ACIT, Circle-6(2), Kolkata, Kolkata V. M/s. PAN Emami Cosmed Ltd., Kolkata

ITA 673/KOL/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6251 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 2 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 06-04-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A BHATTACHARJEE
• Assessee Lawyers: S K AGARWAL
• Keywords: Earning of tax free income
• Section: 14A; 115JB; 11

Judgement Text

1 ITA NO.673/KOL/2017 M/S PAN EMAMI COSMED LTD A.Y.20 14-15 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH D KOL KATA [BEFORE HONBLE SHRI P.M.JAGTAP, AM & SHRI S.S.VI SWANETHRA RAVI, JM ] ITA NO.673/KOL/2017 ASSESSMENT YEAR : 2014-15 A.C.I.T., CIRCLE-6(2), -VERSUS- M/S PAN EMAMI COS MED LTD. KOLKATA KOLKATA (PAN: AABCP 5150 G) (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI A.BHATTACHARJEE, ADDL. CIT FOR THE RESPONDENT: SHRI S.K.AGARWAL, FCA DATE OF HEARING : 12.04.2018. DATE OF PRONOUNCEMENT : 04.07.2018. ORDER PER S.S.VISWANETHRA RAVI, JM THIS IS AN APPEAL BY THE REVENUE AGAINST THE ORDER DATED 02.01.2017 PASSED BY C.I.T-(A)-2, KOLKATA FOR A.Y.2014-15. 2. THE ONLY ISSUE TO BE DECIDED IS AS TO WHETHER T HE CIT(A) IS JUSTIFIED IN DELETING THE ADDITION MADE ON ACCOUNT OF PROVISION U/S 14A W HILE COMPUTING THE DISALLOWANCE UNDER MAT PROCEEDINGS IN THE FACTS AND CIRCUMSTANCE S OF THE CASE. 3. THE LD. DR RELIED ON THE ORDER OF THE AO AND TH E LD. COUNSEL FOR THE ASSESSEE SUPPORTED THE ORDER OF THE CIT(A). 4. HEARD RIVAL SUBMISSIONS AND PERUSED THE RECORD INCLUDING THE CASE LAW/ORDER AS RELIED ON BY THE ASSESSEE. ON PERUSAL OF RECORD, WE FIND THAT THE SIMILAR ISSUE WAS DECIDED BY THIS CO-ORDINATE BENCH, ITAT, KOLKATA IN THE CAS E OF TMT VINIYOGAN PVT. LTD SUPRA AS REFERRED BY THE LD.AR BEFORE US, WHEREIN THE TRI BUNAL HELD THAT NO DISALLOWANCE COULD BE MADE U/S. 14A WHILE COMPUTING THE BOOK PROFIT U /S. 115JB OF THE ACT AND REMANDED THE MATTER TO THE FILE OF AO FOR COMPUTING THE DISA LLOWANCE UNDER CLAUSE (F) TO SECTION 115JB OF THE ACT BY PLACING RELIANCE ON THE DECISIO N OF THE HONBLE HIGH COURT OF 2 ITA NO.673/KOL/2017 M/S PAN EMAMI COSMED LTD A.Y.20 14-15 CALCUTTA IN THE CASE OF CIT VS. JAYSHREE TEA INDUS TRIES LTD IN GA NO. 1501 OF 2014 (ITAT NO. 47 OF 2014) DT. 19-11-14. RELEVANT PARTIT ION OF ORDER DT. 15-12-2017 IS REPRODUCED HEREIN BELOW FOR BETTER UNDERSTANDING:- 14. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD. THE ISSUE IN THE INSTANT CASE RELATES TO THE DISALLOWANCES MADE BY ASSESSING OFFICER U/S 14A R.W .R 8D OF THE INCOME TAX RULES WHILE DETERMINING THE INCOME UNDER NORMAL COMPUTATION OF INCOME. THE DISALLOWANCE OF THE SAM E WAS ALSO MADE WHILE DETERMINING THE PROFIT U/S 115JB OF THE ACT. HOWEVER, WE NOTE THAT IN RECENT JUDGMENT OF SPECIAL BENCH OF HON'BLE DELHI TRIBUNAL IN THE CASE OF ACIT VS. VIREET INVESTMENT PVT. LTD. RE PORTED IN 82 TAXMANN.COM 415 THAT THE DISALLOWANCES MADE U/S 14A R.W.R. 8D CANNOT BE THE SUBJECT MATTER OF DISALLOWANCES WHILE DETERMINING THE NET PROFIT U/S 115JB OF THE ACT. RELEVANT PORTION OF TH E SAID ORDER IS REPRODUCED BELOW: 'IN VIEW OF ABOVE DISCUSSION, THE COMPUTATION UNDER CLAUSE (F) OF EXPLANATION 1 TO SECTION 115JB(2), IS TO BE MADE WI THOUT RESORTING TO THE COMPUTATION AS CONTEMPLATED UNDER SECTION 14A, READ WITH RULE 8D OF THE