DCIT - 9(1)(1), MUMBAI V. ADITYA BIRLA RATAIL LTD., MUMBAI

ITA 6048/MUM/2016

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 8521 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 10-10-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B JAYA KUMAR
• Keywords: Depreciation; Opportunity of being heard; Earning of tax free income
• Section: 143(3); 14A; 6; 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A , MUMBAI BEFORE SHRI C.N. PRASAD, HON'BLE JUDICIAL MEMBER AND SHRI N.K. PRADHAN , HON'BLE ACCOUNTANT MEMBER ITA NO. 6047 & 6048 /MUM/201 6 (A.Y S : 2011 - 12 & 2012 - 13 ) D.C.I.T. 9(1)(1) ROOM NO . 260A, 2 ND FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400 020 V. M/S. ADITYA BIRLA RETAIL LIMITED 86/92 SKYLINE ICON, 5 TH FLOOR, NEAR MITTAL INDL. ESTATE, ANDHERI (E) MUMBAI 400 099 PAN: AAACP 2678 Q (APPELLANT) (RESPONDENT) ITA NO.6175/MUM/2016 (A.Y: 2012 - 13) M/S. ADITYA BIRLA RETAIL LIMITED 86/92 SKYLINE ICON, 5 TH FLOOR, NEAR MITTAL INDL. ESTATE, ANDHERI (E) MUMBAI 400 099 PAN: AAACP 2678 Q V. D.C.I.T. 9(1)(1) ROOM NO. 210 , AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400 020 (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI YOGESH THAR DEPARTMENT BY : SHRI B. JAYA KUMAR DATE OF HEARING : 30.10.2018 DATE OF PRONOUNCEMENT : 31 .12 .2018 2 ITA NO.6047, 6048 & 6175/MUM/2016 M/S. ADITYA BIRLA RETAIL LIMITED O R D E R PER C. N. PRASAD (JM) 1. FIRST WE TAKE UP THE APPEAL OF THE REVENUE FOR THE ASSESSMENT YEAR 2011 - 12 IN ITA.NO. 6047/MUM/2016 . 2. GROUND NO.1 AND 2 OF GROUNDS OF APPEAL OF THE REVENUE FOR THE ASSESSMENT YEAR 2011 - 12 IS WITH REGARD T O DELETION OF DISALLOWANCE U/S. 1 4A R.W. RULE 8D OF I.T. RULES. 3. AT THE OUTSET, LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT ASSESSING OFFICER INVOKING PROVISIONS OF SECTION U/S. 14A R.W. RULE 8D MADE DISALLOWANCE OF .116 CRORES AND THE LD.CIT(A) RESTRICTED THE DISALLOWANCE ONLY TO THE EXEMPT INCOME RECEIVED BY THE ASSESSEE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. THEREFORE, HE SUBMITTED THAT THERE IS NO INFIRMITY IN THE ORDER PASSED BY THE LD.CIT(A). 4. LD. DR VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF THE AUTHORITIES BELOW. ON A CAREFUL READING OF THE LD.CIT(A) ORDER , WE FIND THAT , ASSESSEE DURING THE ASSESSMENT YEAR UNDER CONSIDERATION RECEIVED EXEMPT INCOME OF .57,539/ - AND THE LD.CIT(A) FOLLOWING THE DECISION OF T HE PUNJAB & HARYANA HIGH COURT IN THE CASE OF PR. CIT V. EMPIRE PACKAGE (P.) LTD. (ITA.NO. 415 OF 2015) AND THE DECISION OF THE MUMBAI BENCH IN 3 ITA NO.6047, 6048 & 6175/MUM/2016 M/S. ADITYA BIRLA RETAIL LIMITED THE CASE OF NIMBUS COMMUNICATION LTD V. ACIT (ITA.NO. 1424/MUM/2014) RESTRICTED THE DISALLOWANCE U/S. 14A TO THE EXEMPT INCOME RECEIVED BY THE ASSESSEE DURING THE ASSESSMENT YEAR UNDER CONSIDERATION. THIS BENCH IS CONSISTENTLY HOLDING THAT THE DISALLOWANCE U/S. 14A SHOULD NOT EXCEED EXEMPT INCOME. THUS, WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE LD.CIT(A) IN RESTRICTING THE DISALLOWANCE U/S. 14A TO THE EXEMPT INCOME RECEIVED BY THE ASSESSEE. THUS, WE REJECT THE GROUN DS OF THE REVENUE ON THIS ISSUE. 6. GROUND NO.3 OF GROUNDS OF APPEAL OF THE REVENUE IS THAT THE LD.CIT(A) ERRED IN ALLOWING THE ASSESSEES CLAIM FOR DEPRECIATION ON THE BIZERBA WEIGHING SCALES AS PART OF COMPUTER. 7. THE LD. COUNSEL FOR THE ASSESSEE REFERRING TO PARA NO. 19 OF THE TRIBUNAL ORDER IN ITA.NO. 3572/MUM/2 012 DATED 27.11.2017 F OR THE ASSESSMENT YEAR 2008 - 09 FAIRLY SUBMITTED THAT THE IDENTICAL ISSUE IN ASSESSEES OWN CASE IS DECIDED AGAINST THE ASSESSEE BY THE TRIBUNAL. COPY OF THE ORDER IS PLACED ON RECORD. 8. ON A PERUSAL OF THE ORDER OF THE TRIBUNAL, WE FIN D THAT THIS ISSUE HAS BEEN DECIDED AGAINST THE ASSESSEE AND IN FAVOUR OF THE REVENUE BY THE TRIBUNAL UPHOLDING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. THE TRIBUNAL HELD THAT BIZERBA WEIGHING SCALE I S NOT PART OF THE COMPUTER AND 4 ITA NO.6047, 6048 & 6175/MUM/2016 M/S. ADITYA BIRLA RETAIL LIMITED T HEREFORE NOT ENTI TLED FOR DEPRECIATION @60% AS CLAIMED BY THE ASSESSEE. RESPECTFULLY FOLLOWING THE SAID DECISION, WE UPHOLD THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IN RESPECT OF BIZERBA WEIGHING SCALES . THIS GROUND OF REVENUE IS ALLOWED. 9. IN THE RESULT, APPEAL OF T HE REVENUE IS PARTLY ALLOWED. ITA.NO. 6048 /MUM/2016 & 6175 /MUM/2016 10. THE APPEAL FILED BY THE REVENUE FOR THE ASSESSMENT YEAR 2012 - 13 IS AGAINST THE ORDER OF THE LD.CIT(A) IN DELETING THE DISALLOWANCE MADE U/S. 14A AND DEPRECIATION ON WEIGHING SCALE AND THE APPEAL OF THE ASSESSEE IS AGAINST THE ACTION OF THE LD.CIT(A) IN SUSTAINING THE SUOMOTO DISALLOWANCE MADE BY THE ASSESSEE U/S. 14A IN THE COMPUTATION OF INCOME. 11. BRIEFLY STATED THE FACTS ARE THAT, THE ASSESSEE IN THE RETURN OF INCOME FILED , MADE SUOMOTO DISALLOWANCE OF .13,74,31,390/ - BEING THE EXPENDITURE ATTRIBUTABLE FOR EARNING EXEMPT INCOME. HOWEVER, THE ASSESSING OFFICER COMPLETED ASSESSMENT U/S. 143(3) COMPUTING THE DISALLOWANCE AT .87,15,79,365/ - AND SINCE THE ASSESSEE HIMSELF DISALLOWED .13,7 4,31,390/ - THIS WAS REDUCED AND BALANCE DISALLOWANCE U/S. 14A WAS ARRIVED AT .73,41,47,975/ - . 5 ITA NO.6047, 6048 & 6175/MUM/2016 M/S. ADITYA BIRLA RETAIL LIMITED 12. ON APPEAL THE LD.CIT(A) DELETED THE DISALLOWANCE MADE U/S. 14A BY THE ASSESSING OFFICER FOLLOWING THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CHE MINVEST LIMITED V. CIT [378 ITR 33] AND THE DECISION OF THE MUMBAI BENCH IN THE CASE OF SIRO CLINPHARAM (P.) LTD. V. D.C.I.T (ITA.NOS. 1269 & 1493/MUM/2015) AS NO EXEMPT INCOME WAS EARNED BY THE ASSESSEE DURING THIS ASSESSMENT YEAR. AGAINST THIS ORDER TH E REVENUE IS IN APPEAL. THE ASSESSEE IS ALSO IN APPEAL CONTENDING THAT LD.CIT(A) IS NOT JUSTIFIED IN RESTRICTING THE DISALLOWANCE TO THE SUOMOTO DISALLOWANCE MADE BY THE ASSESSEE IN THE COMPUTATION OF INCOME. 