ISS FACILITY SERVICES INDIA PRIVATE LIMITED, MUMBAI V. DEPUTY COMMISSIONER OF INCOME TAX 10(1)(2), MUMBAI

ITA 5845/MUM/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4286 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 13-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHI RA MA KARTIKIYEN
• Keywords: Earning of tax free income; Revised return; TDS; Rule 8D; Set aside
• Section: 142(1); 14A; 143(1); 201; 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI RAJESH KUMAR , AM AND SHRI AMARJIT SINGH, JM / I .T.A. NO. 6089 /MUM/2017 ( / ASSESSMENT YEAR: 2012 - 13 ) ACIT 10(1), MUMBAI R.NO. 209, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 . / VS. M/S. ISS FACILITY SERVICES INDIA PVT. LTD. (BEFORE MERGER KNOWS AS ISS INTEGRATED FACILITY SERVICES PVT. LTD.) THE QUBE, B - 401/404 & A 402, CTS NO.1498 A/2, MV ROAD, MAROL, ANDHERI (E), MUMBAI - 400 059. (ITA . NO. 5845 /MUM/2017 ) ( / ASSESSMENT YEAR: 201 2 - 13 ) M/S. ISS FACILITY SERVICES INDIA PVT. LTD. (BEFORE MERGER KNOWS AS ISS INTEGRATED FACILITY SERVICES PVT. LTD.) THE QUBE, B - 401/404 & A 402, CTS NO.1498 A /2, MV ROAD, MAROL, ANDHERI (E), MUMBAI - 400059 . / VS. DCIT - 10(1)(2) AAYAKAR BHAVAN, MUMBAI - 400020. ./ ./ PAN/GIR NO. : AABC13815M ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING : 27 . 0 2 .201 9 / DATE OF PRONOUNCEMENT : 13. 03. 2019 / O R D E R REVENUE BY: SHRI ABHI RA MA KARTIKIYEN (DR) ASSESSEE BY : SHRI PIYUSH CHHAJED (AR) ITA. NO.5845 /M/1 7 6089 /M/201 7 A.Y. 2012 - 13 2 PER AMARJIT SINGH, J M: THE REVE NUE AS WELL AS ASSESSEE HAVE FILED THE ABOVE MENTIONED APPEAL S AGAINST THE ORDER DATED 26.07 .201 7 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 17 , MUMBAI [HEREINAFTE R REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y. 2012 - 13 . ITA. N O. 5845 /M/201 7 : - 2. THE ASSESSEE HAS FILED THE PRESENT A PPEAL AGAINST THE ORDER DATED 26 . 0 7 .201 7 PASSED BY THE COMMISS IONER OF INCOME TAX (APPEALS) - 17 , MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVAN T TO THE ASSESSMENT YEAR 2012 - 13 . 3 . THE ASSESSEE HAS RAISED THE FO LLOWING GROUNDS: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD ASSESSING OFFICER HAS ERRED IN MAKING ADDITION FOR DIFFERENCE BETWEEN INCOME AS PER PROFIT & LOSS ACCOUNT AND CREDIT AS PER 26AS OF RS.14,59,614/ - . 2. THE APPELLANT CRAVES LEAVES TO ADD, TO AMEND, ALTER, MODIFY AND/OR WITHDRAW ANY OR ALL OF THE ABOVE GROUNDS OF APPEAL, EACH OF WHICH ARE WITHOUT PREJUDICE TO ONE ANOTHER. 4 . THE BRIEF FACTS OF THE CASE ARE THAT THE A SSESSEE FILED HIS RETURN OF INCOME ON 29 .09.201 2 DECLA RING TOTAL INCOME TO THE TUNE OF RS. 1,62,63,510 / - . THEREAFTER, THE ASSESSEE HAS FILED THE REVISED RETURN OF INCOME ON 29.11.2012 DECLARING TOTAL INCOME TO THE TUNE OF RS.1,62,63,510/ - . THE RE TURN WAS PROCESSED U/S 143(1) OF THE ACT. THEREAFTER, THE CASE W AS SELECTED FOR SCRUTINY, THEREFORE, NOTICES U/S 143(2) & 142(1) OF THE ACT WERE ISSUED AND SERVED UPON THE ASSESSEE. ON ITA. NO.5845 /M/1 7 6089 /M/201 7 A.Y. 2012 - 13 3 VERIFICATION, IT WAS FOUND THAT THE ASSESSEE SHOWED THE INVESTMENT IN SUM OF RS.1,74,32,83,860/ - AS ON 31.03.2011 AND IN SUM OF RS.1,74 ,32,83,860/ - AS ON 31.03.2012. THE AO APPLIED THE PROVISION U/S 14A R.W. RULE 8D OF THE ACT AND ASSESSED THE EXPENDITURE TO EARN THE EXEMPT INCOME IN SUM OF RS.87,16,419/ - . ON EXAMINATION OF PROFIT AND LOSS ACCOUNT VIS - - VIS FORM NO. 26AS, IT WAS NOTICED T HAT THE ASSESSEE RECEIVED THE INCOME FROM M/S. IBM AUTO SYSTEM PVT. LTD. AS PER 26AS IN SUM OF RS.51,09,284/ - WHILE THE BOOKS ASSESSED IN SUM OF RS.36,49,670/ - , THEREFORE, THE DIFFERENCE IN SUM OF RS.14,59,614/ - WAS TREATED AS INCOME AND ACCORDINGLY TAXED. THE TOTAL INCOME OF THE ASSESSEE WAS ASSESSED TO THE TUNE OF RS.2,08,33,330/ - . FEELING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO REJECTED THE CLAIM IN CONNECTION WITH THE DIFFERENCE OF BOOKS OF ACCOUNT AND 26AS IN SUM OF RS.14,59,614/ - , THEREFORE, THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US . ISSUE NO. 1 : - 5 . UNDER THIS ISSUE THE ASSESSEE HAS CHALLENGED THE ADDITION IN SUM OF RS.14,59,614/ - ON ACCOUNT OF DIFFERENCE BETWEEN THE INCOME AS PER THE PROFIT AND LOSS ACCOUNT AND CREDIT AS PER 26AS. THE LD. REPRESENTATIVE OF THE ASSESSEE HAS ARGUED THAT THE BOOKS OF ACCOUNT THE ASSESSEE HAS DULY BEEN EXAMINED AND NO FAULT OF ANY KIND WAS FOUND SO DIFFERENCE ON ACCOUNT OF PROFIT AND LOSS ACCOUNT AND AS PER THE FIGURE REFLECTED IN FORM NO. 26AS IS NOT REQUIRED TO BE ASSESSED AS INCOME OF THE ASSESSEE IN ACCORDANCE WITH LAW . IT IS ALSO ARGUED THAT N O ADDITION CAN BE RAISED IN VIEW OF THE LAW SETTLED IN (2018) 96 TAXMANN.COM 645 (AHD TRIB.) SEAL FOR LIFE INDIA P. ITA. NO.5845 /M/1 7 6089 /M/201 7 A.Y. 2012 - 13 4 LTD. VS. DCIT. HOWEVER, ON THE OTHER HAND, THE LD. REPRESENTATIVE OF THE DEPARTMENT HAS STRONGLY RELIED UPON THE ORDER PASSED BY CIT(A) IN QUESTION. ON APPRAISAL OF THE RECORD, WE NOTICED THAT THE AO RAISED QUERY ABOUT THE DIFFERENCE OF AMOUNT SHOWN IN FORM NO. 26AS AS WELL AS IN THE B OOKS OF ACCOUNT. THE EXPLANATION OF THE ASSESSEE IS THAT THE DIFFERENCE WAS IN CONNECTION WITH THE TWO CUSTOMERS AND THE SHORT FALL IN ONE YEAR WAS MADE UPON IN SUBSEQUENT YEAR IN THE CASE OF ONE CUSTOMER. THE ASSESSEE SUBMITTED THE FOLLOWING DETAILS.: - P ARTICULARS FY 2010 - 11 FY 2011 - 12 TOTAL IN 26AS IN BOOKS IN 26AS IN BOOKS IN 26AS IN BOOKS IBM AUTO SYSTEMS PVT. LTD. 1245100 2704714 5109284 3649670 6354384 6354384 SONY ERICSON MOBILE COMMUNICATIONS INTERNATIONAL 24093598 28371494 - 4032214 24093598 3 2430708 TOTAL 25338698 31076208 5109284 7681884 30447982 38758092 THE ASSESSEE EXPLAINED THAT THE DIFFERENCE HAS ALREADY BEEN SHOWN IN THE EARLIER ASSESSMENT YEAR I.E. 2011 - 12 AND THE AO NOWHERE DIS SATISFY WITH THE CLAIM OF THE ASSESSEE. THE FORM NO. 26A S