REHAB HOUSING P. LTD, MUMBAI V. DCIT CEN CIR 2(3), MUMBAI

ITA 7254/MUM/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3237 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: misc
• Appeal Filed On: 21-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D G PANSARI
• Assessee Lawyers: D V LAKHANI
• Keywords: Opportunity of being heard; Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, AM AND SHRI AMARJIT SINGH, JM ITA NO. 7254 /MUM/ 2017 (ASSESSMENT YEAR: 2013 - 14 ) REHAB HOUSING PVT. LTD. 5 TH FLOOR, GITANEEL ARCADE, 85, HILL ROAD, BANDRA (W), MUMBAI - 400 050 VS. DY. CIT, CENTRAL CIRCLE 2(3), MUMBAI PAN/GIR NO. AABCR 6883 Q ( APPELLANT ) : ( RESPONDENT ) APPELLANT BY : SHRI D. V. LAKHANI & SHRI ROHAN SHAH RESPONDENT BY : SHRI D. G. PANSARI DATE OF HEARING : 03.12.2018 DATE OF PRONOUNCEMENT : 27.02 .2019 O R D E R PER SHAMIM YAHYA, A. M.: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 48, MUMBAI (LD.CIT(A) FOR SHORT) DATED 24.10.2017 AND PERTAINS TO THE ASSESSMENT YEAR (A.Y.) 2013 - 14. 2. THE GROUNDS OF APPEAL READ AS UNDER: 1. ON THE FACTS & CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE DISALLOWANCE U/S. 14A AT RS. 15,50,6227 - . THE CONCLUSION REACHED BY THE LEARNED COMMR. OF INCOME TAX (APPEALS) IS ERRONEOUS. 2. ON THE FACTS & CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN NOT CONSIDERING THE RATIO LAID DOWN BY THE HON'BLE INCOME TAX APPELLATE TRIB UNAL WHILE PASSING THE ORDERS IN THE CASE OF APPELLANT FOR EARLIER YEARS. THE APPELLANT PRAYS THAT THE CONCLUSION REACHED BY THE LEARNED COMMR. OF INCOME TAX (APPEALS) AND DISTINGUISHION THE DECISION OF THE HON'BLE TRIBUNAL IN EARLIER YEARS IS ERRONEOUS. 3 . ON THE FACTS & CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED COMMR. OF INCOME TAX (APPEALS) HAS ERRED IN REJECTING THE CLAIM OF THE APPELLANT THAT THE LEARNED ASSESSING OFFICER HAS NOT RECORDED HOW HE IS NOT SATISFIED WITH THE CORRECTNESS OF THE CL AIM OF THE APPELLANT AND HENCE THE ADDITIONS MADE BY THE LEARNED ASSESSING OFFICER IS NOT JUSTIFIED. THE APPELLANT PRAYS THAT THE BASIC CONDITIONS OF SECTION 14A(2) ARE NOT SATISFIED AND THE ADDITION MADE BY THE LEARNED ASSESSING OFFICER AND CONFIRMED BY T HE LEARNED COMMR. OF INCOME TAX (APPEALS) MAY BE DELETED. 2 ITA NO.7254/MUM/2017 4. ON THE FACTS & CIRCUMSTANCES OF THE CASE THE APPELLANT PRAYS THAT NO EXPENDITURE IS DIRECTLY INCURRED FOR EARNING INCOME NOT CHARGEABLE TO TAX AND HENCE THE DISALLOWANCE MADE BY THE LEARNED AS SESSING OFFICER AND CONFIRMED BY THE LEARNED COMMR. OF INCOME TAX (APPEALS) AMOUNTING TO RS. 15,50,6227 - BE DELETED. 5. ON THE FACTS & CIRCUMSTANCES OF THE CASE THE APPELLANT PRAYS THAT ADDITION MADE BY THE LEARNED ASSESSING OFFICER AND CONFIRMED BY LEA RNED CIT (APPEALS) MAY DISALLOWING THE SUM OF RS. 15,50,6227 - U7S. 14A MAY BE DELETED. 3. ALTHOUGH THE ASSESSEE HAS RAISED VARIOUS GROUNDS, THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT HE SHALL BE RESTRICTING HIS ARGUMENTS FOR THE PLEA THAT THE DECISION OF THE SPECIAL BENCH OF ITAT IN THE CASE OF ACIT V. VIREET INVESTMENTS PRIVATE LIMITED [165 ITD 27] SHOULD BE FOLLOWED. HENC E, HE PLEADED THA T FOR THE PURPOSE OF CALCULATION OF AVERAGE VALUE OF INVESTMENT FOR THE DISALLOWANCE UNDER RULE 8D(2) (III) , ONLY THOSE INVESTMENTS SHOULD BE CONSIDERED WHICH HAVE EARNED EXEMPT INCOME. WE FIND THAT THIS PLEA OF THE LD. COUNSEL OF THE ASSESSEE IS COGENT AND THE DIRECTION OF THE SPECIAL BENCH IN THE CASE OF VIREET INVESTMENTS PRIVATE LIMITED (SUPRA) IS TH ER E TH AT FOR CALCULATING THE AVERAGE VALUE OF INVESTMENT FOR THE P URPOSE OF COMPUTATION UNDER RULE 8D(2)(III) FOR THE PURPOSE OF SECTION 14A , ONLY THOSE INVESTMENT SHOULD BE CONSIDERED ON WHICH EXEMPT INCOME HAS BEEN EARNED. HENCE, WE FIND THAT THIS PLEA OF THE LD. COUNSEL OF THE ASSESSEE NEEDS TO BE ALLOWED. 4. THE LD. DEPARTMENTAL REPRESENTATIVE (LD. DR FOR SHORT) DID NOT HAVE ANY OBJECTION TO THIS PROPOSITION. 5. ACCORDINGLY, WE DIRECT THAT THE A.O. SHOULD MAKE A DISALLOWANCE U/S. 8D(2)(III) IN ACCORDAN CE WITH THE ITAT SPECIAL BENCH IN THE CASE OF VIREET INVESTMENTS PRIVATE LIMITED (SUPRA). NEEDLESS TO ADD, THE ASSESSEE SHOULD BE GRANTED ADEQUATE OPPORTUNITY OF BEING HEARD. 6. IN THE RESULT, THIS APPEAL BY THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 2 7 . 0 2 . 2 0 1 9 S D / - S D / - ( AMARJIT SINGH ) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 2 7 . 0 2 . 2 0 1 9 ROSHANI , SR. PS 3 ITA NO.7254/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