RRB Consultants & Engineers Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 700/DEL/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81910 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 8 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 27-08-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 05-02-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MANOJ KUMAR CHOPRA
• Assessee Lawyers: V RAJ KUMAR
• Keywords: Depreciation; Earning of tax free income; Question of law
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE SHRI B. C. MEENA , ACCOUNTANT MEMBER AND SHRI C. M. GARG, JUDICIAL MEMBER I.T.A .NO. - 700 /DEL/2013 (ASSESSMENT YEAR - 200 8 - 0 9 ) RRB CONSULTANTS & ENGINEERS PVT . LTD. VS. IT O (NOW KNOWN AS ECO RRB INFRA PVT. LTD) WARD - 15(2) 189, SUKHDEV VIHAR NEW DELHI. NEW DELHI. PAN:AAA CR0233R (APPELLANT) (RESPONDENT) ASSESSEE BY: - SH. K. SAMPATH , ADV. & SH. V. RAJKUMAR, ADV. REVENUE BY: - SH. MANOJ KUMAR CHOPRA , SR. DR ORDER PER C. M. GARG, JM. THIS APPEAL OF THE ASSESSEE HAS BEEN PREFERRED AGAINST THE ORDER OF CIT (APPEALS) - X VIII, NEW DELHI, VIDE DATED 1 0 . 12 .201 2 IN APPEAL NO. 338 /2011 - 12 FOR THE ASSESSMENT YEAR 200 8 - 0 9 . 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS IN THIS APPEAL READ S AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) ERRED IN CONFIRMING THE FOLLOWING ACTIONS OF THE ASSESSING OFFICER: - 1. IN REJECTING THE CLAIM U/S 80IA OF THE ACT; 2. IN NOT ALLOWING DEPRECIATION ON LAND AS CLAIM ED; 3. IN DISALLOWING ALLEGED EXPENSES U/S 14A OF THE ACT; 4. IN DISALLOWING DEPRECIATION IN A SUM OF RS.1,07,57,000/ - ; ALL ABOVE ACTIONS BEING ARBITRARY, FALLACIOUS, UNJUST AND UNTENABLE MUST BE QUASHED. 2 GROUND NO. 1 OF THE ASSESSEE 3. APROPOS GROUND NO. 1 WE HAVE HEARD ARGUMENT OF BOTH THE SIDES AND CAREFULLY PERUSED THE RELEVANT MATERIAL PLACED ON RECORD. IN THE BEGINNING OF THE ARGUMENTS THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT A COPY OF THE ORDER OF ITAT/DEL/BENCH C VIDE DAT ED 27.9.2013 IN ASSESSEE S OWN APPEAL ITA NO S . 400/DEL/2011 & 6149/DEL/2012 FOR ASSESSMENT YEAR 2006 - 07 & 2007 - 08 RESPECTIVELY. WE ALSO NOTE THAT THE ITAT DELHI BENCH C IN THE ORDER DATED 27.9.2013 (SUPRA) HAS ALSO DECIDED APPEAL OF THE REVENUE ITA NO. 1139/DEL/2011 FOR ASSESSMENT YEAR 2006 - 07. 4. THE LD. COUNSEL FOR THE ASSESSEE DRAWN OUR ATTENTION TOWARDS PARAGRAPH 7 AT PAGE 8 OF THE ORDER OF THE TRIBUNAL AND SUBMITTED THAT THE ISSUE OF ALLOWABILITY OF U/S 80 - IA OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT ,) AND CONNECTED ISSUE OF APPORTIONMENT OF EXPENSES HAS BEEN SET ASIDE AND RESTORED BACK TO THE FILE OF T HE AO TO DECIDE THE SAME AFRESH, I N THE LIGHT OF HON BLE HIGH COURT JUDGMENTS FOR THE EARLIER ASSESSMENT YEARS. 5. THE LD. DEPARTMENTAL REPRESENTATIVE (DR) FAIRLY ACCEPTED THAT THE DEPARTMENT HAS NO SERIOUS OBJECTION IF THE ISSUE OF ALLOWABILITY OF CLAIM OF THE ASSESSEE U/S 80 - IA OF THE ACT IS SET ASIDE AND RESTORED BACK TO THE FILE OF AO, FOLLOWING THE DECISION OF THE TRIBUNAL FOR ASSESSMENT YEARS 2006 - 07 AND 2007 - 08 (SUPRA). 