DCIT, Circle-8(1), Kolkata, Kolkata V. M/s Ashiana Homes Pvt. Ltd., Kolkata

MA 90/KOL/2016

• Counselvise Citation: [2016] 124 COUNSELVISE.COM (IT) 5118 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 8 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 09-12-2016
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 16-09-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 01-07-2016
• Court: TRIBUNAL
• Keywords: Earning of tax free income; Tax effect
• Section: 14A; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : KOLKATA [BEFORE HONBLE SRI N.V.VASUDEVAN, JM & SHRI M.BA LAGANESH, AM ] M.A.NO.90/KOL/2016 (A/O I.T.A NO. 2258/KOL/2013) ASSESSMENT YEAR : 2006-0 7 D.C.I.T., CIRCLE-8(1), -VS.- M/S. ASHIANA HOMES PVT. LTD. KOLKATA KOLKATA [PAN : AACCA 1100 E] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI SALLONG YADEN, ADDL. CIT(DR) FOR THE RESPONDENT : SHRI PAWAN KUMAR AGARWA L, FCA DATE OF HEARING : 09.12.2016. DATE OF PRONOUNCEMENT : 09.12.2016. ORDER PER N.V.VASUDEVAN, JM THIS IS A MISCELLANEOUS APPLICATION FILED BY THE R EVENUE U/S 254(2) OF THE ACT PRAYING THAT THE ORDER OF THE TRIBUNAL DATED 20.01. 2016 ON THE GROUND THAT THE TAX EFFECT INVOLVED IN THE APPEAL BY THE REVENUE WAS LESS THAN RS. 10 LAKHS AND THEREFORE IN VIEW OF THE CBDT CIRCULAR NO.21/2015 DATED 10.12.2015 WH EREVER THE TAX EFFECT IN AN APPEAL FILED BEFORE THE TRIBUNAL IS LESS THAN RS.10 LAKHS SUCH APPEAL SHOULD BE WITHDRAWN. IT IS A PLEA OF THE REVENUE IN THE MISCE LLANEOUS APPLICATION THAT THE TAX EFFECT IN THE AFORESAID APPEAL FILED BY THE REVENUE WAS RS.11,22,879/- WHICH IS MUCH ABOVE THE MONETARY LIMIT OF RS.10 LAKHS FOR FILING THE APPEALS BEFORE THE TRIBUNAL. WHEN THE MISCELLANEOUS APPLICATION WAS CALLED FOR H EARING THE LD. DR REITERATED THE STAND OF THE REVENUE AS CONTAINED IN THE MISCELLANE OUS APPLICATION. THE LD. COUNSEL FOR THE ASSESSE HOWEVER FILED BEFORE US A CALCULATION O F THE TAX EFFECT INVOLVED IN THE APPEAL WHICH IS GIVEN AS ANNEXURE TO THIS ORDER. HE ALSO BROUGHT TO OUR NOTICE THE D ECISION OF 2 M.A.NO.90/KOL/2016 (A/O ITA NO.2258/KOL/2013) M/S. ASHIANA HOMES PVT. LTD. A.YR.2006-07 2 ITAT, AHMEDABAD BENCH IN THE CASE OF DCIT VS M/S. M AHALAXMI FABRICS MILLS PVT. LTD. VIDE ITA NO.1531/AHD/2007 ORDER DATED 01.04.20 10 WHEREIN THE REFERENCE HAS BEEN MADE BY THE TRIBUNAL TO THE DECISION OF THE HO NBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS CONCORD PHARMACEUTICALS IN TAX APPEA L NO.402/2001 VIDE ORDER DATED 05.08.2008 WHEREIN THE HONBLE GUJARAT HIGH COURT O BSERVED THAT IF THE LD. DR AT THE TIME OF HEARING OF THE APPEAL AGAINST THE APPLICABI LITY OF THE CIRCULAR DESPITE THERE BEING AN EXCEPTION DOES NOT RAISE SUCH OBJECTION TH E DEPARTMENT CANNOT HAVE AN INNING FOR THE PURPOSE OF REASONING SUCH OBJECTION. ACCORD ING TO HIM THEREFORE THE REVENUE OUGHT TO HAVE RAISED THE OBJECTION ON TAX EFFECT AT THE TIME OF HEARING OF THE APPEAL AND CANNOT AGITATE THE ISSUE OF TAX EFFECT BY FILING A MISCELLANEOUS APPLICATION. 2. WE HAVE GIVEN A VERY CAREFUL CONSIDERATION TO THE RIVAL SUBMISSIONS. THE TOTAL INCOME OF THE ASSESSEE FOR A.Y.2006-07 COMPUTED UND ER THE NORMAL PROVISION OF THE ACT WAS AS FOLLOWS :- TOTAL INCOME AS PER RETURN OF THE ASSESSEE RS. 1,13,49,091/- ADD: AS PER PARAGRAPHS 5 ABOVE :RS.31,92,770/ AS PER PARAGRAPH - 6 ABOVE : RS. 4,27 ,959/- AS PER PARAGRAPH - 7 ABOVE : `RS. 19,821/- AS PER PARAGRAPH 8 ABOVE : RS. 5,66,451/- RS. 42,07,001/- TOTAL INCOME RS.1,55,56,092/- ROUNDED OFF TO RS.1,55,56,090/- THE TAX PAYABLE AS PER NORMAL COMPUTATION IS MORE T HAN TAX ON BOOK PROFIT, THEREFORE, THE ASSESSMENT IS MADE ON THE TOTAL INCOME OF RS.1,55,5 6,090/-. 3. THE TOTAL INCOME OF THE ASSESSEE COMPUTED IN TERMS OF SECTION 115JB OF THE ACT AS FOLLOWS :- 2. THE ASSESSEE COMPANY HAS SUBMITTED THE FOLLOWIN G COMPUTATION U/S 115JB OF THE INCOME TAX ACT, 1961 : NET PROFIT AS PER PROFIT & LOSS ACCOUNT : RS.5,85 ,79,704/- LESS : DIVIDEND INCOME [EXEMPT U/S 10(34)] : RS.45,36,833/- FRINGE BENEFIT TAX : RS. 2,80,000/- RS. 48,16, 833/- BOOK PROFIT RS.5,37,62,871/- 3 M.A.NO.90/KOL/2016 (A/O ITA NO.2258/KOL/2013) M/S. ASHIANA HOMES PVT. LTD. A.YR.2006-07 3 3. THE ASSESSEES INVESTMENT FROM WHICH IT DERIVES EXEMPT INCOME IS RS.8,55,91,816/-. HOWEVER, THE ASSESSEE HAS NOT DISALLOWED ANY EXPEND ITURE IN MONITORING AND MAINTAINING THIS INVESTMENT. THEREFORE, 0.5% OF THIS INVESTMENT AMOUNTING TO RS.4,27,959/- IS DISALLOWED AND ADDED TO THE ASSESSEES TOTAL INCOME . 4. COMPUTATION IS AS BELOW : BOOK PROFIT AS PER ASSESSEES COMPUTATION : RS.5,3 7,62,871/- ADD: AS PER PARAGRAPHS 3 ABOVE : RS. 4,27, 959/- BOOK PROFIT : RS.5,41,90,830/- 4. SINCE THE TAX PAYABLE AS PER THE NORMAL COMPU TATION WAS MORE THAN THE BOOK PROFITS THE TOTAL INCOME OF THE ASSESSEE WAS COMPUTED AS PE R THE NORMAL PROVISION OF THE ACT. THE DISPUTED ADDITIONS BY THE REVENUE IN THIS APPEA L IS AN ADDITION OF RS.31,92,770/- WHICH WAS REDUCTION OF THE CLAIM OF THE ASSESSEE FO R DEDUCTION U/S 10A OF THE ACT. THE DISALLOWANCE OF RS.4,27,959/- U/S 14A OF THE ACT. 5. AS A RESULT OF THE ORDER OF THE CIT(A) DELET ING BOTH THE AFORESAID ADDITIONS MADE BY THE AO THE TOTAL INCOME OF THE ASSESSEE CAME TO BE DETERMINED U/S 115JB OF THE ACT AND THAT IS THE COMPUTATION OF TAX EFFECT GIVEN BY THE ASSESEE WHICH IS GIVEN AS ANNEXURE TO THIS ORDER. IF THE REVENUE SUCCEEDS IN THE APPEA L THEN THE COMPUTATION OF TOTAL INCOME OF THE ASSESSEE FOR A.Y.2006-07 WILL BE DONE AS PER THE NORMAL PROVISIONS OF THE ACT. IF THE INCOME OF THE ASSESSEE IS COMPUTED UNDER THE NO RMAL PROVISIONS OF THE ACT THEN THE TAX EFFECT IN THE ADDITIONS CHALLENGED BY THE REVEN UE BEFORE THE TRIBUNAL WILL BE RS.11,22,879/- AS STATED BY THE REVENUE IN THE MISC ELLANEOUS APPLICATION. THEREFORE THE APPEAL OF THE REVENUE WAS NOT HIT BY THE PROHIBITIO N CONTAINED IN CIRCULAR NO.21/2015 DATED 10.12.2015 IN THAT VIEW OF THE MATTER WE ARE OF THE VIEW THAT THE ORDER OF TRIBUNAL DISMISSING THE APPEAL OF THE REVENUE FOR LOW TAX EF FECT SHOULD BE RECALLED AND THE APPEAL SHOULD BE HEARD ON MERITS. WE HOLD AND ORDER ACCORD INGLY. 6. WHEN THE APPEAL WAS TAKEN UP FOR HEARING NON E APPEARED ON BEHALF OF THE ASSESSEE. THE ASSESSE HAD HOWEVER GIVEN A COMPUTATION OF TAX EFFECT IN ITS LETTER DATED 04.01.2016 4 M.A.NO.90/KOL/2016 (A/O ITA NO.2258/KOL/2013) M/S. ASHIANA HOMES PVT. LTD. A.YR.2006-07 4 ADDRESSED TO THE TRIBUNAL. IT WAS ON THIS BASIS THA T THE TRIBUNAL CONCLUDED THAT THE TAX EFFECT IN THE APPEAL WAS LESS THAN RS.10 LAKHS. THE LD. DR DID NOT HAVE AN OCCASION TO CONSIDER THE COMPUTATION OF TAX EFFECT AS GIVEN BY THE ASSESSEE IN ITS LETTER DATED 04.01.2016. IN THIS CIRCUMSTANCES WE ARE OF THE VI EW THAT THE DEPARTMENT DID NOT HAVE PROPER OPPORTUNITY OF EXPLAINING THE TAX EFFECT INV OLVED IN THE APPEAL. 7. FOR THE REASONS GIVEN ABOVE WE RECALL THE OR DER DATED 20.01.2016 AND DIRECT THE REGISTRY TO BE FIXED FOR HEARING IN THE NORMAL COUR SE AFTER DUE NOTICE TO THE PARTIES. 8. IN THE RESULT THE MISCELLANEOUS APPLICATION O F THE REVENUE IS ALLOWED ORDER PRONOUNCED IN THE COURT ON 9.12.2016. SD/- SD/- [M.BALAGANESH] [ N.V.VASUDEVAN ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 9.12.2016. [RG PS] COPY OF THE ORDER FORWARDED TO: 1.M/S. ASHIANA HOMES PVT. LIMITED, 46C, CHOWRINGHEE ROAD, KOLKATA-700071. 2.D.C.I.T., CIRCLE-8, KOLKATA. 3. CIT(A)-III, KOLKATA 4. C.I.T. -III, KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSTT.REGISTRAR, ITAT, KOLKATA BENCHES 5 M.A.NO.90/KOL/2016 (A/O ITA NO.2258/KOL/2013) M/S. ASHIANA HOMES PVT. LTD. A.YR.2006-07 5