13. ON HEARING BOTH THE SIDES, IN SO FAR AS THE RE VENUES APPEAL IS CONCERNED , WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE LD.CIT(A) IN DELETING THE DISALLOWANCE MADE U/S. 14A OF THE ACT BY THE ASSESSEE SINCE THE ASSESSEE HAS NOT EARNED ANY EXEMPT INCOME DURING THE ASSESSMENT YEAR 2012 - 13. IN THE CASE OF PR.CIT V. M/S. BALLARPUR INDUSTRIES LIMITED , THE HON'BLE HIGH COURT OF BOMBAY AT NAGPUR BENCH IN ITA.NO. 51 OF 2016 DATED 13.10.2016 HELD THAT , IN ORDER TO MAKE DISALLOWANCE U/S. 14A THERE SHOULD BE AN INCOME WHICH DOES NOT FORM PART OF TOTAL INCOME AND T HEREFORE SINCE THE ASSESSEE EARNED NO EXEMPT INCOME THERE SHALL NOT BE ANY DISALLOWANCE U/S. 14A OF THE ACT. RESPECTFULLY FOLLOWING THE SAID DECISION, WE UPHOLD THE ORDER OF THE 6 ITA NO.6047, 6048 & 6175/MUM/2016 M/S. ADITYA BIRLA RETAIL LIMITED LD.CIT(A) IN DELETING THE DISALLOWANCE MADE U /S. 14A. GROUNDS RAISE D BY THE REVENUE ON THIS ARE REJECTED. 14. COMING TO THE ISSUE OF HIGHER DEPRECIATION ON WEIGHING SCALE THE SAME IS DECIDED AGAINST THE ASSESSEE BY THE ITAT IN ITA.NO. 3572/MUM/2012 DATED 27.11.2017. FOLLOWING THE SAID ORDER, WE UPHOLD THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. THIS GROUND OF REVENUE IS ALLOWED. 15. COMING TO ASSESSEES APPEAL, IT IS THE CONTENTION OF THE LD . COUNSEL FOR THE ASSESSEE THAT, IN THE COURSE OF THE ASSESSMENT PROCEEDINGS THE ASSESSEE MADE A CLAIM THAT NO DI SALLOWANCE SHOULD BE MADE BY THE ASSESSING OFFICER IN THE ABSENCE OF ANY EXEMPT INCOME. HE FURTHER SUBMITTED THAT EVEN THE SUOMOTO DISALLOWANCE MADE BY THE ASSESSEE IN THE RETURN OF INCOME SHOULD NOT BE CONSIDERED WHILE COMPUTING THE INCOME OF THE ASSESSE E AND TO THIS EXTANT CLAIM WAS MADE BEFORE THE ASSESSING OFFICER IN THE COURSE OF THE ASSESSMENT PROCEEDINGS. THE LD. COUNSEL FOR THE ASSESSEE REFERRING TO THE DECISION OF THE COORDINATE BENCH IN THE CASE OF M/S. HDFC BANK LTD V. ACIT IN ITA.NO. 5480 & 54 81/MUM/2014 DATED 24.08.2016 SUBMITTED THAT THIS TRIBUNAL DIRECTED THE ASSESSING OFFICER TO EXCLUDE EVEN THE SUOMOTO DISALLOWANCE MADE BY THE ASSESSEE IN THE COMPUTATION OF INCOME IN THE ABSENCE OF ANY EXEMPT INCOME AS THE 7 ITA NO.6047, 6048 & 6175/MUM/2016 M/S. ADITYA BIRLA RETAIL LIMITED EXEMPT INCOME WAS LESS THAN THE S UOMOTO DIS ALLOWANCE MADE BY THE ASSESSEE. 16. LD. DR VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER. HE FURTHER SUBMITTED THAT NO SUCH CLAIM WAS MADE BY THE ASSESSEE IN THE COURSE OF THE ASSESSMENT PROCEEDINGS. 17. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF THE AUTHORITIES BELOW. WE HAVE GONE THROUGH PAGE NO. 97 OF THE PAPER BOOK AND FIND THAT THE ASSESSEE MADE ITS CLAIM BEFORE THE ASSESSING OFFICER CONTENDING AS UNDER: - THOUGH WE HAD OUT OF ABUNDANT CAUTION MADE DISALLOWA NCE U/ S.1 4A OF THE ACT IN THE COMPUTATION OF INCOME IN ACCORDANCE WITH RULE 8D, WE SUBMIT THAT SUCH DISALLOWANCE SHOULD NOT BE MADE . THE DISALLOWANCE MADE BY US WAS NOT ONLY OUT OF ABUNDANT CAUTION & SHOULD NOT BE CONSIDERED AS OUR ACQUICIENCE TO SUCH DISALLOWANCE. THE INTENTION OF SECTION 14A IS TO DISALLOW EXPENDITURE INCURRED IN RELATION TO INCOME WHICH DOES N OT FORM PART OF TOTAL INCOME (I.E. EXEMPT INCOME). THEREFORE, IT SEEMS ONLY LOGICAL THAT UNLESS THERE IS EXEMPT INCOM E IN A PARTICULAR YEAR, SECTION 14A SHOULD NOT TRIGGER FOR THAT YEAR. HOWEVER, SUBSEQUENTLY, IN THE FOLLOWING CASES, VARIOUS HIGH COURTS HAVE TAKEN A VIEW THAT UNLESS THERE IS EXEMPT INCOME IN A YEAR, NO DISALLOWANCE U/S 14A CAN BE MADE FOR THAT YEAR. > CI T V. LAKHANIMARKETING ITA.NO. 970/2008(P&H )(HC) > CI T V. SHIVAM MOTORS (P) LTD., ITA.NO. 88/2014 (ALL .)(HC); > CIT V. CORTECH ENERGY PVT. LTD. ITA.NO. 239 OF 2014 (GUJ.) (HC); > CIT V. DELITE ENTERPRISES, ITA.NO. 110/2009 (BOM.)(HC) IN VIEW OF THE FOREGOING WE HUMBLY SUBMIT THAT DISALLOWANCE U/S. 14A SHOULD NOT BE MADE. 18. IN THE COURSE OF THE APPEAL PROCEEDINGS , SUBMISSIONS WERE MADE BEFORE THE LD.CIT(A) ABOUT THE LEGALITY OF THE CLAIM MADE DURING THE ASSESSMENT PROCEEDINGS ON THE DISALLOWANCE U/S. 14A R.W. R ULE 8D OF THE I.T. RULES IN THE ABSENCE OF ANY EXEMPT INCOME. THE LD.CIT(A) WHILE 8 ITA NO.6047, 6048 & 6175/MUM/2016 M/S. ADITYA BIRLA RETAIL LIMITED PASSING THE ORDER THOUGH EXTRACTED THE SUBMISSIONS OF THE ASSESSEE, HE HAS NOT DEALT WITH THE FRESH CLAIM MADE BY THE ASSESSEE, THAT EVEN THE SUOMOTO DISALLOWANCE MADE IN TH E RETURN OF INCOME SHOULD NOT BE CONSIDERED FOR DISALLOWANCE IN THE ABSENCE OF ANY EXEMPT INCOME. 19. LD.CIT(A) RESTRICTED THE DISALLOWANCE TO THE SUOMOTO DISALLOWANCE WHICH WAS ALREADY MADE BY THE ASSESSEE IN THE RETURN OF INCOME AND DELETED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER . SINCE THE LD.CIT(A) FAILED TO CONSIDER THE SUBMISSIONS OF THE A SSESSEE APPARENTLY BY OVERSIGHT, WE ARE OF THE CONSIDERED VIEW THAT THIS ISSUE IN ASSESSEES APPEAL SHOULD BE RESTORED TO THE FILE OF THE LD.CIT(A) FOR ADJUDICAT ING THE CLAIM IN ACCORDANCE WITH LAW. HENCE THE ISSUE RAISED BY THE ASSESSEE IN ITS APPEAL IS RESTORED TO THE FILE OF THE LD.CIT(A) WHO SHALL DECIDE IN ACCORDANCE WITH LAW, AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 20. IN THE RESULT, APPEAL S OF THE REVENUE ARE PARTLY ALLOWED AND APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THE 31 ST DECEMBER , 2018 SD/ - SD/ - ( N.K. PRADHAN ) (C.N. PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI / DATED 31 / 12 / 2018 GIRIDHAR , SPS 9 ITA NO.6047, 6048 & 6175/MUM/2016 M/S. ADITYA BIRLA RETAIL LIMITED COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// BY ORDER (ASSTT. REGISTRAR) ITAT, MUM