NOWHERE SHOWED THE AMENDED DATA OF RETURN BECAUSE THE FIGURE CHANGES ON ACCOUNT OF REVISED RETURN OF TDS AND ON ACCOUNT OF NET O F F SERVICE TAX ETC. COMPARING OF BOOKS OF ACCOUNT WITH THE FORM NO. 26AS FOR THE FY. 2010 - 11 AND F.Y. 2 011 - 12 NOWHERE LEADS TO ANY DIFFERENCE . THE FIGURE HAS ALREADY BEEN FURNISHED BEFORE THE AO WHICH HAS BEEN MENTIONED ABOVE. THE CLAIM OF THE ASSESSEE IS REQUIRED TO BE EXAMINED ON THE BASIS OF THE EXPLANATION RENDERED BY THE ASSESSEE WHICH HAS NOT BEEN DONE BY THE AO. TAKING INT O ACCOUNT, ALL THE ITA. NO.5845 /M/1 7 6089 /M/201 7 A.Y. 2012 - 13 5 FACT A ND CIRCUMSTANCES AND ALSO RELYING UPON THE LAW RELIED BY THE LD. REPRESENTATIVE OF THE ASSESSEE I.E, SEAL FOR LIFE INDIA P. LTD (SUPRA) , W E ARE OF THE VIEW THAT THE ADDITION CONFIRMED BY THE CIT(A) IS WRONG, THEREFORE, WE SET ASIDE THE FINDING OF THE CIT(A) ON THIS ISSUE AD ALLOWED THE CLAIM OF THE ASSESSEE AND DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS HEREBY ALLOWED. ITA NO. 6089 /M/201 7 : - 6 . THE REVENUE HAS FILED THE PRESENT APPEAL AG AINST THE ORDER DATED 26 .0 7 .201 7 PASSED BY THE COMMISSIONER OF I NCOME TAX (APPEALS) - 17 , MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y.2012 - 1 3 . 7 . THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: - 1. 'ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE U/S 14A READ WITH RULE 8D(2) OF INCOME - TAX RULES, 1962 HOLDING THAT 'NO DISALLOWANCE HAS TO BE MADE' WHERE NO EXEMPT INCOME WAS EARNED BY THE ASSESSEE INSPIT E OF THE EXTANT OF CIRCULAR OF CBDT BEARING NO.05/2014 DATED 11.02.2014 WHEREIN THE BOARD HAS CLARIFIED THAT PROVISIONS OF SECTION 14A OF THE ACT ARE APPLICABLE IN THE CASES OF INVESTMENTS IN SHARES WHICH HAS NOT YIELDED ANY DIVIDEND/EXEMPT INCOME.' 2. 'ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, RULE 8D(2) OF THE INCOME - TAX RULES, 1962 CAN BE APPLIED EVEN WHEN NO EXEMPT INCOME HAS BEEN EARNED DURING THE YEAR ON THE INVESTMENTS MADE IN AS MUCH AS MAKING SUCH INVESTMENTS REQUIRE SYSTEMATIC PLANNIN G AND MANAGEMENT THAT CANNOT BE PERFORMED WITHOUT INCURRING ANY EXPENSES, AND, THEREFORE, TO COVER SUCH EXPENSES RULE 8D(2) OF INCOME - TAX RULES, 1962 IS ATTRACTED EVEN WHEN NO EXEMPT INCOME IS EARNED.' ITA. NO.5845 /M/1 7 6089 /M/201 7 A.Y. 2012 - 13 6 3. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT (A) O N THE ABOVE GROUND BE SET ASIDE AND THAT OF THE A.O. BE RESTORED. 4. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUNDS OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 8 . THE FACT OF THE PRESENT CASE IS QUITE SIMILAR TO THE FACT S OF THE CASE NARRATED AB OVE WHILE DECIDING IN ITA. NO.5845/M/2017 ABOVE , THEREFORE, THERE IS NO NEED TO REPEAT THE SAME . ISSUE NOS. 1 TO 3 : - 9 . UNDER THESE ISSUES THE REVENUE HAS CHALLENGED THE DELETION OF ADDITION RAISED IN VIEW OF THE PROVISION U/S 14A R.W. RULE 8D OF THE ACT . BEFORE GOING FURTHER, WE DEEM IT