PLANETCAST MEDIA SERVICES LTD. (formerly known as Essel Shyam Communication Ltd.), NEW DELHI V. ACIT, CENTRAL CIRCLE- 26, NEW DELHI

ITA 6894/DEL/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 3470 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-11-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2014-2015
• Appeal Filed On: 16-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Earning of tax free income; Rule 8D
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F, NEW DELHI BEFORE SH. AMIT SHUKLA, JUDICIAL MEMBER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER (THROUGH VIDEO CONFERENCING) ITA NO. 6894/DEL/2017 : ASSTT. YEAR : 2014-15 PLANETCAST MEDIA SERVICES LTD. (FORMERLY KNOWN AS ESSEL SHYAM COMMUNICATION LTD.), 1121, HEMKUNT CHAMBERS, 11 TH FLOOR, 89, NEHRU PLACE, NEW DELHI VS ACIT, CENTRAL CIRCLE-26, NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. AAACE2299Q ASSESSEE BY : SH. VED JAIN, ADV. REVENUE BY : SH. RAMESH KUMAR, SR. DR DATE OF HEAR ING: 05 . 11 .20 20 DATE OF PRONOUNCEMENT: 10 .11 .20 20 ORDER PER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A)-XXVI, NEW DELHI, DATED 13.10.2017. 2. FOLLOWING GROUNDS HAVE BEEN RAISED BY THE ASSESS EE: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS BAD BOTH IN THE EYES OF LAW AND ON FACTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE L D. CIT (A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMING THE ADDITION OF RS.7,37,989/- ON ACCOUNT OF EXPENSES INCURRED FOR EARNING EXEMPT INCOME U/S 14A OF THE ACT. ITA NO. 6894/DEL/2017 P LANETCAST MEDIA SERVICES LTD. 2 3. THAT THE ADDITION HAS BEEN CONFIRMED REJECTING T HE CONTENTION OF THE ASSESSEE THAT NO SUCH EXPENSES IN RELATION TO EARNING EXEMPT INCOME HAS BEEN INCURRED BY THE ASSESSEE. 4. THAT THE DISALLOWANCE HAS BEEN CONFIRMED REJECTI NG THE CONTENTION OF THE ASSESSEE THAT IN THE ABSENCE OF ANY SATISFACTION WITH REGARD TO THE CONTENTION OF T HE ASSESSEE BEING NOT CORRECT HAVING BEING RECORDED BY THE ASSESSING OFFICER THE DISALLOWANCE IS NOT SUSTAINABLE. 3. THE ASSESSEE IS IN THE BUSINESS OF PROVIDING TELECOMMUNICATION SERVICES LIKE VSAT & BROADBAND SE RVICES AND MADE CUMULATIVE INVESTMENT IN 8.1% IRFC TAX FREE BO NDS AND OTHER INVESTMENTS. THE TOTAL INVESTMENTS MADE BY TH E ASSESSEE AT THE BEGINNING OF THE YEAR WAS RS.13.89 CR. AND A T THE END OF THE YEAR WAS RS.15.62 CR. THE AO HAS DISALLOWED RS. 16.82 LACS ON ACCOUNT OF SECTION 14A AFTER COMPUTING THE AVERA GE VALUE OF INVESTMENT AND TAKING INTO CONSIDERATION THE AVERAG E VALUE OF THE TOTAL ASSETS. OUT OF THE DISALLOWANCE OF RS.16. 82 LACS, THE LD. CIT (A) HAS GIVEN RELIEF OF RS.9.44 LACS HOLDIN G THAT NO DISALLOWANCE IS WARRANTED ON ACCOUNT OF INTEREST AS THE ASSESSEE HAS GOT SUFFICIENT OWN FUNDS FOR THE SAID INVESTMEN T. 4. BEFORE US, DURING THE ARGUMENTS, THE LD. AR BROU GHT TO OUR NOTICE THAT THE ASSESSEE HAS EARNED RS.24.66 LACS A S EXEMPT INCOME FROM THE CUMULATIVE INVESTMENT IN TAX FREE B ONDS OF IRFC OF RS.3.04 CR. AND RELIED UPON THE ORDER OF TH E SPECIAL BENCH OF ITAT IN THE CASE OF VIREET INVESTMENTS IN ITA NO. 502/DEL/2012 WHEREIN IT WAS HELD THAT THE DISALLOWA NCE UNDER RULE 8D(III) BE COMPUTED TAKING INTO CONSIDERATION THE ONLY THE INVESTMENTS YIELDING EXEMPT INCOME. HENCE, IT WAS A RGUED THAT ITA NO. 6894/DEL/2017 P LANETCAST MEDIA SERVICES LTD. 3 THE 0.5% OF THE AVERAGE INVESTMENT ON RS.3.04 CR. B E COMPUTED AS RIGHT DISALLOWANCE. 5. THE LD. DR ARGUED THAT THE CONTENTION OF THE ASS ESSEE CANNOT BE ACCEPTED AND THE ENTIRE INVESTMENT SHOULD BE CONSIDERED FOR COMPUTING 0.5% OF THE AVERAGE INVEST MENTS. 6. HAVING GONE THROUGH THE FACTS OF THE CASE, WE AL SO FIND THAT IN THE CASE OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2014- 15 THE DISALLOWANCE HAS BEEN RESTRICTED TO THE INVE STMENTS YIELDING EXEMPT INCOME PLACING RELIANCE ON JUDGMENT IN THE CASE OF VIREET INVESTMENTS (SUPRA). IN THE ABSENCE OF ANY MATERIAL CHANGE TO THE FACTS OF THE CASE AND IN THE PREPOSITION OF THE LAW, WE HEREBY DIRECT THAT THE DISALLOWANCE BE COMPUTED @0.5% ON THE INVESTMENT OF RS.3.04 CR. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 10/11/2020. SD/- SD/- (AMIT SHUKLA) (DR. B . R. R. KUMAR) JUDICIAL MEMBER ACCOUNTA NT MEMBER DATED: 10/11/2020 *SUBODH/BINITA* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR