M/s. Albasta Wholesale Services Ltd., New Delhi V. ITO, New Delhi

ITA 6041/DEL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 3059 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 1 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2012-2013
• Appeal Filed On: 06-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : D : NEW DELHI BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI C.M. GARG, JUDICIAL MEMBER ITA NO.6041/DEL/2015 ASSESSMENT YEAR : 2012-13 ALBASTA WHOLESALE SERVICES LTD., M-62 & 63, FIRST FLOOR, CONNAUGHT PLACE, NEW DELHI . PAN: AAHCA0198F VS. ITO, WARD 2(2), NEW DELHI. ASSESSEE BY : SHRI ABHISHEK GUPTA, CA DEPTT. BY : SHRI AMIT JAIN, SR. DR DATE OF HEARING : 11.12.2017 DATE OF PRONOUNCEMENT : 11.12.2017 ORDER PER R.S. SYAL, VP: THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDER PASSED BY THE CIT(A) ON 04.09.2015 IN RELATION TO THE ASSE SSMENT YEAR 2012-13. ITA NO.6041/DEL/2015 2 2. THE ONLY ISSUE RAISED IN THIS APPEAL IS AGAINST THE CONFIRMATION OF DISALLOWANCE U/S 14A OF THE INCOME- TAX ACT, 1961 (HEREINAFTER CALLED `THE ACT) AMOUNTING TO RS .1,25,810/- 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE FILED RETURN OFFERING DISALLOWANCE OF RS.552/- U/S 14A OF THE ACT READ WITH RULE 8D OF THE INCOME-TAX RULES, 1962 . THE ASSESSEE WAS REQUIRED TO GIVE CALCULATION OF DISALL OWANCE SO MADE AND, FURTHER, AS TO WHY THE DISALLOWANCE BE NO T WORKED OUT AS PER RULE 8D. THE ASSESSEE FURNISHED REPLY W ITH WHICH THE ASSESSING OFFICER WAS NOT CONVINCED. HE TOOK R ECOURSE TO THE PROVISIONS OF RULE 8D AND COMPUTED DISALLOWANCE U/S 14A AT RS.28,59,190/-. AFTER REDUCING THE AMOUNT VOLUN TARILY DISALLOWED BY THE ASSESSEE AT RS.552/-, THE ASSESSI NG OFFICER MADE THE ADDITION FOR A SUM OF RS.28,58,638/-. THE LD. CIT(A) REDUCED THE DISALLOWANCE TO RS.1,25,810/-, AGAINST WHICH THE ASSESSEE HAS COME UP IN APPEAL BEFORE THE TRIBUNAL. ITA NO.6041/DEL/2015 3 4. WE HAVE HEARD THE PARTIES AND PERUSED THE RELEVA NT MATERIAL ON RECORD. IT CAN BE SEEN FROM THE ASSESSM ENT ORDER THAT THE ASSESSEE WORKED OUT DISALLOWANCE U/S 14A O F THE ACT AT RS.552/-. ON BEING CALLED UPON TO EXPLAIN THE B ASIS FOR SUCH DISALLOWANCE, THE ASSESSEE FURNISHED REPLY DATED 05 .03.2015, WHICH HAS BEEN REFERRED TO IN THE ASSESSMENT ORDER. THE ASSESSING OFFICER DEALT WITH THE SAME BY SIMPLY REC ORDING IN HIS ORDER THAT: THE SAME HAS BEEN PERUSED CAREFULL Y AND IS PLACED ON RECORD. HOWEVER, SUFFICE IT TO STATE HER E THAT THE REPLY FILED IS WITHOUT MERITS AND IS REJECTED ACCOR DINGLY. THEREAFTER, HE DISCUSSED THE PROVISIONS OF SECTION 14A AND THEN PROCEEDED TO COMPUTE THE DISALLOWANCE AS PER R ULE 8D BY OBSERVING THAT: IN VIEW OF THE ABOVE FACTS AND HAV ING REGARD TO THE ACCOUNTS OF THE ASSESSEE, I AM NOT SATISFIED WITH THE CLAIM OF THE ASSESSEE THAT THE PROVISIONS OF SECTIO N 14A ARE NOT APPLICABLE. IT IS DISCERNIBLE FROM THE ASSESSMENT ORDER THAT THE ASSESSING OFFICER DID NOT RECORD ANY SATISFACTION A S TO WHY THE COMPUTATION OF DISALLOWANCE BY THE ASSESSEE WAS NOT RIGHT. ITA NO.6041/DEL/2015 4 5. THE HON'BLE JURISDICTIONAL HIGH COURT IN SERIE S OF DECISIONS LED BY MAXOPP INVESTMENTS LTD. VS. CIT (2012) 347 ITR 272 (DEL), HAS HELD THAT THE RECORDING OF SATISFACTION BY THE ASSESSING OFFICER, HAVING REGARD TO THE ACCOUNT S OF THE ASSESSEE, THAT THE ASSESSEES CLAIM IS NOT CORRECT, IS SINE QUA NON FOR COMPUTING DISALLOWANCE U/S 14A. THE HON'BLE DE LHI HIGH COURT IN CIT VS. HERO MANAGEMENT SERVICES LTD. (2014) 360 ITR 68 (DEL), HAS HELD THAT NO DISALLOWANCE CAN BE MADE U/S 14A OF THE ACT IF NO SATISFACTION HAS BEEN RECO RDED BY THE ASSESSING OFFICER. IN VIEW OF THE FOREGOING DISCUS SION, IT IS CLEAR THAT UNLESS THE ASSESSING OFFICER RECORDS PRO PER SATISFACTION IN TERMS OF SECTION 14A(2) OF THE ACT, HE CANNOT REJECT THE ASSESSEES CLAIM IN THIS REGARD. 6. ADVERTING TO THE FACTS OF THE INSTANT CASE, WE F IND THAT THE ASSESSING OFFICER FAILED TO RECORD ANY SATISFACTION IN TUNE WITH THE STIPULATION CONTAINED IN SECTION 14A, WHICH IS CRUCIAL FOR DISALLOWANCE. AS SUCH, WE HOLD THAT NO DISALLOWANC E U/S 14A ITA NO.6041/DEL/2015 5 CAN BE SUSTAINED. WE, THEREFORE, ORDER TO DELETE T HE ADDITION MADE BY THE ASSESSING OFFICER IN ENTIRETY. 7. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11.12.2017. SD/- SD/- [C.M. GARG] [R.S. SYAL] JUDICIAL MEMBER VICE PRESIDENT DATED, 11 TH DECEMBER, 2017. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.