M/s. Anant Overseas Pvt. Ltd., New Delhi V. DCIT, New Delhi

MA 453/DEL/2017

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 5211 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 30 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 02-02-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 03-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RADHA KATYAL
• Keywords: Opportunity of being heard; Earning of tax free income; TDS; Rule 8D; Set aside
• Section: 14A

Judgement Text

PAGE | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH FRIDAY: NEW DELHI BEFORE SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER (THROUGH VIDEO CONFERENCING) MA NO. 453/DEL/2017 (IN ITA NO. 59/DEL/2014 (ASSESSMENT YEAR: 2010-11) ANANT OVERSEAS PVT. LTD, 305, 3 RD FLOOR, BHANOT CORNER, PAMPOSH ENCLAVE, GK-I, NEW DELHI VS. DCIT, CENTRAL CIRCLE-18, NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI M. P. RASTOGI, ADV REVENUE BY: MS. RADHA KATYAL, SR. DR DATE OF HEARING 06/11/2020 DATE OF PRONOUNCEMENT 02/02/2021 O R D E R PER PRASHANT MAHARISHI, A. M. 1. THIS MISCELLANEOUS APPLICATION IS FILED BY THE ASSESSEE IN ITA NO 59/DEL/2014 FOR ASSESSMENT YEAR 2010-11 DATED 16/06/2017. 2. BRIEF FACTS OF THE MISCELLANEOUS APPLICATION SHOWS THAT IN THE CASE OF THE ABOVE COMPANY THE DISALLOWANCE U/S 14A OF THE ACT WAS MADE. THE LD. AO HAS MADE THE DISALLOWANCE OF RS. 2,64,94,305/- WHEREIN THE LD CIT(A) HAS GRANTED RELIEF OF RS. 2,63,00,285/-. THE DISALLOWANCE WAS ON ACCOUNT OF RULE 8D(2)(II) OF RS. 2,63,23,518/- AND UNDER RULE 8D(2)(III) OF ADMINISTRATIVE EXPENSES OF RS. 1,70,787/-. AGAINST ORDER OF THE LD CIT(APPEAL) GRANTING RELIEF TO THE ASSESSEE THE AO PREFERRED APPEAL BEFORE ITAT. THE CO-ORDINATE BENCH DECIDED THE ISSUE AS PER PARAGRAPH NO. 7 OF THE ORDER AS UNDER:- 7. AFTER HEARING BOTH THE SIDES AND PERUSING THE MATERIALS AVAILABLE ON RECORD, WE FIND FROM THE ORDER OF THE AO THATHE HAS NOTED IN HIS ORDER AT PARA 4.1 AND 4.3 THAT THE ASSESSEE HAS NOT MADE ANY DISALLOWANCE U/S. 14A HIMSELF WHEREAS THE LD. CIT(A) HAS RECORDED A FINDING AT PARA 6.5 THAT THE ASSESSEE HAS HIMSELF DISALLOWEDRS.58,693/-U/S. 14A. WE FURTHER PAGE | 2 OBSERVE FROM THE ORDER OF THE LD. CIT(A)AT PAGE NO. 4 THAT THE ASSESSEE HIMSELF NARRATED THAT WHILE COMPUTING THE DISALLOWANCE U/S. 8D(II) BY THE ASSESSING OFFICER, HE HAS CONSIDERED ONLY THE INTEREST PAID BUT HE HAS NOT CONSIDERED THE INTEREST RECEIVED ON LOANS AMOUNTING TO RS.1,85,73,040/-. IT IS CLEAR FROM THE SUBMISSIONS OF THE ASSESSEE MADE BEFORE THE LD. CIT(A) THAT THE DISALLOWANCE MADE BY THE AO BY APPLYING THE PROCEDURE LAID DOWN IN RULE 8D IS RIGHT, BUT THE FIGURE OF INTEREST PAID SHOULD BE TAKEN AFTER NETTING THE SAME FROM THE INTEREST RECEIVED ON LOAN. WE, FURTHER OBSERVE THAT BOTH THE AUTHORITIES BELOW ARE IN SHARP CONTRADICTION REGARDING SUO MOTO DISALLOWANCE OF EXPENDITURE MADE BY THE ASSESSEE AS NOTED ABOVE. THEREFORE, THE ISSUE NEEDS TO BE RESTORED TO THE FILE OF AO FOR RE-CALCULATION OF DISALLOWANCE U/R. 8D(II) AFTER CONSIDERING THE INTEREST RECEIVED ON LOANS AMOUNTING TO RS.1,85,73,040/-. THE AO HAS ALSO TO EXAMINE WHETHER THE ASSESSEE HAS MADE ANY SUO MOTO DISALLOWANCE AS OBSERVED BY THE LD. CIT(A). THE AO IS ALSO DIRECTED TO GIVE RELIEF OF RS.99,505/-TOWARDS CIRCULATION CHARGES, ROC FILING FEES, SECRETARIAL AUDIT EXPENSES OF CA AND TDS FILING FEE ETC. AS NOTED BY THE LD. CIT(A), AS THESE BEING THE STATUTORY EXPENSES, THE COMPANY IS SUPPOSED TO INCUR UNDER THE LEGAL REQUIREMENTS. ACCORDINGLY, THE MATTER IS RESTORED TO THE FILE OF AO TO DECIDE THE ISSUE AFRESH IN THE LIGHT OF OBSERVATIONS MADE ABOVE. NEEDLESS TO SAY, THE ASSESSEE SHALL BE AFFORDED REASONABLE OPPORTUNITY OF BEING HEARD. 3. THE ASSESSEE IS AGGRIEVED WITH THE ABOVE ORDER STATING THAT THERE ARE MISTAKE APPARENT FROM RECORD IN THE ORDER OF ITAT THAT THE OBSERVATION OF THE ITAT ARE NOT BASED ON THE FACTS AVAILABLE ON RECORD BUT BASED ON ITS OWN ASSUMPTION OF FACTS. MISCELLANEOUS APPLICATION FURTHER STATED THAT THE CO-ORDINATE BENCH STATED THAT THE CIT(APPEAL) HAS RECORDED A FINDING IN PARAGRAPH 6.5 OF THE ORDER THAT ASSESSEE HAS HIMSELF DISALLOWED RS. 58693/- U/S 14A. THE MISCELLANEOUS APPLICATION STATES THAT THE CIT(A) HAS NEVER STATED SUCH. MA REFERRED TO PARA NO. 6.5 THAT THERE IS NO SUCH DISALLOWANCES U/S 14A OF THE ACT BUT OTHER DISALLOWANCES. MISCELLANEOUS APPLICATION FURTHER STATES THAT ASSESSEE NEVER SUBMITTED BEFORE THE CIT(A) THAT DISALLOWANCES MADE BY THE AO IS CORRECT BY APPLYING RULE 8D AND THE FIGURE OF THE INTEREST FOR WORKING OF THE DISALLOWANCES SHOULD BE TAKEN AFTER NETTING OF THE SUM OF INTEREST RECEIVED. THE MISCELLANEOUS APPLICATION STATES THAT THE ASSESSEE CONTESTED BEFORE THE CIT(A) THAT THE INTEREST PAID DOES NOT HAVE ANY NEXUS WITH THE INVESTMENT MADE FOR EARNING EXEMPT INCOME. ALTERNATIVELY, ASSESSEE SUBMITTED THAT IF THE PAGE | 3 INTEREST GROUND FOR NETTING OF THE INTEREST. THE LD CIT(A) HAS NOT TOUCHED THE ALTERNATIVE GROUND BECAUSE THE RELIEF HAS ALREADY BEEN ALLOWED RELIEF ON THE MAIN GROUND . MISCELLANEOUS APPLICATION FURTHER STATES THAT BECAUSE OF THIS THE ASSESSEE SUBMITTED THAT THE REASONING OF THE IAT IS CONTRARY TO THE FACTS. THESE ARE THE MISTAKES APPARENT FROM RECORD. 4. THE LD AR REITERATED THE FACTS STATED IN MA. 5. THE LD DR VEHEMENTLY OPPOSED THE MISCELLANEOUS APPLICATIONS AND SAID THAT ITAT HAS SET ASIDE THE WHOLE ISSUE BACK TO THE FILE OF THE LD AO TO DECIDE THE ISSUE, THEREFORE, THE ASSESSEE IS NOT AGGRIEVED NOW. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONDITIONS AND PERUSED THE ORDERS OF THE CO-ORDINATE BENCH. THE COORDINATE BENCH HAS RECORDED A FINDING OF FACT THAT IN PARAGRAPH 6.5 OF THE ORDER OF THE CIT(A) WHEREIN, THE ASSESSEE HAS HIMSELF DISALLOWED RS. 58693/- U/S 14A OF THE ACT. IN PARAGRAPH 6.5 OF THE ORDER CIT(A) HAS STATED THAT THE ASSESSEE HAS ALREADY DISALLOWED RS. 58639/- UNDER ALTOGETHER DIFFERENT PROVISION OF THE LAW BUT NOT U/S 14A OF THE ACT. THIS FACT IS ALSO EVIDENT FROM THE PARAGRAPH 4.1 OF THE ASSESSMENT ORDER WHEREIN AO HAS SPECIFICALLY STATED THAT ASSESSEE HAS NOT DISALLOWED ANY SUM U/S 14A OF THE ACT. THEREFORE, PRIMA FACIE OBSERVATION MADE BY THE COORDINATE BENCH, AS PER PARA 4.3 OF THE ASSESSMENT ORDER IT IS ALSO EVIDENT THAT ASSESSEE HAS NOT DISALLOWED ANY SUM ON ITS U/S 14A OF THE ACT. IN VIEW OF THIS FACT IT IS APPARENT THAT THE FINDING OF THE CO-ORDINATE BENCH IN PARAGRAPH 7 OF THE ORDER THAT ASSESSEE HAS DISALLOWED ON IT'S OWN A SUM OF RS. 58693/- IS NOT BORNE OUT FROM THE FACTS ON THE RECORD. THEREFORE, THERE IS AN APPARENT ERROR IN THE ORDER OF THE CO-ORDINATE BENCH. SIMILAR IS THE ISSUE WITH RESPECT TO THE NETTING OUT OF THE INTEREST EXPENDITURE WITH INTEREST INCOME WHICH WAS ONLY AN ALTERNATIVE GROUND/ SUBMISSION OF THE ASSESSEE BEFORE CIT (A) WHICH WAS NOT AT ALL ADJUDICATED BY CIT(A) AS ASSESSEE GOT RELIEF BEFORE HIM ON THE ISSUE THAT NO EXPENDITURE ON ACCOUNT OF INTEREST HAS BEEN MADE FOR INVESTMENT FOR EARNING TAX FREE INCOME. MERELY BECAUSE THE CO-ORDINATE BENCH HAS SET ASIDE THE ISSUE FOR FRESH DETERMINATION IT CANNOT BE SAID THAT THE ASSESSEE IS NOT AGGRIEVED. IT IS SO BECAUSE ONCE AGAIN ASSESSEE GOES IN THE SAME PIPELINE FROM WHICH IT HAS PAGE | 4 COME OUT. IN VIEW OF THIS, WE FIND THAT THE ORDER OF THE CO-ORDINATE BENCH HAS MISTAKE APPARENT FROM THE RECORD AND THEREFORE THE ORDER OF THE CO- ORDINATE BENCH IN THE IMPUGNED APPEAL IS RECALLED. 7. IN VIEW OF THIS WE RECALL THE ORDER PASSED BY THE CO-ORDINATE BENCH IN THE IMPUGNED MISCELLANEOUS APPLICATION. THUS MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 02/02/2021. -D/- SD/- SD/- (SUDHANSHU SRIVASTAVA) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 02/02/2021. A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI PAGE | 5 DATE OF DICTATION 02.02.2021 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 2.02.2021 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER 2.02.2021 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/ PS 2.02.2021 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 2.02.2021 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/ PS 2.02.2021 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 02.02.2021 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 2.02.2021 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER