M/s. Russell Credit Limited, Kolkata V. J.C.I.T. (OSD), Circle - 8, Kolkata, Kolkata

MA 147/KOL/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7323 (ITAT-KOLKATA)
• Duration Of Justice: 8 month(s) 17 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 26-04-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 09-08-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Rule 8D
• Section: 14A

Judgement Text

1 MA NOS.146-147/KOL/2018 M/S. RUSSELL CREDIT LIMITED, AYS- 200 9-10 , C , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA ( ) BEFORE . , /AND . . , ) [BEFORE SHRI J. SUDHAKAR REDDY, AM & SHRI A. T. VA RKEY, JM] M.A. NOS.146 & 147/KOL/2018 IN I.T.A. NOS. 629 & 674/KOL/2013 ASSESSMENT YEARS: 2009-10 M/S. RUSSELL CREDIT LIMITED (PAN: AABCR3494H) VS. DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-8, KOLKATA. APPLICANT RESPONDENT DATE OF HEARING 01.02.2019 DATE OF PRONOUNCEMENT 26.04.2019 FOR THE APPLICANT SHRI J. P. KHAITAN, SR. COUNSEL FOR THE RESPONDENT SHRI SANKAR HALDER, JCIT, SR. DR ORDER PER SHRI A. T. VARKEY, JM BY THIS MISC. APPLICATION THE ASSESSEE HAS SOUGHT T O POINT OUT THAT A MISTAKE APPARENT FROM RECORD WITHIN THE MEANING OF SEC. 254(2) OF TH E INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) HAS CREPT IN THE ORDER OF THE TRIBUNAL DATED 11.04.2018. 2. THE CASE OF THE ASSESSEE WITH REGARD TO PRAYER ( A) AND (B) RAISED IN THIS MISC. APPLICATION IS THAT THIS TRIBUNAL WHILE ADJUDICATIN G THE SEVERAL GROUNDS RAISED BY THE ASSESSEE DID NOT DECIDE THE GROUND NO. 4 RAISED BY THE REVENUE AS WELL AS GROUND NO.2 OF THE ASSESSEE CONCERNING THE DISALLOWANCE U/S. 14A READ WITH RULE 8D. THE LD. SR. COUNSEL FOR THE ASSESSEE/APPLICANT POINTED OUT THAT IN GROUND NO. 4 OF THE REVENUES APPEAL, THE DEPARTMENT HAD RAISED THE ISSUE AS TO WHETHER T HE LD. CIT(A) WAS JUSTIFIED IN DIRECTING THE AO TO RESTRICT THE DISALLOWANCE U/S. 14A OF THE ACT TO THE AMOUNT OF EXPENDITURE OF RS.1,22,79,861/- CLAIMED BY THE ASSESSEE WHEREAS NO RESTRICTION IS PROVIDED U/S. 14A OF THE 2 MA NOS.146-147/KOL/2018 M/S. RUSSELL CREDIT LIMITED, AYS- 200 9-10 ACT. PER CONTRA, BY RAISING GROUND NO. 2, THE ASSE SSEE HAD CONTENDED THAT THE DISALLOWANCE U/S. 14A OF THE ACT BE RESTRICTED TO PROPORTIONATE MANAGEMENT EXPENDITURE OF RS.1,22,46,389/- AS OPPOSED TO RS.1,22,79,861/- CON FIRMED BY THE LD. CIT(A). REFERRING TO THE APPELLATE ORDER PASSED BY THIS TRIBUNAL, THE LD. AR SUBMITTED THAT ALTHOUGH THE FACTS CONCERNING THESE GROUNDS WERE NOTED BY THIS TRIBUNA L IN PARA 9 OF THE ORDER BUT NO DECISION/CLARITY WAS GIVEN IN THE FINAL ADJUDICATIO N AS TO WHETHER THE DISALLOWANCE U/S. 14A OF THE ACT CAN OR CANNOT EXCEED THE NET EXPENDITURE ACTUALLY CLAIMED BY THE ASSESSEE. PER CONTRA, THE LD. DR APPEARING ON BEHALF OF THE REVEN UE SUBMITTED THAT THIS TRIBUNAL HAS PASSED A WELL REASONED ORDER ON THIS ISSUE AND, THE REFORE, NO FURTHER ADJUDICATION/CLARIFICATION WAS REQUIRED. 3. AFTER PERUSING THE MATERIAL AVAILABLE ON RECORD AND HEARING THE RIVAL SUBMISSIONS, WE FIND MERIT IN THE SUBMISSION OF THE LD. SR. COUNSEL FOR THE ASSESSEE THAT ALTHOUGH THIS TRIBUNAL TOOK NOTE OF THE FACTS CONCERNING THE NET EXPENDITURE CLAIMED BY THE ASSESSEE AND THE LD. CIT(A)S ACTION OF RESTRICTING THE DISALLOW ANCE U/S. 14A OF THE ACT TO THE EXTENT OF EXPENDITURE CLAIMED AS DEDUCTION BUT NO ADJUDICATIO N WAS FINALLY GIVEN ON THE SPECIFIC GROUND RAISED. WE, THEREFORE, DEEM IT FIT TO RECAL L THE ORDER TO THIS EXTENT AND ADJUDICATE GROUND NO. 4 OF THE REVENUES APPEAL AND GROUND NO. 2 OF THE ASSESSEES APPEAL. 4. IN RESPECT OF GROUND NO.4 OF THE REVENUES APPEA L AND GROUND NO.2 OF THE ASSESSEES APPEAL, WE ARE OF THE CONSIDERED VIEW THAT DISALLOW ANCE U/S. 14A CAN COME INTO PLAY ONLY IN RESPECT OF EXPENSES CLAIMED ACTUALLY FOR DEDUCTION IN THE COMPUTATION OF ASSESSEES TOTAL INCOME AND CANNOT BY ANY STRETCH OF IMAGINATION EXC EED THE EXPENDITURE CLAIMED BY THE ASSESSEE. ACCORDINGLY, WE HOLD THAT IF THE DISALLO WANCE RECOMPUTED BY THE AO IN TERMS OF THE DIRECTION GIVEN IN THE IMPUGNED ORDER EXCEEDS T HE NET EXPENDITURE CLAIMED BY THE ASSESSEE IN THE COMPUTATION OF INCOME, THEN THE AO SHALL RESTRICT THE DISALLOWANCE TO THE EXTENT OF NET EXPENDITURE CLAIMED BY THE ASSESSEE. THE NET EXPENDITURE SHALL BE WORKED OUT BY THE AO AFTER EXCLUDING THE EXPENDITURE DEBITED I N P&L ACCOUNT, BUT WHICH HAS BEEN SEPARATELY ADDED BACK BY THE ASSESSEE IN COMPUTATIO N OF INCOME OR DISALLOWED BY THE AO. THIS GROUND STANDS DECIDED ACCORDINGLY. 3 MA NOS.146-147/KOL/2018 M/S. RUSSELL CREDIT LIMITED, AYS- 200 9-10 5. IN PRAYER (C), THE LD. SR. COUNSEL APPEARING FOR THE ASSESSEE/APPLICANT HAS URGED THAT THIS TRIBUNAL MAY MAKE IT CLEAR THAT THE JUDGMENT O F THE HONBLE SUPREME COURT IN CIT VS. MAXOPP INVESTMENT LTD. 91 TAXMANN.COM 154 (SC) SHAL L BE OPEN TO BE RELIED UPON BY THE ASSESSEE WITH REFERENCE TO ALL QUESTIONS DECIDED IN THIS CASE. AFTER PERUSING THE IMPUGNED APPELLATE ORDER, WE NOTE THAT THE FINDINGS GIVEN IN OUR ORDER ARE DETAILED AND SUFFICIENTLY CLEAR AND NO FURTHER CLARIFICATION AS SUCH IS REQUI RED TO BE GIVEN. HOWEVER, IT HAS TO BE KEPT IN MIND THAT AS PER ARTICLE 141 OF THE CONSTITUTION OF INDIA, THE LAW DECLARED BY THE HONBLE SUPREME COURT IS BINDING ON ALL COURTS INCLUDING TH AT OF THIS TRIBUNAL AS WELL AS THE QUASI- JUDICIAL AUTHORITY LIKE THE AO/ CIT(A). NOT ONLY T HAT IN PARA 9 OF THE IMPUGNED ORDER OF THE TRIBUNAL, WE HAD DIRECTED THEREFORE, WE REMAND THE MATTER BACK TO THE FILE OF AO TO DECIDE THIS ISSUE AFRESH KEEPING MIND THE AFORESAID OBSERV ATION OF OURSELVES IN ACCORDANCE TO LAW . THEREFORE, THE HONBLE SUPREME COURTS DECISION/RAT IO DECIDENDI ON THE ISSUE DECIDED IN THE CASE OF MAXOPP INVESTMENT LTD. (SUPRA) IS BINDING O N AO ALSO AND IT CAN BE RELIED UPON BY THE ASSESSEE BEFORE THE AO IF IT DEEMS FIT TO DO SO . IN THE LIGHT OF THE AFORESAID OBSERVATION, THERE IS NO NECESSITY TO PASS ANY SPECIFIC DIRECTIO N IN THIS RESPECT SINCE WE HAD DIRECTED IN THE IMPUGNED ORDER THAT THE AO TO DECIDE THE ISSUE IN ACCORDANCE TO LAW, WHICH ENCOMPASSES THE RATIO DECIDENDI OF THE DECISION O F THE HONBLE SUPREME COURT/JURISDICTIONAL HIGH COURT ON THE ISSUE IN HAN D AND NEED TO BE TAKEN INTO CONSIDERATION BY THE AO WHILE DECIDING THE MATTER AND SO NO SPECI FIC DIRECTION IS REQUIRED AS SUCH TO BE GIVEN WHICH IS NOTHING BUT SUPERFLUOUS IN THE LIGHT OF PROVISION OF ARTICLE 141 OF THE CONSTITUTION OF INDIA AND, THEREFORE, THIS PRAYER O F THE ASSESSEE IS DISPOSED OF ACCORDINGLY. 6. IN PRAYER (D) OF THE MISC. APPLICATION, THE LD. SR. COUNSEL FOR THE ASSESSEE HAS FURTHER CONTENDED THAT IN PARA 6 OF THE ORDER IT HA S BEEN ERRONEOUSLY STATED THAT ASSESSEE DID NOT OFFER ANY DISALLOWANCE U/S. 14A WHEREAS THE FAC T REMAINS THAT ASSESSEE DID OFFER DISALLOWANCE OF RS.33,472/- U/S. 14A OF THE ACT. I T WAS, THEREFORE, URGED THAT PARA 6 OF THE APPELLATE ORDER BE MODIFIED ACCORDINGLY. 7. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE IMPUGNED APPELLATE ORDER OF OURS, WE NOTE THAT IN PARA 6 THIS TRIBUNAL WHILE GI VING THE BRIEF FACTS OF THE ISSUE WE HAVE 4 MA NOS.146-147/KOL/2018 M/S. RUSSELL CREDIT LIMITED, AYS- 200 9-10 TAKEN NOTE OF THE OBSERVATION MADE BY THE AO THAT N O DISALLOWANCE WAS OFFERED U/S. 14A BY THE ASSESSEE. HOWEVER, AT PARA 7 THIS TRIBUNAL WHI LE ADJUDICATING THIS ISSUE HAS SPECIFICALLY CLARIFIED THAT ASSESSEE COMPANY HAD DETERMINED THE DISALLOWANCE U/S. 14A AT RS.33,472/-. IN OUR CONSIDERED VIEW, THERE IS NO MISTAKE WHICH HAS CREPT IN THE ORDER OF THE TRIBUNAL ON THIS ISSUE, THEREFORE THIS PRAYER IS DISMISSED. 8. IN THE RESULT, MISC. APPLICATION OF ASSESSEE IS PARTLY ALLOWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 26TH APRIL , 2019. SD/- SD/- (J. S. REDDY) (ABY. T. VARKEY) ACCOUNTANT MEMBER JUDICIALMEMBER DATED : 26TH APRIL, 2019 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1. APPLICANT M/S. RUSSELL CREDIT LIMITED, 37, J. L. NEHRU ROAD, KOLKATA- 700 071. 2 RESPONDENT DCIT, CIRCLE-8, KOLKATA. 3. 4. 5. CIT(A)-VIII, KOLKATA. CIT-III, KOLKATA DR, ITAT, KOLKATA. (SENT THROUGH E-MAIL) / TRUE COPY, BY ORDER, ASSISTANT REGISTRAR