IL & FS TRANSPORTATION NETWORK LTD, MUMBAI v. ACIT 10(1), MUMBAI

ITA 3331/MUM/2010 | 2006-2007
Pronouncement Date: 28-09-2011

Appeal Details

RSA Number 333119914 RSA 2010
Assessee PAN AABCC5460A
Bench Mumbai
Appeal Number ITA 3331/MUM/2010
Duration Of Justice 1 year(s) 5 month(s)
Appellant IL & FS TRANSPORTATION NETWORK LTD, MUMBAI
Respondent ACIT 10(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 28-09-2011
Appeal Filed By Assessee
Bench Allotted I
Date Of Final Hearing 14-09-2011
Next Hearing Date 14-09-2011
Assessment Year 2006-2007
Appeal Filed On 28-04-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH I BEFORE SHRI J SUDHAKAR REDDY (AM) & SHRI VIJAY PAL RAO(JM) I.T.A.NO. 3331/MUM/2010 (ASSESSMENT YEAR : 2006-07 ) IL&FS TRANSPORTATION NETWORKS LTD. THE IL&FS FINANCIAL CENTER PLOT NO. C-22 G BLOCK BANDRA KURLA COMPLEX BANDRA EAST MUMBAI-400 051. VS. ACIT 10(1) MUMBAI. PAN/GIR NO. : AABCC5460A ASSESSEE BY : SHRI D.V. LAKHANI DEPARTMENT BY : SHRI SUNIL KUMAR SINGH DATE OF HEARING : 14.9.2011 DATE OF PRONOUNCEMENT : 28.9.2011 ORDER PER J. SUDHAKAR REDDY (AM) :- THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED A GAINST THE ORDER OF LEARNED CIT(A)-21 MUMBAI DATED 22.3.2010 FOR A.Y. 2006-07 ON THE FOLLOWING GROUNDS : 1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW LEARNED CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF ` 1 45 93 665/- U/S. 14A BY INVOKING THE PROVISIONS O F RULE 8D. THE APPELLANT PRAYS THAT THE DISALLOWANCE OF ` 1 45 93 665/- U/S. 14A IS NOT JUSTIFIED AND BE DELE TED. 2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE APPE LLANT PRAYS THAT THE PROVISIONS OF SECTION 14A READ WITH RULE 8D ARE NOT APPLICABLE FOR A.Y. 2006-07. THE INVOCATION OF THE PROVISIONS OF SECTION 14A READ WITH RULE 8D IS ERRO NEOUS AND BAD IN LAW. 3) ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE APPE LLANT SUBMITS THAT THERE IS NO INCOME. THERE IS NO DIRECT EVIDENCE THAT ANY BORROWINGS HAVE BEEN MADE FOR THE PURPOSE OF MAKING INVESTMENTS AND HENCE NO DISALLOWANCE OF IN TEREST SHOULD BE MADE U/S. 14A. THE DISALLOWANCE OF ` 1 24 82 977/- IS NOT JUSTIFIED AND BE DELETED. 4) ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE APPE LLANT SUBMITS THAT THERE IS NO EVIDENCE OF INCURRING ANY DIRECT IL&FS TRANSPORTATION NETWORKS LTD. 2 EXPENDITURE FOR THE PURPOSE OF EARNING EXEMPT INCOM E. THE APPELLANT PRAYS THAT NO DISALLOWANCE OF EXPENSES SH OULD BE MADE U/S. 14A. THE DISALLOWANCE OF ` 21 10 688/- IS NOT JUSTIFIED AND BE DELETED. 5) THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THAT INT EREST U/S. 234B OF INCOME TAX ACT 1961 IS LEVIABLE ON TH E FACTS OF THE CASE. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE APPELLANT SUBMIT THAT THE APPELLANT IS NOT LIABLE T O PAY INTEREST U/S. 234B. THE INTEREST LEVIED BY THE LEAR NED ASSESSING OFFICER AND MODIFIED IN VIEW OF THE ORDER OF LEARNED CIT(A) MAY BE DELETED. 