREJUDICE, THE LOWER AUTHORITIES HAVE ER RED IN NOT APPRECIATING THE FACT THAT DISALLOWANCE U/S 14A OF THE ACT CANNOT EXCEED THE EXEMPT INCOME. 3. REGARDING GROUND NO. 7, IT WAS SUBMITTED BY LD. AR OF ASSESSEE THAT AS PER THE TRIBUNAL ORDER RENDERED IN THE CASE OF PEST CONTROL INDIA PVT. LTD. VS. DCIT IN ITA NO. 5048/MUM/2016 DATED 31.10.2017, IT WAS HELD THAT DISALLOWANCE U/S. 14A R.W. RULE 8D CANNOT EXCEED THE AMOUNT OF EXEMPT INCOME OF THE RELEVANT ITA NO. 573/BANG/2018 PAGE 2 OF 3 YEAR. HE ALSO SUBMITTED THAT WHILE HOLDING SO THE TRIBUNAL HAS FOLLOWED THE JUDGMENT OF HONBLE DELHI HIGH COURT RENDERED IN TH E CASE OF JOINT INVESTMENTS PVT. LTD. VS. CIT AS REPORTED IN 59 TAXMANN.COM 295 (DELHI). HE SUBMITTED COPY OF THIS JUDGMENT OF HONBLE DELHI HIGH COURT ALSO. IN REPLY IT WAS SUBMITTED BY LD. AR OF ASSESSEE THAT PRESENT ADDITION IS THE AGR EED ADDITION AND IN SUPPORT OF THE CONTENTION HE DRAWN MY ATTENTION TO PARA NO. 4 OF THE ASSESSMENT ORDER WHERE THE AO HAS NOTED THAT AR OF ASSESSEE APPEARED AND FURNISHED REVISED COMPUTATION AFTER COMPUTING THE EXPENSES AS PER SEC TION 14A R.W. RULE 8D AND AS PER THE SAME THE DISALLOWANCE U/S. 14A IS QUANTI FYING AS RS. 22,50,616/-. HE FURTHER POINTED OUT THAT THE AO DISALLOWED THE SAME AMOUNT FOR WHICH THE LD. AR OF ASSESSEE HAS AGREED. HE SUBMITTED THAT AGAINST THE AGREED ADDITION, NO PEAK CAN BE FILED BY THE ASSESSEE BEFORE THE CIT(A) OR T HE TRIBUNAL. 4. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. REGARD ING THE CONTENTION OF LD. DR OF REVENUE THAT AGAINST AGREED ADDITION, NO APPEAL CAN BE FILED BY THE ASSESSEE BEFORE CIT(A) OR THE TRIBUNAL, I WOULD LIKE TO OBSE RVE THAT THE POSITION IN SUCH IF IT IS FOUND THAT BECAUSE THE ASSESSEE HAS AGREED SA ME ADDITION BEFORE AO AND IT HAS RESULTED IN CARRYING OUT ANY FURTHER ENQUIRY , THE ASSESSEE CANNOT FILE THE APPEAL AGAINST SUCH ADDITION. BUT IN THE PRESENT C ASE THE LD. AR OF ASSESSEE HAS AGREED FOR ADDITION OF RS. 22,50,616/- AS PER THE C OMPUTATION U/S. 14A R.W. RULE 8D. 5. BEFORE ME ALSO THIS IS NOT THE ARGUMENT OF LD. A R OF ASSESSEE THAT NO ARGUMENT SHOULD BE MADE U/S. 14A R.W. RULE 8D BEFORE CIT(A) OR THIS IS THE ARGUMENT THAT SUCH DISALLOWANCE SHOULD NOT EXCEED THE QUANTUM OF EXEMPT INCOME OF THE PRESENT YEAR AND IN SUPPORT OF HIS CONTENTION RELIA NCE HAS BEEN PLACED ON THE TRIBUNAL ORDER. THE ASSESSMENT ORDER IS DATED 29.0 2.2016 THAT IS BEFORE THE DATE OF TRIBUNAL ORDER. UNDER THESE FACTS IN MY CONSIDE RED OPINION, IT CANNOT BE SAID THAT ONLY BECAUSE THE COMPUTATION FOR DISALLOWANCE WAS MADE BY THE LD. AR OF ASSESSEE WITHOUT HOLDING OF ANY JUDICIAL DECISION A ND LATER ON SOME JUDICIAL DECISION COMES AS PER WHICH COMPUTATION OF SUCH DIS ALLOWANCE HAS TO BE RESTRICTED TO SOME EXTENT, THEN IT CANNOT BE SAID T HAT BECAUSE LD. AR OF ASSESSEE HAS AGREED TO SUCH DISALLOWANCE AS PER SUCH COMPUTA TION, THE ASSESSEE SHOULD ITA NO. 573/BANG/2018 PAGE 3 OF 3 NOT GET BENEFIT OF SUBSEQUENT JUDICIAL DECISION RES TRICTING THE DISALLOWANCE TO SOME EXTENT. HENCE I RESPECTFULLY FOLLOW THE TRIBU NAL ORDER RENDERED IN THE CASE OF PEST CONTROL INDIA PVT. LTD. VS. DCIT (SUPRA) AN D DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. GROUND NO. 7 IS ALLOWED. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. SD/- (ARUN KUMAR GARODIA) ACCOUNTANT MEMBER BANGALORE, DATED, THE 23 RD MARCH, 2018. /MS/ COPY TO: 1. APPELLANT 4. CIT(A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.