DCIT CEN CIR 1(4), MUMBAI V. D.B. REALTY LTD, MUMBAI

ITA 7133/MUM/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 3099 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2014-2015
• Appeal Filed On: 18-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H N SINGH
• Keywords: Rule 8D; Set aside
• Section: 14A; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUM BAI BEFORE SHRI SHAMIM YAHYA, AM AND SHRI AMARJIT SINGH , JM ITA NO.7133/MUM/2017 (ASSESSMENT YEAR: 2014-15) DCIT,CENTRAL CIRCLE-1(4) ROOM NO.902, PRATHISHTA BHAVAN 9 TH FLOOR, OLD CGO BUILDING ANNEXE MUMBAI-400 020 VS. M/S. D.B.REALTY LIMITED DB HOUSE, YSHODHAM GEN. A.K. VAIDYA MARG, GOREGAON(E) MUMBAI- 400 063 PAN/GIR NO. AACCD5174F ( APPELLANT ) : ( RESPONDENT ) APPELLANT BY : SHRI H.N.SINGH RESPONDENT BY : ARATI VISSANJI DATE OF HEARING : 06.02.2019 DATE OF PRONOUNCEMENT : 05. 03.2019 O R D E R PER SHAMIM YAHYA, A. M.: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-47, MUMBAI (L D. CIT(A) FOR SHORT) DATED 13.09.2017 AND PERTAINS TO THE ASSESSMENT YEAR (A.Y .) 2014-15 2. THE GROUNDS OF APPEAL READ AS UNDER: I. 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCE O F THE CASE AND IN LAW, THE LD. CTT(A) WAS JUSTIFIED IN DELETING DISALLOWANCE ON AC COUNT OF EXPENDITURE UNDER SECTION 14A OF THE ACT, READ WITH RULE 8D OF IT RULES, 1962 , IS COVERED UNDER CLAUSE (F) OF EXPLANATION 1 TO SECTION 115JB(2)? II. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE DISALLOWANCE ON ACCOU NT OF EXPENDITURE UNDER SECTION 14A OF THE ACT READ WITH RULE 8D OF THE IT RULES, 1962, WI THOUT APPRECIATING THE DECISION OF HONBLE ITAT F BENCH, MUMBAI, VIDE ITS ORDER DATE D 21-10-2015 IN THE CASE OF DCIT VS. VIRAJ PROFILES LIMITED (2016) 156 ITD 72 (MUMBA I TRIB.) THAT IN TERMS OF CLAUSE (F) TO EXPLANATION 1 TO SECTION115JB(2) AND DABUR INDIA LT D. VS. ACIT (2013) 145 ITD 175 (MUMBAI TRIB.) DISALLOWANCE MADE BY ASSESSING OFFIC ER UNDER SECTION 14A READ WITH RULE 8D OF IT RULES, 1962, HAS TO BE ADDED BACK FOR PURP OSE OF ARRIVING AT FIGURE OF BOOK PROFIT? 2. THE APPELLANT CRAVES LEAVE TO ADD, TO AMEND AND / OR TO ALTER ANY OF THE GROUNDS OF APPEAL, IF NEED BE. 2 ITA NO. 7133/MUM/2017 3. THE APPELLANT, THEREFORE, PRAYS THAT ON THE GROU NDS STATED ABOVE, THE ORDER OF THE CIT(A)- 47, MUMBAI, MAY BE SET ASIDE AND THAT OF THE ASSESS ING OFFICER RESTORED. 4. A COPY OF THE CIT(A)-47, MUMBAI, ORDER WAS RECEI VED ON 18-10-2017 . LAST DATE FOR FILING SECOND APPEAL IS 16-12-2017 . 3. THE ASSESSEE IS IN THIS CASE IS A PUBLIC LIMITED CO MPANY ENGAGED IN THE BUSINESS OF CONSTRUCTION AND DEVELOPMENT OF PROJECTS RELATING T O REAL ESTATE. DURING THE COURSE OF THE ASSESSMENT THE ASSESSING OFFICER MADE A DISALLOWANC E OF RS.10,2614,365/- U/S 14A OF THE ACT. THE AO IMPORTED THIS DISALLOWANCE U/S 115 JB O F THE I.T. ACT BY ADDING THE SAME TO THE BOOK PROFIT. 4. UPON ASSESSEE APPEAL IN THIS REGARD LD. CIT(A) R EFERRED TO THE SPECIAL BENCH DECISION OF THE ITAT IN THE CASE OF ACIT VS. VIREET INVESTMENT PVT.LTD. (2017) IN ITA NO.502/DEL/2012 VIDE ORDER DATED JUNE 16, 2017. HE ALSO REFERRED TO HONBLE DELHI HIGH COURT DECISION IN THE CASE OF PR. CIT VS. BHUSHAN S TEEL LTD.: ITA NO. 593/2015 AND ALSO HONBLE BOMBAY HIGH COURT DECISION IN THE CASE OF C IT VS. JSW ENERGY LIMITED LTD., [2015] 60 TAXMANN.COM 303(BOMBAY). LD. CIT DIRECTED THAT DISALLOWANCE AS PER SECTION 14A OF THE ACT READ WITH RULE 8D CANNOT BE IMPORTED INTO COMPUTATION OF BOOK PROFIT U/S 115JB OF THE ACT. 5. AGAINST THE ABOVE ORDER REVENUE IS IN APPEAL BEF ORE US, WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORD, WE HAVE ALSO CONSID ERED THE PRECEDENTS RELIED UPON. LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDER O F THE ASSESSING OFFICER. PER CONTRA THE LD. COUNSEL OF THE ASSESSEE STATED THAT THE ISS UE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION AS REFERRED BY THE LD. CIT (A) AS ABOVE. 3 ITA NO. 7133/MUM/2017 6. UPON CAREFUL CONSIDERATION WE FIND THAT THE ISSU E COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF ITAT SPECIAL BENCH IN THE CASE O F VIREET INVESTMENTS (SUPRA). IN THIS CASE IT WAS HELD THAT DISALLOWANCE U/S 14A CANNOT B E IMPORTED INTO SECTION 115JB. 7. HONBLE DELHI HIGH COURT IN THE CASE OF BHUSHA N STEEL LTD., (SUPRA) HAS HELD AS UNDER:- ..THE ITAT HAS RIGHTLY HELD THAT THIS BEING IN TH E NATURE OF DISALLOWANCE, AND WITH EXPLANATION 115JB NOT SPECIFICALLY MENTIONING SECTI ON 14A OF THE ACT, THE ADDITION WAS NOT JUSTIFIED. THE VIEW TAKEN BY THE ITAT CANNOT BE FAULTED WITH. IT IS CONSISTENT WITH THE DECISION IN APOLLO TYRES LTD. V. COMMISSIONER OF INCOME TAX (20 02) ITR 273 (SC) WHICH HELD THAT THE ASSESSING OFFICER DOES NOT HAV E THE JURISDICTION TO GO BEHIND THE NET PROFIT SHOWN IN THE PROFIT AND LOSS ACCOUNT EXCEPT TO THE EXTENT PROVIDED IN THE EXPLANATION TO SECTION 115J 8. HONBLE BOMBAY HIGH COURT IN THE CASE OF JSW ENE RGY LTD., HAS HELD AS UNDER: - 9. HOWEVER, THE TRIBUNAL ALSO NOTED THAT BY WAY OF ADDITIONAL GROUND THE ASSESSEE CHALLENGED DISALLOWANCE UNDER SECTION 14A IN CALCUL ATION OF BOOK PROFIT UNDER SECTION 115JB. THE TRIBUNAL THEREFORE HEARD BOTH SIDES ON A DDITIONAL GROUND AND IN PARAGRAPH 18 HELD THAT ONCE THE ACCOUNTS ARE PREPARED IN ACCORDA NCE WITH INDIAN COMPANIES ACT, 1956, THEY HAVE BEEN APPROVED BY THE REGISTRAR OF COMPANI ES, THEN, THE ASSESSING OFFICER MUST TAKE THOSE ACCOUNTS INTO CONSIDERATION. IF THE ASSE SSEE HAS NOT DEBITED ANY ACTUAL EXPENDITURE RELATING TO THE EARNING OF THE EXEMPT I NCOME, THEREFORE, THE PROVISIONS OF SECTION 14A CANNOT BE IMPORTED INTO THE COMPUTATION OF BOOK PROFIT UNDER SECTION 115JB OF THE INCOME TAX ACT,1961. THEREFORE, EVEN CLAUSE (F) OF EXPLANATION TO SECTION 115JB WHICH REFERS TO THOSE AMOUNTS WHICH ARE DEBITED TO THE PROFIT AND LOSS ACCOUNT, ALONE CAN BE ADDED TO THE BOOK PROFIT, CANNOT APPLY. THEN, TH E TRIBUNAL REFERRED TO THE ORDER PASSED IN THE CASE OF ESSAR TELEHOLDINGS LTD. (SUPRA). 9. ACCORDINGLY, IN THE BACKGROUND OF AFORESAID DECI SION AND PRECEDENT, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD. CIT(A). ACCORDIN GLY, WE UPHELD THE SAME. 10. IN THE RESULT, THIS APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 05 TH MARCH, 2019. SD/- SD/- (AMARJIT SINGH) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED : 05.03.2019 THIRUMALESH SR.PS 4 ITA NO. 7133/MUM/2017 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT - CONCERNED 5. DR, ITAT, MUMBAI 6. GUARD FILE BY ORDER, (DY./ASSTT. REGISTRAR) ITAT, MUMBAI