3 6. ON CAREFUL CONSIDERATION OF OUR SUBMISSIONS AND PERUSAL OF THE ORDER OF THE TRIBUNAL (SUPRA), WE OBSERVED THAT THE COORDINATE BENCH OF THIS TRIBUNAL HAS RESTORED THE ISSUE TO THE FILE OF AO WIT H FOLLOWING OBSERVATIONS AND CONCLUSIONS : 7. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN OUR VIEW THE ENDS OF JUSTICE WILL MEET IF THE ASSESSEE THE ASSESSEE AND REVENUE S GROUND ON THE ISSUE OF ALLOWABILITY OF DEDUCTIO N U/S 80 - IA AND CONNECTED ISSUE OF APPORTIONMENT OF EXPENSES ARE SET ASIDE AND RESTORED BACK TO THE FILE OF ASSESSING OFFICER TO DECIDE THE SAME AFRESH AFTER THE HIGH COURT JUDGMENT IS PRONOUNCED IN THIS CASE FOR EARLIER YEARS. THE SETTING ASIDE WILL AVOID MULTIPLICITY OF LITIGATION AND COMPLICATIONS. ASSESSING OFFICER WILL GIVE EFFECT TO THE HIGH COURT S ORDER WHICH WILL CONCLUSIVELY DECIDE THE ISSUES ABOUT THE QUESTION OF LAW ADMITTED BY HON BLE HIGH COURT ON THIS SUBJECT. IN CONSIDERATION THEREOF WE SET ASIDE THE ISSUES BACK TO THE FILE OF ASSESSING OFFICER TO DECIDE THE SAME AFRESH AFTER HIGH COURT S JUDGMENT IS PRONOUNCEMENT WHICH WILL DECIDE THE ISSUE. 7. IN VIEW OF ABOVE ORDER OF THE TRIBUNAL WE FIND AN APPROPRIATE TO SET ASIDE AND RESTORED BACK THE ISSUE OF ALLOWABILITY OF DEDUCTION U/S 80 - I A OF THE ACT AND CONNECTED ISSUE OF APPORTIONMENT OF EXPENSES TO THE FILE OF AO TO DECIDE THE SAME AFRESH A S PER DIRECTIONS GIVEN IN THE ORDER OF THE TRIBUNAL FOR ASSESSMENT YEARS 2006 - 07 & 2007 - 08 (SUPRA). WE ARE AN AGREEMENT WITH THE CONCLUSION OF THE TRIBUNAL THAT THE SETTING ASIDE WILL AVOID MULTIPLICITY OF LITIGATION AND COMPLICATIONS AND WILL MEET THE ENDS OF JUSTICE. THE AO IS ALSO DIRECTED THAT HE 4 WILL GIVE EFFECT TO THE ORDER OF HON BLE HIGH COURT WHILE DE CIDING THE ISSUES WHICH WILL CONCLUSIVELY DECIDE THE ISSUES ABOUT THE QUESTION OF LAW ADMITTING BY HON BLE HIGH COURT ON THIS SUBJECT. ACCORDINGLY WE SET ASIDE THE ISSUES BACK TO THE FILE OF AO TO DECIDE THE SAME AFRESH AFTER HON BLE HIGH COURT S JUDGMENT IS PRONOUNCED. THEREFORE, GROUND NO. 1 OF THE ASSESSEE IS DEEMED TO BE ALLOWED FOR STATISTICAL PURPOSES. GROUND NO. 2 8. THE LD. DR DRAWN OUR ATTENTION TOWARDS PARAGRAPH 8 AT PAGE 9 OF THE ORDER OF THE TRIBUNAL (SUPRA) AND SUBMITTED THAT THE GRO UND NO. 2 PERTAINING TO ALLOWABILITY OF DEPRECIATION ON LAND AS CLAIMED BY THE ASSESSEE HAS BEEN DECIDED IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. 9. THE LD. COUNSEL FOR THE ASSESSEE FAIRLY ACCEPTED THAT THE ISSUE HAS BEEN DECIDED AGAINST THE ASS ESSEE. ON CAREFULLY PERUSAL OF PARAGRAPH 8 AT PAGE 9 OF THE ORDER OF THE TRIBUNAL (SUPRA) WE ARE AN AGREEMENT WITH THE CONCLUSION OF THE COORDINATE BENCH OF THIS TRIBUNAL THAT THIS SETTLED LAW THAT DEPRECIATION CANNOT BE ALLOWED AND LAND, THEREFORE, GROUND NO. 2 OF THE ASSESSEE IS ALSO DISMISSED FOR AY 2008 - 09. GROUND NO. 3 10. WE HAVE HEARD ARGUMENT OF BOTH THE SIDES, APROPOS GROUND NO. 3. 