DCIT, New Delhi V. M/s. Consolidated Finvest & Holding Ltd., New Delhi

ITA 6521/DEL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 4373 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-09-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 01-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Earning of tax free income
• Section: 14A; 115JB; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: B , NEW DELHI BEFORE SHRI P.K. BANSAL , VICE PRESIDENT & SHRI AMIT SHUKLA , ACCOUNTANT MEMBER ITA NO. 6521 /DEL/201 4 A.Y. 20 11 - 12 DC IT CIRCLE - 6(2) NEW DELHI VS . CONSOLIDATED FINVEST & HOLDING LTD. 11/5B, BASEMENT, PUSA ROAD OPP. TELEPHONE EXCHANGE NEW DELHI 110 005 PAN: AAA CJ0090N (APPELLANT) (RESPONDENT) APPELLANT BY SH. ANSHU PRAKASH, SR.DR RESPONDENT BY NONE DATE OF HEARING 18 TH SEPTEMBER, 2017 DATE OF PRONOUNCEMENT 22 ND SEPTEMBER, 2017 ORDER PER P.K. BANSAL , VICE PRESIDENT THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A) - VI, NEW DELHI DATED 23.09.2014 BY TAKING THE FOLLOWING EFFECTIVE GROUND OF APPEAL. THE ASSESSING OFFICER DCIT, CIRCLE 6(2), NEW DELHI IS HEREBY DIRECTED TO FILE APPEAL IN THE ABOVE MENTIONED CASE BEFORE THE ITAT, NEW DELHI ON THE FOLLOWING GROUND OF APPEAL: THE LD. CIT(A) HAS ERRED IN LAW IN NOT UPHOLDING THE ACTION OF THE A.O. IN ADDING THE AMOUNT OF DISALLOWANCE U/S 14A AS PER THE NORMAL COMPUTATION ITA NO.6521/DEL/2014 A.Y.: 2011 - 12 CONSOLIDATED FINVEST & HOLDING LTD. 2 PROVISIONS OF THE ACT AS DONE BY ASSESSEE COMPANY ITSELF, IN COMPUTING THE PROFIT AS PER THE PROVISIONS OF S.115JB OF THE INCOME TAX ACT, 1961. 2. THE BRIEF FACTS OF THE CASE ARE THAT IN COMPUTATION OF THE BOOK PROFIT THE COMPANY HAD MADE ADD ITION OF RS.15,34,506/ - IN TERMS OF CLAUSE (F) OF EXPLANATION 1 TO SECTION 115JB OF THE INCOME TAX ACT, 1961 (THE ACT) IN RELATION TO DIVIDEND INCOME OF RS.3,86,63,506/ - WHICH WAS ALSO EXCLUDED FROM THE BOOK PROFIT BEING THE EXEMPT INCOME , U/S 10(34) OF TH E ACT . WHILE COMPUTING THE NORMAL TAXABLE INCOME THE COMPANY MADE DISALLOWANCE OF RS.72,83,694/ - UNDER SECTION 14A READ WITH RULE 8D OF INCOME TAX RULES WITH REFERENCE TO DIVIDEND INCOME AS WELL AS CAPITAL GAIN WHICH HAD BEEN CLAIMED EXEMPT UNDER SECTI O N 10(34) AND 10(38) OF THE ACT RESPECTIVELY. THE ASSESSING OFFICER DID NOT AGREE WITH THE CLAIM OF THE ASSESSEE BUT HE MADE ADDITION OF RS.72,83,694/ - + RS.98,619/ - IN TERMS OF CLAUSE (F) OF EXPLANATION 1 TO SECTION 115JB OF THE ACT AS AGAINST THE AMOUNT OF RS.15,34,506/ - ADDED BY THE COMPANY. THE ASSESSEE WENT IN APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE. 3. NONE APPEARED ON BEHALF OF THE ASSESSEE. WE THEREFORE HEARD THE LD.D.R. 4. AFTER HEARING THE LD.D.R. AND GOING THROUGH THE ORDERS OF THE AUTHORITIES BELOW, WE NOTE D THAT S.115JB OF THE ACT DOES NOT PROVIDE FOR THE METHOD OF DETERMINATION OF THE AMOUNT TO BE ADDED WITH REFERENCE TO EXEMPT INCOME , W HILE FOR THE PURPOSE OF NORMAL COMPUTATION OF INCOME DISALLOWANC E HAS TO BE MADE IN ACCORDANCE WITH S.14A READ WITH RULE 8D. IN VIEW OF THIS ITA NO.6521/DEL/2014 A.Y.: 2011 - 12 CONSOLIDATED FINVEST & HOLDING LTD. 3 FACT RULE 8D OF THE INCOME TAX RULES HAS NO RELEVANCE TO THE COMPUTATION OF BOOK PROFITS U/S 115 JB. A SIMILAR VIEW HAS BEEN TAKEN IN THE FOLLOWING DECISIONS. I. GOETZE (INDIA) LTD. VS. CIT (2009) 32 SOT 101 (DEL.) II. QUIPPO TELECOM INFRASTRUCTURE LTD. VS. ACIT, ITA NO.493/2010 - ITAT DELHI DATED 18.02.2011. III. PRETORIA ENCLAVE LTD. VS. DCIT, ITA NO.108/KOL/2012, ITAT KOLKATA DECIDED ON 21.6.2012. IV. ACIT VS. SPRAY ENGINEERING DEVICES LTD. (2012) 53 SOT 760 (CHANDIGARH). 4.1. EVEN OTHERWISE ALSO S.14A(1) OF THE ACT SPECIFICALLY STATES THAT THE AFORESAID SECTION IS FOR THE PURPOSE OF COMPUTING THE TOTAL INCOME UNDER THIS CHAPTER . ACCORDINGLY THE PROVISIONS OF S.14A ARE RELEVA NT TO THE COMPUTATION OF TOTAL INCOME UNDER CHAPTER IV OF THE INCOME TAX ACT WHICH MEANS S.15 TO 59 OF THE ACT AND IT CANNOT BE APPLIED IN COMPUTATION OF THE BOOK PROFIT U/S 115 JB. WE DO NOT FIND ANY ILLEGALITY OR INFIRMITY IN THE ORDER OF LD. CIT(A) WH E REIN HE CONFIRMED ASSESSEE S ACTION OF DISALLOWING AN AMOUNT OF RS.72,83,694/ - IN TERMS OF RULE 8D OF INCOME TAX RULES BUT THE ADDITION OF RS.15,34,506/ - FOR THE PURPOSE OF COMPUTATION OF BOOK PROFIT ON PROPORTIONATE BASIS WITH REFERENCE TO THE INCOME ON DIVIDEND EXCLUDED IN THE BOOK PROFIT BEING EXEMPT U/S 10(34) OF THE ACT. 4.2. THE LD.DR EVEN THOUGH RELIED ON THE ORDER OF THE ASSESSING OFFICER BUT COULD NOT BR ING TO OUR KNOWLEDGE ANY DECISION WHICH HAS TAKEN THE VIEW CONTRARY TO THE DECISION AS HAS BEEN REFERRED TO HEREIN ABOVE. ITA NO.6521/DEL/2014 A.Y.: 2011 - 12 CONSOLIDATED FINVEST & HOLDING LTD. 4 5. IN THE RESULT THE APPEAL OF THE REVENUE STANDS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 22 .09.2017. SD/ - SD/ - ( AMIT SHUKLA ) ( P.K. BANSAL ) JUDICIAL MEMBER VICE PRESIDENT DATED: THE 22 ND SEPTEMBER, 2017 * GMV COPY FORWARDED TO: - 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR, ITAT - TRUE COPY - BY ORDER, ASSISTANT REGISTRAR ITAT DELHI BENCHES NEW DELHI