DCIT, Jaipur V. MAHINDRA WORLD CITY(JAIPUR) LTD., Jaipur

ITA 914/JPR/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5206 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-08-2016
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 31-12-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJINDER SINGH
• Assessee Lawyers: ROHAN SOGANI CA DH R
• Keywords: Opportunity of being heard; Earning of tax free income; Additional evidence
• Section: 14A

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH HKKXPUN] YS[KK LNL; ,OA JH YFYR DQEKJ] U;KF;D LN L; DS LE{K BEFORE:SHRI BHAGCHAND, AM & SHRI LALIET KUMAR, J M VK;DJ VIHY LA-@ ITA NO. 914/JP/2014 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2010-11 THE DCIT CIRCLE -2 JAIPUR CUKE VS. M/S. MAHINDRA WORLD CITY (JAIPUR) LTD. 411, NEELKANTH TOWER, BHAWANI SINGH ROAD C-SCHEME JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AAECM 4950 C VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY: SHRI RAJINDER SINGH, ADDL. CIT -DR FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI RAJEEV SOGANI AND SHRI ROHAN SOGANI, CA LQUOKBZ DH RKJH[K@ DATE OF HEARING : 15/07/2016 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 04 /08/2016 VKNS'K@ ORDER PER BHAGCHAND, AM THE REVENUE HAS FILED AN APPEAL AGAINST THE ORDER OF THE LD. CIT(A)-I, JAIPUR DATED 29-10-2014 FOR THE ASSESSMEN T YEAR 2010-11 RAISING THEREIN FOLLOWING GROUNDS OF APPEAL. (I) WHETHER ON THE FACTS IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS. 66,26,803/- MADE BY THE AO ON ACCOUNT OF DISAL LOWANCE OF INTEREST EXPENSES ON OD FACILITIES. ITA NO. 914/JP/2014 THE DCIT, CIRCLE- 2, JAIPUR VS. M/S. MAHINDR A WORLD CITY (JAIPUR) LTD. JAIPUR . 2 (II) WHETHER ON THE FACTS IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE DISALLOWANCE OF RS. 1,62,04,699/- MADE BY THE AO U/S 14A OF THE I.T. ACT, 1961 (III) WHETHER ON THE FACTS IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE AFORESAID ADDITIONS BY ADMITTING THE ADDITIONAL EVIDENCES WIT HOUT GIVING PROPER OPPORTUNITY OF VERIFICATION TO THE ASSESSING OFFICER, VIOLATING THE PROVISION OF RULE 46A(3) OF THE INCOM E TAX RULES, 1962 2.1 AT THE OUTSET OF THE HEARING, THE LD. DR THROUG H GROUND NO. (III) PRAYED THAT LD. CIT(A) HAS DECIDED BOTH THE ISSUES IN FAVOUR OF THE ASSESSEE BY ADMITTING THE ADDITIONAL EVIDENCES WITH OUT GIVING PROPER OPPORTUNITY OF VERIFICATION TO THE ASSESSING OFFICE R WHICH IS A VIOLATION OF THE PROVISION OF RULE 46A(3) OF THE INCOME TAX RULE S, 1962. FOR THE SAKE OF CONVENIENCE AND BREVITY, THE CONCLUDING PARA OF LD. CIT(A)S ORDER ON BOTH THE ISSUES OF THE ASSESSEE ARE AS UNDER:- PAGE 5 FOR GROUND NO. 1- I HAVE DULY CONSIDERED THE SUBMISSIONS OF THE APPELLANT AND HAVE ALSO GONE THR OUGH THE ASSESSMENT ORDER. I HAVE ALSO CONSIDERED THE SUBMIS SIONS MADE BY THE APPELLANT AND HAVE ALSO GONE THROUGH TH E ASSESSMENT ORDER. . IT IS HOWEVER NOTED FROM THE DETAILS OF FURNISHE D BY THE APPELLANT THAT ASSUMPTION MADE BY THE AO IS NOT CORRECT. IT IS FURTHER NOTED THAT THE AO HAS MADE THE DISALL OWANCE ONLY ON THE BASIS OF ASSUMPTIONS AND THAT TOO WITHO UT ITA NO. 914/JP/2014 THE DCIT, CIRCLE- 2, JAIPUR VS. M/S. MAHINDR A WORLD CITY (JAIPUR) LTD. JAIPUR . 