PINEBRIDGE INVESTMENTS CAPITAL INDIA P. LTD., MUMBAI V. PR. CIT, RANGE-8, MUMBAI

ITA 800/MUM/2021

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 6910 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-08-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2015-2016
• Appeal Filed On: 17-05-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revision of order; Earning of tax free income; Assessment record; Rule 8D; Set aside
• Section: 263; 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C, MUMBAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO.800/M/2021 ASSESSMENT YEAR: 2015-16 M/S. PINEBRIDGE INVESTMENTS CAPITAL (INDIA) PVT. LTD., 1101, TOWER-B, PENINSULA BUSINESS PARK, G.K. MARG, LOWER AUTHORITIES PAREL, MUMBAI-400 013 PAN: AAFCA 7262A VS. PR. CIT RANGE-8, ROOM NO.611, 6 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 (APPELLANT) (R ESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI MADHUR AGARWAL, A.R. REVENUE BY : SHRI RAJEEV SAHU, D.R. DATE OF HEARING : 22.07.2021 DATE OF PRONOUNCEMENT : 04.08.2021 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 24.11.2017 OF THE PRINCIPAL COMMISSIONER OF INCOME TAX [HEREINAFTER REFERRED TO AS THE PCIT] RELEVANT TO ASSESSMENT YEAR 2015-16. 2. THE COMMON ISSUE RAISED IN ALL THE THREE GROUND S OF APPEAL IS AGAINST THE INVALID EXERCISE OF REVISIONA RY JURISDICTION BY LD. PCIT UNDER SECTION 263 OF THE ACT WHEREBY TH E LD. PCIT HAS DIRECTED THE AO TO COMPUTE THE DISALLOWANCE UND ER SECTION 14A OF THE ACT WHICH RUNS CONTRARY TO THE DECISION OF HONBLE SUPREME COURT AND HIGH COURTS WHEREIN THESE JUDICIA L FORUMS ITA NO.800/M/2021 M/S. PINEBRIDGE INVESTMENTS CAPITAL (INDIA) PVT. LT D. 2 HAVE HELD THAT NO DISALLOWANCE COULD BE MADE WHERE THERE IS NO EXEMPT INCOME DURING THE YEAR. 3. THE FACTS IN BRIEF ARE THAT THE ASSESSMENT IN TH IS CASE WAS FRAMED UNDER SECTION 143(3) OF THE ACT VIDE ORDER D ATED 24.11.2017. THEREAFTER, THE LD. PCIT, ON PERUSAL O F THE ASSESSMENT RECORDS PARTICULARLY NOTE NO.11 OF BALAN CE SHEET, OBSERVED THAT THE ASSESSEE HAS MADE HUGE INVESTMENT S IN SHARES IN ITS INDIAN SUBSIDIARY, HOWEVER, NO DISALL OWANCE UNDER SECTION 14A WAS MADE. THE LD. PCIT HAS FURTHER OBS ERVED THAT THESE INVESTMENTS ARE CAPABLE OF EARNING OF EXEMPT INCOME NONETHELESS NO INCOME WAS DERIVED IN THE YEAR UNDER CONSIDERATION AND SINCE NEITHER ASSESSEE NOR AO DIS ALLOWED ANY EXPENSES AS PER RULE 8D, THEREFORE, THE SAME WAS RE QUIRED TO BE WORKED OUT AND DISALLOWED ACCORDINGLY. CONSEQUENTL Y, THE LD. PCIT ISSUED A NOTICE UNDER SECTION 263 OF THE ACT D ATED 19.03.2021 GIVING A SHOW CAUSE NOTICE TO THE ASSESS EE AS TO WHY THE ASSESSMENT FRAMED UNDER SECTION 143(3) DATED 24 .11.2017 SHOULD NOT BE REVISED AS THE SAME IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE ASSESSEE SUBMI TTED BEFORE THE LD PCIT THAT ASSESSEE HAS NOT EARNED ANY EXEMP T INCOME DURING THE YEAR BY PLACING RELIANCE ON VARIOUS DECI SIONS AS UNDER: 1. CIT VS CHETTINAD LOGIISTICS 9P) LTD (2017) 80 TAXMA NN.COM 221 (MADRAS) 2. SUNBEAM AUTO LTD VS CIT (2011)(332 ITR 167) 3. IDEA CELLULAR LTD VS DOT (2008) 301 ITR 407 4. MAX INDIA LTD VS CIT (1993) 203 ITR 108 (BOM H C) THE SUBMISSIONS OF THE ASSESSEE DID NIOT FIND FAVOU R WITH THE LD PCIT AND HE SET ASIDE THE ASSESSMENT FRAMED U/S 143 (3) OF THE ACT DATED 24.11.2017. ITA NO.800/M/2021 M/S. PINEBRIDGE INVESTMENTS CAPITAL (INDIA) PVT. LT D. 3 4. THE LD. A.R. SUBMITTED BEFORE THE BENCH THAT SI NCE THE ASSESSE WAS NOT HAVING ANY EXEMPT INCOME DURING THE YEAR , NO DISALLOWANCE WAS MADE EITHER THE ASSESSE OR BY THE AO IN VIEW OF THE SETTLED LEGAL POSITION AS DISCUSSED HEREINAB OVE. THE LD AR ARGUED THAT ASSESSMENT FRAMED UNDER SECTION 143(3) DATED 24.11.2017 WAS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF THE REVENUE AS THE SAME HAS BEEN PASSED IN CONSO NANCE WITH VARIOUS DECISIONS AS CITED ABOVE OF THE HON'BLE APE X COURT AND VARIOUS HIGH COURTS INCLUDING JURISDICTIONAL HIGH C OURT, THEREFORE THE ORDER AS PASSED BY THE LD. PCIT UNDER SECTION 263 SETTING ASIDE THE ASSESSMENT MAY KINDLY BE QUASHED AS THE ASSUMPTION OF JURISDICTION U/S 263 IS WRONG AND INV ALID. 5. THE LD. D.R., ON THE OTHER HAND, RELIED HEAVILY ON THE ORDER OF LD. PCIT BY SUBMITTING THAT AT THIS STAGE IT WOU LD BE PREMATURED TO LOOK INTO THE MATTER WHETHER ANY DISA LLOWANCE UNDER SECTION 14A COULD BE MADE OR NOT. THE LD. D. R. SUBMITTED THAT THE AO MAY EXAMINE THE ISSUE IN THE SET ASIDE PROCEEDINGS AND DECIDE THE MATTER ACCORDINGLY. 6. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE FIND THAT THE REVISIONARY JURISDICTION H AS BEEN EXERCISED BY THE LD. PCIT UNDER SECTION 263 MERELY ON THE GROUND THAT AO HAS NOT MADE ANY DISALLOWANCE UNDER SECTION 14A OF THE ACT ON THE INVESTMENTS WHICH ARE CAPABLE OF YIELDING DIVIDEND INCOME WHILE ACCEPTING UNDISPUTEDLY THAT D URING THE YEAR THE ASSESSEE HAS NOT RECEIVED ANY EXEMPT INCOM E BY WAY OF DIVIDEND FROM SHARES. WE HAVE ALSO PERUSED THE DEC ISIONS RELIED UPON BY THE ASSESSEE OF VARIOUS HIGH COURTS INCLUDI NG JURISDICTIONAL HIGH COURT AND ALSO THE DECISION OF HONBLE ITA NO.800/M/2021 M/S. PINEBRIDGE INVESTMENTS CAPITAL (INDIA) PVT. LT D. 4 SUPREME COURT IN THE CASE OF MAXOPP INVESTMENTS LTD . VS. CIT 402 ITR 604 (SC) WHEREIN IT HAS BEEN HELD THAT NO D ISALLOWANCE IS CALLED FOR WHERE THE ASSESSEE HAS NOT RECEIVED A NY EXEMPT INCOME DURING THE YEAR FROM THE INVESTMENTS. BESIDE S WE NOTE THAT THE AO HAS SPECIFICALLY EXAMINED THIS ISSUE DU RING THE COURSE OF ASSESSMENT PROCEEDINGS AND THE ASSESSEE H AS FILED DETAILED SUBMISSIONS BEFORE THE AO AND THE AO, AFTE R TAKING INTO CONSIDERATION THE REPLY OF THE ASSESSE, HAS TAKEN A VIEW THAT NO DISALLOWANCE IS CALLED FOR. IN VIEW OF THESE FACTS AND CIRCUMSTANCES AND THE RATIO LAID DOWN BY VARIOUS JU DICIAL FORUMS, IN OUR CONSIDERED OPINION THE EXERCISE OF R EVISIONARY JURISDICTION IS INVALID AND CONSEQUENTLY THE PROCEE DINGS U/S 263 OF THE ACT AND RESULTANT ORDER OF PCIT IS QUASHED . 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 04.08.2021. SD/- SD/- ( RAVISH SOOD) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 04.08.2021. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASS TT. REGISTRAR, ITAT, MUMBAI.