ACIT, C-6, Ludhiana V. Majestic Hotels Ltd., Ludhiana

ITA 770/CHANDI/2018

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5764 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 28-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Earning of tax free income; Commercial expediency; Rule 8D; Set aside
• Section: 14A

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, B, CHANDIGARH , ! '# $ % & '# , () BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ./ ITA NO. 770/CHD/2018 / ASSESSMENT YEAR : 2013-14 THE ACIT , CIRCLE-6, LUDHIANA VS. M/S MAJESTIC HOTELS LTD., FEROZEPUR ROAD, LUDHIANA ./PAN NO: AAACH9066F / APPELLANT /RESPONDENT ! /ASSESSEE BY : NONE ' ! / REVENUE BY : SH. MANJIT SINGH, SR, DR # $ % /DATE OF HEARING : 20.11.2018 &'() % / DATE OF PRONOUNCEMENT : 17.12. 2018 (*/ ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVENU E AGAINST THE ORDER DATED 16.3.2018 OF THE COMMISSIONER OF INCOME TAX(APPEALS)-3, LUDHIANA [HEREINAFTER REFERRED TO AS CIT(A)]. 2. NONE HAS COME PRESENT ON BEHALF OF THE ASSESSEE. HOWEVER, WE FIND THAT SINCE THE IDENTICAL ISSUES HAVE BEEN RAISED IN THE APPEALS FOR EARLIER ASSESSMENT YEARS AND THE MATTER HAS BEEN HEARD ON 2 8.8.2011, SINCE THE FINDINGS ARRIVED AT IN THE APPEAL FOR THE EARLIER ASSESSMENT YEAR WILL ALSO APPLY TO THE IDENTICAL ISSUES RAISED IN THE YEAR UN DER CONSIDERATION, HENCE, THIS APPEAL IS ADJUDICATED AFTER HEARING THE LD. DR . ITA NO. 770-CHD-2018- M/S MAJESTIC HOTELS LTD., LUDHIANA 2 3. THE REVENUE IN THIS APPEAL HAS TAKEN THE FOLLOWI NG GROUNDS:- 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF T HE CASE IN LAW, THE COMMISSIONER OF INCOME TAX (APPEALS) WAS JUSTIFIED IN DELETING THE DISALLOWANCE OF RS. 51,64 ,563/- MADE BY THE ASSESSING OFFICER UNDER SECTION 14A OF THE INCOME TAX ACT READ WITH RULE 8D OF THE INCOME-TAX RULES ON THE REASONING THAT NO EXEMPT INCOME WAS EARNED IN THE RELEVANT YEAR? 1.1 WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE COMMISSIONER OF INCOME-TAX (APPEALS) WAS JUSTIFIED IN DELETING THE DISALLOWANCE OF RS. 51,64 ,563/- MADE BY THE ASSESSING OFFICER UNDER SECTION 14A OF THE INCOME TAX ACT PARTICULARLY WHEN THE SIMILAR DISALL OWANCE HAD BEEN PARTLY CONFIRMED BY THE CIT(A) IN THE CASE OF M/S MALWA COTTON & SPINNING MILLS LTD. IN AYS 2010- 11, 2011-12 AND 2012-13? 1.2 WHETHER ON THE FACTS & CIRCUMSTANCES OF THE CASE AN D IN LAW, THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS JUSTIFIED IN NOT FOLLOWING THE RATIOS LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF MAXOPP INDUSTR Y LIMITED 402 ITR 640 AND GODREJ & BOYCE MFG. CO. LTD . 394 ITR 449 AND CBDT'S CIRCULAR NO. 05/2014. 