INCOME-TAX RULES, 1962. ' THE RATIO LAID DOWN BY THE HON'BLE TRIBUNAL IS SQUA RELY APPLICABLE TO THE FACTS OF THE CASE. THUS IT CAN BE CONCLUDED THAT THE DISALLOWANCE MADE UNDER SECTION 14A R.W.R 8D CANNOT BE RESORTED WHILE DETERMINING THE EXPENSES AS MENTIONED UNDER C LAUSE (F) TO EXPLANATION 1 OF SECTION 115JB OF THE ACT. HOWEVER IT IS ALSO CLEAR THAT THE DISALLOWANCE NEED S TO BE MADE IN TERMS OF THE PROVISIONS OF CLAUSE (F) TO SECTION 115JB OF THE ACT WHILE DETERMINING THE BOOK PROFIT. IN HOLDING SO WE DRAW OUR SUPPORT FROM THE JUDGMENT OF HON'BLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. JAYSHREE TEA INDUSTRIES LTD. IN GO NO.1501 OF 2014 (ITAT NO.47 OF 2014) DATED 19.11.14 WHEREIN IT WAS HELD THAT THE D ISALLOWANCE IN RELATION TO EXEMPTED INCOME NEEDS TO BE MADE AS PER THE CLAUSE (F) TO EXPLANATION-1 OF SEC. 115JB OF THE ACT INDEPENDENTL Y. THE RELEVANT EXTRACT OF THE JUDGMENT IS REPRODUCED BELOW:- 'WE FIND COMPUTATION OF THE AMOUNT OF EXPENDITURE R ELATABLE TO EXEMPTED INCOME OF THE ASSESSEE MUST BE MADE SINCE THE ASSESSEE HAS 3 ITA NO.673/KOL/2017 M/S PAN EMAMI COSMED LTD A.Y.20 14-15 NOT CLAIMED SUCH EXPENDITURE TO BE NIL. SUCH COMPUT ATION MUST BE MADE BY APPLYING CLAUSE (F) OF EXPLANATION 1 UNDER SECTION 115JB OF THE ACT. WE REMAND THE MATTER FOR SUCH COMPUTATION TO BE MADE BY THE LEARNED TRIBUNAL. WE ACCEPT THE SUBMISSION OF MR. KHAITAN, LEARNED SE NIOR ADVOCATE THAT THE PROVISION OF SECTION 115JB IN THE MATTER OF COM PUTATION IS A COMPLETE CODE IN ITSELF AND RESORT NEED NOT AND CAN NOT BE MADE TO SECTION 14A OF THE ACT. ' IN VIEW OF ABOVE WE HOLD THAT THE DISALLOWANCES MAD E UNDER THE PROVISIONS OF SEC. 14A R.W.S 8D OF THE IT RULES, CA NNOT BE APPLIED TO THE PROVISION OF SEC.115JB OF THE ACT AS PER DIRECT ION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. SH REE TEA INDUSTRIES LTD. (SUPRA). THEREFORE, THE AO SHALL WORK OUT THE DISALLOWANCES IN TERMS OF THE CLAUSE (F) TO EXPLANATION-1 OF SEC. 11 5JB OF THE ACT INDEPENDENTLY AFTER CONSIDERING THE EXPENSES DEBITE D IN THE PROFIT & LOSS ACCOUNT AS MANDATED UNDER THE PROVISIONS OF LA W. THEREFORE WE ARE INCLINED TO RESTORE THIS ISSUE TO THE FILE OF A O FOR FRESH ADJUDICATION IN ACCORDANCE TO LAW AND IN THE LIGHT OF ABOVE DISC USSION. THUS THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED FOR STA TISTICAL PURPOSES.' 5. IN VIEW OF SAID DECISION OF HONBLE HIGH COURT O F CALCUTTA AND RESPECTFULLY FOLLOWING THE SAME, WE REMAND THE MATTER TO THE AO AND TO WORK THE DISALLOWANCE RELATING TO EXEMPT INCOME IN TERMS OF CLAUSE (F) TO EXPLANATION-1 OF SECTION 115JB OF THE ACT. ORDER OF CIT(A) IS SET ASIDE. GROUND RAISED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSE. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSES. O RDER PRONOUNCED IN THE OPEN COURT ON 04.07.2018. SD/- SD/- [P.M.JAGTAP] [ S.S.VISWANETHRA RAVI ] ACCOUNTANT MEMBER JUDICIAL MEMBE R DATED : 04.07.2018. [RG SR.PS] 4 ITA NO.673/KOL/2017 M/S PAN EMAMI COSMED LTD A.Y.20 14-15 COPY OF THE ORDER FORWARDED TO: 1.M/S PAN EMAMI COSMED LTD., 687, EMAMI TOWER, ANA NDPUR, E.M.BYPASS, KOLKATA-700107. 2. A.C.I.T., CIRCLE-6(2), KOLKATA. 3. C.I.T.(A)-2, KOLKATA 4. C.I.T.- 2, KOLKATA.. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER, SENIOR PRIVATE SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHES