Income Tax Appellate Tribunal - Mumbai
Deputy Commissioner Of Income Tax ... vs Crest Logistics & Engineers Private ... on 19 July, 2019
आयकर अपीलीय अधिकरण "C" न्यायपीठ मुंबई में।
IN THE INCOME TAX APPELLATE TRIBUNAL "C" BENCH, MUMBAI
श्री महावीर स हिं , न्याययक दस्य एविं श्री राजेश कुमार लेखा दस्य के मक्ष।
BEFORE SRI MAHAVIR SINGH, JM AND SRI RAJESH KUMAR, AM
Aayakr ApIla saM . / ITAs No. 310/Mum/2018
(inaQa- a rNa baYa- / Assessment Year 2012-13)
Aayakr ApIla saM . / ITAs No. 311/Mum/2018
(inaQa- a rNa baYa- / Assessment Year 2013-14)
D.C.I.T, 14(1)(2) M/s. Crest Logistics & Engineers
Room No. 475, 4th Fl., Private Limited
Aaykar Bhavan, Maharshi (Erstwhile REL Utility Engineers Ltd.,
Karve Road, Mumbai-400 Formerly Known as Sonata Investments
Vs.
020. Ltd.)
Unit No. 306, 3rd Fl., Magnus Opus,
Kalina, Santacruz (E),
Mumbai-400055
(ApIlaaqaI- / Appellant) .. (p`%yaqaaI- / Respondent)
स्थायी ले खा िं . / PAN No. AACCR7266 A
अपीलाथी की ओर े / Appellant by : Shri N.S. Jing Ping, DR
प्रत्यथी की ओर े / Respondent by : s/shri Deepak Jain
Amit Khatiwala, ARs'
न
ु वाई की तारीख / Date of hearing: 26.06.2019
घोषणा की तारीख / Date of pronouncement : 19.07.2019
AadoSa / O R D E R
महावीर स हुं , न्याययक दस्य/
PER MAHAVIR SINGH, JM:
These two appeals by the Revenue are arising out of the separate orders of the Commissioner of Income Tax (Appeals)], 22, Mumbai in appeal Nos. CIT(A)22/IT/172/2015-16 and 2 ITA s No .3 1 0 & 3 11 / Mum/ 2 01 8 CIT(A)22/IT/577/2015-16, both dated 30-10-2017. The Assessments were framed by the Deputy Commissioner of Income Tax, 14(1)(2), Mumbai (in short DCIT/ITO/ AO) for the A.Ys. 2012- 13 and 2013-14 vide orders dated 3.03.2015 and 15.02.2016, under section 143(3) of the Income-tax Act, 1961 (hereinafter 'the Act').
2. The only common issue involved in these appeals of the revenue is as regard to the orders of the CIT(A) restricting the disallowance of expenses in relatable to exempt income to the extent of exempt income on investments which are giving rise to exempt income only u/s. 14A of the Act r.w.r. 8D of the I.T Rules, 1962. For this, the Revenue has raised following grounds in ITA No. 310/Mum/2018 for the A.Y 2012-13: -
"1. Whether in law and on the facts of the instant case, was the CIT(A) right in excluding those investments which did not yield exempt income in the said A.Y 2012-13 from the calculation of disallowance s u/s. 14A r.w.r 8D.
2. Whether on law and in the facts of the instant case, was the CIT(A) right in restricting the disallowance u/s. 14A to the extent of exempt income earned by the Assessee Company?"
3. Briefly stated the facts are that the assessee has claimed exempt income u/s. 10A of the Act amounted to Rs. 6,85,83,096/-. The assessee has shown suo moto disallowance of 3 ITA s No .3 1 0 & 3 11 / Mum/ 2 01 8 expenses relating to exempt income u/s. 14A of the Act at Rs. 57,66,54,012/-. The assessee considered the investments, which have actually yield exempt income excluding stock-in-trade. According to assessee, it has considered the disallowance of expenses u/s. 14A of the Act r.w.r 8D of the Rules considering of investments, which yielded tax free income, of Rs.164,01,61,676/- . The Assessing Officer after considering the submissions of the assessee considered the interest expenditure for making disallowance under Rule 8D(2)(ii) of the Rules at Rs. 149,87,33,902/-. The Assessing Officer also computed the disallowance of expenses on account administrative expenses by computing the amount equal to 1½ % on average value of investments at Rs. 14,14,27,774/-. Thereby, the Assessing Officer considered the total disallowance at Rs. 164,01,61,676/-. The Assessing Officer also considered the suo moto disallowance by the assessee at Rs.74,75,30,920/- and thereby disallowed balance amount of Rs. 89,26,30,756/-. Aggrieved, the assessee preferred an appeal before the CIT(A).
