ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1, Kota V. SUDHA HOSPITAL & MEDICAL RESEARCH CENTRE, Kota

MA 101/JPR/2018

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 4204 (ITAT-JAIPUR)
• Duration Of Justice: 2 month(s) 4 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 04-10-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 30-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J C KULHARI
• Keywords: Earning of tax free income
• Section: 143(3); 14A

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ MA NO. 101/JP/2018 (ARISING OUT OF ITA NO. 671/JP/2017) ACIT, CIRCLE-1, KOTA. CUKE VS. SUDHA HOSPITAL AND MEDICAL RESEARCH CENTRE PVT. LTD. 11-A, TALWANDI, KOTA LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAGCS 2221 N VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI P.C. PARWAL (C.A.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI J.C. KULHARI (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 14/09/2018 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 04/10/2018 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THE PRESENT MISCELLANEOUS APPLICATION FILED BY THE REVENUE AGAINST THE ORDER PASSED BY THE CO-ORDINATE BENCH I N ITA NO. 671/JP/2017 DATED 09.10.2017. 2. THE REVENUE IN ITS APPLICATION HAS SUBMITTED THA T A SSESSMENT IN THIS CASE WAS COMPLETED U/S 143(3) ON 28.06.2016 AT INCOME OF RS. 1,93,98,130/- AS AGAINST INCOME OF RS.1,92,36,3 90/- DECLARED BY THE ASSESSEE. OUT OF THE TOTAL ASSESSED INCOME, ONE OF THE DISALLOWANCES MADE BY THE AO WAS U/S 14A OF THE IT ACT M.A. NO. 101/JP/2018 ACIT VS SHUDHA HOSPITAL AND MEDICAL RESEARCH CENTRE PVT. LTD. 2 AT RS. 1,61,741/- ON ACCOUNT OF INVESTMENT OF RS. 1 ,72,27,146/- IN SHARE. THE INCOME OF THIS INVESTMENT WAS NOT INC LUDIBLE WHILE COMPUTING THE TOTAL INCOME. THE ASSESSEE HAS NOT DI SALLOWED ANYTHING U/S 14A. ACCORDINGLY, THE ADDITION WAS MAD E IN THE LIGHT OF THE CENTRAL BOARD OF DIRECT TAXES VIDE CIR CULAR NO.05/2014. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE FILE D APPEAL BEFORE THE CIT(A), WHO ALLOWED THE APPEAL OF THE ASSESSEE RELYING ON THE VARIOUS DECISIONS OF DIFFERENT APPELLATE AUTHORITIE S. AGGRIEVED WITH THE ORDER OF THE CIT(A), DEPARTMENT PREFERRED APPEAL BEFORE HON'BIE ITAT ON THE FOLLOWING GROUND AS THE CASE WAS COVERED IN THE EXCEPTION UNDER PARA 8(B) OF CBD T CIRCULAR NO. 21/2015, DATED 10/12/2015: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN: (I) DELETING THE ADDITION OF RS. 1,61,741/- MADE BY THE AO U/S 14A OF THE IT ACT, 1961, R.W.R. 8D OF THE IT RULES, 19 62 AS AMENDED BY THE INCOME TAX (13 TH AMENDMENT) RULES, 2016 AND IN VIEW OF CBDT CIRCULAR NO. 05/2014 THE CENTRAL BOARD OF DIRECT TAXES VIDE CIRCULAR NO. 05/2014 CLARIFIED THE ISSUE AND ITS RELEVANT PORTION IS AS UNDER:- 'THUS, THE LEGISLATIVE INTENT IS TO ALLOW ONLY THAT EXPENDITURE WHICH IS RELATABLE TO EARNING OF INCOME AND IT THER EFORE FOLLOWS THAT THE EXPENSES WHICH ARE RELATABLE TO EARNING OF EXEMPT M.A. NO. 101/JP/2018 ACIT VS SHUDHA HOSPITAL AND MEDICAL RESEARCH CENTRE PVT. LTD. 3 INCOME HAVE TO BE CONSIDERED FOR DISALLOWANCE, IRRE SPECTIVE OF THE FACT THAT WHETHER ANY SUCH INCOME HAS BEEN EARN ED DURING THE FINANCIAL YEAR OR NOT.' AND THE RELEVANT PROVISIONS OF SECTION 14A ARE AS U NDER:- 14A [(1)] FOR THE PURPOSES OF COMPUTING THE TOTAL INCOME UNDER THIS CHAPTER, NO DEDUCTION SHALL BE ALLOWED IN RESPECT O F EXPENDITURE INCURRED BY THE ASSESSEE IN RELATION TO INCOME WHIC H DOES NOT FORM PART OF THE TOTAL INCOME UNDER THIS ACT.] [(2) THE ASSESSING OFFICER SHALL DETERMINE THE AMOU NT OF EXPENDITURE INCURRED IN RELATION TO SUCH INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THIS ACT IN ACCORDANCE WITH SUCH METHOD AS MAY BE PRESCRIBED, IF THE ASSESSING OFFICER, HAVING REGARD TO THE ACCOUNTS OF THE ASSESSEE, IS NOT SATISFIED WITH THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE IN RESPECT OF SUCH EXPENDITURE IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THIS A CT. (3) THE PROVISIONS OF SUB-SECTION (2) SHALL ALSO AP PLY IN RELATION TO A CASE WHERE AN ASSESSEE CLAIMS THAT NO EXPENDITURE H AS BEEN INCURRED BY HIM IN RELATION TO INCOME WHICH DOES NOT FORM PA RT OF THE TOTAL INCOME UNDER THIS ACT :] IT WAS SUBMITTED THAT THE TRIBUNAL HAD DISMISSED TH E APPEAL OF THE REVENUE VIDE PRESENT ORDER AND MENTIONED THA T THE REVENUE WAS NOT ABLE TO CONTROVERT THE FINDINGS AS RECORDED BY THE LD. CIT(A) IN HIS ORDER ON FACT AS WELL AS ON L AW, THEREFORE, NO REASON TO INTERFERE IN THE ORDER OF THE LD. CIT(A) AND SAME STANDS UPHOLD. M.A. NO. 101/JP/2018 ACIT VS SHUDHA HOSPITAL AND MEDICAL RESEARCH CENTRE PVT. LTD. 4 AGAINST THE ORDER OF THE ITAT, THE REVENUE HAS PRE FERRED APPEAL BEFORE HON'BLE HIGH COURT. HON'BLE HIGH COUR T VIDE ORDER DATED 08/05/2018 IN DBIT NO. 64/2018 STATING AS UND ER: THE APPEAL IS NOT MAINTAINABLE AT THIS STAGE. HOW EVER, IT WILL BE OPEN FOR THE APPELLANT TO CHALLENGE THE SAME BY WAY OF R EVIEW AND THE TRIBUNAL WILL CONSIDER THE REVIEW APPLICATION PREF ERRED BY THE APPELLANT. THE TIME TAKEN TILL TODAY FROM FILING OF THIS APPEAL WILL BE TAKEN INTO CONSIDERATION WHILE CONSIDERING THE RECT IFICATION APPLICATION. LIBERTY IS GRANTED THE CHALLENGE BOTH THE ORDER. IN THE LIGHT OF THE DECISION OF THE HONBLE HIGH C OURT, JAIPUR BENCH, JAIPUR IN DBIT APPEAL NO. 64/2018 AND IN VIEW OF TH E SECTION 254(2) OF THE IT ACT, 1961, IT IS PRAYED THAT THE ORDER DATED 09.10.2017 IN ITA NO. 671/JP/2017 IN THE CASE IF M/S SUDHA HOSPITAL A ND MEDICAL RESEARCH CENTRE PVT. LTD., KOTA MAY KINDLY BE REVIE WED IN THE LIGHT OF THE PROVISIONS OF SECTION 14A AND BOARDS CIRCULAR NO. 5/2014 AND ALSO CONSIDERING THAT THE CASE FALL IN THE EXCEPTIONS UN DER PARA 8(B) OF THE CIRCULAR 21/2015, DATED 10/12/2015 OF THE CBDT. THE APPEAL MAY KINDLY BE DECIDED ON MERIT. 3. THE LD. AR IS HEARD WHO HAS OPPOSED THE MISCELL ANEOUS APPLICATION. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ON PERUSAL OF THE ORD ER PASSED BY THE COORDINATE BENCH, IT IS NOTED THAT LIMITED ISSUE UN DER CONSIDERATION WAS DELETION OF RS. 1,61,741/- MADE U/S 14A OF THE ACT R.W.S. 8D OF THE IT RULES. THE COORDINATE BENCH HAS CONFIRMED THE FINDINGS M.A. NO. 101/JP/2018 ACIT VS SHUDHA HOSPITAL AND MEDICAL RESEARCH CENTRE PVT. LTD. 5 OF THE LD. CIT(A) THAT WHERE NO EXEMPT INCOME HAS B EEN EARNED BY THE APPELLANT TO WARRANT DISALLOWANCE AS PER THE PR OVISIONS U/S 14A R.W.S. 8D, THE ADDITION OF RS. 1,61,741/- WAS DIRE CTED TO BE DELETED. IT HAS BEEN OBSERVED BY THE COORDINATE BEN CH THAT THE REVENUE WAS NOT ABLE TO CONTROVERT THE FINDINGS SO RECORDED BY THE LD. CIT(A). ACCORDINGLY, THE COORDINATE BENCH FOUN D NO REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A) AND THE SAME WAS CONFIRMED AND THE MATTER WAS DECIDED ON MERITS OF T HE CASE. EVEN THOUGH THE LIBERTY HAS BEEN GRANTED BY THE HONBLE HIGH COURT TO THE REVENUE TO FILE THE PRESENT MISC. APPLICATION A ND WE HAVE ADMITTED THE SAME, THE REVENUE HAS NOT BEEN ABLE TO HIGHLIGHT WHAT SPECIFIC MISTAKE HAS OCCURRED IN THE ORDER PAS SED BY THE COORDINATE BENCH WHICH CALLS FOR RECTIFICATION UNDE R SECTION 254(2) OF THE ACT. THEREFORE, THE MISCELLANEOUS APPLICATIO N SO FILED THE REVENUE IS HEREBY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 04/10/2018. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 04/10/2018. * SANTOSH VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- ACIT, CIRCLE-1, KOTA. 2. IZR;FKHZ@ THE RESPONDENT- SUDHA HOSPITAL AND MEDICAL RESEARCH CENTRE PVT. LTD., KOTA. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) M.A. NO. 101/JP/2018 ACIT VS SHUDHA HOSPITAL AND MEDICAL RESEARCH CENTRE PVT. LTD. 6 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE { M.A. NO. 101/JP/2018} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR