DCIT, New Delhi V. M/s. Lally Automobiles Pvt. Ltd., New Delhi

ITA 756/DEL/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7188 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 10-02-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: D NEW DELHI BEFORE SMT DIVA SINGH, JUDICIAL MEMBER AND SH.L.P.SAHU, ACCOUNTANT MEMBER I.T.A .NO.-756/DEL /2014 (ASSESSMENT YEAR-2009- 10) DCIT, CIRCLE-4(1), NEW DELHI (APPELLANT) VS LALLY AUTOMOBILES PVT.LTD., D-196, OKHLA INDUSTRIAL AREA, PHASE-I, NEW DELHI PAN-AABCL1446K (RESPONDENT) APPELLANT BY MS. RISHPAL BEDI, SR.DR RESPONDENT BY NONE ORDER PER DIVA SINGH, JM THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE AS SAILING THE CORRECTNESS OF THE ORDER DATED 29.11.2013 OF CIT(A) -VIII, NEW DELHI PERTAINING TO 2009-10 ASSESSMENT YEAR ON THE FOLLOWING GROUNDS:- 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN DELETING DISALLOWANCE O F RS.55,42,112/- UNDER SECTION 14A R.W.RULE 8D(II) & 8D(III). 2. THAT THE ORDER OF THE LD. CIT(A) IS ERRONEOUS AND I S NOT TENABLE ON FACTS AND IN LAW. 3. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEN D OR FORGO ANY GROUND(S) OF APPEAL RAISED ABOVE AT THE TIME OF HEARING. 2. NO ONE WAS PRESENT AT THE TIME OF HEARING ON BEH ALF OF THE ASSESSEE. HOWEVER, THE APPEAL IS BEING DECIDED AFTER HEARING THE LD. SR.DR WHO POINTED OUT THAT CONTRARY TO THE STATUTORY MANDATE THE CIT( A) INSTEAD OF DECIDING THE APPEAL IN THE FACTS OF THE PRESENT CASE HAS INSTEAD RESTORED THE ISSUE BACK TO THE AO. THE ORDER ACCORDINGLY IT WAS SUBMITTED COULD N OT BE SUSTAINED. DATE OF HEARING 11.01.2016 DATE OF PRONOUNCEMENT 09.02.2016 I.T.A .NO.-756/DEL/2014 PAGE 2 OF 3 3. WE HAVE HEARD THE SUBMISSIONS AND PERUSED THE MA TERIAL AVAILABLE ON RECORD. IT IS SEEN THAT THE ASSESSEE IN THE YEAR U NDER CONSIDERATION DECLARED A LOSS RETURN OF RS. 1,46,77,658/-. THE SAID RETURN WAS PROCESSED U/S 143(1) AND AFTER ISSUANCE OF NOTICE U/S 143(2) ETC. IT WAS SEL ECTED FOR SCRUTINY. THE ASSESSEE IN THE YEAR UNDER CONSIDERATION IS STATED TO BE ENGAGED IN THE BUSINESS OF TRADING AND SERVICES OF AUTOMOBILES. THE ISSUE UNDER CONSIDERATION PERTAINS TO INVESTMENT IN SHARE INCOME WHICH AS PER THE COMP UTATION OF INCOME DOES NOT PART OF INCOME. THE ASSESSEE WAS REQUIRED TO EXPLA IN WHY DISALLOWANCE U/S 14A R.W. RULE 8D SHOULD NOT BE MADE. CONSIDERING THE R EPLY, THE AO MADE A DISALLOWANCE OF RS.55,42,112/-. THE ASSESSEE CHALL ENGED THIS IN APPEAL BEFORE THE CIT(A). THE ARGUMENTS ADVANCED BEFORE THE CIT( A) ARE FOUND REPRODUCED IN PAGES 2 TO 6 IN THE IMPUGNED ORDER. A PERUSAL OF T HE CONCLUSION ARRIVED AT SHOWS THAT THE LD.CIT(A) INSTEAD OF OBTAINING A REM AND REPORT RESTORED THE ISSUE FOR VERIFICATION TO THE AO. AS WOULD BE EVID ENT FROM THE FOLLOWING EXTRACT OF THE ORDER:- I HAVE PERUSED THE ASSESSMENT ORDER, GROUNDS OF AP PEAL, STATEMENTS OF FACTS AND SUBMISSIONS. I HAVE DISCUSSED THE MAT TER WITH THE AR VERY CAREFULLY. THE AR ARGUED THAT THERE IS NO EXE MPT INCOME IN THE P&L ACCOUNT, HENCE THE DISALLOWANCE U/S 14A FOR EXP ENDITURE INCURRED IN RELATION TO EARNING EXEMPT INCOME DOES NOT ARISE AT ALL. THE INVESTMENT BY APPELLANT COMPANY IN THE LAND OF SUBSIDIARY COMPANY WAS IN THE NATURE OF TRADING/BUSINESS FOR O PENING A SHOW ROOM. THE SUBSIDIARY COMPANY AMTRAC AUTOMOBILES ( P.) LTD. WAS HAVING NO INCOME FOR LAST 10 YEARS. THE APPELLANT COMPANY INVESTED THERE TO HAVE LAND, BUILDING SHOWROOM FOR ITSELF. THE AO IS DIRECTED TO VERIFY THIS FACT AND DELETE THE A DDITION AS THERE IS NO EXEMPT INCOME IN THE TAX AUDIT REPORT I N P&L ACCOUNT FILED ALONGWITH RETURN. (EMPHASIS PROVIDED) 4. IT IS SEEN THAT THE POWER OF THE CIT(A) TO SET A SIDE HAS SUBSEQUENTLY BEEN WITHDRAWN BY THE FINANCE ACT W.E.F 01.06.2001. WE FIND SUB-SECTION (1) OF SECTION 251 OF THE INCOME TAX ACT, 1961 WHICH ADDRE SSES THE POWERS OF I.T.A .NO.-756/DEL/2014 PAGE 3 OF 3 COMMISSIONER OF APPEALS SPECIFICALLY MANDATES THAT WHILE DISPOSING THE APPEAL THE COMMISSIONER MAY CONFIRM, REDUCE, ENHANCE OR ANNUL THE ASSESSMENT. IN THE FACTS OF THE PRESENT CASE, WE FIND THAT THE LD. CIT(A) HAS EXERCISED A POWER WHICH IS NOT VESTED IN HIM BY THE STATUTE. ACCORDI NGLY, WE FIND THAT THE LD.SR.DR IS CORRECT IN HER SUBMISSIONS AS THE FINDI NG ARRIVED AT CANNOT BE SUSTAINED. IN VIEW THEREOF THE IMPUGNED ORDER IS S ET ASIDE AND THE ISSUE IS RESTORED BACK TO THE LD. CIT(A) WITH THE DIRECTION TO PASS A SPEAKING ORDER IN ACCORDANCE WITH LAW BY WAY OF OBTAINING A REMAND RE PORT, IF NEED BE FROM THE AO AND/ OR CARRY OUT THE NECESSARY VERIFICATION AT HIS OWN AND CONFRONTING THE SAME TO THE AO FOR REBUTTAL ETC. NEEDLESS TO SAY T HAT A REASONABLE OPPORTUNITY OF BEING HEARD SHALL BE GRANTED TO THE ASSESSEE. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSES IN TERMS OF THE ABOVE DIRECTIONS. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 09 OF FEBRUARY, 2016. SD/- SD/- (L.P.SAHU) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED:09/02/2016 *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTAN T REGISTRAR ITAT NEW DELHI