DCIT CIR 3(3), MUMBAI V. WHITE PEARLS HOTELS & INVESTMENT P. LTD, MUMBAI

ITA 7519/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3245 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2011-2012
• Appeal Filed On: 17-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ISHWER P RATHIAR
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

INCOME-TAX APPELLATE TRIBUNAL -GBENCH MUMBA I , , , BEFORE S/SHRI RAJENDRA,ACCOUNTANT MEMBER AND RAM LAL NEGI,JUDICIAL MEMBER ./ITA/7519/MUM/2014, /ASSESSMENT YEARS: 2011-12 DCIT-3(3)(2) ROOM NO.609,6 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400 020. VS. M/S. WHITE PEARLS HOTELS & INVESTMENT PVT. LTD. 4/27, 1 ST FLOOR, KAMAL MANSION, ARTHUR BUNDER ROAD,COLABA MUMBAI-400 005. PAN: AAACW 0011 E ( /APPELLANT ) ( / RESPONDENT) REVENUE BY: SHRI K.V. VISPUTE-DR ASSESSEE BY: SHRI ISHWER P. RATHI-AR / DATE OF HEARING: 24.08.2016 / DATE OF PRONOUNCEMENT: 24.08.2016 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDER DATED 19.09.2014 OF CIT(A)-7, MUMBAI THE ASSESSING OFFICER(AO)HAS FILED THE PRESENT APPEAL.ASSESSEE-COMPANY,ENGAGED I N THE BUSINESS OF HOSPITALITY,FILED ITS RETURN OF INCOME,DECLARING TOTAL INCOME OF RS. 3.24CRORES. THE AO COMPLETED THE ASSESSMENT UNDER SECTION 143 (3) OF THE ACT,ON 10/12/2013,DETERMININ G THE INCOME OF THE ASSESSEE AT RS.4.85 CRORES. 2. THE EFFECTIVE GROUND OF APPEAL IS ABOUT DELETION OF DISALLOWANCE MADE UNDER SECTION 14A OF THE ACT.AT THE TIME OF HEARING BEFORE US,IT WAS BRO UGHT TO OUR NOTICE THAT IN THE EARLIER AY.S. IDENTICAL ISSUE WAS DECIDED AGAINST THE AO BY THE T RIBUNAL.WE FIND THAT WHILE DECIDING THE APPEALS FOR THE AY.S.2009-10 AND 2010-11(ITA.S.4313 &4314/MUM/2014/DTD.23.11.2015),THE TRIBUNAL DECIDED THE ISSUE AS UNDER: 2. THE GRIEVANCE OF THE REVENUE IS COMMON IN BOTH THESE APPEALS AND RELATES TO THE DISALLOWANCE MADE UNDER SECTION 14 A OF THE ACT WHICH HAS BEEN D ELETED BY THE LD. CIT (A). THE REVENUE HAS HEAVILY RELIED ON THE DECISION OF THE TRIBUNAL SPEC IAL BENCH IN THE CASE OF CHEMINVEST LTD..121 ITD 318 AS PER GROUND NO.2 OF GROUNDS OF APPEAL. 3. THIS ISSUE IS NOW WELL SETTLED BY THE HONBLE HI GH COURT OF DELHI WHICH HAS REVERSED THE DECISION OF THE SPECIAL BENCH IN THE CASE OF CHEMIN VEST LTD.. 378 ITR 33. THE RELEVANT PORTION AND THE DECISION OF THE HONBLE HIGH COURT READS AS UNDER: 7519/M/14 WHITE PEARLS HOTELS 2 THE EXPRESSION DOES NOT FORM PART OF THE TOTAL IN COME IN SECTION 14A OF THE INCOME- TAX ACT, 1961, ENVISAGES THAT THERE SHOULD BE AN AC TUAL RECEIPT OF INCOME, WHICH IS NOT INCLUDIBLE IN THE TOTAL INCOME, DURING THE RELEVANT PREVIOUS YEAR FOR THE PURPOSE OF DISALLOWING ANY EXPENDITURE INCURRED IN RELATION TO THE INCOME. IN OTHER WORDS, SECTION 14A WILL NOT APPLY IF NO EXEMPT INCOME IS RECEIVED OR RECEIVABLE DURING THE RELEVANT PREVIOUS YEAR. HELD, THAT NO EXEMPTED INCOME WAS EARNED BY THE ASS ESSEE IN THE RELEVANT ASSESSMENT YEAR AND SINCE THE GENUINENESS OF THE EXPENDITURE I NCURRED BY THE ASSESSEE WAS NOT IN DOUBT, NO DISALLOWANCE COULD BE MADE UNDER SECTION 14A . RESPECTFULLY,FOLLOWING THE ABOVE ORDER,WE DECIDE TH E EFFECTIVE GROUND AGAINST THE AO. AS A RESULT,APPEAL FILED BY THE AO STANDS DIS MISSED. . ORDER PRONOUNCED IN THE OPEN COURT ON 24TH AUGUST ,2016. 24 , 2016 SD/- SD/- ( / R.L.NEGI ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 24.08.2016. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.