DCIT, v. M/s GMR Infrastrucutre Ltd.,,

ITA 232/BANG/2013 | 2009-2010
Pronouncement Date: 30-09-2016 | Result: Allowed

Appeal Details

RSA Number 23221114 RSA 2013
Assessee PAN AABCG8889P
Bench Bangalore
Appeal Number ITA 232/BANG/2013
Duration Of Justice 3 year(s) 7 month(s) 8 day(s)
Appellant DCIT,
Respondent M/s GMR Infrastrucutre Ltd.,,
Appeal Type Income Tax Appeal
Pronouncement Date 30-09-2016
Appeal Filed By Department
Order Result Allowed
Bench Allotted B
Tribunal Order Date 30-09-2016
Date Of Final Hearing 13-06-2016
Next Hearing Date 13-06-2016
Assessment Year 2009-2010
Appeal Filed On 20-02-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI A.K. GARODIA ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN JUDICIAL MEMBER ITA NO.232/BANG/2013 ASSESSMENT YEAR : 2009-10 THE DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 1(1) BANGALORE. VS. M/S. GMR INFRASTRUCTURE LTD. NO.25/1 SKIP HOUSE MUSEUM ROAD BANGALORE 560 025. PAN: AABCG 8889P APPELLANT RESPONDENT CO NO.65/BANG/2013 [IN ITA NO.232/BANG/2013] ASSESSMENT YEAR : 2009-10 M/S. GMR INFRASTRUCTURE LTD. BANGALORE 560 025. PAN: AABCG 8889P VS. THE DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 1(1) BANGALORE. CROSS OBJECTOR RESPONDENT REVENUE BY : SHRI A.R.V. SREENIVASAN JT. CIT(DR) ASSESSEE BY : SHRI JAGADISH K. (EMPLOYEE OF ASSESSEE) DATE OF HEARING : 09.08.2016 DATE OF PRONOUNCEMENT : 30.09.2016 O R D E R PER A.K. GARODIA ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE REVENUE AND CO IS FIL ED BY THE ASSESSEE AND THESE ARE DIRECTED AGAINST THE ORDER OF CIT (AP PEALS)-I BANGALORE DATED 30.11.2012 FOR AY 2009-10. ITA NO. 232/BANG/2013 & CO NO.65/BANG/2013 PAGE 2 OF 6 2. GROUND RAISED BY THE REVENUE IN ITS APPEAL ARE AS UNDER:- 1) THE ORDER OF THE CIT (A) IS OPPOSED TO LAW AN D FACTS OF THE CASE. 2) THE LEARNED CIT (A) ERRED IN LAW AND IN FACT I N DIRECTING THE ASSESSING OFFICER TO ACCEPT THE DISALLOWANCE OU T OF THE INTEREST EXPENSES OF RS.14 18 38 064/ - COMPUTED B Y THE ASSESSEE AS AGAINST THE DISALLOWANCE MADE BY THE ASSESSING O FFICER AS PER CLAUSE (II) OF SUB-RULE(2) OF RULE 8D OF INCOME TAX RULES R.W.S. 14A OF THE INCOME TAX ACT OF RS. 17 27 52 979/-. 3) FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE U RGED AT THE TIME OF HEARING THE HON'BLE TRIBUNAL MAY ALLOW THE APPEAL IN THE INTEREST OF JUSTICE AND EQUITY. 3. GROUNDS RAISED BY THE ASSESSEE IN THE CO ARE AS UNDER:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE CROSS OBJECTOR PRAYS THAT THE DISALLOWANCE OF INTER EST DETERMINED U/S 14A OF RS.14 18 38 064/- WAS SUPPORTED BY A REP ORT FROM AN INDEPENDENT FIRM OF CHARTERED ACCOUNTANT WHO WAS E NGAGED TO EXAMINE THE BOOKS OF ACCOUNT AND DETERMINE THE AMOU NT OF INTEREST DISALLOWANCE U/S 14A. THE DISALLOWANCE OF INTEREST AMOUNT OF RS. 14 18 38 064/- IS ALSO CERTIFIED BY T HE TAX AUDITOR AND THE SAME IS AS PER THE BOOKS OF ACCOUNT OF THE CROSS OBJECTOR DETERMINED HAVING REGARD TO ITS BOOKS OF ACCOUNT. 2. ON THE FACTS AND CIRCUMSTANCE OF THE CASE AND IN LAW THE CROSS OBJECTOR PRAYS THAT NO DISALLOWANCE OF INTERE ST OVER AND ABOVE THE AMOUNT OF RS. 14 18 38 064/- DETERMINED H AVING REGARD TO ITS BOOKS OF ACCOUNT BASED ON RATIO OF AVERAGE I NVESTMENTS IN SHARE (AS REDUCED BY INVESTMENTS DIRECTLY IDENTIFIA BLE OUT OF IDENTIFIABLE FUNDS SUCH AS INVESTMENTS MADE OUT OF IPO PROCEEDS AND QIP PROCEEDS AND INVESTMENTS IN GROWTH MUTUAL F UNDS) TO AVERAGE ASSETS (AS REDUCED BY INVESTMENTS MADE OUT OF IDENTIFIABLE FUNDS SUCH AS INVESTMENTS MADE OUT OF IPO PROCEEDS AND QIP PROCEEDS) CAN BE MADE BY APPLYING THE FORMU LA IN RULE- 8D AS WELL AS BY DISREGARDING THE BOOKS OF ACCOUNT. ITA NO. 232/BANG/2013 & CO NO.65/BANG/2013 PAGE 3 OF 6 3. ON THE FACTS AND CIRCUMSTANCE OF THE CASE AND I N LAW TO INVOKE RULE 8D THE AO SHOULD AFTER CONSIDERING TH E ACCOUNTS OF THE CROSS OBJECTOR NOT BEEN SATISFIED WITH THE COR RECTNESS OF THE CLAIM OF THE CROSS OBJECTOR IN RESPECT OF SUCH EXPE NDITURE IN RELATION TO INCOME WHICH DOES NOT FORM PART OF TOTA L INCOME UNDER THIS ACT AND SUCH NON-SATISFACTION MUST BE OBJECTIV E. THUS TO INVOKE RULE 8D THE AO SHOULD PROVIDE A JUSTIFIABLE REASON FOR NOT BEING SATISFIED WITH THE CLAIM OF THE CROSS OBJ ECTOR WHICH IN THE CROSS OBJECTOR'S CASE IS ABSENT; WITHOUT PREJUDICE: 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE AMOUNT OF DISALLOWANCE OF INTEREST OF RS.14 18 38 0 64/- WORKED OUT HAVING REGARD TO ITS BOOKS OF ACCOUNT ON NEXUS BASIS OF CROSS OBJECTOR WAS HIGHER THAN THE AMOUNT OF DISALLOWANCE OF RS.9 51 11 172/- WORKED OUT IN ACCORDANCE WITH THE METHOD P RESCRIBED IN RULE 8D OF THE IT RULES. CROSS OBJECTION NO. 2: 1. THE CROSS OBJECTOR CRAVES LEAVE TO ADD ALTER AND /OR AMEND ALL OR ANY OF THE FOREGOING CROSS OBJECTIONS STATED ABOVE. 4. IT WAS SUBMITTED BY THE LD. DR OF THE REVENUE TH AT IN PARA 3.9 OF HIS ORDER RELIEF WAS ALLOWED BY THE CIT (APPEALS) ON T HIS BASIS THAT ASSESSEE HAS PROVED THAT THE SOURCE OF CERTAIN INVESTMENTS I S OUT OF INTEREST FREE FUNDS AND THE QUESTION OF APPORTIONING ANY INTEREST EXPENDITURE FOR COMPUTATION OF DISALLOWANCE U/S. 14A OF THE ACT DOE S NOT ARISE. BUT HIS DECISION IS WITHOUT ANY REASONING OR BASIS AS TO HO W THE ASSESSEE HAS PROVED THAT SOURCE OF CERTAIN INVESTMENTS IS OUT OF INTEREST FREE FUNDS. HE SUPPORTED THE ASSESSMENT ORDER AND CONTENDED THAT O N THIS ISSUE THE ITA NO. 232/BANG/2013 & CO NO.65/BANG/2013 PAGE 4 OF 6 ORDER OF CIT (APPEALS) SHOULD BE REVERSED AND THAT OF AO SHOULD BE RESTORED. 5. AS AGAINST THIS SHRI JAGADISH K. EMPLOYEE OF T HE ASSESSEE COMPANY WHO APPEARED ON BEHALF OF ASSESSEE COMPANY SUPPORTED THE ORDER OF CIT (APPEALS). REGARDING THE CO OF THE ASSESSEE IT IS SUBMITTED THAT THE DISALLOWANCE UPHELD BY THE CIT(APPEALS) IS EXCESSIVE AND IN FACT THE CIT(A) HAS ENHANCED THE DISALLOWANCE ON ACCOUNT OF INDIRECT EXPENSES TO RS.11 73 87 442 AS AGAINST THE AMOUNT OF DISALLO WANCE OF RS.9 83 00 803 DETERMINED BY THE AO IN THE ASSESSME NT ORDER WHICH AMOUNTS TO ENHANCEMENT AND SINCE NO NOTICE U/S. 251 (2) OF THE ACT WAS ISSUED BY THE CIT(A) THE ENHANCEMENT MADE BY HIM I S NOT JUSTIFIED AND VALID. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FI ND THAT IN THE ASSESSMENT ORDER THE AO HAD WORKED OUT THE DISALLO WANCE U/S. 14A BY APPLYING RULE 8D OF THE I.T. RULES AND HE HAS CALCU LATED THE DISALLOWANCE OUT OF INTEREST EXPENDITURE ON THE BASIS OF PROPORT IONATE INVESTMENT IN TAX EXEMPT INVESTMENTS AND TOTAL ASSETS. IN ADDITION T O THAT HE HAS MADE DISALLOWANCE OF 0.5% OF AVERAGE AMOUNT OF TAX EXEMP T INVESTMENT. IN THIS MANNER HE HAS WORKED OUT TOTAL DISALLOWANCE AT RS. 27 10 53 782. AS AGAINST THIS THE LD. CIT(A) HAS UPHELD THE DISALLO WANCE OF RS.26 00 40 736 AS AGAINST THE TOTAL DISALLOWANCE MADE BY THE AO U/ S. 14A; OF RS.27 10 53 782. HENCE IT IS SEEN THAT THERE IS NO ENHANCEMENT MADE BY ITA NO. 232/BANG/2013 & CO NO.65/BANG/2013 PAGE 5 OF 6 THE LD. CIT(A) IN RESPECT OF DISALLOWANCE U/S. 14A AND THEREFORE THIS GROUND OF ASSESSEES CO HAS NO MERIT. 7. IN FACT THE LD. CIT(A) HAS REDUCED THE DISALLOW ANCE OUT OF INTEREST EXPENDITURE AND HAS INCREASED THE DISALLOWANCE OUT OF ADMINISTRATIVE EXPENSES. BUT WHILE DOING SO THE CIT(A) HAS NOT I NDICATED THE REASONING AND BASIS OF GIVING A FINDING THAT SOME OF THE INVE STMENTS ARE MADE BY THE ASSESSEE OUT OF INTEREST FREE FUNDS AVAILABLE WITH THE ASSESSEE. UNDER THESE FACTS WE DEEM IT FIT AND PROPER THAT THIS IS SUE SHOULD GO BACK TO THE FILE OF CIT(APPEALS) FOR FRESH DECISION AND ACCORDI NGLY WE SET ASIDE THE ORDER OF CIT(APPEALS) AND RESTORE THE ENTIRE MATTER BACK TO HIS FILE FOR FRESH DECISION AFTER PROVIDING ADEQUATE OPPORTUNITY OF B EING HEARD TO BOTH SIDES AND HE SHOULD PASS A SPEAKING AND REASONED ORDER. 8. IN THE RESULT THE APPEAL OF THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSES WHEREAS CO OF THE ASSESSEE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF SEPTEMBER 2016. SD/- SD/- (SMT.ASHAVIJAYARAGHAVAN ) ( A.K. GARODIA ) JUDICIAL MEMBER ACCOUN TANT MEMBER BANGALORE DATED THE 30 TH SEPTEMBER 2016. /D S/ ITA NO. 232/BANG/2013 & CO NO.65/BANG/2013 PAGE 6 OF 6 COPY TO: 1. APPELLANT 2. RESPONDENTS 3. CIT 4. CIT(A) 5. DR ITAT BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR ITAT BANGALORE.