4. The CIT(A) after considering the facts and circumstances of the case and provisions of law restricted the disallowance to the extent of income as shown by the assessee. The CIT(A) gave his findings in para 7. 2 as under:-
""7.2 I have considered the facts of the case and the appellant's submissions. On the issue of jurisdiction for considering claims not made in the return of income by appellate authorities, there are various judgements of the Hon'ble Apex Court and 4 ITA s No .3 1 0 & 3 11 / Mum/ 2 01 8 also other Courts holding that an assessee is entitled to raise additional grounds not merely in terms of legal submissions, but also additional claims which were not made in the return filed by it and that the appellate authorities have jurisdiction to entertain the same. The Hon'ble jurisdictional High Court in the case of CIT vs. Pruthvi Brokers & Shareholders Pvt. Ltd [2012] (23 taxmann.com 23) had discussed some of these judgements at length and held that the appellate authorities have jurisdiction to consider additional claims even though not claimed in the return of income. In view of this judgement of the Hon'ble jurisdictional High Court (supra) and the decision of the Hon'ble Tribunal in the appellant's own case for A.Y 2009-10 in ITA No. 7177/M/2013 dated 14.07.2017, the additional ground of appeal is being admitted. The Hon'ble Tribunal (supra) in the appellant's own case has also held that disallowance under section 14A is to be restricted to the exempt income earned by the assessee. Respectfully following the decision of the Hon'ble Tribunal in the appellant's own case, the Assessing Officer is directed to restrict the disallowance u/s. 14A to the extent of the exempt income only.5
ITA s No .3 1 0 & 3 11 / Mum/ 2 01 8 The appellant's additional ground of appeal is allowed."
Aggrieved, now the Revenue is in appeal before this Tribunal.
5. We noted that this issue is clearly covered in favour of the assessee and against the revenue by the decision of the Hon'ble Bombay High Court in the case of Balapur Industries, wherein the decision of the Hon'ble Delhi High Court in the case of Chem Investments was considered and the Hon'ble Bombay High Court has held as under: -
"On hearing the learned Counsel for the Department and on a perusal of the impugned orders, it appears that both the Authorities have recorded a clear finding of fact that there was no exempt income earned by the assessee. While holding so, the Authorities relied on the judgment of the Delhi High Court in Income Tax Appeal No. 749/2014, which holds that the expression "does not form part of the total income" in Section 14A of the Income Tax Act, 1961 envisages that there should be an actual receipt of the income, which is not includible in the total income, during the relevant previous year for the purpose of disallowing any expenditure incurred in relation to the said income. The Income Tax Appellate Tribunal held that the provisions of Section 14A of the Income Tax Act, 1961 would not 6 ITA s No .3 1 0 & 3 11 / Mum/ 2 01 8 apply to the facts of this case as no exempt income was received or receivable during the relevant previous year. It is not the case of the Assessing Officer that any actual income was received by the assessee and the same was includible in the total income. In the facts of the case, the Authorities held that since the investments made by the assessee in the sister concerns were not the actual income received by the assessee, they could not have been included in the total income."
6. We noted that this issue is clearly covered in favour of assessee. Hence, we find no infirmity in the impugned order of the CIT(A) restricting the disallowance to the extent of exempt income. Hence, we affirm the order of the CIT(A) on this issue.
7. Similar facts are raised in A.Y 2013-14 in ITA No. 311/Mum/2018. In this A.Y also, we affirm the impugned order of the CIT(A) in restricting the disallowance of expenses to the extent of exempt income.
8. In the result, both, the appeals of the revenue are dismissed.
Order pronounced in the open court on 19.07.2019.
Sd/- Sd/-
(राजेश कुमार / RAJESH KUMAR) (महावीर स हिं /MAHAVIR SINGH)
(लेखा दस्य / ACCOUNTANT MEMBER) (न्याययक दस्य/ JUDICIAL MEMBER)
मुिंबई, ददनािंक/ Mumbai, Dated: 19. 07.2019. PP/ SPS 7 ITA s No .3 1 0 & 3 11 / Mum/ 2 01 8 आदे श की प्रयिसलपप अग्रेपिि/Copy of the Order forwarded to :
1. अपीलाथी / The Appellant
2. प्रत्यथी / The Respondent.
3. आयकर आयक् ु त(अपील) / The CIT(A)
4. आयकर आयक् ु त / CIT
5. ववभागीय प्रयतयनधि, आयकर अपीलीय अधिकरण, मुिंबई / DR, ITAT, Mumbai
6. गार्ड फाईल / Guard file.
आदे शान ार/ BY ORDER, त्यावपत प्रयत //True Copy// उप/ हायक पुंजीकार (Asstt. Registrar) आयकर अपीलीय अधिकरण, मुिंबई / ITAT, Mumbai