Davalagiri Property Developers Private Limited , Bangalore V. Assistant Commissioner of Income Tax Circle-2(1)(2), Bangalore

ITA 851/BANG/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8072 (ITAT-BANGALORE)
• Duration Of Justice: 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 23-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Rectification of order; Earning of tax free income; Set aside
• Section: 143(3); 14A; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI B.R BASKARAN, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER ITA NO.851/BANG/2019 ASSESSMENT YEAR : 2013-14 DAVALAGIRI PROPERTY DEVELOPERS PVT. LTD., PRERANA CHAMBERS, 2 ND FLOOR, NEHRU NAGAR, MAIN ROAD, KUMAR PARK WEST, BENGALURU-560 020. PAN AACCD 3575 A VS. THE ASST. COMMISSIONER OF INCOME- TAX, CIRCLE 2(1)(2), BENGALURU. APPELLANT RESPONDENT APPELLANT BY : SHRI RAVISH RAO, C.A RESPONDENT BY : SHRI R.N SIDDAPPAJI, ADDL. CIT (DR) DATE OF HEARING : 10.07.2019 DATE OF PRONOUNCEMENT : 12.07.2019 O R D E R PER B.R BASKARAN, ACCOUNTANT MEMBER THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINS T THE ORDER DATED 22-02-2019 PASSED BY LD CIT(A)-2, BENGALURU AND IT RELATES TO THE ASSESSMENT YEAR 2013-14. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD CIT(A) IN PARTIALLY CONFIRMING THE A DDITION TO BOOK PROFIT OF EXPENSES RELATING TO EXEMPT INCOME. 2. WE HEARD THE PARTIES AND PERUSED THE RECORD. TH E ASSESSMENT IN THE HANDS OF THE ASSESSEE WAS ORIGINA LLY COMPLETED ON 28.03.2016 U/S 143(3) OF THE ACT. SUBSEQUENTLY THE AO NOTICED THAT THE ADDITION MADE U/S 14A OF THE ACT, BEING EX PENSES RELATED ITA NO.851/BANG/2019 PAGE 2 OF 5 TO EXEMPT INCOME AMOUNTING TO RS.9,47,670/- T THE T OTAL INCOME WAS NOT ADDED WHILE COMPUTING BOOK PROFIT U/S 115JB OF THE ACT. ACCORDINGLY THE AO PASSED A RECTIFICATION ORDER DAT ED 11.09.2017, WHEREIN HE ADDED RS.9,47,060/- TO THE BOOK PROFIT. 3. THE ASSESSEE CHALLENGED THE ADDITION SO MADE TO THE BOOK PROFITS BY FILING APPEAL BEFORE LD CIT(A). BEFORE THE FIRST APPELLATE AUTHORITY, THE ASSESSEE SUBMITTED THAT IT DID NOT R ECEIVE ANY EXEMPT INCOME AND HENCE NO DISALLOWANCE U/S 14A IS CALLED FOR. IN THE ALTERNATIVE, THE ASSESSEE SUBMITTED THAT IF AT ALL ANY ADDITION IS CALLED FOR, THEN THE SAME SHOULD BE RESTRICTED TO R S.4,39,299/-. TAKING CUE FROM THE ALTERNATIVE SUBMISSION, THE LD CIT(A) GAVE PARTIAL RELIEF TO THE ASSESSEE AND CONFIRMED ADDITI ON TO THE EXTENT OF RS.4,39,299/-. 4. THE CASE OF THE ASSESSEE BEFORE US IS THAT T HE LD CIT(A) HAS NOT ADJUDICATED THE MAIN CONTENTION, BUT CHOSE TO C ONFIRM THE ALTERNATIVE CONTENTION. HE SUBMITTED THAT THE ASSE SSEE DID NOT EARN ANY EXEMPT INCOME AND HENCE NO DISALLOWANCE U/S 14A FOR THE PURPOSES OF SEC.115JB IS ALSO CALLED FOR. ON THE CONTRARY, THE LD D.R SUBMITTED THAT THE ASSESSEE SHOULD NOT HAVE ANY GRIEVANCE, SINCE THE LD CIT(A) HAS ACCEPTED THE ALTERNATIVE CO NTENTIONS OF THE ASSESSEE. 