JSW ENERGY LTD, V. ASST CIT CIR 11(5),

MA 208/MUM/2013

• Counselvise Citation: [2013] 124 COUNSELVISE.COM (IT) 1304 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 15 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 27-12-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 15-11-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 11-06-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SURINDER KUMAR
• Keywords: Earning of tax free income
• Section: 14A; 115JB; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUM BAI . . , , BEFORE SHRI B. R. MITTAL, JM AND SHRI SANJAY ARORA , AM MA NO.208/MUM/2013 (ARISING OUT OF ITA NO. 498/MUM/2010) ASSESSMENT YEAR 2005-06 JSW ENERGY LIMITED JINDAL MANSION, 5A, DR. G. DESHMUKH MARG, MUMBAI-400 026 / VS. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 11(5), MUMBAI ./! ./PAN: AAACJ 8109 N APPLICANT : RESPONDENT APPLICANT BY : SHRI RAKESH JOSHI RESPONDENT BY : SHRI SURINDER KUMAR ' #$% & ' / DATE OF HEARING : 13.12.2013 ()* & ' / DATE OF PRONOUNCEMENT : 27.12.2013 + / O R D E R PER SANJAY ARORA, A. M.: THIS IS A MISCELLANEOUS APPLICATION BY THE ASSESSEE U/S. 254(2) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) DIRECTED AGAINST THE ORDER BY THE TRIBUNAL DATED 30.04.2013 IN ITS CASE FOR THE ASSESSMENT YEAR (A.Y .) 2005-06. 2. THE ASSESSEES APPLICATION CONCERNS THE DISPOSAL BY THE TRIBUNAL OF ITS ADDITIONAL GROUND, WHICH READS AS UNDER: 2 MA NO. 208/MUM/2013 (A.Y. 2005-06) JSW ENERGY LTD. VS. ASST. CIT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. ASSESSING OFFICER HAS ERRED IN DISALLOWING A SUM OF RS.8,59,1 01/- AS EXPENDITURE INCURRED, TO EARN EXEMPT INCOME, APPLYING SECTION 1 4A, WHICH IS APPLICABLE TO CHAPTER IV, WHILE CALCULATING BOOK PROFIT U/S.11 5JB OF THE INCOME TAX ACT, 1961. THE SAME HAS BEEN ADJUDICATED BY THE TRIBUNAL VIDE PARA 8 OF ITS IMPUGNED ORDER, READING THUS: 8. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATE RIAL ON RECORD, INCLUDING THE ORDER BY THE TRIBUNAL IN ITS OWN CASE FOR AY 20 06-07. THE RATIONALE OF THE PROVISION (CL. (F) OF EXPLANATION 1 TO S. 115JB) IS UNEXCEPTIONAL. CL. (II) OF EXPLANATION 1 PROVIDES FOR THE REDUCTION OF THE NET PROFIT AS PE R THE P&L A/C BY, SIMILARLY, ANY INCOME TO WHICH THE PROVISIO NS OF, INTER ALIA , SEC. 10 ARE APPLICABLE. AS EXEMPT INCOME IS TO BE REDUCED I N COMPUTING THE BOOK PROFIT, ANY EXPENDITURE RELATABLE TO THE SAME IS LI KEWISE TO BE ADDED BACK. BOTH THE ADJUSTMENTS ARE, UNDERSTANDABLY AND UNDOUB TEDLY, ONLY IN RESPECT OF SUMS CREDITED OR DEBITED, AS THE CASE MAY BE, IN THE ACCOUNTS OF THE COMPANY. NOW, THE REVENUE HAVING ESTIMATED THE EXPE NDITURE IN RELATION TO THE DIVIDEND INCOME, CLAIMED EXEMPT U/S. 10(34), AT RS. 8.59 LACS, WHICH AMOUNT THE ASSESSEE DOES NOT DISPUTE, THE SAME AMOU NT HAS BEEN ADDED BACK BY IT UNDER CL.(F), WHILE AT THE SAME TIME DED UCTING THE DIVIDEND INCOME (RS. 256.38 LACS) UNDER CL. (II) FROM THE NE T PROFIT IN COMPUTING THE BOOK PROFIT U/S. 115JB. THE DISALLOWANCE U/S. 14A I S ALSO WITH REFERENCE TO THE AMOUNT ACTUALLY INCURRED AND CLAIMED BY THE ASS ESSEE PER ITS RETURN OF INCOME, WHICH IN TURN IS BASED ON THE AUDITED ACCOU NTS. IN ANY CASE, THERE CAN BE NO PRESUMPTION OF THE EXPENDITURE QUA WHICH DISALLOWANCE U./S. 14A HAS BEEN MADE AND SUSTAINED AS BEING NOT DEBITED IN THE ACCOUNT BOOKS, AND WHICH SUMS UP THE REVENUES CASE AS MADE OUT BY THE LD. DR. THE ONLY OPTION, THEREFORE, UNDER THE CIRCUMSTANCES AVAILABL E IS THAT THE MATTER IS RESTORED BACK TO THE FILE OF THE AO TO ALLOW THE AS SESSEE AN OPPORTUNITY TO SHOW AS TO HOW THE ESTIMATED EXPENDITURE OF RS. 8.5 9 LACS DISALLOWED U/S. 14A AS INCURRED IN RELATION TO THE TAX EXEMPT INCOM E, IS AT EITHER NIL OR A LESSER AMOUNT, I.E., PER THE ASSESSEES BOOKS. ON T HIS PROPOSITION BEING ADVANCED TO THE LD. AR, REQUIRING HIM TO MAKE OUT A PRIMA FACIE CASE, ONLY UPON WHICH THE RESTORATION TO THE ASSESSING AUTHORI TY COULD BE MADE BY US, HE CONCEDED TO THE IMPUGNED ADJUSTMENT AS BEING REA SONABLE. WE, THEREFORE, CONFIRM THE SAME, DISMISSING THE ASSESSE ES ADDITIONAL GROUND. THE ASSESSEE PER ITS PRESENT APPLICATION, PLACING R ELIANCE ON A NUMBER OF DECISIONS, AS UNDER, STATES THAT IN DECIDING THE ISSUE RAISED BY ITS ADDITIONAL GROUND, THE TRIBUNAL HAS NOT 3 MA NO. 208/MUM/2013 (A.Y. 2005-06) JSW ENERGY LTD. VS. ASST. CIT FOLLOWED THE DECISION OF THE COORDINATE BENCH IN TH E ASSESSEES OWN CASE FOR AN EARLIER YEAR, I.E., A.Y. 2006-07: A) SUNDARJAS KANYALAL BHATIJA & ORS. VS. COLLECTOR, TH ANE, MAHARASHTRA & ORS. [1990] 183 ITR 130 (SC); B) UNION OF INDIA & ANR. VS. PARAS LAMINATES (P) LTD. [1990] 87 CTR 180 (SC) : [1990] 186 ITR 722 (SC) ; C) HONDA SIEL POWER PRODUCT LTD. VS. CIT [2007] 295 ITR 466 (SC) AND; D) CIT VS. GOODLAS NEROLAC PAINTS LTD. [1991] 188 ITR 1 (BOM). IT IS SUBMITTED THAT A CONTRARY VIEW COULD NOT HAVE BEEN TAKEN BY THE TRIBUNAL INASMUCH AS IT IS BOUND TO, WHERE HOLDING A DIFFERENT VIEW, FOL LOW THE PROCEDURE OF REFERRING THE MATTER TO A LARGER BENCH. 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. THE TRIBUNAL AS WOULD BE EVIDENT FROM A READING OF PARA 8 OF ITS OR DER, WHICH BEARS ITS FINDINGS AS WELL AS ITS DECISION, WHILE AGREEING IN PRINCIPLE WITH THE DECISION BY THE TRIBUNAL FOR A.Y. 2006- 07, WAS OF THE FURTHER VIEW THAT THE MATTER IS PRIN CIPALLY AND PRIMARILY FACTUAL; THE LEGAL MANDATE FOR THE ADJUSTMENT, WHICH COULD THOUGH ONLY EXTEND TO THE EXPENDITURE ACTUALLY INCURRED AND BOOKED IN ACCOUNTS, BEING PROVIDED BY EXPLANATION 1(F) TO SECTION 115JB OF THE ACT. FURTHER, THE LD. AUTHORIZED REPRESENTATIVE (AR) ON BEING REQUIRED TO SHOW THE BASIS ON WHICH IT CLAIMS THE EXPENDITURE DISALLOWED U/S.14A AS NOT REPRESENTING THE ACTUAL EXPENDITURE, SO THAT NO BOOK ADJUSTMENT IN ITS RESP ECT COULD BE MADE, OR IS TO BE MADE AT A LOWER SUM, CONCEDED TO THE SAME AS BEING ONLY REASO NABLE. THE TRIBUNAL BEING ALSO THE SAME VIEW; THE SAID ADJUSTMENT BEING AT RS.8.59 LAC S AS AGAINST THE DIVIDEND INCOME OF RS.256.38 LACS, FOUND NO BASIS FOR CANCELLATION OR FOR EVEN A CASE FOR RESTORATION OF THE MATTER TO THE ASSESSING AUTHORITY AS HAVING BEEN MA DE OUT AND, ACCORDINGLY, DISMISSED THE ASSESSEES ADDITIONAL GROUND. ON WHAT BASIS, IN VIEW THEREOF, WE FAIL TO UNDERSTA ND, DOES THE ASSESSEE CLAIM THE TRIBUNALS ORDER TO BE MISTAKEN IN TERMS OF SECTION 254(2) ? IN FACT, DURING THE COURSE OF THE HEARING IN THE RECTIFICATION PROCEEDINGS, IT WA S SUBMITTED BY THE LD. AR THAT THE 4 MA NO. 208/MUM/2013 (A.Y. 2005-06) JSW ENERGY LTD. VS. ASST. CIT INTEREST ON THE BORROWING, WHICH STOOD DISALLOWED B Y THE ASSESSING OFFICER (A.O.) U/S.14A, STOOD INVESTED IN SHARES ON WHICH NO DIVID END INCOME STANDS ACTUALLY RECEIVED. THE SAME, FIRSTLY, IS AT VARIANCE WITH THE ARGUMENT S ADOPTED BEFORE US (DURING THE HEARING OF THE APPEAL); RATHER, WOULD GO TO SHOW THAT THE F ACTS OF THE CASE MAY WELL BE DIFFERENT FROM THAT OBTAINING FOR A.Y. 2006-07. TWO, EVEN ON MERITS, I.E., ASSUMING THAT THE CONTENTION IS CORRECT AND COGNIZANCE THEREOF COULD BE TAKEN BY US IN THE INSTANT PROCEEDINGS, THE A.O.S IMPUGNED ACTION HAS THE FUL L SANCTION OF LAW, AND FOR WHICH WE MAY REFER TO THE DECISIONS IN THE CASE OF CIT VS. RAJENDRA PRASAD MOODY [1978] 115 ITR 519 (SC), BESIDES THE DECISIONS IN THE CASE OF GODREJ & BOYCE MFG. CO. LTD. V. DY. CIT [2010] 328 ITR 81 (BOM) AND CHEMINVEST LTD. V. ITO [2009] 121 ITD 318 (DEL-SB). IN FACT, THIS ARGUMENT HAS BEEN DISCOUNTENANCED BY THE TRIBUNAL IN A NUMBER OF DECISIONS. WE MAY BEFORE PARTING WITH THE MATTER, ALSO CLARIFY THAT THE VIEW EXPRESSED BY THE TRIBUNAL IN THE INSTANT CASE, I.E., ON MERITS, RATH ER, STANDS ALSO INDEPENDENTLY ADOPTED BY DIFFERENT BENCHES OF THE MUMBAI TRIBUNAL, VIZ.: - ESQUIRE PRIVATE LIMITED VS. DCIT (IN ITA NO.5688/MUM/2011 DATED 29.08.2012); - ITO V . RBK SHARE BROKING PVT. LTD. (IN ITA NOS.7546 & 6678/MUM/2011 DATED 24.07.2013); - ITO VS. SEA WIND INVESTMENT & TRDG. CO. LTD. (IN ITA NO.6320/MUM/2004 DATED 17.10.2007). WE, ACCORDINGLY, FIND NO MERIT IN THE ASSESSEES IN STANT APPLICATION. WE DECIDE ACCORDINGLY. 4. IN THE RESULT, THE ASSESSEES MISCELLANEOUS APPL ICATION IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON DECEMBER 27, 2013 SD/- SD/- (B. R. MITTAL) (SANJAY ARORA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER ' % MUMBAI; ,# DATED : 27.12.2013 $.#../ ROSHANI , SR. PS 5 MA NO. 208/MUM/2013 (A.Y. 2005-06) JSW ENERGY LTD. VS. ASST. CIT !'#$% &%'# / COPY OF THE ORDER FORWARDED TO : 1. - . / THE APPELLANT - APPLICANT 2. / . / THE RESPONDENT 3. ' 0 ( - ) / THE CIT(A) 4. ' 0 / CIT - CONCERNED 5. 3$45 / #67 , - ' 67* , ' % / DR, ITAT, MUMBAI 6. 589 :% / GUARD FILE ( / BY ORDER, )/(* + (DY./ASSTT. REGISTRAR) , ' % / ITAT, MUMBAI