ACIT, Mohali V. M/s Saraswati Agro Chemicals India Pvt. Ltd., Mohali

MA 74/CHANDI/2019

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1857 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 month(s) 2 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 17-06-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 15-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MANJIT SINGH
• Keywords: Earning of tax free income; Tax effect; Rule 8D
• Section: 14A

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.74/CHD/2019 IN ./ ITA NO.390/CHD/2017 / ASSESSMENT YEAR : 2012-13 THE A.C.I.T., CIRCLE 6(1), MOHALI. M/S SARASWATI AGRO CHEMICAL INDIA PVT. LTD., VILLAGE-DAO MAJRA, KHARAR, KURALI ROAD, DISTT. MOHALI, PUNJAB. ./PAN NO: AAFSC2290A /APPELLANT /RESPONDENT /ASSESSEE BY : SHRI MANJIT SINGH, CIT(DR) ! / REVENUE BY : NONE ' # $ /DATE OF HEARING : 24.05.2019 %&'( $ /DATE OF PRONOUNCEMENT:17.06.2019 /ORDER PER SANJAY GARG, JUDICIAL MEMBER : THE PRESENT MISCELLANEOUS APPLICATION HAS BEEN MOVED BY THE ACIT, CIRCLE 6(1), MOHALI/THE CONCERNE D ASSESSING OFFICER (A.O.) PLEADING THEREIN THAT THE ORDER OF THE TRIBUNAL DATED 7.9.2018 PASSED IN ITA MA NO.74/CHD/2019 A.Y.2012-13 2 NO.390/CHD/2017, RELEVANT TO ASSESSMENT YEAR 2012-1 3 IS NOT ACCEPTABLE TO THE A.O. BECAUSE OF THE REASON S MENTIONED IN THE APPLICATION. IT HAS BEEN PLEADED I N THE SAID APPLICATION THAT THE APPEAL OF THE REVENUE WAS DISMISSED AS HAVING TAX EFFECT LESS THAN THE PRESCR IBED LIMIT OF RS.20 LACS AS PRESCRIBED VIDE CBDT CIRCULA R NO.3/2018 DATED 11.7.2018 FOR FILING THE APPEAL BEF ORE THE TRIBUNAL. THAT HOWEVER, ON MERITS THE REVENUE H AS A CASE IN THE LIGHT OF THE CBDT CIRCULAR NO.5/2014 WH ICH PROVIDES THAT DISALLOWANCE OF EXPENDITURE FOR EARNI NG TAX EXEMPT INCOME U/S 14A OF THE INCOME TAX ACT (IN SHO RT THE ACT), 1961 READ WITH RULE 8D OF THE INCOME TA X RULES, 1962 IS TO BE MADE IRRESPECTIVE OF THE FACT THAT ASSESSEE HAS NOT EARNED ANY TAX EXEMPT INCOME. 2. WE HAVE HEARD THE RIVAL CONTENTIONS. ADMITTEDLY, THE APPEAL OF THE REVENUE WAS DISMISSED BECAUSE OF LOW TAX EFFECT AS BEING HIT BY CBDT CIRCULAR NO.3/2018 DATE D 11.7.2018. SINCE THERE IS NO OPINION GIVEN IN THE S AID ORDER ON THE MERITS OF THE SAID CASE, THE ISSUE ON THE MERITS HAS BEEN LEFT OPEN TO BE ADJUDICATED IN APPR OPRIATE CASE. THE CONCERNED ACIT/A.O. HAS NOT POINTED OUT A NY MISTAKE APPARENT ON RECORD IN THIS RESPECT. WE FURTHER MA NO.74/CHD/2019 A.Y.2012-13 3 FIND THAT THE LD.CIT(A) HAS DECIDED THE APPEAL ON M ERITS IN THE LIGHT OF VARIOUS DECISIONS OF THE HON'B LE JURISDICTIONAL HIGH COURT, WHICH WERE BINDING UPON THE CIT(A) IRRESPECTIVE OF THE CBDT CIRCULAR NO.5/2014, RELIED UPON BY THE A.O. MERELY BECAUSE THE ORDER OF THIS TRIBUNAL IS NOT ACCEPTABLE TO THE A.O. THAT ITSEL F CANNOT BE A GROUND TO MOVE AN MISCELLANEOUS APPLICATION U/ S 254(2) OF THE ACT. 3. THE APPLICATION U/S 254(2) OF THE ACT LIES IN CA SE THERE IS A MISTAKE APPARENT ON RECORD IN THE ORDER OF THE TRIBUNAL. THE ORDER OF THE TRIBUNAL CANNOT BE ASSAI LED ON MERITS IN THE GARB OF MISCELLANEOUS APPLICATION U/S 254(2) OF THE ACT. RELIANCE IN THIS RESPECT CAN BE PLACED ON THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CA SE OF 'COMMISSIONER OF INCOME-TAX VS RAMESH ELECTRIC AND TRADING CO.' (1993) 203 ITR 497 (BOM.), WHEREIN THE HON'BLE HIGH COURT WHILE RELYING UPON THE DECISION OF THE H ON'BLE SUPREME COURT IN THE CASE OF T. S. BALARAM, ITO V. VOLKART BROTHERS' [1971] 82 ITR 50 AND FURTHER RELYING UPON THE DECISIONS OF THE VARIOUS HIGH COURTS HAS CATEGORICA LLY HELD THAT THE POWER OF RECTIFICATION UNDER SECTION 254(2 ) OF THE INCOME-TAX ACT CAN BE EXERCISED ONLY WHEN THE MISTAKE MA NO.74/CHD/2019 A.Y.2012-13 4 WHICH IS SOUGHT TO BE RECTIFIED IS AN OBVIOUS AND P ATENT; MISTAKE WHICH IS APPARENT FROM THE RECORD, AN D NOT A MISTAKE WHICH REQUIRES TO BE ESTABLISHED BY ARGUMEN TS AND A LONG DRAWN PROCESS OF REASONING ON POINTS ON WHIC H THERE MAY CONCEIVABLY BE TWO OPINIONS. 4. FURTHER, IF THE ORDER OF THE TRIBUNAL IS NOT ACC EPTABLE TO THE A.O., IT IS OPEN TO THE A.O. TO FILE APPEAL BEFORE THE HIGHER AUTHORITY I.E. THE HON'BLE JURISDICTIONAL HI GH COURT. HOWEVER, THE MISCELLANEOUS APPLICATION DOES NOT LIE STATING THAT THE ORDER IS NOT ACCEPTABLE TO THE ACIT/THE CO NCERNED A.O. THE HON'BLE SUPREME COURT IN THE CASE OF 'UOI AND OTHERS VS. KAMALAKSHI FINANCE CORPORATION' AIR 1992 SC 711 HAS CATEGORICALLY HELD THAT THE PRINCIPLES OF J UDICIAL DISCIPLINE REQUIRE THAT THE ORDERS OF THE HIGHER AP PELLATE AUTHORITIES SHOULD BE FOLLOWED UNRESERVEDLY BY THE SUBORDINATE AUTHORITIES. THE HON'BLE SUPREME COURT HAS FURTHER HELD THAT THE MERE FACT THAT THE ORDER OF T HE APPELLATE AUTHORITY IS NOT ACCEPTABLETO THE DEPAR TMENT IN- ITSELF IS AN OBJECTIONABLE PHRASE AND IS NOT A GROU ND FOR NOT FOLLOWING THE SAME UNLESS ITS OPERATION HAS BEEN SU SPENDED BY A COMPETENT COURT. MA NO.74/CHD/2019 A.Y.2012-13 5 5. IN VIEW OF THIS, THERE IS NO MERIT IN THE MISCEL LANEOUS APPLICATION AND THE SAME IS ACCORDINGLY, DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- # $ % &' (ANNAPURNA GUPTA) (SANJAY GARG ) ( / ACCOUNTANT MEMBER / JUDICIAL MEMBER *# /DATED: 17 TH JUNE, 2019 * ' * &) *+ ,+ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ' - / CIT 4. ' - ( )/ THE CIT(A) 5. +./ 0 , $ 0 , 123/4 / DR, ITAT, CHANDIGARH 6. /3 5# / GUARD FILE &) ' / BY ORDER, ! / ASSISTANT REGISTRAR