DCIT, C-6(1), Mohali V. M/s TDS Management Consultants P. Ltd., Mohali

MA 50/CHANDI/2019

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 0203 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 month(s) 6 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 27-03-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 21-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MANJIT SINGH
• Keywords: Earning of tax free income; Tax effect; Rule 8D
• Section: 14A; 2

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH B , CHANDIGARH , !' # $ % &' , BEFORE: SHRI SANJAY GARG, JUDICIAL MEMBER AND SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER / MA NO.50/CHD/2019 IN ./ ITA NO.656/CHD/2018 / ASSESSMENT YEAR :2014-15 THE D.C.I.T., CIRCLE 6(1), MOHALI. M/S TD S MANAGEMENT CONSULTANTS P. LTD., SCF 81, PHASE-VI, MOHALI ./ PAN: AACCT5653K /APPELLANT /RESPONDENT /ASSESSEE BY : SHRI MANJIT SINGH, SR.DR ! / REVENUE BY : NONE ' # $% /DATE OF HEARING : 15.03.2019 &'() $% /DATE OF PRONOUNCEMENT: 27.03.2019 /ORDER PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER : VIDE THIS MISCELLANEOUS APPLICATION THE REVENUE HAS SOUGHT RECALLING OF THE ORDER PASSED IN ITA NO.656/CHD/2018 DATED 01.08.2018 RELATING TO ASSESS MENT YEAR 2014-15, WHEREIN THE APPEAL OF THE REVENUE WAS DISMISSED ON ACCOUNT OF LOW TAX EFFECT INVOLVED AS PRESCRIBED BY THE CBDT CIRCULAR NO. 3/2018 DATED 11.07.2018. 2. IT HAS BEEN POINTED OUT THAT THE ISSUE INVOLVED IN THE APPEAL RELATED TO DISALLOWANCE OF EXPENSES MADE U/S 14A OF 2 THE ACT. IT HAS BEEN CONTENDED THAT THE CBDT IN IT S CIRCULAR NO.5/2014 HAS CLARIFIED THAT THE DISALLOWA NCE OF EXPENSES U/S 14A OF THE ACT WOULD BE ATTRACTED EVEN IF NO EXEMPT INCOME IS EARNED. THE REVENUE HAS, THEREFORE , CONTENDED THAT THE APPEAL HAD BEEN ALLOWED IN VIOL ATION OF CBDT CIRCULAR AS ABOVE. AS PER THE PRESENT APPLICA TION FILED ,IT HAS BEEN CONTENDED THAT THE DISMISSAL OF THE AP PEAL AS ABOVE WAS NOT ACCEPTABLE ON THE FOLLOWING GROUNDS: (I) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ORDER OF THE HONBLE ITAT IS NOT PERVERSE AND THE LEGAL ISSUES RAISED BY THE REVENUE BEFORE IT SHOULD BE REINSTATED AND DECIDED ON MERITS. (II) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE HONBLE ITAT IS JUSTIFIED IN DISMISSING THE APPEAL OF THE REVENUE OBSERVING THAT THE TAX EFFECT IN THE CASE IS BELOW THE MONETARY LIMIT AS LAID DOWN VIDE INST. NO.3/2018(EARLIER 21/2015),IGNORING THE FACT THAT THE CASE IS COVERED UNDER THE EXCEPTION (B) OF PARA 10 DRAWN IN THE AFORESAID CIRCULAR DUE TO CBDT CIRCULAR NO.5/2014 DATED 11.02.2014 (III) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ORDER OF THE HONBLE ITAT IS JUSTIFIED IN DISMISSING THE APPEAL OF THE REVENUE O N TAX EFFECT, AND NOT DECIDING THE MERITS, IGNORING T HE LEGISLATIVE INTENT EXPRESSED IN CBDTS CIRCULAR NO.5/2014 DATED 11.02.2014,WHICH EXPLICITLY STATES THAT EXPENSES RELATABLE TO EARNING OF EXEMPT INCOME HAVE TO BE CONSIDERED FOR DISALLOWANCE IRRESPECTIVE OF THE FACT WHETHER ANY SUCH INCOME HAS BEEN EARNED DURING THE F.Y OR NOT AS CONFIRMED BY APEX COURT IN MAXOPP INVESTMENT LTD. VS CIT ,91 TAXMAN.COM 154(SC). (IV) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE HONBLE ITAT IS JUSTIFIED IN DISMISSING THE APPEAL OF THE REVENUE ON TAX EFFECT, AND NOT DECIDING THE MERITS, WITHOUT APPRECIATING THE FACT THAT THE APPLICABILITY OF SECTION 14A OR R ULE 8D DOES NOT DEPEND ON EARNING OF INCOME AS HELD BY SUPREME COURT I THE CASE OF CIT VS RAJENDER PRASAD MOODY(1978) 115 ITR 519? 3 (V) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE HONBLE ITAT IS JUSTIFIED IN DISMISSING THE APPEAL OF THE REVENUE ON TAX EFFECT, AND NOT DECIDING THE MERITS, WITHOUT APPRECIATING THE FACT THAT THERE IS NO SUCH RESTRICTION STIPULAT ED EITHER IN SECTION 14A OF THE INCOME TAX ACT OR RULE 8D OF THE INCOME TAX RULE? (VI) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE HONBLE ITAT IS JUSTIFIED IN DISMISSING THE APPEAL OF THE REVENUE ON TAX EFFECT, AND NOT DECIDING THE MERITS, IGNORING THE PRINCIPAL OF APPORTIONMENT REGARDLESS OF EXEMPT INCOME LAID DOWN BY HONBLE SUPREME COURT DECISION IN CIT VS WALFORT SHARE AND STOCK BROKERS P LTD:326 ITR 1 (SC) AND UPHELD BY THE HONBLE SUPREME COURT IN 91 TAXMANN.COM 154 (SC)? (VII) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE HONBLE ITAT IS JUSTIFIED IN DISMISSING THE APPEAL OF THE REVENUE ON TAX EFFECT, AND NOT DECIDING THE MERITS, WHEN THE ADDITION WAS DELETED FOLLOWING THE DECISION OF THE HONBLE HIGH COURT IN LAKHANI MARKETING DECIDED FOLLOWING DECISIONS IN THE CASE OF HERO CYCLESLTD.,323 ITR 204 AND CIT VS WINSOME TEXTILE INDUSTRIES LTD., 319 ITR 204 WHOSE FACTS ARE DISTINGUISHABLE FROM THE TAXPAYERS, IGNORING THE PRINCIPAL OF APPORTIONMENT LAID DOWN BY HONBLE SUPREME COURT DECISION IN CIT VS WALFORT SHARE AND STOCK BROKERS P LTD:326 ITR 1 (SC) AND UPHELD BY THE HONBLE SUPREME COURT IN 91 TAXMANN.COM 154 (SC)? 3. IT HAS THEREFORE BEEN REQUESTED THAT THE ORDER P ASSED IN ITA NO.656/CHD/2018 DT.01-08-18 BE RECALLED AND DEC IDED ON MERITS. 4. WE HAVE HEARD THE LD.DR AND ALSO GONE THROUGH TH E CONTENTS OF THE MISCELLANEOUS APPLICATION FILED BEF ORE US . FROM A PERUSAL OF THE SAME WE DO NOT FIND ANY MISTA KE POINTED OUT IN THE ORDER PASSED BY THE ITAT. ON THE CONTRARY, THE REVENUE HAS CHALLENGED THE SAID ORDER VIDE THIS MISCELLANEOUS APPLICATION FILED U/S 254(2) OF THE ACT, RAISING SEVERAL GROUNDS BEFORE US, AS REPRODUCED AB OVE FROM THE APPLICATION FILED BY THE REVENUE BEFORE US, STA TING THAT 4 THE ORDER WAS PERVERSE AND COULD NOT HAVE BEEN DISM ISSED ON ACCOUNT OF LOW TAX EFFECT INVOLVED SINCE IT WAS COVERED UNDER EXCEPTION SPECIFIED BY CBDT FOR DISMISSAL ON ACCOUNT OF LOW TAX EFFECT, AND HAD BEEN PASSED IGNORING THE LEGISLATIVE INTENT EXPRESSED IN CBDT CIRCULAR NO.5/ 2014 DATED 11-02-14 AND PRINCIPAL LAID DOWN IN VARIOUS D ECISIONS THAT APPORTIONMENT OF EXPENSES HAS BEEN TO BE DONE REGARDLESS OF EXEMPT INCOME EARNED. THE SAME, WE HO LD, IS NOT TENABLE IN LAW SINCE IT IS ONLY APPARENT MISTA KES WHICH CAN BE RECTIFIED BY WAY OF THE PRESENT PROCEEDINGS AND FOR CHALLENGING ORDERS PASSED BY THE ITAT THERE IS LEGA L RECOURSE AVAILABLE WHICH DEFINITELY DOES NOT INCLUDE CHALLEN GING IT BY WAY OF THE PRESENT MISCELLANEOUS APPLICATION UNDER SECTION 254(2) OF THE ACT. THE MISCELLANEOUS APPLICATION IS LIABLE TO BE DISMISSED FOR THE AFORESAID REASON. 5. IN THE RESULT, THE MISCELLANEOUS APPLICATION FIL ED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- # $ % &' (SANJAY GARG) (ANNAPURNA GUPTA) /JUDICIAL MEMBER '( /ACCOUNTANT MEMBER *# /DATED: 27 TH MARCH, 2019 * ' * ' *+,- , / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ' . / CIT 5 4. ' . ( )/ THE CIT(A) 5. ,/0 1 , $ 1 , 23405 / DR, ITAT, CHANDIGARH 6. 046# / GUARD FILE ' * ' / BY ORDER, / ASSISTANT REGISTRAR