5. HOWEVER, WE NOTICE THAT THE ISSUE ABOUT ADD ITION OF EXPENSES RELATING TO EXEMPT INCOME TO BE MADE IN TERMS OF PR OVISIONS OF SEC.115JB WAS DECIDED BY THE SPECIAL BENCH OF DELHI ITAT IN THE CASE OF VIREET INVESTMENTS (82 TAXMANN.COM 415), WH EREIN IT HAS ITA NO.851/BANG/2019 PAGE 3 OF 5 BEEN HELD THAT THE COMPUTATION MADE U/S 14A OF THE ACT CANNOT BE ADOPTED FOR THE PURPOSES OF COMPUTING BOOK PROFIT U /S 115JB OF THE ACT, MEANING THEREBY, THE AO IS REQUIRED TO COMPUTE THE ADDITION, IF ANY, BY CONSIDERING THE FACTS PREVAILING IN EACH CA SE. IN THE INSTANT CASE, WE NOTICE THAT THE AO HAS ADOPTED THE DISALLO WANCE COMPUTED BY HIM U/S 14A OF THE ACT FOR THE PURPOSES OF SEC.1 15JB AND THE SAME IS CONTRARY TO THE DECISION RENDERED BY THE SP ECIAL BENCH IN THE ABOVE SAID CASE. 6. THE LD A.R SUBMITTED THAT THE PROVISIONS OF C LAUSE (F) OF EXPLANATION 1 TO SEC.115JB OF THE ACT PROVIDES FOR ADDITION OF THE AMOUNT OR AMOUNTS OF EXPENDITURE RELATABLE TO ANY E XEMPT INCOME TO THE NET PROFIT. HE SUBMITTED THAT THE ASSESSEE DID NOT EARN ANY EXEMPT INCOME AND HENCE THE QUESTION OF APPORTIONIN G ANY EXPENSES DOES NOT ARISE. ACCORDINGLY, HE SUBMITTED THAT NO ADDITION IS CALLED FOR WHILE COMPUTING BOOK PROFIT U/S 115JB OF THE ACT. 7. SINCE THE COMPUTATION MADE BY THE AO IS CONT RARY TO THE DECISION RENDERED BY SPECIAL BENCH OF DELHI ITAT AN D SINCE THE AO DID NOT EXAMINE THE CONTENTIONS OF THE ASSESSEE DIS CUSSED IN THE PRECEDING PARAGRAPH, WE SET ASIDE THE ORDER PASSED BY LD CIT(A) AND RESTORE THIS ISSUE TO THE FILE OF THE AO WITH T HE DIRECTION TO EXAMINE THE CONTENTIONS OF THE ASSESSEE BY FOLLOWIN G THE DECISION RENDERED BY SPECIAL BENCH OF ITAT, REFERRED SUPRA. ITA NO.851/BANG/2019 PAGE 4 OF 5 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE I S TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH JULY, 2019. SD/ - (BEENA PILLAI) JUDICIAL MEMBER SD/ - (B.R BASKARAN) ACCOUNTANT MEMBER BANGALORE, DATED, 12 TH JULY, 2019. / VMS / COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3 . THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER A SST. REGISTRAR, ITAT, BANGALORE. ITA NO.851/BANG/2019 PAGE 5 OF 5 1. DATE OF DICTATION 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO SR.P.S .. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER .. 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S. .. 6. DATE OF UPLOADING THE ORDER ON WEBSITE.. 7. IF NOT UPLOADED, FURNISH THE REASON FOR DOING SO .. DICTATION NOTE ENCLOSED . 8. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 9. DATE ON WHICH ORDER GOES FOR XEROX & ENDORSEMENT 10. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 11. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER . 12. THE DATE ON WHICH THE FILE GOES TO DISPATCH SEC TION FOR DISPATCH OF THE TRIBUNAL ORDER . 13. DATE OF DESPATCH OF ORDER. ..