ASSISTANT COMMISSIONER OF INCOME TAX 3(2)(1), MUMBAI V. MUKUND GLOBAL FINANCE Limited , MUMBAI

MA 515/MUM/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3337 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 15 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 15-02-2019
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2011-2012
• Appeal Filed On: 31-07-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K L KANAK
• Assessee Lawyers: M A GOHEL
• Keywords: Rectification of order
• Section: 14A

Judgement Text

P A G E | 1 M.A. NO. 515/MUM/2018 A.Y. 2011 - 12 (ARISING OUT OF ITA NO. 6360/MUM/2016) THE DEPUTY COMMISSIONER OF INCOME TAX - 3(2)(1) VS. M/S MUKUND GLOBAL FINANCE LTD. IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, M UMBAI BEFORE SHRI MANOJ KUMAR AGGARWAL, AM AND SHRI RAVISH SOOD, JM M.A. NO.515 /MUM/2018 (ARISING OUT OF ITA NO. 6360/MUM/2016 ) ( / ASSESSMENT YEAR:2011 - 12 ) THE DEPUTY COMMISSIONER OF INCOME TAX 3(2)(1), ROOM NO.608, 6 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD MUMBAI 400 020 / VS. M/S MUKUND GLOBAL FINANCE LTD. 3 RD FLOOR, BAJAJ BHAVAN, 226 JAMNABHAI BAJAJ MARG, NARIMAN POINT, MUMBAI 400 021 ./ ./ PAN NO. AAACM8348N ( / APPLICANT) : ( / RESPONDENT ) / APPLICANT BY : SHRI K.L. KANAK, SR. D.R / RESPONDENT BY : SHRI M.A. GOHEL, A .R / DATE OF HEARING : 01 .02.2019 / DATE OF PRONOUNCEMENT : 1 5 .02.2019 / O R D E R PER RAVISH SOOD, JUDICIAL MEMBER: THE PRESENT MISCELLANEOUS APPLICATION FILED BY THE REVENUE ARISES FROM THE ORDER PASSED BY THE TRIBUNAL IN THE CASE OF ACIT - 3(2)(1), MUMBAI VS. MUKUND GLOBAL FINANCE LTD. IN ITA NO. 6360/MUM/2016, DATED 03.01.2018 FOR A.Y. 2011 - 12 . 2. DURING THE COURSE OF THE HEARING OF THE APPLICATION IT WAS SUBMITTED BY THE LD. DEPARTMENTAL REPRESENTATIVE (FOR SHORT D.R) THAT P A G E | 2 M.A. NO. 515/MUM/2018 A.Y. 2011 - 12 (ARISING OUT OF ITA NO. 6360/MUM/2016) THE DEPUTY COMMISSIONER OF INCOME TAX - 3(2)(1) VS. M/S MUKUND GLOBAL FINANCE LTD. THE TRIBUNAL WHILE DISMISSING THE APPEAL OF THE REVENUE HAD DRAWN SUPPORT FROM ITS EARLIER ORDER PASSED IN THE ASSESSES OWN CASE FOR A.Y. 2012 - 13 IN ITA NO. 809/MUM/2017. THE LD. D.R. SUBMITTED THAT THE ORDER PASSED BY THE TRIBUNAL SUFFERED FROM A MISTAKE APPARENT FROM RECORD ON TWO GROUNDS VIZ. (I) UPHOLDING OF THE ORDER OF THE CIT(A) WHO HAD VACATED THE DISALLOWANCE MADE BY THE A.O UNDER SEC. 14A; AND (II) UPHOLDING OF THE ORDER OF THE CIT(A) WHO HAD VACATED THE OBSERVATION OF THE A.O THAT THE DISALLOWANCE MADE UNDER SEC.14A WAS NOT TO BE CONSIDERED WHILE COMPUTING THE BOOK PROFIT UNDER SEC.115JB OF THE IT ACT. IN SUM AND SUBSTANCE, THE LD. D.R H A S TRIED TO IMPRESS UPON US THAT THE ORDER OF THE TRIBUNAL ON BOTH OF THE SAID ISSUE S SUFFERED FROM A MISTAKE WHICH RENDERED THE SAME AMENABLE FOR RECTIFICATION UNDER SEC.254(2) OF THE IT ACT. 3. IT WAS AVERRED BY THE LD. D.R THAT IN THE BACKDROP OF THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF MAXOPP INVESTMENT LTD. VS. CIT (2018) 402 ITR 640 (SC) THE CONTENTION OF THE ASSESSEE THAT AS THE INVESTMENTS IN THE SHARES WERE BACKED WITH AN INTENT TO ACQUIRE STAKE IN THE ASSO CIATE COMPANIES AND NOT WITH THE INTENTION OF EARNING OF ANY DIVIDEND INCOME DID NO LONGER HOLD THE GROUND. APART THEREFROM, IT WAS SUBMITTED BY THE LD. D.R THAT THE TRIBUNAL WHILE CONCLUDING THAT THE DISALLOWANCE MADE UNDER SEC.14A R.W. RULE 8D WAS NOT TO BE CONSIDERED FOR THE PURPOSE OF COMPUTING THE BOOK PROFIT UNDER SEC.115JB HAD WRONGLY BASED ITS DECISION BY TAKING SUPPORT OF THE ORDER PASSED BY THE S PECIAL BENCH OF THE ITAT, DELHI IN THE CASE OF ACIT VS. VIREET INVESTMENT PVT. LTD. & ANR. (2017) 1 65 ITD 27 (DEL)(SB). IT WAS SUBMITTED BY THE LD. D.R THAT THE TRIBUNAL WHILE SO CONCLUDING HAD FAILED TO TAKE COGNIZANCE OF THE ORDERS OF THE COORDINATE BENCHES OF THE ITAT, MUMBAI THAT WERE RELIED UPON BY THE REVENUE VIZ. (I) VIRAJ PROFILES LTD. (ITA NO. 4439/MUM/2013; DATED P A G E | 3 M.A. NO. 515/MUM/2018 A.Y. 2011 - 12 (ARISING OUT OF ITA NO. 6360/MUM/2016) THE DEPUTY COMMISSIONER OF INCOME TAX - 3(2)(1) VS. M/S MUKUND GLOBAL FINANCE LTD. 21.10.2015 - 46 ITR (T) 626 ) [MUMBAI - TRIB] (2016); AND (II) FERANI HOTEL S PVT. LTD. ( ITA NO. 857/MUM/2013; DATED 17.11.2014 ) . FURTHER , IT WAS STATED BY THE LD. D.R THAT THE TRIBUNAL HAD ALSO FAILED TO APPRECIATE THAT THE AFOREMENTIONED D ECISIONS RELIED UPON BY THE REVENUE WERE PASSED BY THE JURISDICTIONAL BENCHES OF THE TRIBUNAL AND HAD NOT BEEN CONTESTED ANY FURTHER, WHEREAS THE DECISION OF THE S PECIAL BENCH OF THE ITAT, DELHI IN THE CASE OF VIREET INVESTMENT PVT. LTD. (SUPRA) HAD BEEN ASSAILED BY THE REVENUE BY WAY OF AN APPEAL BEFORE THE HONBLE HIGH COURT OF DELHI. 4. PER CONTRA, THE LD. AUTHORIZED REPRESENTATIVE (FOR SHORT A.R) FOR THE ASSESEE RELIED ON THE ORDER PASSED BY THE TRIBUNAL AND SUBMITTED THAT NO SUCH INFIRMITY DID EMERGE THEREFROM WHICH WOULD RENDER THE SAME AMENABLE FOR RECTIFICATION UNDER SEC. 254(2) OF THE IT ACT. IT WAS FURTHER SUBMITTED BY THE LD. A.R THAT THE REVENUE IN THE GA RB OF THE PRESENT APPLICATION WAS AS A MATTER OF FACT SEEKING A REVIEW OF THE ORDER PASSED BY THE TRIBUNAL. 5. WE HAVE HEARD THE AUTHORIZED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDER PASSED BY THE TRIBUNAL WHILE DISPOSING OFF THE APPEAL AND TH E MATERIAL AVAILABLE ON RECORD. WE FIND OURSELVES TO BE IN AGREEMENT WITH THE CONTENTION OF THE LD. A.R THAT THE REVENUE IN THE GARB OF THE PRESENT APPLICATION FILED UNDER SEC. 254(2) IS IN FACT SEEKING A REVIEW OF THE ORDER . IN SO FAR THE CONTENTION OF TH E LD. D.R THAT IN LIGHT OF THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF M/S M A XOPP INVESTMENT LTD (SUPRA) MAKING OF STRATEGIC INVESTMENT BY AN ASSESSEE IN ITS ASSOCIATE COMPANIES CANNOT FORM A BASIS FOR NOT MAKING A DISALLOWANCE UNDER SEC.14A I S CONCERNED , WE ARE PRINCIP ALLY IN AGREEMENT WITH THE LD. D.R ON THE SAID ASPECT. HOWEVER, WE FIND THAT THE TRIBUNAL WHILE DISPOSING OFF THE PRESENT APPEAL OF THE REVENUE HAD NOT VACATED THE DISALLOWANCE MADE BY THE A.O UNDER SEC.14A ON P A G E | 4 M.A. NO. 515/MUM/2018 A.Y. 2011 - 12 (ARISING OUT OF ITA NO. 6360/MUM/2016) THE DEPUTY COMMISSIONER OF INCOME TAX - 3(2)(1) VS. M/S MUKUND GLOBAL FINANCE LTD. THE GROUND THAT THE INVESTMENT S MADE BY THE ASSESSEE IN THE SHARES OF ITS ASSOCIATE COMPANIES WERE IN THE NATURE OF STRATEGIC INVESTMENT S . THE LD. D.R ON BEING CONFRONTED WITH THE SAID FACT COULD NOT REBUT THE SAME. WE THUS ARE UNABLE TO COMPREHEND AS TO ON WHAT BASIS THE REVENUE HA S SOUGHT RECTIFICATION OF MISTAKE IN THE ORDER OF THE TRIBUNAL ON THE SAID PREMISE. 6. WE ARE ALSO UNABLE TO PERSUADE OURSELVES TO ACCEPT THE CONTENTION OF THE REVENUE THAT THE OBSERVATION OF THE TRIBUNAL IN ITS ORDER THAT THE DISALLOWANCE MADE UNDER SEC. 14A WAS NOT TO BE CONSIDERED WHILE COMPUTING THE BOOK PROFIT UNDER SEC.115JB SUFFERS FROM A MISTAKE WHICH RENDERS THE SAME AMENABLE FOR RECTIFICATION UNDE R SEC. 254(2) OF THE IT ACT. THE TRIBUNAL WHILE SO OBSERVING HAD RELIED ON THE ORDER PASSED BY THE S PECIAL BENCH OF THE ITAT, DELHI IN THE CASE OF VIREET INVESTMENT PVT. LTD. (SUPRA) . WE ARE UNABLE TO ACCEPT THE CONTENTION ADVANCED BY THE LD. D.R THAT TH E ORDERS PASSED BY THE COORDINATE BENCHES OF THE TRIBUNAL IN THE CASE OF VIRAJ PROFILES LTD . (SUPRA) AND FERANI HOTELS PVT. LTD.(SUPRA) WERE TO HAVE PRECEDENCE OVER THE ORDER PASSED BY THE S PECIAL BENCH OF THE ITAT, DELHI IN THE CASE OF VIREET INVESTMENT PVT. LTD. (SUPRA) . IN OUR CONSIDERED VIEW THE AFORESAID CONTENTION OF THE LD. D.R IS ABSOLUTELY MISCONCEIVED AND CLEARLY MILITATES AGAINST THE RULE OF JUDICIAL DISCIPLINE . APART THEREFROM, THE CONTENTION OF THE LD. D.R THAT THE ORDER OF THE S PECIAL BENCH OF THE ITAT IN THE CASE OF VIREET INVESTMENT PVT. LTD. (SUPRA) HAD BEEN ASSAILED BY THE REVENUE BY WAY OF AN APPEAL BEFORE THE HONBLE HIGH COURT OF DELHI IN OUR CONSIDERED VIEW DOES NOT CARRY ANY WEIGHT AGE DE HORS ANY ORDER STA YING THE OPERATION OF THE SAID DECISION . BE THAT AS IT MAY, IN OUR CONSIDERED VIEW THE REVENUE BY FILING THE PRESENT APPLICATION UNDER SEC.254(2) I S CLEARLY SEEKING A REVIEW OF THE ORDER PASSED BY THE TRIBUNAL WHILE DISPOSING OFF ITS APPEAL , WHICH WE ARE P A G E | 5 M.A. NO. 515/MUM/2018 A.Y. 2011 - 12 (ARISING OUT OF ITA NO. 6360/MUM/2016) THE DEPUTY COMMISSIONER OF INCOME TAX - 3(2)(1) VS. M/S MUKUND GLOBAL FINANCE LTD. AFRAI D IS NOT PERMISSIBLE AS PER THE MANDATE OF LAW . WE THUS FINDING NO MERIT IN THE APPLICATION FILED BY THE REVENUE DISMISS THE SAME. 7. THE APPLICATION FILED BY THE REVENUE IS DISMISSED. ORDER PRO NOUNCED IN THE OPEN COURT ON 1 5 . 02.2019 S D / - S D / - ( MANOJ KUMAR AGGARWA L ) (RAVISH SOOD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; 1 5 . 0 2 . 2 0 1 9 PS. ROHIT / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI