ASST CIT 15(2)(1), MUMBAI V. HCC CONCESSION LTD, MUMBAI

ITA 6203/MUM/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1027 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 21-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANADI VARMA
• Assessee Lawyers: PRASAD BAPAT
• Keywords: Earning of tax free income; Revised return

Judgement Text

, , , , INCOME-TAX APPELLATE TRIBUNAL IBENCH M UMBAI , , BEFORE S/SH. RAJENDRA,ACCOUNTANT MEMBER & RAVISH SOOD, JUDICIAL MEMBER ./I.T.A./6203/MUM/2016 , /ASSESSMENT YEAR: 2012-13 ACIT-15(2)(1) ROOM NO.357, 3 RD FLOOR, AAYAKAR BHAVAN, M.K. ROAD MUMBAI-400 020. VS. M/S. HCC CONCESSIONS LTD. HINCON HOUSE, 11 TH FLOOR, 247 PARK, LBS MARG, VIKROLI WEST, MUMBAI-400 083. PAN:AACCH 0024 L ( /APPELLANT ) ( / RESPONDENT ) REVENUE BY: SHRI ANADI VARMA-CIT-DR ASSESSEE BY: SHRI PRASAD BAPAT / DATE OF HEARING: 06/11/2017 / DATE OF PRONOUNCEMENT: 03/01/2018 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) , / PER RAJENDRA, AM - CHALLENGING THE ORDER,DATED 10/08/2016,OF CIT (A)-2 4, MUMBAI THE ASSESSING OFFICER (AO) HAS FILED THE PRESENT APPEAL.ASSESSEE-COMPANY,ENGAG ED IN THE BUSINESS OF DEVELOPMENT OF ALL TYPES OF INFRASTRUCTURE FACILITIES,FILED ITS RETURN OF INCOME ON 25/09/2012.LATER ON A REVISED RETURN WAS FILED ON 03/12/2012,DECLARING TOTAL INCO ME OF RS.(-)4.40 CRORES.THE AO COMPLETED THE ASSESSMENT,U/S.143 (3) OF THE ACT,ON 13/03/2015 ,DETERMINING ITS INCOME AT RS. 13.17 CRORES. 2. EFFECTIVE GROUND OF APPEAL IS ABOUT DISALLOWANCE O F RS. 17.57 CRORES, MADE U/S.14 A OF THE ACT.DURING THE ASSESSMENT PROCEEDINGS,THE AO ASKED THE ASSESSEE TO FURNISH THE DETAILS OF DIS -ALLOWANCE MADE U/S.14A. HE OBSERVED THAT IN THE FI NANCIAL STATEMENTS THE ASSESSEE HAD SHOWN OTHER INCOME OF RS.20,67,36,417/-,THAT FOR TH E YEAR UNDER CONSIDERATION IT HAD SHOWN CURRENT INVESTMENT AT RS. 43.64 CRORES AND NON-CURR ENT INVESTMENT AT RS. 540.47 CRORES. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE,TH E AO HELD THAT EARNING ANY INCOME FROM INVESTMENT COULD NOT BE WITHOUT SYSTEMATIC PLANNING AND MANAGEMENT, THAT INVESTMENT DECISIONS REQUIRED SUBSTANTIAL MARKET RESEARCH AND DAY TO DAY ANALYSIS OF MARKET TRENDS, THAT EXPENDITURE INCURRED TOWARDS EARNING SUCH INCOME CO ULD NOT BE LIMITED TO SALARY OF THE EMPLOYEES, THAT THE TERM EXPENDITURE WOULD TAKE IN ITS SWEEP NOT ONLY DIRECT EXPENDITURE BUT ALSO ALL FORMS OF EXPENDITURE, THAT IT COULD NOT BE RULED OUT THAT INTEREST-BEARING FUNDS WOULD NOT BE UTILISED FOR MAKING INVESTMENTS, THAT HE WAS NOT SATISFIED WITH THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE IN RESPECT OF SUCH EXPENSES D ISALLOWED IN THE COMPUTATION. HE MADE A 6203/MUM/16-(12-13) M/S. HCC CONCESSIONS LTD. 2 DISALLOWANCE OF RS.17,57,51,160/-(RS. 15.81 CRORES UNDER RULE 8D(II) + RS. 1.76 CRORES UNDER RULE 8D(III) OF THE INCOME TAX RULES, 1962 (RULES). 3. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE PREF ERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY(FAA)AND MADE ELABORATE SUBMISSI ONS. AFTER CONSIDERING THE AVAILABLE MATERIAL, HE HELD THAT THE ASSESSEE HAD EARNED NO E XEMPT INCOME DURING THE YEAR UNDER CONSIDERATION, THAT THE FUNDS OWNED BY THE ASSESSEE EXCEEDED RS. 950 CRORES,THAT INVESTMENT IN THE EQUITY AND PREFERENCE SHARES OF THE SUBSIDY COMPANIES WAS ONLY RS. 540 CR ORES, THAT THE INVESTMENTS WERE ALSO MADE AS PER THE DIRECTIONS OF NATIONAL HIGHWAY AUTHORITY OF INDIA.HE REFERRED TO THE JUDGMENT OF CHEMINVEST INDIA OF THE HONORABLE DELHI HIGH COURT AND HELD THAT AO WAS NOT JUSTIFIED IN MAKING THE DISALLOWANC E. 4. BEFORE US,THE DEPARTMENTAL REPRESENTATIVE(DR)STATED THAT CBDT HAD ISSUED A CIRCULAR ON 11/2/2014 (CIRCULAR NUMBER 5 OF 2014) IN THAT REGAR D, THAT AS PER THE CIRCULAR DISALLOWANCE OF EXPENDITURE WAS TO BE MADE EVEN IF THE ASSESSEE HAD NOT EARNED ANY EXEMPT INCOME IN A PARTICULAR YEAR.THE AUTHORISED REPRESENTATIVE(AR)SU PPORTED THE ORDER OF THE FAA. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS.WE FIND THAT TH E ASSESSEE HAD NOT EARNED ANY EXEMPT INCOME DURING THE YEAR UNDER CONSIDERATION,THAT THE AO HAD INVOKED THE PROVISIONS OF RULE 8D OF THE RULES R.W.S.14A OF THE ACT, THAT THE FAA HAS GIVEN A CATEGORICAL FINDING OF FACT THAT FUNDS OWNED BY THE ASSESSEE WERE MUCH MORE THAN THE INVESTMENTS MADE.IN OUR OPINION,IN ABSENCE OF EXEMPT INCOME AND CLAIM OF EXPENDITURE M ADE AGAINST SUCH INCOME,DISALLOWANCE U/S.14 A SHOULD NOT HAVE BEEN MADE.THE PROVISIONS W ERE BROUGHT ON STATUTE TO PREVENT THE MISUSE OF DOUBLE DEDUCTION I.E.CLAIMING EXEMPT INCO ME AND CLAIMING EXPENDITURE AGAINST SUCH INCOME.NO DISALLOWANCE CAN BE MADE IF ASSESSEE DOES NOT SHOW ANY EXEMPT INCOME AND EXPENDITURE AGAINST THE INCOME THAT DOES NOT FORM P ART OF THE TOTAL INCOME. CONSIDERING THE ABOVE,WE ARE OF THE OPINION THAT FA A HAS RIGHTLY DELETED THE DISALLOWANCE MADE BY THE AO.SO,CONFIRMING HIS ORDER, WE DECIDE T HE EFFECTIVE GROUND OF APPEAL AGAINST THE AO. AS A RESULT, APPEAL FILED BY THE AO STANDS DISMISSE D. . ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD JANUARY, 2018. 03 , 2018 SD/- SD/- ( (( ( /RAVISH SOOD) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; /DATED :03 .01.2018. JV.SR.PS. 6203/MUM/16-(12-13) M/S. HCC CONCESSIONS LTD. 3 / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR I BENCH, ITAT, MUMBAI / , , . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.