Modi Shelters Pvt. Ltd., Hyderabad, Hyderabad V. ITO, Ward-16(1), Hyderabad, Hyderabad

ITA 672/HYD/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2694 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 2 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 31-07-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 20-05-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR L RAMJI RAO
• Assessee Lawyers: S RAMA RAO
• Keywords: Earning of tax free income; Tax effect
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI CHANDRA POOJARI , ACCOUNTANT MEMBER ITA.NO. 672/HYD/2015 ASSESSMENT YEAR 2011 - 2012 M/S. MODI SHELTERS PVT LTD., 8 - 2 - 120/76/A/B/16,17,18, 4 TH FLOOR, ASHOKA HITECH CHAMBERS, ROAD NO.2, BANIARA HILLS, HYDERABAD - 34. PAN:AADCM8355N VS. INCOME TAX OFFICER, WARD - 16(1), HYDERABAD. (APPELLANT) (RESPONDENT) ITA.NO.1159/HYD/2015 ASSESSMENT YEAR 2011 - 2012 INCOME TAX OFFICER, WARD - 16(4 ), HYDERABAD. VS. M/S. MODI SHELTERS PVT LTD, 5 - 4 - 187/3&4, SOHAM MANSION, 3 RD FLOOR, M.G. ROAD, SECUNDERABAD. (APPELLANT) (RESPONDENT) FOR ASSESSEE: SHRI S. RAMA RAO FOR REVENUE : DR. L. RAMJI RAO , DR DATE OF HEARING : 03.08.2017 DATE OF PRONOUNCEMENT : 03.08.2017 ORDER PER D. MANMOHAN , VP. THESE CROSS APPEALS ARISE OUT OF THE ORDER PASSED BY THE LD. CIT(A) - 4, HYDERABAD AND THEY PERTAIN TO THE ASSESSMENT YEAR 2011 - 2012. THE APPEAL FILED BY THE REVENUE IS BARRED BY LIMITATION BY 101 DAYS. AT THE TIME OF HEARING, LD COUNSEL APPEARING FOR THE A SSESSEE SUBMITTED THAT THE TAX EFFECT BEING LESS THAN RS. 10 LAKHS, THE DEPARTMENT IS BOUND BY CIRCULAR ISS UED BY THE CBDT AND OUGHT NOT H A V E PREFER R E D AN APPEAL. AT THIS JUNCTURE, LD DR SUBMITTED THAT HE HAS INSTRUCTIONS FROM THE 2 ASSESSING OFFICER TO STATE TH AT THE APPELLANT I.E., ITO, WARD - 16(4), HYDERABAD, SEEKS PERMISSION TO WITHDRAW THE APPEAL FILED BY THE REVENUE. UNDER THESE CIRCUMSTANCES, WE PERMIT THE REVENUE TO WITHDRAW ITS APPEAL AND ACCORDINGLY DISMISS THE SAME. SINCE THE APPEAL IS WITHDRAWN, WE ARE NOT GOING INTO THE REASONS FOR THE DELAY IN FILING THE APPEAL. 2. IN SO FAR AS THE APPEAL FILED BY THE ASSESSEE, THOUGH THERE ARE SIX GROUNDS, THE ISSUES INVOLVED THEREIN PERTAIN TO THE ELIGIBILITY TO CLAIM EXEMPTION U/S 80IB(10) AND APPLICABILITY OF THE PROVISIONS OF SECTION 14 A OF THE ACT. 3. DURING THE C OURSE OF ASSESSMENT PROCEEDINGS THE A.O., UPON DETAILED EXAMINATION, DISALLOWED THE CLAIM OF EXEMPTION U/S 80IB(10) OF THE ACT , WITH REGARD TO THE INCOME EARNED FROM EMERALD PARK ANNEX PROJECT , ON TH E GROUND THAT EACH UNIT EXCEEDED THE AREA OF 1500 SQ. FT. IN FACT, THE A.O. RELIED UPON THE ORDER OF THE ITAT IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2008 - 2009. FOR THE SAME REASONS, LD. CIT(A) CONFIRMED THE ORDER PASSED BY THE A.O. AND THUS T HE ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL. 4. AT THE TIME OF HEARING, LD COUNSEL FOR THE A SSESSEE FAIRLY ADMITTED THAT THE ISSUE I S SQUARELY COVERED BY THE ORDERS PASSED BY THE ITAT IN ASSESSEES OWN CASE FOR THE EARLIER ASSESSMENT YEARS 2008 - 09 TO 2010 - 2011. UNDER THESE CIRCUMSTANCES, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER PASSED BY THE LD. CIT (A) AND ACCORDINGLY REJECT THE GROUNDS URGED BY THE ASSESSEE. 5. WITH REGARD TO THE APPLICATION OF PROVISIONS OF SECTION 14A OF THE ACT, THE LD COUNSELS C ONTENTION IS THAT IT HAD N O T EARNED ANY INCOME , WHICH DO NOT FORM PART OF TOTAL INCOME, FROM THE INVESTME NT DURING THE YEAR. HE RELIED UPON THE ORDER OF THE ITAT, HYDERABAD BENCHES ON THIS ISSUE WHEREIN IT WAS HELD THAT IN THE ABSENCE OF ANY EXEMPT INCOME, THE PROVISIONS OF SECTION 14A R.W. RULE 8D CANNOT BE MADE APPLICABLE IN VIEW THE EXPRESSION IN RELATION TO INCOME WHICH DOES NOT FORM PART OF TOTAL INCOME. THE PROVISIONS OF SECTION 14A OF THE ACT IMPLIES THAT EARNING OF INCOME IN THE YEAR UNDER CONSIDERATION IS A PRE - REQUISITE FOR APPLICATION OF PROVISIONS OF SECTION 14A OF THE ACT . LD DR FAIRLY ADMITTED THAT THERE ARE SEVERAL DECISIONS OF THE ITAT, HYDERABAD BENCH WHERE IN, A SIMILAR VIEW IS TAKEN. LD C O U N S E L RELIED UPON THE RECENT DECISION OF 3 THE HONBLE DELHI HIGH COURT IN THE CASE OF CHEMINVEST LIMITED VS. CIT (ITA NO.749/2014, DATED 0 2.09.2015). NO CONTRARY DECISION COULD BE PLACED BY THE LD DR. UNDER THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE LD. CIT(A) ERRED IN APPLYING THE PROVISIONS OF SECTION 14A IN THE INSTANT CASE DESPITE THE FACT THAT THERE IS NO EXEMPT INCOME EARNED BY THE ASSESSEE. ACCORDINGLY, GROUND S NO . 4 AND 5 URGED BY THE ASSESSEE ARE ALLOWED. 6. IN THE RESULT, AS PRONOUNCED IN THE OPEN COURT, THE APPEAL FILED BY THE ASSESSEE - COMPANY IS PARTLY ALLOWED WHEREAS, THE APPEAL FILED BY THE REVENUE IS DISMISSED AS WITHD RAWN. 7. ORDER PRONOUNCED IN THE OPEN COURT ON 03 RD OF AUGUST, 2017. S D / - S D / - (CHANDRA POOJARI ) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT HYDERABAD, DATED: 03 RD AUGUST , 2017 OKK, SR.PS COPY TO 1. SRI S. RAMARAO, ADVOCATE, FLAT NO.102, SHRIYAS ELEGANCE, 3 - 6 - 643, STREET NO.9, HIMAYATNAGAR, HYDRABAD - 500029. 2. INCOME TAX OFFICER S, WARD - 16(1) & 16(4), HYDERABAD. 3. CIT(A) - 4 , HYDERABAD. 4. ADDL./ JCIT - 1 6 , HYDERABAD. 5. D.R. ITAT B BENCH, HYDERABAD. 6. GUARD FILE