NECESSARY TO ADVERT THE FINDING OF THE CIT(A) ON RECORD.: - 5.1 IT IS A ADMITTED FACT THAT THOUGH THE APPELLANT COMPANY HAS MADE INVESTMENT IN EXEMPT INCOME YIELDING ASSETS, HOWEVER, DURING THE YEAR UNDER REFERENCE NO EX EMPT INCOME HAS BEEN EARNED. THE SHARES IN WHICH INVESTMENT HAS BEEN MADE HAS NOT YIELDED ANY DIVIDEND INCOME THIS FACT WAS SUBMITTED BEFORE THE A 0. HOWEVER, AC STILL PROCEEDED TO COMPUTE THE DISALLOWANCE UNDER RULE 14A R.W RULE 8D THERE ARE VARIOUS JUDIC IAL PRONOUNCEMENTS REFERRED ABOVE, WHICH HAVE LAID DOWN THE PRINCIPLE THAT WHERE NO EXEMPT INCOME IS RECEIVED OR RECEIVABLE DURING THE RELEVANT PREVIOUS YEAR PROVISIONS OF SECTION 14A SHALL NOT APPLY THE HONBLE DELHI HIGH COURT, IN CASE OF CHEMINVESTMENT LTD.378 ITR 33 DELHI, HELD THAT IN THE CONTEXT OF FACTS ENUMERATED HEREINBEFORE THE COURT ANSWERS THE QUESTION FRAMED BY HOLDING THAT THE EXPRESSION DOES NOT FROM PART OF THE TOTAL INCOME' IN SECTION 14A OF THE ENVISAGES THAT THERE SHOULD BE AN ACTUAL REC EIPT OF INCOME, WHICH IS NOT INCLUDIBLE IN THE TOTAL INCOME, DURING THE RELEVANT PREVIOUS YEAR FOR THE PURPOSE OF DISALLOWING ANY EXPENDITURE INCURRED IN RELATION TO THE SAID INCOME. IN OTHER WORDS, SECTION 14A WILL NOT APPLY IF NO EXEMPT INCOME IS RECEIVE D OR RECEIVABLE DURING THE RELEVANT PREVIOUS YEAR.' ITA. NO.5845 /M/1 7 6089 /M/201 7 A.Y. 2012 - 13 7 5.2 IN VIEW OF THE ABOVE, IT IS HELD THAT THE APPELLANT COMPANY IS NOT IN RECEIPT OF ANY DIVIDEND INCOME FOR THE RELEVANT PREVIOUS YEAR. HENCE NO DISALLOWANCE U/S 14A R.W. RULE 8D HAS TO BE MADE. THE ADD ITION MADE BY THE A0 OF RS.31,10,208 IS DELETED AND THE GROUND OF APPEAL ON THIS ISSUE IS ALLOWED. 10. ON APPRAISAL OF THE ABOVE MENTIONED FINDING, WE NOTICED THAT THE ASSESSEE NOWHERE EARNED ANY EXEMPT INCOME, THEREFORE, THE CIT(A) BY RELYING UPON THE DE CISION OF THE DELHI HIGH COURT IN THE CASE OF CHEMINVESTMENT LTD. 378 ITR 33 DELHI HAS DELETED THE ADDITION RAISED IN VIEW OF THE PROVISION U/S 14A R.W. RULE 8D OF THE ACT. SINCE THE ASSESSE NOWHERE EARNED THE EXEMPT INCOME, THEREFORE, NO DISALLOWANCE U/S 14A R.W. RULE 8D OF THE ACT IS WARRANTED . I N VIEW OF THE ABOVE FACT AND CIRCUMSTANCES , WE ARE OF THE VIEW THAT THE CIT(A) HAS DECIDED THE MATTER OF CONTROVERSY JUDICIOUSLY AND CORRECTLY WHICH IS NOT LIABLE TO BE INTERFERE WITH AT THIS APPELLATE STAGE. ACCO RDINGLY, BOTH THE ISSUES ARE DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE . 11 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS HEREBY ORDERED TO BE ALLOWED AND APPEAL FILED BY THE REVENUE IS HEREBY DISMISSED . ORDER PRONOUNCE D IN THE OPEN COURT ON 13. 03.2019 . SD/ - SD/ - ( RAJESH KUMAR ) (AMARJIT SINGH) / ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBA I DATED : 13. 03.2019 VIJAY ITA. NO.5845 /M/1 7 6089 /M/201 7 A.Y. 2012 - 13 8 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RE SPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI