Income Tax Appellate Tribunal - Mumbai
Sun-N-Sand Hotels Pvt. Ltd., Mumbai vs Dcit - 8(3), Mumbai on 10 March, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL,
MUMBAI BENCH "E", MUMBAI
BEFORE SHRI B R BASKARAN ACCOUNTANT MEMBER &
SHRI AMIT SHUKLA, JUDICIAL MEMBER
M.A No. 162 & 163/Mum/2016
(Arising out of ITA NoS.2390 & 2041/MUM/2014
For A Y: 2008-09)
Sun-n-Sand Hotel (Shirdi) Private Ltd., DCIT 8(3)
39, Juhu Beach, Vs. Mumbai
Mumbai - 400 049
PAN AABCS3521J
(Applicant) (Respondent)
Applicant By : Shri Prakash Jotwani
Respondent By : Shri Nitin Waghmare
Date of Hearing :21.10.2016 Date of Pronouncement : 10.03.2017
ORDER
Per Amit Shukla, Judicial Member:
In the aforesaid Miscellaneous Applications the applicant assessee has pointed out that there are some mistakes apparent from record, which needs to be rectified.
2. In MA No. 162/Mum/2016, the nature of mistakes pointed out reads as under:
"Re: Ground no.1 of the appeal: Taxing of sales tax benefit received under Power Policy in respect of windmills:
The Ground No.1 was in respect of taxing of sales tax benefit. The appellant has claimed it to be capital in nature not taxable, while the AO taxed it as revenue income. Similar ground was involved in earlier years. The appellant had made an application u/s. 158A(1) of the Act for avoiding repetitive appeals on the ground that the issue covered in the ground No.1 was pending before the Bombay High court in the appellant's own case for AY 2005 -06. The AO gave his 2 MA No.162 & 163/Mum/2016 Sun-n-Sand Hotel (Shirdi) Pvt. Ltd.
report u/s. 158A(2), which has been reproduced in the ITAT Order. The Hon'ble Tribunal ought to have passed an Order as required u/s. 158A(4) of the Act but no such order was passed in the ITAT order dated 12-4-2016. Instead the ground was treated as dismissed (Refer Page 5 of the order). This has resulted into mistake which is apparent from record and needs to be corrected by passing a speaking order to the effect that whatever is the decision of the Hon High Court for A Y 2005-06 will be applicable to this year also.
Re: Name of the appellant in the header on each page:
The name of the appellant has been erroneously typed as "Sun-n-Sand Hotel (Mumbai Pvt. Ltd." in English instead of Sun-n-Sand Hotel (Shirdi) Pvt. Ltd. The same needs correction."
2. Before us, the Ld. Counsel, Shri Prakash Jotwani submitted that, in relation to the Ground No.1, it was pleaded on behalf of the assessee that, it had made application under section 158(1) of the Act before this Tribunal for avoiding repetitive appeals as similar grounds were decided against the assessee and the matter was sub-judice before the Hon'ble High Court in the assessee's own case for the assessment year 2005-06. The Assessing Officer has also given his report under section 158AC (ii) which has been reproduced by the Tribunal in the impugned order. The Tribunal ought to have held that whatever the decision of the Hon'ble High Court gives on the issue involved, the same should be applied in the appeal under consideration instead of that, the Tribunal has dismissed the assessee's ground.
3. After considering the aforesaid submissions and on perusal of the material on record, we find that in Ground No.1, the assessee has challenged taxability of sales-tax benefit which has been treated as revenue expenditure receipt by the Department as against the capital receipt claimed by the assessee. This issue was decided against the assessee by the Tribunal in AY 2005-06 against which matter is 3 MA No.162 & 163/Mum/2016 Sun-n-Sand Hotel (Shirdi) Pvt. Ltd.
pending before the Hon'ble Bombay High Court. The assessee had made a declaration under section 158(1) on which a report from Department was called for and accordingly, the Assessing Officer has given on his report under section 158A(2) content of which has been incorporated in the Tribunal order. However, we have dismissed the assessee's ground instead of holding that, a decision of Hon'ble High Court on this issue should be applied. Accordingly, we hold that whatever would be the decision of the Hon'ble High Court on the issue involved in the appeal for the assessment year 2005-06 which is pending, same should be applied for the appeals under consideration. The assessee shall not be entitled for further raising this question in appeal before Hon'ble High Court in this year. With this observation, we hold that, though the issue stands decided against the assessee, however, whenever the issue is decided by the Hon'ble High Court then consequential order should be passed. In fact, in similar appeals for assessment years 2006-07 and 2007-08, the Tribunal, after noting the relevant report of the revenue on the application made by the assessee u/s. 158(1), had observed as under:-
3. Thus, we hold that, whatever would be the decision of Hon'ble High Court on the issues involved in the appeal for AY 2005-06 which is pending, the same shall be applied for the appeals under consideration. Accordingly, the assessee shall not be entitled to further raise this question in appeal before the Hon'ble High Court in this year. With this observation, we hold that as of now, the issue stands decided against the assessee in view of the earlier decision of the Tribunal. Thus, the grounds raised by the assessee are treated as dismissed in both the appeals. Accordingly, a ground raised by the assessee for AY 2006-07 and AY 2007-08 stands dismissed.
Similarly in the impugned order also we give similar directions that whatever may be the outcome of the decision of Hon'ble High Court on the issues involved in the appeal for AY 2005-06, the same shall be applicable for the A Y 2008-09 also.
4 MA No.162 & 163/Mum/2016Sun-n-Sand Hotel (Shirdi) Pvt. Ltd.
4. As regards the mistake in the title of the case, we find it to be correct and the same should be read as "Sun-n-Sand Hotel (Shirdi) Pvt. Ltd." With these observations, the Miscellaneous Application No.162/Mum/2016 is allowed.
5. As regards MA NO.163/Mum/2016, the following issues have been raised:
1. Re: Ground No.1 of the appeal: Taxing of sales tax benefit received under Power Policy in respect of windmills:
The Ground No.1 was in respect of taxing of sales tax benefit. The appellant has claimed it to be capital in nature not taxable, while the AO taxed it as revenue income. Similar ground was involved in earlier years. The appellant had made an application u/s. 158A(1) of the Act for avoiding repetitive appeals on the ground that the issue covered in the ground No.1 was pending before the Bombay High court in the appellant's own case for AY 2003-04. The AO gave his report u/s. 158A(2) dated 23-9-2015. The Hon'ble Tribunal ought to have passed an Order as required u/s. 158A(4) of the Act but no such order was passed in the ITAT order dated 12-4-2016. Instead the ground was treated as dismissed (Refer Page 9 of the order). This has resulted into a mistake which is apparent from record and needs to be corrected by passing a speaking order to the effect that whatever the decision of the Hon High Court for AY 2003-04 will be applicable for this year also.
2. Re: Ground No.2 of the appeal: Disallowance of expenses u/s. 14A read with Rule 8-D:
The appellant had filed revised ground No.2 vide letter 8-4- 2016 inter-alia claiming that strategic investments in shares of subsidiary company and joint venture company and in partnership firm should be excluded while computing the disallowance. While disposing off the ground, the Hon Tribunal directed the AO to verify the extent of investment made in partnership firm only to remove the same from the working value of average investments for the purpose of calculating the disallowance under rule 8D(2)(iii). No directions were given tin respect of similar exclusion of value of strategic investments in subsidiary company and joint venture company, which resulted into a mistake apparent from record and needs to be rectified."5 MA No.162 & 163/Mum/2016
Sun-n-Sand Hotel (Shirdi) Pvt. Ltd.
6. As regards the first issue, the same observation which has been made above in MA 162/Mum/2016 would be applicable. Accordingly, we direct the AO to follow the outcome of the decision of the Hon'ble High Court on this issue. Thus, the contention raised by the assessee in the impugned application is allowed.
7. Regarding the disallowance of expenses u/s. 14A read with Rule 8D, the Ld. Counsel for the assessee submitted that, the assessee had filed revised ground No.2, vide petition/ letter dated 08.04.2016 claiming that 'strategic investment' in shares of subsidiary company and joint venture company and in the partnership firm should be excluded while calculating the disallowance. While disposing off the ground, the Tribunal has directed the Assessing Officer to verify the extent of investment in partnership firm only and remitted the matter to the AO and rework the average value of investment for the purpose of calculating the disallowance under Rule 8D(2)(iii). However, no such directions have been given in respect of similar exclusion or value of strategic investment in subsidiary company and Joint Venture Company. Thus, non-adjudication of this aspect is mistake apparent from record which needs to be rectified.
8. On the other hand, Ld. DR objected to the same.
9. On perusal of the material on record and after considering the rival submissions, we find that assessee before us has taken a revised ground, vide letter dated 08.04.2016 contending that, strategic investment in shares of subsidiary company; joint venture company and in partnership firm should be excluded while computing the average value of investment for the purpose of disallowance under Rule 8D (2)(iii). We find that, while disposing off the said ground, the issue relating to strategic investment in shares of subsidiary company and Joint Venture Company has been inadvertently left out 6 MA No.162 & 163/Mum/2016 Sun-n-Sand Hotel (Shirdi) Pvt. Ltd.
to be adjudicated. It is undisputed fact that these are strategic investments which in view of our finding given in the order itself same should be removed from the working from the value of average investment as provided under Rule 8D (2)(iii). Accordingly, we direct the Assessing Officer to examine the same and exclude the said strategic investment in the form of the said subsidiary and joint venture and calculate the disallowance under Rule 8D(2)(iii). With this direction, the order of the Tribunal is modified and Miscellaneous Application filed by the assessee is allowed. With this direction, ground no.2 relating to disallowance of expenses u/s. 14A read with Rule 8D is modified to the extent mentioned above. Thus, the MA No. 163/Mum/2016 is allowed.
10. In the result, the Miscellaneous Applications filed by the assessee are allowed.
Order pronounced in the open court on 10th March, 2017.
Sd/- Sd/-
(B R Baskaran) (Amit Shukla)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Mumbai, Dated:10.03.2017.
SA
Copy to: The Applicant
The Respondent
The CIT, Concerned, Mumbai
The CIT (A) Concerned, Mumbai
The DR 'E' Bench
//True Copy//
By Order
(Assistant Registrar)
Income Tax Appellate Tribunal,
Mumbai