Income Tax Appellate Tribunal - Mumbai
Itd Cementation India Ltd, Mumbai vs Cit 22, Mumbai on 23 August, 2017
आयकर अपीलीय अिधकरण, अिधकरण, मुब ं ई "आई " खंडपीठ Income-tax Appellate Tribunal "I"Bench Mumbai सव ी राजे , लेखा सद य एवं रिवश सूद, याियक सद य Before S/Sh. Rajendra,Accountant Member & Ravish Sood, Judicial Member आयकर अपील सं./I.T.A./5398/Mum/2015 , िनधा रण वष /Assessment Year: 2011-12 M/s. ITD Cementation India Ltd. ACIT, -14(2)(1) National Plastic Building Mumbai.
A-Subhash Road, Paranjape B Scheme Vs.
Vile Parle (E),Mumbai-400 057
PAN:AAACT 1426 A
(अपीलाथ /Appellant) ( यथ / Respondent)
Revenue by: Shri Saurabhkumar Rai-DR
Assessee by: Shri Anuj Kisnadwala-AR
सुनवाई क तारीख / Date of Hearing: 23/08/2017
घोषणा क तारीख / Date of Pronouncement: 23/08/2017
आयकर अिधिनयम,1961
अिधिनयम क धारा 254(1)के
के अ तग त आदे श
Order u/s.254(1)of the Income-tax Act,1961(Act)
लेखा सद
य राजे के अनुसार /PER RAJENDRA, AM-
Challenging the order dated, 24/08/2015,of the CIT (A)-22,Mumbai, the assessee has filed the present appeal.Assessee-firm,engaged in the business of civil mining, marine and specialist engineering and construction activities,filed its return of income on 30/11/2011, declaring total income at Rs. Nil with Loss at Rs.53.61 Lakhs. It paid taxes u/s. 115JB of the Act on adjusted book profit of Rs.8.95 crores.The Assessing Officer(AO)completed the assessment,u/s.143(3) of the Act,on 26/03/2015,determining its income of the assessee at Rs.2.25 crores.
2.During the course of hearing before us the Authorised Representative (AR) stated that the assessee was not interested in pursuing Grounds of appeal No. 4 and 5.Hence,same stand dismissed as not pressed.
2.1.Next effective Ground of appeal (GOA 2-3) is about partly confirming the disallowance made by the AO u/s. 14A of the Act r.w.Rule 8D(2)(iii) of the Income tax Rule,1962(Rules). During the assessment proceedings the AO found that the assessee had made investment of Rs.38.54crores.He directed it to furnish the details of expenses incurred in relation to the exempt income and to explain as to why disallowance u/s. 14A r.w. Rule 8D should not be made.After considering the submission of the assessee,dated 21.02.2015,he held that expenditure in relation to exempt income had to be disallowed even when no exempt income 5398/Mum/15-ITD Cementation India Ltd.
was earned.Finally,he made disallowance of Rs.2.48 crores (Rs.2.32 crores under the head interest expenditure +Rs.16.28 crores -0.5% of the average value of investment).
2.2.Aggrieved by the order of the AO,the assessee preferred an appeal before the First Appellate Authority(FAA) and made elaborate submissions.After considering available material,he deleted the addition made on account of interest expenditure.However,the dis - allowance made by the AO on account of average investment was upheld.
2.3.Before us,the AR stated that identical issue had been dealt with by the Tribunal ,while deciding the appeal for AY.2010-11(ITA/157/Mum/2015 ;dated 4.1.2017). The Departmental Representative (DR) supported the order of the FAA.
We find that the Tribunal has dealt the issue as under and had restored back the matter to the file of AO.
"3.Effective ground of appeal is about partly confirming the disallowance of Rs.9.99 lakhs. During the assessment proceedings,the AO observed that assessee has made huge invest - ments,income from which was likely to be exempt as per the provisions of the Act. Accordingly,he directed the assessee to furnish the working of disallowance under section 14A read with Rule 8D of the Income Tax Rules,1962(Rules)for earning the exempt income. In its reply,the assessee argued that no expenditure had been incurred towards earning of the exempt income, that no disallowance under section 14A should be made. After considering the submission of the assessee, the AO held that making of investment and earning of exempt income required efforts. He made disallowance of Rs.1.13 crores (Rs.1.03 crores under the head 'interest expenditure'and Rs. 9.99 lakhs under the head 0.5% of the average value of the investment)invoking the provisions of section 14A r.w.r. 8D of the Rules. He added the said disallowance to the book profit also,citing clause(f) of section 115JB of the Act.
4.Aggrieved by the order of the AO,the assessee preferred an appeal before the First appellate Authority (FAA). After considering the submission of the assessee and the assessment order, she referred to the order for the AY. 2008-09. Following the same,she deleted the interest dis - allowance of Rs. 1.03 crores. However, disallowance for administrative expenses (0.5% of the average investment) was upheld.
5.During the course of hearing before us,the AR contended that investment was made in subsidiaries companies of the group or in the JBCs, that assessee had claimed no expenditure against the exempt income,that in the AY.2009-10,entire addition made by the AO, including the addition on account of average investment,was deleted by the FAA, that the AO had not challenged deletion,that the investment in the JVC.s was made for having a control over the activities of the said entities.The DR supported the order of the FAA.
6.We have heard the rival submissions and perused the material before us.We find that the AO had made disallowance under the head administrative expenses,that the assessee had not claimed any expenditure for earning exempt income,that the investment was made in subsidia - ry companies or the JVC.s,where the assessee was the partner.Considering these facts, we are of the opinion that the FAA was not justified in upholding the addition made by the AO under section 14A r.w.r.8D.The effective ground of appeal is decided in favour of the assessee.
7.Now,we will take the first additional ground.The AR argued that the assessee had not earned any exempt income qua book profit,that the FAA had not adjudicated the issue.With reference to the additional ground No.2, he contended that AO had applied the rate of taxation at 18% as against the correct rate of 15%. The DR left the issues to the discretion of the Bench.After considering the above submission,we are of the opinion that both the issues should be restored 2 5398/Mum/15-ITD Cementation India Ltd.
back to the file of the AO for fresh adjudication/verification. Additional grounds raised by the assessee are allowed in its favour,in part."
As the facts for the year under consideration are similar to facts for the earlier AY so, respectfully following our earlier order (supra),we remit the issue to the file of AO for fresh adjudication.He is directed to afford reasonable opportunity to the assessee and consider material produced by it.First effective Ground of appeal is decided in favour of the assessee, in part.
3.Second effective Ground of appeal is about confirming the disallowance made u/s. 14A of the Act,while computing the book profit as per the provision of section 115JB of the Act.The AR stated that Special Bench of the Tribunal in the case of Vireet Investment (P.) Ltd. (82taxmann.com415) has decided the issue in favour of the assessee. He also referred to the case of Mrinalini Trading Co. Pvt. Ltd. (ITA/1211/Mum/2014 (AY-10-11, 26/7/2017).The DR supported the order of the FAA.
We would like to reproduce para -10 of the order of Mrinalini Tading Co.(supra)and it reads as under:-
"10.Coming to the additional ground raised by the assessee challenging the adjustment towards book profit computed u/s. 115JB of the Income-tax Act, 1961 the assessee contends that no adjustment can be made towards book profit computed u/s.115JB for any disallowance made under section 14A r.w.r.8D. The assessee further contended that the book profit under the provisions of section 115JB has to be computed as per Explanation 1 which permits add back of only certain items to the book profit as listed out in the Explanation 1. Since disallowance u/s. 14a r.w.r.8d is not covered u/s. 115JB, no adjustment can be made towards disallowance made u/s.14A. We find merits in the arguments of the assessee for the reason that the ITAT, Special Bench in the case of ACIT vs. Vireet Investments Pvt.Ltd.(2017) 82Taxmann.com 415(Del.Trib)(SB) has considered similar issue and after considering the provisions of section 115JB(2) observed that computation of book profit in terms of clause (f) of Explanation 1 to Section 115JB(2) is to be made without restoring to computation as contemplated u/s. 14A r.w.r.8D. Therefore, considering the facts of the case and also following the decision of ITAT, Delhi Special Bench, we are of the view that no adjustments can be made towards book profit computed u/s. 115JB on account of disallowance made u/s. 14A for the purpose of computation of book profit u/s. 115JB of the Income-tax act, 1961."
Respectfully following the above orders of the Tribunal second effective Ground of appeal is decided in favour of the assessee.
As a result, appeal filed by the assessee stands partly allowed. फलतः िनधा रती ारा दािखल क गई अपील अंशतःमंजरू क जाती है.
Order pronounced in the open court on 23rd,August,2017. आदेश क घोषणा खुले यायालय म दनांक 23 अग त, 2017 को क गई ।
Sd/- Sd/-
रिवश सूद /Ravish Sood)
(रिवश (राजे / RAJENDRA)
याियक सद य / JUDICIAL MEMBER लेखा सद य / ACCOUNTANT MEMBER
मुंबई Mumbai; दनांक/Dated :23.08.2017.
Jv.Sr.PS.
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5398/Mum/15-ITD Cementation India Ltd.
आदेश क ितिलिप अ ेिषत/Copy of the Order forwarded to :
1.Appellant /अपीलाथ 2. Respondent /
यथ
3.The concerned CIT(A)/संब अपीलीय आयकर आयु , 4.The concerned CIT /संब आयकर आयु
5.DR " I " Bench, ITAT, Mumbai /िवभागीय ितिनिध, खंडपीठ,आ.अिध.मुंबई
6.Guard File/गाड फाईल स यािपत ित //True Copy// आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार Dy./Asst. Registrar आयकर अपीलीय अिधकरण, मुंबई /ITAT, Mumbai.
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