KOHINOOR PLANET CONSTRUCTION PRIVATE LIMITED , MUMBAI V. ACIT-CC-6(3)(2),MUMBAI , MUMBAI

ITA 6342/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 6772 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-04-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2010-2011
• Appeal Filed On: 04-10-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMIT KUMAR
• Keywords: Earning of tax free income; Question of law; Rule 8D
• Section: 143(3); 14A; 115JB; 143(2); 13; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (VIRTUAL COURT) H BENCH, MUMBAI BEFORE SHRI MANOJ KUMAR AGGARWAL , A M & SHRI RA VISH SOOD, JM ITA.NO S . 6342, 6343 & 6344/ MUM/201 9 (A.Y : 2010 - 11, 2011 - 12 & 2012 - 13 ) M/S. KOHINOOR PLANET CONSTRUCTIONS PVT. LTD., KOHINOOR CORPORATE OFFICE SENAPATI BAPAT MARG DADAR (W), MUMBAI PAN NO: AABCR6994E V. ACIT - 6(3)(2) ROOM NO. 522, 5 TH FLOOR AAYAKAR BHAVAN, M.K. ROAD MUMBAI 400 020 (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI JAYESH DADIA REVENUE BY : SHRI SUMIT KUMAR DATE OF HEARING : 30.03.2021 DATE OF PRONOUNCEMENT : 06 .04 .2021 O R D E R PER BENCH 1. THE SE CAPTIONED APPEALS FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 12, MUMBAI (FOR SHORT LD. CIT(A)) DATED 24.07.2019 WHICH INTURN ARISES FROM THE RESPECTIVE ASSESSMENT ORDERS PASSED U/S. 14 3(3) 2 ITA.NOS. 6342, 6343 & 6344/MUM/2019 (A.Y: 2010 - 11, 2011 - 12 & 2012 - 13) M/S. KOHINOOR PLANET CONSTRUCTIONS PVT. LTD., OF TH E INCOME TAX ACT (FOR SHORT ACT ) FOR THE ASSESSMENT YEAR S 2010 - 11, 2011 - 12 AND 2012 - 13. 2. AS COMMON ISSUES ARE INVOLVED IN THE CAPTIONED APPEALS, THE SAME ARE BEING TAKEN UP AND DISPOSED OFF BY WAY OF A CONSOLIDATED ORDER. 3. WE SHALL FIRST TAKE UP THE APPEAL FILED BY THE ASSESSEE FOR A.Y. 2010 - 11. THE ASSESSEE HAS ASSAILED THE IMPUGNED ORDER ON THE FOLLOWING STANDALONE GROUND OF APPEAL WHICH IS AS UNDER: - THE LD.CIT(A) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN CONFIR MING THE ACTION OF THE ASSESSING OFFICER IN MAKING DISALLOWANCE OF .1,42,50,500/ - UNDER SECTION 14 A OF THE INCOME TAX ACT WHERE NO EXEMPT INCOME WAS EARNED BY THE ASSESSEE COMPANY. THE ACTION IS UNJUSTIFIED AND UNWARRANTED. 4. BRIEFLY STATED, THE ASSESSEE COMPANY WHICH IS ENGAGED IN THE BUSINE SS OF PROPERTY DEVELOPMENT /POWER GENERATION WITH THE HELP OF WIND POWER CONVERTOR HAD FILED ITS OR IGINAL RETURN OF INCOME ON 30.0 9.201 0, DECLARING NIL INCOME. SUBSEQUENTLY THE CASE OF THE ASSESSEE WAS SELECTED FOR SC RUTINY ASSESSMENT U/S. 143(2) OF THE ACT. THE ASSESSING OFFICER VIDE HIS ORDER PASSED U/S . 143(3) OF THE ACT, DATED 31.03.2019 INTER ALIA MADE A DISALLOWANCE U/S. 14A OF .1,44,76,162/ - . AGGRIEVED , THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD.C IT(A) AND THE ITAT. THE TRIBUNAL VIDE ITS ORDER PASSED IN ITA.NO. 3 ITA.NOS. 6342, 6343 & 6344/MUM/2019 (A.Y: 2010 - 11, 2011 - 12 & 2012 - 13) M/S. KOHINOOR PLANET CONSTRUCTIONS PVT. LTD., 624 TO 626/M UM /2016 AND ITA.NO. 7111/MUM/2016 DATED 30.05.2018 FOR THE AFOREMENTIONED ASSESSMENT YEARS I.E. A.Y. 2010 - 11, 20 11 - 12 AND A.Y. 2012 - 13 RESTORED THE ISSUE TO THE FILE OF THE ASSE SSING OFFICER WITH THE DIRECTION TO VERIFY THE DOCUMENTS PROVIDED BY THE ASSESSEE AND RE - ADJUDICATE THE MATTER AFRESH. 5. THE ASSESSING OFFICER GIVING EFFECT TO THE ORDER PASSED BY THE TRIBUNAL, VIDE HIS ORDER U/S. 143(3) R.W.S. 254 OF THE ACT, DATED 31.03.20 19, WORK ED OUT THE DISALLOWANCE U/S. 14 A AT . 2,08,93,476/ - AND ASSESSED THE INCOME OF THE ASSESSEE UNDER THE NORMAL PROVISIONS AT .7,27,23,875/ - . APART FROM THAT, THE BO OK PROFITS OF THE ASSESSEE U/S. 115JB OF THE ACT WAS DETERMINED AT .95,14,28,595/ - . 6. AGGRIEVED , THE ASSESSEE ASSAILED THE A SSESS MENT O RDER PASSED BY THE ASSESSING OFFICER U/S. 143(3) R.W.S. 254 OF THE ACT , DATED 31 .03.2019 BEFORE THE LD.CIT(A) . O BSERVING THAT THE ASSESSEE HAD SUFFICIENT OWN FUNDS TO JUSTIFY THE INVESTMENTS IN THE EXEMPT IN COME YIELDING ASSETS, THE LD.CIT(A) VACATED THE DISALLOWANCE OF .58,06,026/ - MADE BY THE ASSESSING OFFICER U/S. 14A R.W. RULE 8D(2)(II) . ALSO , TAKING COGNIZANCE OF THE FACT THAT THE ASSESSING OFFICER HAD WRONGLY CONSIDERED THE AMOUNT 4 ITA.NOS. 6342, 6343 & 6344/MUM/2019 (A.Y: 2010 - 11, 2011 - 12 & 2012 - 13) M/S. KOHINOOR PLANET CONSTRUCTIONS PVT. LTD., OF THE OPENING INVESTMENT S AND CLOSING INVESTMENT S FOR THE PURPOSE OF COMPUTING THE DISALLOWANCE U/S. 14A R.W. RULE 8D ( 2 )(III) , THE LD.CIT(A) REWORKED OUT THE AVERAGE VALUE OF INVESTMENT S AT .1,42,50,500/ - AND DIRECTED THE ASSESSING OFFICER TO MODIFY THE DISALLOWANCE U/S . 14A R.W. RULE 8D(2)(III). ALSO, DRAWING SUPPORT FROM THE ORDER OF THE ITAT, DELHI H' BENCH ( SPECIAL BENCH ) IN THE CASE OF ACIT V. VIREET INVESTMENT (P.) LTD., 82 TAXMANN.COM 415, THE LD.CIT(A) CONCLUDED THAT NO ADJUSTMENT COULD BE MADE TO THE BOOK PROF ITS U/S. 115JB OF THE ACT IN RESPECT OF THE EXPENSES INCURRED IN RELATION TO THE DISALLOWANCE WORKED OUT U/S. 14A R.W. RULE 8 D . ACCORDINGLY, THE LD.CIT(A) PARTLY ALLOWED THE ASSESSEES APPEAL. ASSESSEE BEING AGGRIEVED HAS CARRIED THE MATTER BEFORE US. 7. AT THE OUTSET, IT WAS SUBMITTED BY THE LEARNED AUTHORIZED REPRESENTATIVE (FOR SHORT A . R ) FOR THE ASSESSEE, THAT AS THE ASSESSEE DURING THE YEAR IN QUESTION HAD NOT EARNED ANY EXEMPT INCOME THUS, NO DISALLOWANCE U/S. 14A WAS LIABLE TO BE MADE IN THE HANDS OF THE ASSESSEE . IN ORDER TO BUT TRESS HIS AFORESAID CLAIM, THE LD . A . R RELIED ON THE JUDGEMENTS OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF PCIT - 6 V. KOHINOOR PROJECT (P.) LTD., [2020] 121 TAXMANN.COM 177 5 ITA.NOS. 6342, 6343 & 6344/MUM/2019 (A.Y: 2010 - 11, 2011 - 12 & 2012 - 13) M/S. KOHINOOR PLANET CONSTRUCTIONS PVT. LTD., (BOMBAY) AND PCIT V. RED CHILLIES ENTERTAINMENT (P.) LTD., [2020] 116 TAXMANN.COM 770 (BOMBAY). 8. IT WAS FURTHER AVERRED BY THE LD . A . R THAT AS HELD BY THE HON'BLE HIGH COURT , IN ABSENCE OF ANY EXEMPT INCOME HAVING BEEN RECEIVED OR RECEI VA BLE BY THE ASSESSEE DURING THE YEAR IN QUESTIO N NO DI SALLOWANCE U/S. 14A BE CALLED FOR. IT WAS THE CLAIM OF THE LD. A.R THAT SECTION 14A WOULD NOT APPLY IF NO EXEMPT INCOME WAS RECEIVED OR WAS RECEIVABLE DURING T HE RELEVANT PREVIOUS YEAR. ON THE BASIS OF THE AFORESAID AVERMENTS IT WAS THE CLAIM OF THE LD .A . R THAT AS NO EXEMPT INCOME WAS RECEIVED OR WAS RECEIVABLE BY THE ASSESSEE DURIN G T HE YEAR IN QUESTION , T HEREFORE NO DISALLOWANCE U/S. 14A WAS CALLED FOR IN ITS CASE. IN ORDER TO DISPEL ANY DOUBT THAT NO EXEMPT INCOME WAS RECEIVED OR WAS RECEIVABLE BY THE ASSESSEE DURING THE RELEVANT PREVIOUS YEAR I.E. A.Y. 2010 - 11, LD. A .R TOOK US THROUGH THE COMPUTATION OF INCOME, COPY OF THE RETURN OF INCOME OF THE ASSESSEE AND ITS AUDITED ACCO UNTS FOR THE YEAR IN QUESTION. 9. PER CONTRA, LEARNED DEPARTMENTAL REPRESENTATIVE (FOR SHORT LD. D . R ) RELIED ON THE O RDERS OF THE LOWER AUTHORITIES. HOWEVER, LD.D . R VERY 6 ITA.NOS. 6342, 6343 & 6344/MUM/2019 (A.Y: 2010 - 11, 2011 - 12 & 2012 - 13) M/S. KOHINOOR PLANET CONSTRUCTIONS PVT. LTD., FAIRLY ADMITTED THAT THE ASSESSEE HAD NOT EARNED ANY EXEMPT INCO ME DURING THE YEAR IN QUESTION. 10. WE HAVE HEARD THE AUTHORIZED REPRESENTATIVES OF BOTH THE PARTIES AND P ERUSED THE ORDER S OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD , AND ALSO CONSIDERED THE JUDICIAL PRONOUNCEMENTS THAT HAVE BEEN PRESSED INTO SERVICE BY THEM TO DRIVE HOME THE IR RESPECTIVE CONTENTIONS. AS OBSERVED BY US, HEREINABOVE, IT IS THE CLAIM OF THE LD .A . R THAT NO EXEMPT INCOME WAS RECEIVED OR WAS RECE IVABLE BY THE ASSESSEE DURING THE YEAR IN QUESTION I.E. A.Y. 2010 - 11 . LD.D . R HAD CANDIDLY ADMITTED THE A FORESAID CLAIM OF THE ASSESSEE. IT IS IN THE BACKDROP OF THE AFORESAID FACT THAT NO EXEMPT INCOME WAS RECEIVED OR WAS RECEIVABLE BY THE ASSESSEE DURING THE YEAR IN QUESTION, THAT WE SHALL HEREIN DEAL WITH THE ISSUE IN HAND. IT IS THE CLAIM OF THE LD .A . R, AND RIGHTLY SO, T HAT IN THE ABSENCE OF ANY EXEMPT INCOME , NO DISALLOWANCE U/S. 14A IS LIABLE TO BE MADE IN THE HANDS OF THE ASSESSEE. WE FIND THAT THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF PCIT - 6 V. KOHINOOR PROJECT (P.) LT D., (SUPRA) I N UNEQUIVOCAL TERMS HAD CONCLUDED THAT SECTION 14A WOULD NOT APPLY IF NO EXEMPT INCOME WAS RECEIVED OR WAS RECEIVABLE BY THE ASSESSEE DURING THE RELEVANT PREVIOUS YEARS. FOR THE SAKE OF CLARITY, 7 ITA.NOS. 6342, 6343 & 6344/MUM/2019 (A.Y: 2010 - 11, 2011 - 12 & 2012 - 13) M/S. KOHINOOR PLANET CONSTRUCTIONS PVT. LTD., WE HEREIN CULL OUT THE RELEVANT OBSERVATIONS OF THE HON'BLE HIGH COURT AS UNDER: - 8. SECTION 14A OF THE ACT DEALS WITH EXPENDITURE INCURRED IN RELATION TO INCOME NOT INCLUDIBLE IN TOTAL INCOME. AS PER SUBSECTION (1) OF SECTION 14A, FOR THE PURPOSE OF COMPUTING THE TOTAL INCOME, NO DEDUCTION SHALL BE ALLOWED IN RESPECT OF EXPENDITURE INCURR ED BY THE ASSESSEE IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME. IN CHEMINVEST LTD. (SUPRA) DELHI HIGH COURT EXAMINED THE EXPRESSION 'DOES NOT FORM PART OF THE TOTAL INCOME' AS APPEARING IN SUB - SECTION (1) OF SECTION 14A OF THE ACT. D ELHI HIGH COURT HELD THAT THE SAID EXPRESSION ENVISAGES THAT THERE SHOULD BE AN ACTUAL RECEIPT 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 TH E SAID INCOME. IT WAS CLARIFED THAT SECTION 14A WILL NOT APPLY IF NO EXEMPT INCOME IS RECEIVED OR RECEIVABLE DURING THE RELEVANT PREVIOUS YEAR. 9. THIS VIEW HAS BEEN FOLLOWED IN SEVERAL DECISIONS BY THIS COURT. IN FACT IN INCOME TAX APPEAL NO. 259 OF 2017, PRINCIPAL COMMISSIONER OF INCOME TAX, MUMBAI V/S. MAN INFRAPROJECTS LTD., DECIDED ON 09.04.2019, THIS COURT FOLLOWED THE DECISION OF THE DELHI HIGH COURT IN CHEMINVEST LTD. (SUPRA). IT WAS FURTHER NOTED IN MAN INFRAPROJECTS LTD. THAT THE DECISION OF THE D ELHI HIGH COURT WAS CHALLENGED BY THE REVENUE BEFORE THE SUPREME COURT BY FLING SLP BUT THE SLP WAS DISMISSED. 10. IN THE LIGHT OF THE ABOVE, WE HOLD THAT NO SUBSTANTIAL QUESTION OF LAW ARISES FROM THE ORDER OF THE TRIBUNAL. THE APPEAL IS DEVOID OF MERIT A ND IS ACCORDINGLY, DISMISSED . 11. ALSO, A SIMILAR VIEW HAD BEEN TAKEN BY THE HON'BLE HIGH COURT IN THE CASE OF PCIT V. RED CHILLIES ENTERTAINMENT (P.) LTD., (SUPRA). ACCORDINGLY, IN THE BACKDROP OF THE FACT THAT THE NO EXEMPT INCOME WAS RECEIVED OR WAS RECEI VABLE BY THE ASSESSEE DURING T HE YEAR IN QUESTION I.E. A.Y. 2010 - 11, WE AGREE WITH THE CLAIM OF THE LD .A .R THAT NO 8 ITA.NOS. 6342, 6343 & 6344/MUM/2019 (A.Y: 2010 - 11, 2011 - 12 & 2012 - 13) M/S. KOHINOOR PLANET CONSTRUCTIONS PVT. LTD., DISALLOWANCE U/S. 14A WAS CALLED FOR IN THE HANDS OF THE ASSESSEE. ACCORDINGLY, IN TERMS OF OUR AFORESAID OBSERVATION WE HEREIN SE T - ASIDE TH E ORDER OF THE LD.CIT(A) AND VACATE THE DISALLOWANCE OF .1,42,50,500/ - MADE BY THE ASSESSING OFFICER U/S. 14A OF THE ACT. ACCORDINGLY, GROUND NO. 1 IS ALLOWED. 12. RESULTANTLY, APPEAL FILED BY THE ASSESSEE FOR A.Y. 2010 - 11 IS ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. ITA.NO S. 6343 & 6344/MUM/2019 (A.Y. 2011 - 12 & 2012 - 13) 13. AS THE FACTS AND THE ISSUE INVOLVED IN THE AFOREMENTIONED APPEALS I.E. A.Y. 2011 - 12, ITA.NO. 6343/MUM / 20 19 AND A.Y. 2012 - 13, ITA.NO. 6344/MUM/2019 REMAINS THE SAME , AS WERE THERE BEFORE US IN THE ASSESSEES APPEAL FOR A.Y. 2010 - 11, ITA.NO. 6342/MUM/2019, T HEREFORE, OUR ORDER THEREIN PASSED WHILE DISPOSING OFF THE ASSESSEES APPEAL FOR A.Y. 2010 - 11 SHALL APPLY MUTATIS - MUTANDIS FOR THE PURPOSE OF DISPOSING OFF THE AFORE MENTIONED APPEALS FOR A.Y. 2011 - 12 AND A.Y. 2012 - 13. 9 ITA.NOS. 6342, 6343 & 6344/MUM/2019 (A.Y: 2010 - 11, 2011 - 12 & 2012 - 13) M/S. KOHINOOR PLANET CONSTRUCTIONS PVT. LTD., 14. RESULTANTLY, APPEALS FILED BY THE ASSE SSEE FOR A.Y. 2011 - 12, ITA.NO. 6343/MUM / 20 19 AND A.Y. 2012 - 13, ITA.NO. 6344/MUM/2019 ARE ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. 15. ACCORDINGLY, APPEALS FILED B Y THE ASSESSEE FOR THE A.Y. 2010 - 11, ITA.NO. 6342/MUM/2019, A.Y. 2011 - 12, ITA.NO. 6343/MUM / 20 19 AND A.Y. 2012 - 13, ITA.NO. 6344/MUM/2019 ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 0 6 .04 .2021 S D / - S D / - ( MANOJ KUMAR AGGARWAL ) (R AVISH SOOD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI / DATED 0 6 / 04 /2021 GIRIDHAR , S R. PS 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