5 11. THE LD. COUNSEL FOR THE ASSESSEE DRAWN OUR ATTENTION TOWARDS PARAGRAPH 9 AT PAGE 9 OF THE ORDER OF THE TRIBUNAL W HEREIN DISALLOWANCE U/S 14A OF THE ACT READ WITH RULE 8D OF THE INCOME TAX RULES 1962, HAS BEEN ALLOWED AND DELETING THE IMPUGNED DISALLOWANCE. THE RELEVANT OPERATIVE CONCLUSIVE PARAGRAPH OF THE ORDER OF THE TRIBUNAL (SUPRA) READS AS UNDER: 9. THAT LEAVES US ONLY GROUND ABOUT DISALLOWANCE OF EXPENSES ATTRIBUTABLE TO EXEMPT INCOME U/S 14A READ WITH RULE 8D. IT IS SETTLED LAW THAT RULE 8D IS APPLICABLE FROM A.Y. 2008 - 09 ONWARDS. PRESENTLY THE ISSUE IN QUESTION BEING FOR A.Y. 2007 - 08 AND THE DIVIDE ND INCOME BEING NEGLIGIBLE AND RECEIVED BY WARRANTS ONLY WHICH ARE DEPOSITED IN BANK, THERE IS NO JUSTIFICATION IN ATTRIBUTING ADMINISTRATIVE EXPENSES IN DEPOSITING THE WARRANTS OF NEGLIGIBLE AMOUNT. WE DELETE THE DISALLOWANCE. 12. THE LD. DR REPLIED THAT ADMITTEDLY RULE 8D OF THE INCOME TAX RULES WAS NOT APPLICABLE FOR ASSESSMENT YEAR 2006 - 07 & 2007 - 08 BUT THE SAME IS APPLICABLE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION IN THIS APPEAL I.E. A.Y. 2008 - 09. FURTHER THE LD. DR FAIRLY ACCEPTED THAT THE DISAL LOWANCE MADE BY THE AO HAS BEEN DELETED BY THE ORDER OF THE TRIBUNAL FOR ASSESSMENT YEARS 2006 - 07 & 2007 - 08. 13. ON CAREFULLY CONSIDERATION OF ABOVE SUBMISSIONS AND PERUSAL OF THE IMPUGNED ORDER AS WELL AS ORDER OF THE TRIBUNAL FOR EARLIER ASSESSMENT YEARS (SUPRA). WE OBSERVE THAT THERE WAS A DISALLOWANCE OF RS. 83,051/ - U/S 14A OF THE ACT AGAINST THE DIVIDEND INCOME OF RS.83,564/ - FOR THE ASSESSMENT YEAR 6 2007 - 08 WHICH WAS DELETED BY THE COORDINATE BENCH OF THE TRIBUNAL BY OBSERVING THAT THE DIVIDEND INCOME BEING NEGLIGIBLE AND RECEIVED THROUGH DIVIDEND WARRANTS ONLY , WHICH WERE DEPOSITED IN BANK, AND THERE WA S NO JUSTIFICATION IN ATTRIBUTING THE ADMINISTRATIVE EXPENSES FOR THE SIMPLE ACT OF DEPOSITING THE DIVIDEND WARRANTS TO THE BANK ACCOUNT OF THE ASSESSE E . IN THE PRESENT APPEAL, THE LD. CIT(A) HAS UPHELD SIMILAR DISALLOWANCE OF RS.83,051/ - MADE BY THE AO BY APPLYING RULE 8D OF THE INCOME TAX RULES R.W.S. 14A OF THE ACT. 14. WE ARE OF THE CONSIDERED OPINION THAT GROUND NO. 3 OF THE ASSESSEE IS SQUARELY CO VERED IN FAVOUR OF THE ASSESSEE BY THE EARLIER ORDER OF THE TRIBUNAL FOR ASSESSMENT YEAR 2007 - 08 (SUPRA) AND RESPECTFULLY FOLLOWING THE SAME GROUND NO. 3 OF THE ASSESSEE IN THIS APPEAL IS ALSO ALLOWED AND THE AO IS DIRECTED TO DELETE THE DISALLOWANCE MADE U/S 14A OF THE ACT. GROUND NO. 4 15. APROPOS GROUND NO. 4, WE HAVE HEARD ARGUMENTS OF BOTH THE SIDES AND CAREFULLY PERUSED THE RELEVANT MATERIAL PLACED ON RECORD. SINCE THE ISSUE OF ALLOWABILITY OF CLAIM OF THE ASSESSEE U/S 80 - IA OF THE ACT HAS BEEN SET A SIDE TO THE FILE OF THE AO FOR AFRESH DECISION AFTER THE HON BLE HIGH COURT S JUDGMENT IS PRONOUNCED IN THE CASES FOR EARLIER ASSESSMENT YEARS, THEREFORE, THE ISSUE OF DISALLOWING OF DEPRECIATION ON WIND ELECTRIC GENERATORS (WEG) IS ALSO RESTORED TO THE FI LE OF THE AO FOR AFRESH ADJUDICATION IN THE LIGHT AND LINE OF DECISION OF 7 HON BLE HIGH COURT ON THE ISSUE. ACCORDINGLY, GROUND NO. 4 OF THE ASSESSEE IS DEEMED TO BE ALLOWED FOR STATISTICAL PURPOSES. 16. TO SUM UP, APPEAL OF THE ASSESSEE ON GROUND NO. 1 AN D 4 IS DEEMED TO BE ALLOWED FOR STATISTICAL PURPOSES. APPEAL OF THE ASSESSEE ON GROUND NO. 2 IS PARTLY DISALLOWED AND ON GROUND NO. 3 IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 /10 /2014. SD/ - SD/ - (B. C. MEENA ) (C. M. GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 16 / 10 /2014 *AK VERMA* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR