FIRST WINNER INDUSTRIES LTD, MUMBAI V. ADDL CIT RG 9(1), MUMBAI

ITA 5730/MUM/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 1696 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 23-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V JENARDHANAN
• Assessee Lawyers: NIKHIL BAJAJ
• Keywords: Earning of tax free income; Reasonable cause
• Section: 14A; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL K BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, AM AND SHRI RAM LAL NEGI, JM I.T.A. NO . 5730/MUM/2016 ( ASSESSMENT YEAR: 2011 - 12 ) M/S. FIRST WINN ER INDUSTRIES LTD. 605, BUSINESS CLASSIC, CHINCHOLI BUNDER ROAD, MALAD (W), MUMBAI - 64 VS. ADD. CIT, RANGE 9(1), MUMBAI PAN/GIR NO. AAACF 7079 H ( APPELLANT ) : ( RESPONDENT ) & I.T.A. NO . 5731/MUM/2016 (ASSESSMENT YEAR: 2011 - 12 ) M/S. FIRST WINNER LIFESTYLE LTD. 605, BUSINESS CLASSIC, CHINCHOLI BUNDER ROAD, MALAD (W), MUMBA I - 64 VS. ADD. CIT, RANGE 9(1), MUMBAI PAN/GIR NO. AACCR 3942 F ( APPELLANT ) : ( RESPONDENT ) APPELLANT BY : SHRI NIKHIL BAJAJ RESPONDENT BY : SHRI V. JENARDHANAN DATE OF HEARING : 12.07.2018 DATE OF PRONOUNCEMENT : 05.09 .2018 O R D E R PER S HAMIM YAHYA, A. M.: THESE ARE APPEALS BY TWO ASSESSEE S AGAINST THE RESPECTIVE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) FOR ASSESSMENT YEAR 2011 - 12. 2. S INCE THE ISSUES ARE COMMON AND CONNECTED AND THE APPEALS WERE HEARD TOGETHER THES E ARE BEING CONSOLIDATED AND DISPOSED OF TOGETHER BY THIS COMMON ORDER. 3. THE COMMON ISSUE RAISED IS THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) E RRED IN SUSTAINING THE DISALLOWANCE U /S. 1 4 A AS UNDER : 2 ITA NO S . 5730 & 5731/MUM/2016 ITA NO. 5730/MUM/2016 RS.1,02,62,673/ - ITA N O. 5731/MUM/2016 RS.10,10,722/ - 4. A T THE OUTSET , IT IS NOTED THAT THERE IS A DELAY OF 89 DAYS IN ITA NO. 5730/MUM/2016 AND 142 DAYS IN ITA NO. 5731/MUM/2016 IN FILING THE APPEALS. THE REASONABLE CAUSE FOR THE DELAY HAS BEEN ATTRIB UTED TO BE THE AILM ENT OF DIRECTOR . I N SUPPORT OF THIS , MEDICAL CERTIFICATE HAS BEEN DULY ATTACHED. 5. UPON CAREFUL CONSIDERATION AND HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE WE CONDONE THE DELAY. I N THESE CASES , THE ASSESSING OFFICER HAS INVOKED THE PROVISIONS OF SECT ION 14A AN D DISALLOWED THE AFORESAID SUMS. T HE ASSESSING OFFICER HAS REJECTED THE ASSESSEE S CLAIM THAT SINCE THERE WAS NO EXEMPT INCOME , DISALLOWANCE U /S.14A IS NOT SUSTAINABLE. IN DOING SO , THE ASSESSING OFFICER HAS PLACED RELIANCE UPON THE CB DT C IRCULAR IN THIS REGARD. 6. UPON THE ASSESSEE'S APPEAL , THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS SUSTAINED THE ORDER OF THE ASSESSING OFFICER. 7. AGAINST THIS ORDER , THE ASSESSEE IS IN APPEAL BEFORE US. 8. WE HAVE HEARD THE LEARNED DEPARTMENTAL REPRESE NTATIVE . N ONE APPEARED ON BEHALF OF TH E ASSESSEE. THE ADJOURNMENT PETITION FILED BY THE ASSESSEE IN THIS REGARD HAS BEEN REJECTED BY US AS . I N OUR OPINION , THE MATTER CAN BE DISPOSED OF BY HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSING THE RE CORDS. 9. WE NOTE THAT IN THIS CASE IT IS THE CLAIM OF THE ASSESSEE THAT THE ASSESSEE H AS NOT EARNED ANY EXEMPT INCOME . T HIS FACT HAS BEEN DULY NOTED BY THE AUTHORITIES BELOW. THERE 3 ITA NO S . 5730 & 5731/MUM/2016 IS NO DISPUTE IN THIS REGARD. IN THESE CIRCUMSTANCES , WHEN THE ASSESSEE H AS NOT EARNED ANY EXEMPT INCOME, DISALLOWANCE U /S.14A IS NOT SUSTAINABLE. THIS POSITION IS SUPPORTED BY THE HONBLE DELHI HIGH COURT DECISION IN THE CASE OF CHEMINVEST LTD VS CIT [2015] 378 ITR 33 (DEL) WHICH WAS FOLLOWED BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF PRINCIPAL CIT VS. BALLARPUR INDUSTRIES LTD. (IN ITA NO. 51 OF 2016 ) . R ESPECTFULLY FOLLOWING THE PRECEDENT , WE HOLD THAT SINCE THE ASSESSEE HAS NOT EARNED ANY EXEMPT INCOME , DISALLOWANCE U /S.14A IS NOT AT ALL SUSTAINABLE. ACCORDINGLY , WE SET ASIDE THE ORDER'S OF AUTHORITIES BELOW AND DELETE THE ADDITION. 10. IN THE RESULT, THESE APPEALS BY THE ASSESSEE STAND ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 05.09.2018 SD/ - SD/ - ( RAM LAL NEGI ) (S HAMIM YAHYA) J UDICIAL MEMBER A CCOUNTANT MEMBER MUMBAI ; DATED : 05.09.2018 ROSHANI , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT - CONCERNED 5. DR, ITA T, MUMBAI 6. GUARD F ILE BY ORDER, (DY./ASSTT. REGISTRAR) ITAT, MUMBAI