2. WHETHER ON THE FACTS & CIRCUMSTANCES OF THE CAS E AND IN LAW, THE COMMISSIONER OF INCOME-TAX (APPEALS) WAS JUSTIFIED IN DELETING THE DISALLOWANCE OF RS.1,37,1 2,660/- MADE BY THE ASSESSING OFFICER UNDER SECTION 36(I)(I II) OF THE INCOME-TAX ACT PARTICULARLY WHEN SHE HAS FOL LOWED THE DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF ABHISHEK INDUSTRIES LTD. 286 ITR 1 IN MANY CASES WHILE CONFIRMING THE DISALLOWANCE OF INTEREST ? 2.1 WHETHER ON THE FACTS & CIRCUMSTANCES OF THE CA SE AND IN LAW. THE COMMISSIONER OF INCOME-TAX (APPEALS) WAS JUSTIFIED IN DELETING THE DISALLOWANCE OF RS. 1,37, 12,660/- MADE BY THE ASSESSING OFFICER UNDER SECTION 36(L)(I II) OF THE INCOME-TAX ACT PARTICULARLY WHEN THE SAID ADVAN CES GIVEN TO M/S MACRO DAIRY VENTURE PVT. LTD. WERE MAD E OUT OF COMPOSITE FUNDS INCLUDING THE BORROWED FUNDS? 2.2 WHETHER ON THE FACTS &. CIRCUMSTANCES OF THE CA SE AND IN LAW, THE COMMISSIONER OF INCOME-TAX (APPEALS) WAS JUSTIFIED IN DELETING THE DISALLOWANCE OF RS. 1,37, 12,660/- MADE BY THE ASSESSING OFFICER UNDER SECTION 36(L)(I II) OF ITA NO. 770-CHD-2018- M/S MAJESTIC HOTELS LTD., LUDHIANA 3 THE INCOME-TAX ACT PARTICULARLY WHEN THE ASSESSEE F AILED TO DEMONSTRATE THE COMMERCIAL EXPEDIENCY OF ADVANCES W ERE GIVEN TO M/S MACRO DAIRY VENTURE PVT. LTD. OUT OF COMPOSITE FUNDS INCLUDING THE BORROWED FUNDS? THAT THE ORDER OF THE CIT(A) ON THE ABOVE ISSUES RA ISED IN THIS APPEAL BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESORTED TO. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY GROUND OF APPEAL BEFORE IT IS FINALLY DISPOSED OFF. 4. GROUND NOS. 1, 1.1 & 1.2: THE ISSUE RAISED BY THE REVENUE VIDE THESE GROUNDS IS IN RESPECT OF THE ACTION OF THE LD . CIT(A) IN DELETING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER U/S 14A OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). 5. A PERUSAL OF THE ABOVE GROUNDS OF APPEAL ITSELF REVEALS THAT THE LD. CIT(A) HAS DELETED THE ADDITIONS MADE BY THE ASSES SING OFFICER U/S 14A OF THE ACT ON THE GROUND THAT THE ASSESSEE DID NOT E ARN ANY EXEMPT INCOME DURING THE YEAR UNDER CONSIDERATION. THE ISSUE IS S QUARELY COVERED IN FAVOUR OF THE ASSESSEE BY VARIOUS DECISIONS OF THE HON'BLE HIGH COURTS INCLUDING THAT OF THE HON'BLE JURISDICTIONAL HIGH COURT OF PUNJAB AND HARYANA IN THE CASE OF CIT VS. WINSOME TEXTILES (2009) 319 ITR 204 (P&H) AND HON'BLE DELHI HIGH COURT IN THE CASE OF CHEMINVEST LTD VS. ITO (2015) 378 ITR 33 (DELHI) AND OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CORRTECH ENERGY P. LTD. (2014) 45 T AXMAN.COM 116 AND FURTHER OF THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. M/S SHIVAM MOTORS (P) LTD (2014) 272 CTR (ALL) 277. IN ALL THE ABOVE REFERRED TO CASE LAWS, THE HON'BLE HIGH COURTS HAVE BEEN UNANIMOUS TO HOLD THAT NO DISALLOWANCE IS ATTRACTED U/S 14A IN CASE THE ASSESSEE HAS NOT ITA NO. 770-CHD-2018- M/S MAJESTIC HOTELS LTD., LUDHIANA 4 EARNED ANY INCOME NOT FORMING PART OF THE TOTAL INC OME. IN VIEW OF THIS, WE DO NOT FIND ANY MERIT ON THIS ISSUE RAISED BY T HE REVENUE. 6. GROUND NOS. 2, 2.1 & 2.2 : VIDE THESE GROUNDS, THE REVENUE HAS AGITATED THE ACTION OF THE CIT(A) IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER OUT OF THE INTEREST EXPENDITURE U /S 36(I)(III) OF THE INCOME TAX ACT. IDENTICAL ISSUE HAS BEEN RAISED BY THE REVENUE IN THE EARLIER ASSESSMENT YEAR 2012-13 WHICH HAS BEEN DECI DED BY THIS TRIBUNAL IN THE OWN CASE OF THE ASSESSEE BY THIS BENCH VIDE ORD ER DATED 26.11.2018, WHEREIN, THE TRIBUNAL AFTER CONSIDERING THE RIVAL SUBMISSIONS OF THE PARTIES HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDING THAT ASSESSEE WAS POSSESSED OF SUFFICIENT OWN FUNDS TO MEET THE I NVESTMENT / INTEREST FREE ADVANCES MADE. THE TRIBUNAL WHILE ALLOWING TH IS ISSUE IN FAVOUR OF THE ASSESSEE HAS RELIED UPON THE DECISION OF THE HO N'BLE BOMBAY HIGH COURT IN THE CASE OF RELIANCE UTILITIES AND POWER LTD. 313 ITR 340 AND OF THE HON'BLE JURISDICTIONAL HIGH COURT IN BRIG HT ENTERPRISE PVT LTD. VS. CIT 381 ITR 107. NO DISTINGUISHING FACT HAS BEEN POINTED OUT BY THE LD. DR FOR THE YEAR UNDER CONSIDERATION. THIS ISS UE IS SQUARELY COVERED BY THE VARIOUS DECISIONS OF THE HON'BLE JURISDICTI ONAL HIGH COURT IN CIT VS. KAPSONS ASSOCIATES (2016) 381 ITR 204 (P&H), A ND THE LATEST DECISION OF THE TRIBUNAL IN THE CASE OF ACIT VS. JANAK GLOBAL RESOURCES PVT LTD ITA NO. 470/CHD/2018 ORDER DATED 16.10.201 8, (INCIDENTALLY CONSISTED OF BOTH OF US), WHEREIN, THE ISSUE HAS B EEN DECIDED IN FAVOUR OF THE ASSESSEE BY ALSO CONSIDERING THE DECISION OF TH E HON'BLE APEX COURT IN THE CASE OF HERO CYCLES VS. CIT 379 ITR 347 (SC) AND ALSO FINDINGS ARRIVED IN THE CASE OF AVON CYCLES LTD. VS. CIT IN ITA NO.277 OF 2013. ITA NO. 770-CHD-2018- M/S MAJESTIC HOTELS LTD., LUDHIANA 5 HENCE, THIS ISSUE IS ACCORDINGLY DECIDED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 7. NO OTHER ISSUE HAS BEEN RAISED. IN VIEW OF THIS , WE DO NOT FIND ANY MERIT IN THE APPEAL OF THE REVENUE AND THE SAME IS ACCORDINGLY DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17.12.2018 SD/- SD/- ( $ % & '# / ANNAPURNA GUPTA) () / ACCOUNTANT MEMBER ( / SANJAY GARG) / JUDICIAL MEMBER DATED : 17.12 . 2018 .. '+ ,- .- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. # / / CIT 4. # / ( )/ THE CIT(A) 5. -01 2 , % 2 , 34516 / DR, ITAT, CHANDIGARH 6. 15 7$ / GUARD FILE '+ # / BY ORDER, 8 ' / ASSISTANT REGISTRAR 1.