TATA SONS LTD, MUMBAI V. ASST CIT CIR 2(3), MUMBAI

MA 235/MUM/2020

• Counselvise Citation: [2020] 109 COUNSELVISE.COM (IT) 9634 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 1 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 18-12-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Assessment Year: 2009-2010
• Appeal Filed On: 16-09-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T S KHALSA
• Keywords: Earning of tax free income; Rule 8D
• Section: 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (V I RTUAL COURT) , F BENCH MUMBAI BEFORE SHRI MAHAVIR SINGH, VP & SHRI M.BALAGANESH, AM MA NO.235/MUM/2020 (ARISING OUT OF ITA NO. 4637 /MUM/ 20 16) ( ASSESSMENT YEAR : 2009 - 10 ) M/S. TATA SONS PRIVATE LI M ITED 24, BOMBAY HOUSE HOMI MODY STREET FORT, MUMBAI 400 001 VS. THE ASST. COMMISSIONER OF INCOME TAX - 2(3)(1) ROOM NO.552, 5 TH FLOOR AAYAKAR BHAVAN, M.K.ROAD MUMBAI 400 020 PAN/GIR NO. AAACT4060A (APPELLANT ) .. (RESPONDENT ) ASSESSEE BY MS. ARA TI VISSANJI REVENUE BY SHRI T.S.KHALSA DATE OF HEARING 18 / 12 /2020 DATE OF PRONOUNCEMENT 18 / 12 /2020 / O R D E R PER M. BALAGANESH (A.M) : BY VIRTUE OF THIS MISCELLANEOUS APPLICATION, THE ASSESSEE SEEKS FOR MODIFICATION OF THE O RDER PASSED BY THIS TRIBUNAL IN ITA NO.4637/MUM/2016 FOR A.Y.2009 - 10 DATED 07/08/2020 ON THE GROUND THAT THIS TRIBUNAL WHILE DISPOSING OFF THE GROUND NO.4A WITH REGARD TO DISALLOWANCE MADE U/S.14A OF THE ACT WHILE COMPUTING BOOK PROFITS U/S.115JB OF THE AC T HAD IN PARA 6 HELD , THAT THE VOLUNTARY DISALLOWANCE MADE BY THE ASSESSEE IN THE RETURN OF INCOME IN THE SUM OF RS.474.19 CRORES NEED TO BE ADDED UNDER CLAUSE F OF EXPLANATION TO SECTION MA NO.235/MUM/2020 M/S. TATA SONS LTD., 2 115JB(2) OF THE ACT. THIS FINDING GIVEN BY THE TRIBUNAL WAS STATE D TO BE INCORRECT BY THE LD. AR AS THE SAID WORKING OF RS.474.19 CRORES WAS INDEED MADE BY THE ASSESSEE IN ACCORDANCE WITH COMPUTATION MECHANISM PROVIDED IN RULE 8D(2) OF THE RULES WHICH FACT HAS BEEN CONFIRMED BY THE LD. CIT(A) ALSO IN HIS APPELLATE ORDER . 2. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THIS TRIBUNAL IN PARA 6 HAD CATEGORICALLY HELD THAT COMPUTATION MECHANISM PROVIDED IN RULE 8D(2) OF THE RULES CANNOT BE MADE APPLICABLE FOR THE PURPOSE OF MAK ING DISALLOWANCE OF EXPENSES UNDER CLAUSE F OF EXPLANATION TO SECTION 115JB(2) OF THE ACT BY PLACING RELIANCE ON THE SPECIAL BENCH OF DELHI TRIBUNAL DECISION IN THE CASE OF VIREET INVESTMENTS REPORTED IN 165 ITD 27. FURTHER, THIS TRIBUNAL HAD ALSO HELD THAT ONLY THE ACTUAL EXPENSES SHOULD BE CONSIDERED FOR THE PURPOSE OF DISALLOWANCE THEREON. HAVING HELD SO, THIS TRIBUNAL ERRED IN NOT CONSIDERING THE ACTUAL EXPENDITURE INCURRED BY THE ASSESSEE FOR THE PURPOSE OF EARNING EXEMPT INCOME AND ERRONEOUSLY DIRE CTED TO DISALLOW A SUM OF RS.474.19 CRORES U/S.115JB OF THE ACT ON THE MISTAKEN IMPRESSION THAT THE SAME REPRESENTS ACTUAL AMOUNT OF EXPENDITURE INCURRED. IT IS NOT IN DISPUTE THAT RS.474.19 CRORES WAS THE DISALLOWANCE COMPUTED BY THE ASSESSEE VOLUNTARILY WHILE FILING THE RETURN OF INCOME AND THAT THE SAID COMPUTATION WAS MADE IN ACCORDANCE WITH RULE 8D(2) OF THE RULES. ONCE THE COMPUTATION MECHANISM OF RULE 8D(2) OF THE RULES CANNOT BE MADE APPLICABLE AT ALL FOR THE PURPOSE OF CLAUSE F OF EXPLANATION TO SECTION 115JB(2) OF THE A CT, THEN THE LOGICAL RECOURSE WOULD BE TO DETERMINE THE ACTUAL EXPENDITURE INCURRED FOR EARNING EXEMPT INCOME. WE FIND THAT THE ACTUAL EXPENDITURE INCURRED FOR EARNING THE EXEMPT INCOME HAS BEEN ALREADY QUANTIFIED BY THE LD. CIT(A ) AT RS.35.70 CRORES IN HIS APPELLATE ORDER WHICH HAD ADMITTEDLY MISSED ATTENTION OF THE TRIBUNAL WHILE PASSING MA NO.235/MUM/2020 M/S. TATA SONS LTD., 3 THE ORDER, THEREBY CONSTITUT ING THE MISTAKE APPARENT ON RECORD WARRANTING RECTIFICATION U/S.254(2) OF THE ACT. WHEN THIS WAS SHOWN TO LD. DR, TH E LD. DR FAIRLY AGREED FOR THE PROPOSED RECTIFICATION. HENCE, WE HOLD THAT PARA 6 IN PAGE 14 OF THE ORDER PASSED BY THIS TRIBUNAL ON 07/08/2020 STANDS MODIFIED AS UNDER: - 6. THE NEXT ISSUE TO BE DECIDED IS WITH REGARD TO DISALLOWANCE MADE U/S.14A OF THE A CT VIS - - VIS COMPUTATION OF BOOK PROFITS U/S.115JB OF THE ACT, FOR WHICH, WE FIND THE ASSESSEE HAS RAISED AN ADDITIONAL GROUND BEFORE US. WE FIND THAT THIS ADDITIONAL GROUND GOES TO THE ROOT OF THE MATTER AND DOES NOT INVOLVE VERIFICATION OF ANY FACTS. ACC ORDINGLY, THE SAID ADDITIONAL GROUND IS ADMITTED AND TAKEN UP FOR ADJUDICATION. WE FIND THAT THE SPECIAL BENCH OF DELHI TRIBUNAL IN THE CASE OF VIREET INVESTMENTS REPORTED IN 165 ITD 27 HAD HELD THAT ACTUAL EXPENDITURE ALONE SHOULD BE CONSIDERED FOR DISALL OWANCE IN TERMS OF CLAUSE(F) TO EXPLANATION 1 TO SECTION 115JB OF THE ACT. ACCORDINGLY, WE DIRECT THE LD. AO TO DISALLOW RS.35.70 CRORES UNDER CLAUSE F OF EXPLANATION 1 TO SECTION 115JB (2) OF THE ACT WHILE COMPUTING THE BOOK PROFITS U/S.115JB OF THE ACT . ACCORDINGLY, THE ADDITIONAL GROUND NO.4A RAISED BY THE ASSESSEE IS PARTLY ALLOWED. 3. ALL OTHER CONTENTS OF ORIGINAL ORDER PASSED ON 07/08/2020 BY THIS TRIBUNAL SHALL REMAIN UNCHANGED. 4. IN THE RESULT, MISCELLANEOUS APPLICATION OF THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED IN OPEN COURT ON 18 / 12 /2020 . SD/ - ( MAHAVIR SINGH ) SD/ - (M.BALAGANESH) VICE PRESIDENT ACCOUNTANT MEMBER MUMBAI ; DATED 18 / 12 / 2020 KARUNA , SR.PS MA NO.235/MUM/2020 M/S. TATA SONS LTD., 4 COPY OF THE ORDER FOR WARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//