PANGEA LEGAL DATABASE SYSTEMS PRIVATE LIMITED, MUMBAI v. ACIT , 10(3)(2), MUMBAI

ITA 1663/MUM/2015 | 2010-2011
Pronouncement Date: 13-11-2017 | Result: Dismissed

Appeal Details

RSA Number 166319914 RSA 2015
Assessee PAN AAACM6124A
Bench Mumbai
Appeal Number ITA 1663/MUM/2015
Duration Of Justice 2 year(s) 7 month(s) 23 day(s)
Appellant PANGEA LEGAL DATABASE SYSTEMS PRIVATE LIMITED, MUMBAI
Respondent ACIT , 10(3)(2), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 13-11-2017
Appeal Filed By Assessee
Tags No record found
Order Result Dismissed
Bench Allotted K
Tribunal Order Date 13-11-2017
Assessment Year 2010-2011
Appeal Filed On 20-03-2015
Judgment Text
THE INCOME TAX APPELLATE TRIBUNAL B BENCH MUMBAI BEFORE SHRI R.C.SHARMA ACCOUNTANT MEMBER AND SHRI PAWAN SINGH JUDICIAL MEMBER ITA NO.1663/MUM./2015 (ASSESSMENT YEAR: 2009-10) DCIT - 2(2) ROOM NO.545 AAYAKAR BHAVAN M.K. ROAD MUMBAI-400020 . APPELLANT V/S MEDITAB SPECIALITIES PVT. LTD. 12 GUNBOW STREET FORT MUMBAI-AAACM6124A . RESPONDENT ASSESSEE BY : SHRI. V.MOHAN REVENUE BY : SHRI. SUMAN KUMAR-SR. AR DATE OF HEARING 13.11.2017 DATE OF ORDER 13..11 .2017 O R D E R PER: PAWAN SINGH THIS APPEAL BY THE REVENUE U/S 253 OF INCOME-TAX AC T IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)-5 MUMBAI DATED 12.12.2013 FOR THE ASSESSMENT YEAR-2009-10. THE REV ENUE HAS RAISED TWO GROUNDS OF APPEAL:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LD. CIT(A) ERRED IN RESTRICTING THE DISALLOWANC E MADE BY THE AO U/S. 14A R.W.R. 8D OF RS.75 97 250/- TO RS.5 57 517/- IGNORING THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN TH E CASE OF GODREJ & BOYCE MFG. CO. LTD. VS. DCIT (2010) 328 IT R 081 (BORN.) WHEREIN IT IS HELD THAT RULE 8D IS A REASO NABLE METHOD 2 ITA NO.1663/MUM/2015 MEDITAB SPECIALITIES PVT. LTD. 2 FOR MAKING THE DISALLOWANCE U/S. 14A AND IT IS APPL ICABLE FOR A.Y. 2009-10.' 2. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED HOLDING THAT THE DISALLOW ANCE U/S. 14A CANNOT BE MADE IN RESPECT OF INCOME OF SEZ STATING THAT INCOME FROM WHICH IS ELIGIBLE FOR DEDUCTION U/S. 801A/IB O R U/S. 10AA AND BOTH ARE DEDUCTION PROVISIONS WITHOUT APPRECIA TING THAT THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S. 801 A/IB AS THE ASSESSEE IS NOT A DEVELOPER OF SEZ AND THE ASSESSEE IS ELIGIBLE FOR EXEMPTION U/S. 10AA WHICH FALLS IN CHAPTER III APPEARING IN THE ACT UNDER THE HEAD - 'INCOMES WHICH DO NOT FORM PART OF TOTAL INCOME' AND THEREFORE THE INCOME OF THE ASSES SEE FROM SEZ IS EXEMPT INCOME.' 2. AT THE OUTSET OF THE HEARING THE LD. AUTHORIZE D REPRESENTATIVE OF THE ASSESSEE SUBMITS THAT BOTH GR OUNDS OF APPEAL RAISED BY THE REVENUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE IN ITS OWN CASE FOR THE ASSESSMENT YEAR 20 08-09 IN ITA NO.5604/MUM/2011 DATED 18/08/2017. ON GOING THROUG H THE ORDER IN ITA NO. 5604/M/2011 THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE FAIRLY AGREED WITH T HE ARGUMENTS OF THE LD. AUTHORIZED REPRESENTATIVE. 2.1. WE HAVE CONSIDERED THE SUBMISSION OF THE LD. A.R OF THE ASSESSEE AND PERUSED THE ORDER OF THE TRIBUNAL FOR A.Y 2008- 09 IN ITA NO. 5604/UM/2011 DATED 18.08.2017 IN ASSE SSEES OWN CASE. THE COORDINATE BENCH OF THE TRIBUNAL HAS PASSED THE FOLLOWING ORDER:- 8. WE HAVE PATIENTLY AND CAREFULLY HEARD RIVAL CON TENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HA VE ALSO 3 ITA NO.1663/MUM/2015 MEDITAB SPECIALITIES PVT. LTD. 3 APPLIED OUR MIND TO THE DECISIONS RELIED UPON BY BO TH THE PARTIES. AT THE OUTSET WE MUST PUT IT ON RECORD TH AT LEARNED AUTHORISED REPRESENTATIVE HAS RESTRICTED HIS CONTEN TION ON THE DISPUTED ISSUE OF DISALLOWANCE MADE UNDER SECTION 1 4A R/W RULE 8D ONLY ON THE PROPOSITION THAT THE DISALLOWAN CE UNDER SECTION 14A CANNOT EXCEED THE EXEMPT INCOME EARNED IN A PARTICULAR ASSESSMENT YEAR. IN THIS CONTEXT THE LE ARNED AUTHORISED REPRESENTATIVE HAS FURNISHED A CHART BEF ORE US AS PER WHICH THE EXEMPT INCOME EARNED IN THE ASSESSMEN T YEARS UNDER APPEAL ARE AS UNDER: A.Y. 200809 ` 6 04 377 A.Y. 201011 ` 9 130 A.Y. 201213 ` NIL 9. IN VIEW OF THE AFORESAID SUBMISSIONS OF THE LEAR NED AUTHORISED REPRESENTATIVE WE ARE CALLED UPON TO DECIDE THE LI MITED ISSUE WHETHER THE DISALLOWANCE UNDER SECTION 14A R/W RULE 8D HAS TO BE RESTRICTED TO THE EXTEMPT INCOME EARNED IN A PARTIC ULAR ASSESSMENT YEAR. TO COUNTER THE AFORESAID PROPOSITI ON OF THE LEARNED AUTHORISED REPRESENTATIVE THE LEARNED DEPA RTMENTAL REPRESENTATIVE HAS SUBMITTED THAT THE PROVISIONS OF SECTION 14A R/W RULE 8D BEING MANDATORY IN NATURE THE ASSESSIN G OFFICER HAS TO COMPUTE THE DISALLOWANCE UNDER SECTION 14A IN TE RMS OF THE METHOD PRESCRIBED UNDER SECTION RULE 8D. WE ARE UNA BLE TO AGREE WITH THE CONTENTION OF THE LEARNED DEPARTMENTAL REP RESENTATIVE. IN CASE OF CHEMINVEST LTD. V/S CIT ITA 749/2014 D ATED 2 ND SEPTEMBER 2015 THE HON'BLE DELHI HIGH COURT HAS HE LD THAT NO DISALLOWANCE UNDER SECTION 14A OF THE ACT CAN BE M ADE IN THE ABSENCE OF EXEMPT INCOME. IN CASE OF CIT V/S JOINT INVESTMENT PVT. LTD. ITA NO.117/2015 DATED 25 TH FEBRUARY 2015 THE HON'BLE DELHI HIGH COURT HAS HELD THAT THE DISALLOWANCE UND ER SECTION 14A CANNOT SWALLOW THE ENTIRE EXEMPT INCOME. FOLLOWING THE AFORESAID RATIO OF THE HON'BLE DELHI HIGH COURT DIFFERENT BE NCHES OF THE 4 ITA NO.1663/MUM/2015 MEDITAB SPECIALITIES PVT. LTD. 4 TRIBUNAL HAVE HELD THAT DISALLOWANCE UNDER SECTION 14A R/W RULE 8D CANNOT EXCEED THE EXEMPT INCOME EARNED BY THE A SSESSEE IN A PARTICULAR ASSESSMENT YEAR. IN FACT ITAT DELHI SPECIAL BENCH IN CASE OF ACIT V/S VIREET INVESTMENT PVT. LTD. (SU PRA) HAS HELD THAT ONLY INVESTMENTS YIELDING EXEMPT INCOME DURING THE YEAR CAN BE CONSIDERED FOR COMPUTING AVERAGE VALUE OF IN VESTMENT. IN CONTRAST THE DECISIONS RELIED UPON BY THE LEARNED DEPARTMENTAL REPRESENTATIVE IN NO WAY CONTRADICT THE AFORESAID R ATIO. ON A CAREFUL READING OF THE DECISION IN CASE OF DISTRIBU TORS (BARODA) PVT. LTD. (SUPRA) CLOTH TRADERS PVT. LTD. (SUPRA ACG ASSOCIATED CAPSULES PVT. LTD. (SUPRA) WE ARE CONVINCED THAT T HESE DECISIONS ARE IN NO WAY CONNECTED TO THE ISSUE IN DISPUTE IN THE PRESENT APPEALS. AS FAR AS THE DECISIONS IN WALFORT SHARES AND STOCK BROKERS (SUPRA) GODREJ & BOYCE MFG. CO. PVT. LTD. (SUPRA) ARE CONCERNED THOUGH THEY ARE IN THE CONTEXT OF SECTIO N 14A OF THE ACT HOWEVER THESE DECISIONS CANNOT BE SAID TO BE LAYING DOWN THE RATIO THAT EVEN IN ABSENCE OF EXEMPT INCOME DIS ALLOWANCE UNDER SECTION 14A CAN BE MADE OR THE DISALLOWANCE U NDER SECTION 14A SHOULD NOT BE RESTRICTED TO THE EXEMPT INCOME E ARNED IN A PARTICULAR ASSESSMENT YEAR. LEARNED DEPARTMENTAL RE PRESENTATIVE HAS FAILED TO BRING TO OUR NOTICE EVEN A SINGLE DEC ISION WHICH DIRECTLY COUNTERS THE PROPOSITION PUT FORWARD BY TH E LEARNED AUTHORISED REPRESENTATIVE. IN THE AFORESAID VIEW OF THE MATTER FOLLOWING THE RATIO LAID DOWN IN THE DECISIONS REFE RRED TO ABOVE BY US WE HOLD THAT IF IN A PARTICULAR ASSESSMENT YEAR THE ASSESSEE HAS NOT EARNED ANY EXEMPT INCOME NO DISALLOWANCE U NDER SECTION 14A CAN BE MADE. SIMILARLY THE DISALLOWAN CE UNDER SECTION 14A CANNOT EXCEED THE EXEMPT INCOME EARNED IN A PARTICULAR ASSESSMENT YEAR. IN TERMS OF OUR AFORESA ID OBSERVATIONS WE DIRECT THE ASSESSING OFFICER TO RE STRICT THE DISALLOWANCE UNDER SECTION 14A TO ` 6 04 377 IN ASSESSMENT YEAR 200809 AND ` 9 130 IN ASSESSMENT YEAR 201112. IN ASSESSMENT YEAR 201213 ASSESSEE HAS NOT EARNED AN Y EXEMPT INCOME THEREFORE NO DISALLOWANCE UNDER SECTION 14 A CAN BE 5 ITA NO.1663/MUM/2015 MEDITAB SPECIALITIES PVT. LTD. 5 MADE. IN VIEW OF OUR REASONING ABOVE THE GROUNDS R AISED BY THE DEPARTMENT IN ITS APPEAL HAVE BECOME REDUNDANT HEN CE DISMISSED. 10. BEFORE PARTING WE MUST CLARIFY THAT WE HAVE NO T EXPRESSED ANY OPINION ON THE ISSUE OF APPLICABILITY OF SECTIO N 14A TO THE INVESTMENTS MADE IN SEZ WHICH IS LEFT OPEN TO BE D ECIDED ON ITS OWN MERIT IF IT ARISES IN ANY OTHER ASSESSMENT YEAR . 2.2. CONSIDERING THE DECISION OF THE TRIBUNAL IN A SSESSEES OWN CASE FOR ASSESSMENT YEAR 2008-09 WE FIND THAT BOTH THE ISSUE RAISED BY THE REVENUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE HENCE RESPECTFULLY FOLLOWING THE ORDER O F THE TRIBUNAL THE GROUNDS OF APPEALS RAISED BY THE REVENUE ARE D ISMISSED. FINALLY THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13.11.2017 SD/- SD/- R.C. SHARMA PAWAN SINGH ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED: 13.11.2017 F{X~{T? C|TX FXVXT COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE; 2. THE REVENUE; 3. THE CIT(A); 4. THE CIT MUMBAI CITY CONCERNED; 5. THE DR ITAT MUMBAI; 6 ITA NO.1663/MUM/2015 MEDITAB SPECIALITIES PVT. LTD. 6 6. GUARD FILE. BY ORDER (DY./ASSTT.REGISTRAR) ITAT MUMBAI