2. WE HAVE HEARD SHRI D.V. LAKHANI LEARNED AR ON B EHALF OF THE ASSESSEE AND SHRI SUNIL KUMAR SINGH LEARNED DEPART MENTAL REPRESENTATIVE. 3. AFTER HEARING RIVAL CONTENTIONS WE FIND THAT TH E FIRST APPELLATE AUTHORITY HAD FOLLOWED THE ORDER OF THE SPECIAL BEN CH OF THE TRIBUNAL IN THE CASE OF ITO VS. DAGA CAPITAL MANAGEMENT 26 SOT 603 (MUM)(SB) AND CONFIRMED THE DISALLOWANCE MADE BY THE ASSESSIN G OFFICER UNDER PROVISIONS OF RULE 14A BY APPLYING RULE 8D. BEFORE US LEARNED COUNSEL FOR THE ASSESSEE RELIED ON THE JUDGEMENT OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF GODREJ AND BOYCE MANUFACTURING CO. LTD. 328 ITR 81 (BOM). LEARNED COUNSEL FOR THE ASSESSEE ALSO REL IED ON THE JUDGEMENT OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF RELIANC E UTILITIES AND POWERS LTD. 313 ITR 340 (BOM) AND SUBMITS THAT THE ASSESSEE HAS SUFFICIENT INTEREST FREE FUNDS AND THAT PRESUMPTION IN LAW IS IN HIS FAVOUR AND HENCE ON FACTS NO DISALLOWANCE CAN BE MADE U/S . 14A. WHILE IT IS TRUE THAT THE COURT HAD TAKEN SUCH A VIEW AS THE A SSESSING OFFICER HAS NOT LOOKED INTO THE MATTER WE SET ASIDE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION IN ACCORDA NCE WITH LAW. THE ASSESSING OFFICER SHALL KEEP IN MIND THE FOLLOWING DECISIONS OF THE TRIBUNAL WHILE ADJUDICATING THE MATTER. SHOPPERS STOP LTD. VS. ACIT ITA NOS. 1448 & 4475/MUM/2010 DATED 30.8.2011 FOR A.Y. 2006-07 & 20 07- 08. M/S. K. RAHEJA CORP. PVT. LTD. ITA NO. 4099/MUM/20 10 DATED 24.6.2011 FOR A.Y. 1999-2000 M/S. SAHARA INDIA MASS COMMUNICATION LTD. VS. ACIT ITA NO. 522/MUM/2006 DATED 28.4.2011 FOR A.Y. 2002-03 IL&FS TRANSPORTATION NETWORKS LTD. 3 ACIT VS. VINOD CHOPRA FILMS P. LTD. ITA NO. 4019/M UM/2010 DATED 29.7.2011 FOR A.Y. 2006-07. 4. IN ALL THESE CASES IT HAS BEEN HELD THAT IF THE RE ARE SUFFICIENT INTEREST FREE ADVANCES AVAILABLE WITH THE ASSESSEE PRESUMPTION IS THAT THE INVESTMENT WOULD HAVE BEEN MADE OUT OF THESE I NTEREST FREE FUNDS GENERATED OR AVAILABLE WITH THE COMPANY. IF THE INT EREST FREE FUNDS WERE SUFFICIENT TO MEET THE INVESTMENT THEN NO DISALLOWA NCE OF INTEREST EXPENDITURE CAN BE MADE U/S. 14A. IN THE RESULT G ROUND NO. 1 TO 4 IN WHICH THE ISSUE ON DISALLOWANCE U/S. 14A IS SET AS IDE TO THE FILE OF THE ASSESSING OFFICER. 5. GROUND NO. 5 IS ON THE LEVY OF INTEREST U/S. 234 B. LEVY OF INTEREST IS MANDATORY AND CONSEQUENTIAL. HENCE THIS GROUND I S ALSO REMITTED BACK TO THE ASSESSING OFFICER FOR FRESH CALCULATION. 6. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER HAS BEEN PRONOUNCED ON 28 TH DAY OF SEPTEMBER 2011. SD/- (VIJAY PAL RAO) JUDICIAL MEMBER SD/- (J.SUDHAKAR REDDY) ACCOUNTANT MEMBER DATED : 28 TH SEPTEMBER 2011. COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A)-CONCERNED. 4. THE CIT CONCERNED. 5. THE DR CONCERNED MUMBAI 6. GUARD FILE BY ORDER TRUE COPY ASSTT. REGISTRAR ITAT MUMBAI PS