DCIT, C-6(1), Mohali V. M/s Active Clothing Co. Pvt. Ltd., Mohali

MA 110/CHANDI/2019

• Counselvise Citation: [2019] 111 COUNSELVISE.COM (IT) 5541 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 month(s) 10 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 04-10-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 24-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ARVIND SUDERSHAN
• Keywords: Earning of tax free income; Tax effect; Rule 8D
• Section: 14A; 254(2)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER & MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER M.A. NO. 110/CHD/2019 ( ARISING OUT OF ITA NO. 657/CHD/2018 DECIDED VIDE ORDER 18.11.2018) / ASSESSMENT YEAR : 2012-13 THE DCIT, VS. M/S ACTIVE CLOTHING CO.PVT. LTD. CIRCLE 6(1), E-225, INDL. AREA, PHASE 8B, MOHALI MOHALI PAN NO. AADCA4562D (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI TEJ MOHAN SINGH, ADVOCATE RESPONDENT BY : SHRI ARVIND SUDERSHAN, SR.DR DATE OF HEARING : 04.10.2019 DATE OF PRONOUNCEMENT : 04.10.2019 ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT MISCELLANEOUS APPLICATION HAS BEEN MOVE D BY THE DCIT, CIRCLE 6(1), MOHALI/THE CONCERNED ASSESSING O FFICER (A.O.) PLEADING THEREIN THAT THE ORDER OF THE TRIBU NAL DATED 28.112018 PASSED IN ITA NO.657/CHD/2018, RELEVANT TO ASSESSMENT YEAR 2012-13 IS NOT ACCEPTABLE TO THE A.O. BECAUSE OF THE REASONS MENTIONED IN THE APPLICATION. IT HAS BEEN PLEADED I N THE SAID 2 APPLICATION THAT THE APPEAL OF THE REVENUE WAS DISM ISSED AS HAVING TAX EFFECT LESS THAN THE PRESCRIBED LIMIT OF RS.20 LACS AS PRESCRIBED VIDE CBDT CIRCULAR NO.3/2018 DATED 11.7.2018 FOR FI LING THE APPEAL BEFORE THE TRIBUNAL. THAT HOWEVER, ON MERITS THE RE VENUE HAS A CASE IN THE LIGHT OF THE CBDT CIRCULAR NO.5/2014 WHICH P ROVIDES THAT DISALLOWANCE OF EXPENDITURE FOR EARNING TAX EXEMPT INCOME U/S 14A OF THE INCOME TAX ACT (IN SHORT THE ACT), 1961 RE AD WITH RULE 8D OF THE INCOME TAX RULES, 1962 IS TO BE MADE IRRESPE CTIVE OF THE FACT THAT ASSESSEE HAS NOT EARNED ANY TAX EXEMPT INCOME. 2. WE HAVE HEARD THE RIVAL CONTENTIONS. ADMITTEDLY, THE APPEAL OF THE REVENUE WAS DISMISSED BECAUSE OF LOW TAX EFFECT AS BEING HIT BY CBDT CIRCULAR NO.3/2018 DATED 11.7.2018. SINCE THER E IS NO OPINION GIVEN IN THE SAID ORDER ON THE MERITS OF TH E SAID CASE, THE ISSUE ON THE MERITS HAS BEEN LEFT OPEN TO BE ADJUDI CATED IN APPROPRIATE CASE. THE CONCERNED DCIT/A.O. HAS NOT P OINTED OUT ANY MISTAKE APPARENT ON RECORD IN THIS RESPECT. WE FURTHER FIND THAT THE LD.CIT(A) HAS DECIDED THE APPEAL ON MERITS IN T HE LIGHT OF VARIOUS DECISIONS OF THE HON'BLE JURISDICTIONAL HIGH COURT, WHICH WERE BINDING UPON THE CIT(A) IRRESPECTIVE OF THE CB DT CIRCULAR NO.5/2014, RELIED UPON BY THE A.O. MERELY BECAUSE THE ORDER OF THIS TRIBUNAL IS NOT ACCEPTABLE TO THE A.O. THAT ITSELF CANNOT BE A GROUND TO MOVE AN MISCELLANEOUS APPLICATION U/S 254 (2) OF THE ACT. 3 3. THE APPLICATION U/S 254(2) OF THE ACT LIES IN CA SE THERE IS A MISTAKE APPARENT ON RECORD IN THE ORDER OF THE TRIB UNAL. THE ORDER OF THE TRIBUNAL CANNOT BE ASSAILED ON MERITS IN THE GARB OF MISCELLANEOUS APPLICATION U/S 254(2) OF THE ACT. RE LIANCE IN THIS RESPECT CAN BE PLACED ON THE DECISION OF THE HON'BL E BOMBAY HIGH COURT IN THE CASE OF 'COMMISSIONER OF INCOME-TAX VS RAMESH ELECTRIC AND TRADING CO.' (1993) 203 ITR 497 (BOM.), WHEREIN THE HON'BLE HIGH COURT WHILE RELYING UPON THE DECISION OF THE H ON'BLE SUPREME COURT IN THE CASE OF T. S. BALARAM, ITO V. VOLKART BROTHERS' [1971] 82 ITR 50 AND FURTHER RELYING UPON THE DECISIONS OF TH E VARIOUS HIGH COURTS HAS CATEGORICALLY HELD THAT THE POWER OF REC TIFICATION UNDER SECTION 254(2) OF THE INCOME-TAX ACT CAN BE EXER CISED ONLY WHEN THE MISTAKE WHICH IS SOUGHT TO BE RECTIFIED IS AN OBVIOUS AND PATENT; MISTAKE WHICH IS APPARENT FROM THE RECORD, AN D NOT A MISTAKE WHICH REQUIRES TO BE ESTABLISHED BY ARGUMENTS AND A LONG DRAWN PROCESS OF REASONING ON POINTS ON WHICH THERE MAY C ONCEIVABLY BE TWO OPINIONS. 4. FURTHER, IF THE ORDER OF THE TRIBUNAL IS NOT ACC EPTABLE TO THE A.O., IT IS OPEN TO THE A.O. TO FILE APPEAL BEFORE THE HI GHER AUTHORITY I.E. THE HON'BLE JURISDICTIONAL HIGH COURT. HOWEVER, THE MI SCELLANEOUS APPLICATION DOES NOT LIE STATING THAT THE ORDER IS NOT ACCEPTABLE TO THE ACIT/THE CONCERNED A.O. THE HON'BLE SUPREME COURT IN THE CASE OF 'UOI AND OTHERS VS. KAMALAKSHI FINANCE CORPORATION' AIR 1992 SC 4 711 HAS CATEGORICALLY HELD THAT THE PRINCIPLES OF J UDICIAL DISCIPLINE REQUIRE THAT THE ORDERS OF THE HIGHER APPELLATE AUT HORITIES SHOULD BE FOLLOWED UNRESERVEDLY BY THE SUBORDINATE AUTHORITIE S. THE HON'BLE SUPREME COURT HAS FURTHER HELD THAT THE MERE FACT T HAT THE ORDER OF THE APPELLATE AUTHORITY IS NOT ACCEPTABLE TO THE DEPA RTMENT IN-ITSELF IS AN OBJECTIONABLE PHRASE AND IS NOT A GROUND FOR NOT FO LLOWING THE SAME UNLESS ITS OPERATION HAS BEEN SUSPENDED BY A COMPET ENT COURT. 5. IN VIEW OF THIS, THERE IS NO MERIT IN THE MISCEL LANEOUS APPLICATION AND THE SAME IS ACCORDINGLY, DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 04.10.2019. SD/- SD/- (ANNAPURNA GUPTA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 04.10.2018 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR