गोकुलधाम रियल एस्टेट डेवलपमेंट कंपनी प्राइवेट लिमिटेड ( अमलगमटेड विथ D.B. रियल्टी प्राइवेट लिमिटेड ), MUMBAI V. DCIT CEN CIR 1(4), MUMBAI

ITA 6398/MUM/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5491 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2013-2014
• Appeal Filed On: 31-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CH ARUN KUMAR SINGH LD
• Assessee Lawyers: ARATI VISSANJI LD
• Keywords: Earning of tax free income
• Section: 143(3); 14A; 115JB

Judgement Text

ITA NO. 6398/MUM/2017 GOKULDHAM REAL ESTATE DEVELOPMENT CO. PVT. LTD. ASSESSMENT YEAR: 2013-14 1 IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI , , BEFORE HONBLE SHRI PAWAN SINGH, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.6398/MUM/2017 ( / ASSESSMENT YEAR: 2013-14) GOKULDHAM REAL ESTATE DEVELOPMENT CO. PVT. LTD. (AMALGAMATED WITH DB REALTY LTD.) DB HOUSE, YASHODHAM GEN.A.K.VAIDYA MARG GOREGAON (E), MUMBAI 400 063 / VS. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1(4) 9 TH FLOOR OLD CGO BUILDING ANNEXE M.K.ROAD MUMBAI 400 020 ./ ./PAN/GIR NO. AACCG-5054-B ( /APPELLANT ) : ( / RESPONDENT ) ASSES SEE BY : MS. ARATI VISSANJI - LD. AR REVENUE BY : CH. ARUN KUMAR SINGH - LD.DR !' / DATE OF HEARING : 28/01/2019 !' / DATE OF PRONOUNCEMENT : 05/02/2019 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2013-14 CONTEST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-47, MUMBAI, [CIT(A)], APPEAL NO.CIT(A)-47/AP.231/16-17 ORDER DATED 23/08/2017 QUA CONFIRMATION OF CERTAIN DISALLOWANCE U/S 14A. ITA NO. 6398/MUM/2017 GOKULDHAM REAL ESTATE DEVELOPMENT CO. PVT. LTD. ASSESSMENT YEAR: 2013-14 2 2.1 FACTS IN BRIEF ARE THAT THE ASSESSEE BEING RESIDENT CORPORATE ASSESSEE STATED TO BE ENGAGED IN THE BUSINESS OF REAL ESTATE DEVELOPMENT DURING IMPUGNED AY WAS ASSESSED IN SCRUTINY ASSESSM ENT U/S 143(3) ON 12/03/2016 BY LD. DEPUTY COMMISSIONER OF INCOME TAX- CENTRAL CIRCLE-1(4), MUMBAI [AO] WHEREIN THE INCOME OF THE ASSESSEE WAS DETERMINED AS RS.687.47 LACS UNDER NORMAL PROVI SIONS AFTER SOLE DISALLOWANCE U/S 14A FOR RS.57.53 LACS AS AGAINST A S AGAINST RETURNED INCOME OF RS.629.94 LACS E-FILED BY THE ASSESSEE ON 29/03/2014. 2.2 DURING ASSESSMENT PROCEEDINGS, IT TRANSPIRED TH AT THE ASSESSEE MADE CERTAIN INVESTMENTS IN REDEEMABLE OPTIONALLY CONVERTIBLE CUMULATIVE PREFERENCE SHARES OF RS. 10/- EACH FULLY PAID OF AN ENTITY NAMELY DB MIG REALTORS AND BUILDERS PVT LTD. AGGREGATING TO RS.124.34 CRORES WHICH, IN THE OPINION OF THE LD. AO, CALLED FOR DISALLOWANCE U/S 14A. THE ASSESSEE HAD ALREADY OFFERED SUO-MOTO DISALLOWANCE OF RS.0.50 LACS AGAINST THE SAME IN THE COMPUTATION OF INCOME. THE ASSESSEE DEFENDED HIS STAND VIDE REPLY DATED 07/03/ 2016, INTER-ALIA, BY SUBMITTING THAT NONE OF THE EXPENDITURE INCURRED DU RING THE YEAR HAD ANY PROXIMATE CAUSE IN RELATION TO MAKING OF AFORE-SAID INVESTMENTS. THE ATTENTION WAS DRAWN TO THE FACT THAT FRESH INVESTME NTS DURING IMPUGNED AY WAS ONLY RS.19.34 CRORES WHEREAS THE INVESTMENT OF RS.105 CRORES WAS MADE IN PRECEDING YEARS. A PLEA WAS ALSO RAISED THAT NO DISALLOWANCE WAS WARRANTED SINCE THE ASSESSEE DID N OT EARN ANY EXEMPT INCOME DURING IMPUGNED AY. HOWEVER, NOT CONVINCED, LD. AO RELYING UPON CBDT CIRCULAR NO.05/2014 CONCLUDED THAT DISALLOWANCE WAS ATTRACTED EVEN IN SUCH CASES. FINALLY, APPLYING RUL E 8D(2)(III), LD. AO WORKED OUT EXPENSE DISALLOWANCE OF RS.57.53 LACS AN D ADDED THE SAME ITA NO. 6398/MUM/2017 GOKULDHAM REAL ESTATE DEVELOPMENT CO. PVT. LTD. ASSESSMENT YEAR: 2013-14 3 TO THE INCOME OF THE ASSESSEE WITHOUT PROVIDING THE ADJUSTMENT OF RS.0.50 LACS SUO-MOTO OFFERED BY THE ASSESSEE IN THE COMPUTATION OF INCOME. THE DISALLOWANCE WAS MADE WHILE COMPUTING T HE INCOME UNDER NORMAL PROVISIONS AS WELL AS WHILE COMPUTING BOOK-PROFITS U/S 115JB. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH PARTIAL SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 23/08/2 017 WHEREIN THE DISALLOWANCE U/S 14A WAS HELD TO BE JUSTIFIED. HOWE VER, LD. AO WAS DIRECTED TO GRANT ADJUSTMENT OF RS.0.50 LACS SUO-MOTO OFFERED BY THE ASSESSEE AND FURTHER THE ADJUSTMENT OF DISALLOWANCE AS MADE BY LD. AO U/S 115JB WAS REJECTED IN TERMS OF CERTAIN JUDICIAL PRONOUNCEMENTS. AGGRIEVED, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. THE LD. AUTHORIZED REPRESENTATIVE FOR ASSESSEE [ AR], MS. ARATI VISSANJI, SUBMITTED THAT NO DISALLOWANCE WAS WARRANTED IN THE ABSENCE OF ANY EXEMPT INCOME IN TERM OF JUDGEMENT OF HONBL E BOMBAY HIGH COURT [NAGPUR BENCH] RENDERED IN PCIT VS. BALLARPUR INDUSTRIES LTD. [ITA NO.51 OF 2016] & HONBLE DELHI HIGH COURT RENDERED IN PCIT VS. MCDONALDS INDIA (P) LTD. [101 TAXMANN.COM 86], THE COPIES OF WHICH HAVE BEEN PLACED ON RECORD. PER CONTRA, LD. DR SUPPORTED THE STAND OF LD. FIRST APPELLATE AUTHORITY. 5. WE HAVE CAREFULLY HEARD THE RIVAL CONTENTIONS AN D PERUSED RELEVANT MATERIAL ON RECORD. UPON CAREFUL CONSIDERATION, THE UNDISPUTED FACT THAT EMERGES IS THAT THE ASSESSEE HAS BEEN SADDLED WITH EXPENSE DISALLOWANCE U/R 8D(2)(III) WHEREAS IT HAS NOT EARN ED ANY EXEMPT INCOME DURING THE IMPUGNED AY. IN THE ABSENCE OF ANY EXEMP T INCOME, NO DISALLOWANCE U/S 14A READ WITH RULE 8D(2)(III) , IN OUR OPINION, WAS WARRANTED. THE AFORESAID CONCLUSION IS DULY FORTIFI ED NOT ONLY BY THE CITED ITA NO. 6398/MUM/2017 GOKULDHAM REAL ESTATE DEVELOPMENT CO. PVT. LTD. ASSESSMENT YEAR: 2013-14 4 BINDING JUDICIAL PRECEDENTS BUT ALSO BY CATENA OF J UDICIAL PRONOUNCEMENTS, FEW OF WHICH COULD BE ENUMERATED IN THE FOLLOWING MANNER:- THE REVENUE IS UNABLE TO BRING ON RECORD ANY CONTRA RY JUDGMENT. THEREFORE, RESPECTFULLY FOLLOWING THE SAME, WE CONC LUDE THAT SINCE NO EXEMPT INCOME WAS EARNED BY THE ASSESSEE DURING IMP UGNED AY, THE DISALLOWANCE AS CONFIRMED BY LD. CIT(A) COULD NOT B E SUSTAINED. WE ORDER SO. 6. RESULTANTLY, THE APPEAL STANDS ALLOWED IN TERMS OF OUR ABOVE ORDER. ORDER PRONOUNCED IN THE OPEN COURT ON 05 TH FEBRUARY, 2019. SD/- SD/- (PAWAN SINGH) (MA NOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 05.02.2019 PS / K. RAVI KUMAR / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. '# ! / THE RESPONDENT 3. $$% ( ) / THE CIT(A) 4. $$% / CIT CONCERNED 5. & ''() , $) , / DR, ITAT, MUMBAI 6. ' +,- / GUARD FILE NO. CASE LAW JUDICIAL AUTHORITY CITATION 1. CIT VS. HOLCIM INDIA P. LTD. HONBLE DELHI HIGH COURT 111 DTR 158 2. CHEMINVEST LTD VS CIT HONBLE DELHI HIGH COURT 3 78 ITR 33 3. PCIT VS IL&FS ENERGY DEV. CO. LTD. HONBLE DELHI HIGH COURT 84 TAXMANN.COM 186 4. PCIT VS EMPIRE PACKAGE PVT. LTD. HONBLE PUNJAB & HARYANA HIGH COURT 81 TAXMANN.COM 108 5. CIT VS LAKHANI MARKETING INC. HONBLE PUNJAB & H ARYANA HIGH COURT 2015 4 ITR-OL 246 6. CIT VS HERO CYCLES LTD HONBLE PUNJAB & HARYANA HIGH COURT 323 ITR 518 7. CIT VS. WINSOME TEXTILES IND. LTD. HONBLE PUNJA B & HARYANA HIGH COURT 319 ITR 204 8. CIT VS CORRTECH ENERGY PVT LTD HONBLE GUJARAT H IGH COURT 223 TAXMANN.COM 130 ITA NO. 6398/MUM/2017 GOKULDHAM REAL ESTATE DEVELOPMENT CO. PVT. LTD. ASSESSMENT YEAR: 2013-14 5 / BY ORDER, / % (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.