3 OBTAINING ANY EXPLANATION FROM THE APPELLANT IN THI S REGARD. THE DETAILED WORKING FURNISHED BY THE APPELLANT SHO WS THAT THE TOTAL INTEREST DEBITED WAS ONLY RS. 77,733/- AN D THE INTEREST BEARING O/D FUNDS WERE NOT UTILIZED FOR GE TTING TAX FREE INCOME. ON SIMILAR FACTS LD. CIT(A)-1 JAIPUR D ATED 16- 09-2013 HAS DELETED THE ADDITION MADE ON SAME GROUN D. THE DISALLOWANCE MADE BY THE AO, THEREFORE, APPEARS TO BE WITHOUT ANY BASIS AND IS ACCORDINGLY DELETED. APPEL LANT GETS RELIEF OF RS. 66,26,803/-. PAGES 27 & 28 FOR GROUND NO. 2 IT IS CLEAR FROM DECISIONS (IBID) THAT THE PROVISIONS OF RULE 8D CAN NOT BE INVOKED ON THE BASIS OF MERE PRESUMPTION. IT IS NOT ED THAT IN THE PRESENT CASE THE PROVISIONS OF SECTION 14A READ WITH RULE 8D HAVE BEEN INVOKED ONLY ON THE BASIS OF PRESUMPTI ON, WITHOUT BRINGING OUT ANY SPECIFIC FACT WITH RESPECT TO THE EXPENDITURE INCURRED FOR EARNING EXEMPT INCOME. THE AO HAS NOT BROUGHT ON RECORD ANY FACT TO SHOW THAT THE APPELLANTS CASE REQUIRED APPLICATION OF RULE 8D, E XCEPT FOR SAYING MECHANICALLY THAT THE EXEMPT INCOME COULD NO T HAVE BEEN EARNED IN A VACUUM. AS MENTIONED ABOVE, THIS T YPE OF GENERAL OBSERVATION IS NOT SUFFICIENT TO APPLY THE PROVISIONS OF RULE 8D. THE DISALLOWANCE MADE BY THE AO THEREFO RE, APPEARS TO BE UNJUSTIFIED. THEREFORE, ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND ALSO AFTER DULY CONSIDERING SUBMISSIONS OF APPELLAN T AND CONTENTION OF AO, I FIND THAT WHEN THE INVESTMENT H AS BEEN MADE BY THE APPELLANT COMPANY OUT OF ITS OWN FUNDS, ALSO WHEN THE AO HAS NOT GIVEN THE SPECIFIC / CATEGORICA L FINDINGS IN THE ASSESSMENT ORDER AND DULY CONSIDERING VARIOU S JUDGEMENTS AS MENTIONED ABOVE, DISALLOWANCE OF RS. 1,62,04,699/- MADE U/S 14A OF THE ACT CANNOT BE SUS TAINED. ACCORDINGLY, ASSESSEE GETS RELIEF OF RS. 1,62,04,69 9/-. ITA NO. 914/JP/2014 THE DCIT, CIRCLE- 2, JAIPUR VS. M/S. MAHINDR A WORLD CITY (JAIPUR) LTD. JAIPUR . 4 2.2 THE LD. AR VEHEMENTLY OPPOSED THE SUBMISSIONS O F THE LD. DR . HOWEVER, THE LD. AR SUPPORTED THE ORDER OF THE LD . CIT(A). 2.3 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN NUT SHELL, THE ISSUE IN QUE STION IS THAT THE LD. CIT(A) HAS DECIDED THE GROUND NO. 1 AND GROUND NO. 2 IN FAVOUR OF THE ASSESSEE BY ADMITTING THE ADDITIONAL EVIDENCES WITH OUT GIVING PROPER OPPORTUNITY OF VERIFICATION TO THE ASSESSING OFFICE R AND THUS VIOLATING THE PROVISIONS OF RULE46A(3) OF THE INCOME TAX RULES, 1 962. THE LD. DR DURING THE COURSE OF HEARING PRAYED THAT THE ADDITI ONAL EVIDENCES PLACED BEFORE THE LD. CIT(A) WERE NEITHER FILED BEFORE THE AO NOR REFERRED TO THE AO FOR VERIFICATION DURING APPELLATE PROCEEDINGS. H ENCE, THE DEPARTMENT SHOULD BE GIVEN PROPER OPPORTUNITY TO TAKE INTO CON SIDERATION THE ADDITIONAL EVIDENCES FOR VERIFICATION. AFTER HEARIN G BOTH SIDES, WE IN THE INTEREST OF JUSTICE AND EQUITY REMAND THE ISSUES RA ISED IN THE GROUND NO. 1 AND 2 OF THE REVENUE TO THE FILE OF THE LD. CIT(A ) TO DECIDE AFRESH AFTER GIVING ADEQUATE OPPORTUNITY OF BEING HEARD TO BOTH THE PARTIES. HENCE, THE APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PU RPOSES. ITA NO. 914/JP/2014 THE DCIT, CIRCLE- 2, JAIPUR VS. M/S. MAHINDR A WORLD CITY (JAIPUR) LTD. JAIPUR . 5 3.0 IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 04 /08/201 6. SD/- SD/- YFYR DQEKJ HKKXPUN (LALIET KUMAR) (BHAGCHAND ) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 04 /08/ 2016 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE DCIT, CIRCLE-2. JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- M/S. MAHINDRA WORLD CITY (JAIPUR) L TD. JAIPUR 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 914/JP/2014) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR