Assistant Commissioner of Income-tax, V. Shri Ravindra Maupatial Sakhla, Pune

ITA 915/PUN/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9182 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-07-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 12-06-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Depreciation; Earning of tax free income
• Section: 14A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE . . . . , , BEFORE SHRI D.KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO. 915/PUN/2015 / ASSESSMENT YEAR : 2011-12 ACIT, CIRCLE - 6, PUNE . /APPELLANT V/S SHRI RAVINDRA NAUPATLAL SAKLA, OFFICE NO.1 TO 5, MILLENNIUM STAR, NEAR RUBY HALL CLINIC, DHOLE PATIL ROAD, PUNE 411 002 PAN : ACEPS2235F . /RESPONDENT . / ITA NO. 823/PUN/2015 / ASSESSMENT YEAR : 2011-12 SHRI RAVINDRA NAUPATLAL SAKLA, OFFICE NO.1 TO 5, MILLENNIUM STAR, NEAR RUBY HALL CLINIC, DHOLE PATIL ROAD, PUNE 411 001 PAN : ACEPS2235F . /APPELLANT V/S ACIT, RANGE - 2, PUNE . /RESPONDENT ASSESSEE BY : SHRI NILESH KHANDELWAL REVENUE BY : SHRI MUKESH JHA, JCIT / ORDER PER D. KARUNAKARA RAO, AM : THESE ARE CROSS APPEALS FILED BY THE ASSESSEE AND T HE REVENUE RELATING TO THE ASSESSMENT YEAR 2011-12. THEY ARE FILED AGAINST THE ORDER OF CIT(A)-4, PUNE DATED 12-03-2015. BOTH THE APPEALS RELATE TO / DATE OF HEARING :12.07.2017 / DATE OF PRONOUNCEMENT:12.07.2017 2 ITA NO.915/PUN/2015 & ITA NO.823/PUN/2015 THE COMMON ISSUES REGARDING THE DISALLOWANCE U/S.14 A OF THE ACT READ WITH RULE 8D OF THE INCOME TAX RULES, 1962. THEREF ORE, BOTH THE APPEALS ARE CLUBBED AND ADJUDICATED BY THIS COMPOSI TE ORDER. 2. BRIEFLY STATED RELEVANT FACTS ARE THAT THE ASSES SEE IS AN INDIVIDUAL AND PARTNER IN VARIOUS PARTNERSHIP FIRMS. HE IS EN GAGED IN THE BUSINESS OF CONSTRUCTION AND PROMOTERS AND DEVELOPERS. HE F ILED THE RETURN OF INCOME ON 30-09-2011 DECLARING THE TOTAL INCOME OF RS.1,16,31,160/-. IN THE ASSESSMENT, AO DISALLOWED AN AMOUNT OF RS.48 ,33,662/- U/S.14A OF THE ACT. OTHERWISE, ASSESSEE REPORTED OF RECEIV ING EXEMPT INCOME BY WAY OF SHARE OF PROFIT FROM FIRMS AMOUNTING TO RS.2 4.50 CRORES (ROUNDED OFF). FURTHER, ASSESSEE RECEIVED EXEMPT DIVIDEND I NCOME TOO. IT IS THE CLAIM OF THE ASSESSEE THAT NO EXPENDITURE WAS INCUR RED FOR EARNING THE SHARE OF PROFIT AS WELL AS THE SAID DIVIDEND INCOME . HOWEVER, THE AO REJECTED THE ASSESSEES CLAIM AND PROCEEDED TO APPL Y THE PROVISIONS OF SECTION 14A R.W. RULE 8D OF THE ACT. DURING THE AS SESSMENT PROCEEDINGS, WITHOUT PREJUDICE, THE ASSESSEE SUBMITTED THAT DISA LLOWANCE OF THE EXPENDITURE, IF ANY, MAY BE RESTRICTED TO SUM OF RS .15,85,072/- ONLY. IT INCLUDES THE DISALLOWANCE OF RS.11,61,930/- UNDER C LAUSE 2(II) OF RULE 8D AND RS.3,21,615/- UNDER CLAUSE 2(III) OF RULE 8D OF THE INCOME TAX RULES, 1962. IGNORING THE SAME, THE AO QUANTIFIED THE DISALLOWANCE OF RS.1,84,949/- UNDER CLAUSE 2(II) OF RULE 8D AND RS. 46,48,813/- (@0.5% OF THE AVERAGE INVESTMENTS) UNDER RULE 8D(III) OF T HE RULES. WHILE MAKING DISALLOWANCES, THE AO CONSIDERED THE DEPREC IATION ALSO AS AN EXPENDITURE FOR THE CALCULATIONS UNDER RULE 8D OF T HE INCOME TAX RULES. 3. DURING THE FIRST APPELLATE PROCEEDINGS, ASSESSEE RELIED ON VARIOUS DECISIONS AND SUBMITTED THAT THE DISALLOWANCE MADE BY THE AO DOES NOT HAVE THE STRENGTH OF THE JUDICIAL PRONOUNCEMENTS. AFTER CONSIDERING THE 3 ITA NO.915/PUN/2015 & ITA NO.823/PUN/2015 ASSESSEES EXPLANATION, THE CIT(A) DIRECTED THE AO TO RESTRICT THE DISALLOWANCE TO THE EXTENT OF EXPENDITURE ACTUALLY CLAIMED BY THE ASSESSEE WHICH IS RS.15,85,072/- AND GRANTED RELIEF TO THE EXTENT OF RS.32,48,590/- (RS.48,33,662 RS.15,85,072/-). OF COURSE, DEPRECIATION CLAIM MUST NOT BE CONSIDERED FOR SAID DISALLOWANCES . CONTENTS OF PARA NO.8.4 OF THE CIT(A) ORDER IS RELEVANT. 4. AGGRIEVED WITH THE CONFIRMATION OF ADDITION OF R S.15,85,072/- THE ASSESSEE IS IN APPEAL BEFORE US. FURTHER, AGGRIEVED WITH THE RELIEF OF RS.32,48,590/- GRANTED TO THE ASSESSEE THE REVENUE IS IN APPEAL BEFORE US. REVENUE HAS ACCEPTED THE DECISION OF CIT(A) ON THE RELIEF RELATING TO THE DEPRECIATION CLAIM. 5. IN CONNECTION WITH THE ABOVE APPEALS OF THE ASSE SSEE AS WELL AS THE REVENUE, LD. COUNSELS FOR THE ASSESSEE AND THE REVENUE SUBMITTED THAT IDENTICAL ISSUES WERE SUBJECT MATTER OF ADJUDI CATION BEFORE THE TRIBUNAL FOR THE ASSESSMENT YEARS 2008-09 AND 2010- 11 VIDE ITA NOS. 159 AND 577/PUN/2014 IN THE ASSESSEES OWN CASE. T HE TRIBUNAL PASSED THE ORDER ON 08-01-2016 WHICH HAPPED TO BE SUBSEQUE NT IN TIME TO THE DATE OF THE ORDER OF THE CIT(A), I.E. 12-03-2015. THEY ALSO FAIRLY MENTIONED THAT THIS ORDER OF THE TRIBUNAL ANSWERS A LL THE ISSUES RAISED BY BOTH THE ASSESSEE AS WELL AS THE REVENUE. THEREFOR E, BOTH THE PARTIES CONCURRED TO THE PROPOSAL TO REMAND THE ISSUES TO T HE FILE OF THE AO FOR DECIDING THE ISSUES AFRESH IN THE LIGHT OF THE DECI SION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.YRS. 2008-09 TO 2010-11 ( SUPRA). WE FIND MERIT IN THE SAME. AS SUCH, THE ORDER OF THE TRIBU NAL DATED 08-01-2016 WAS NOT CONSIDERED BY THE CIT(A) AT THE TIME OF ORD ER OF THE CIT(A). ACCORDINGLY, ALL THE GROUNDS RAISED BY THE ASSESSEE AND THE REVENUE ARE RESTORED TO THE FILE OF THE AO FOR FRESH DECISION I N THE MATTER. IT GOES 4 ITA NO.915/PUN/2015 & ITA NO.823/PUN/2015 WITHOUT SAYING THAT THE AO SHALL GRANT REASONABLE O PPORTUNITY OF HEARING TO THE ASSESSEE. AO SHALL STRICTLY ADHERE TO THE O RDER OF THE TRIBUNAL (SUPRA). ACCORDINGLY, ALL THE GROUNDS RAISED BY TH E ASSESSEE AND THE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. 6. IN THE RESULT, THE APPEALS OF THE ASSESSEE AND T HE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 12 TH DAY OF JULY, 2017. SD/- SD/- (VIKAS AWASTHY) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE; DATED : 12 TH JULY, 2017. / COPY OF THE ORDER FORWARDED TO : / BY ORDER , // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE 1. / THE APPELLANT 2. / THE RESPONDENT 3. THE CIT(A) - 4 , PUNE 4. THE CIT - 4, PUNE 5 . DR, ITAT, A BENCH PUNE; 6 . / GUARD FILE.