M/s. Paramount Comunications Ltd.,, New Delhi v. ACIT, New Delhi

ITA 415/DEL/2012 | 2006-2007
Pronouncement Date: 29-03-2012 | Result: Allowed

Appeal Details

RSA Number 41520114 RSA 2012
Assessee PAN AAACP0969Q
Bench Delhi
Appeal Number ITA 415/DEL/2012
Duration Of Justice 2 month(s) 1 day(s)
Appellant M/s. Paramount Comunications Ltd.,, New Delhi
Respondent ACIT, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 29-03-2012
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted F
Tribunal Order Date 29-03-2012
Date Of Final Hearing 29-03-2012
Next Hearing Date 29-03-2012
Assessment Year 2006-2007
Appeal Filed On 27-01-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F : NEW DELHI BEFORE SHRI U.B.S. BEDI JUDICIAL MEMBER AND SHRI K.D. RANJAN ACCOUNTANT MEMBER I.T.A.NO.415/DEL/2012 ASSESSMENT YEAR : 2006-07 PARAMOUNT COMMUNICATION LTD. VS. ACIT C-125 PARAMOUNT HOUSE CIRCLE 14(1) NARAINA INDL. AREA PHASE-1 NEW DELHI. NEW DELHI 110 028. AAACP0969Q (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SATYEN SETHI ADVOCATE RESPONDENT BY : SHRI AROOP KUMAR SINGH SR. DR O R D E R PER K.D. RANJAN ACCOUNTANT MEMBER THIS APPEAL BY THE ASSESSEE FOR ASSTT. YEAR 2006-07 ARISES O UT OF ORDER OF CIT(A) XVII NEW DELHI. THE GROUNDS OF AP PEAL RAISED BY ASSESSEE IS REPRODUCED AS UNDER :- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE COMMISSIONER OF INCOME-TAX (APPEALS)-XVII NE W DELHI (BRIEFLY THE CIT(A)] HAS ERRED IN UPHOLDING DISALLOWANCE OF ` 8 50 243/- MADE UNDER SECTION 14A O F THE INCOME TAX ACT 1961 (BRIEFLY THE ACT) READ W ITH RULE 8D OF INCOME TAX RULES 1962. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) HAS ERRED IN NOT APPRECIATING THAT D URING THE RELEVANT YEAR NO EXEMPT INCOME WAS EARNED THEREFORE SECTION 14A WAS NOT ATTRACTED. 2 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) HAS ERRED IN HOLDING THAT THE APPELL ANT DID NOT SUBSTANTIATE THAT INVESTMENT IN SHARES WAS MADE OUT OF INTEREST FREE FUNDS THEREFORE DISALLOWANCE OF INT EREST UNDER SECTION 14A WAS JUSTIFIED. 4. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE ORDER PASSED BY CIT(A) UPHOLDING THE DISALLOWANCE UNDER SECTION 14A IS NOT IN ACCORDANCE WI TH THE RATIO OF JUDGMENT OF JURISDICTIONAL HIGH COURT D ATED 18.11.2011 IN MAXOPP INVESTMENT LIMITED & OTHERS V. CIT. 5. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) HAS ERRED IN NOT APPRECIATING THAT DISALLOWANCE U/S 14A OF THE ACT CAN ONLY BE OUT OF AC TUAL EXPENDITURE AND THAT DISALLOWANCE CANNOT BE MADE ON PRESUMPTIONS. 6. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) HAS ERRED IN HOLDING THAT THE QUESTIO N WHETHER RULE 8D WAS APPLICABLE TO THE ASSESSMENT YEAR IN QUESTION CANNOT BE CONSIDERED IN DISPOSING THE APPEA L AGAINST ASSESSMENT MADE UNDER SECTION 143(3) / 263 OF THE ACT. 2. THE ONLY ISSUE FOR CONSIDERATION RELATES TO CONFIRMI NG THE ADDITION MADE UNDER SECTION 14A OF THE ACT. THE FACT S OF THE CASE STATED ARE THAT ASSESSMENT U/S 143(3) WAS MADE ON 9.11.200 8 ON TOTAL INCOME OF ` 30 99 43 041/-. SUBSEQUENTLY COMMI SSIONER OF INCOME TAX DELHI V SET ASIDE THE ASSTT. U/S 263 ON THE GROUND THAT AO HAD NOT DISALLOWED EXPENSES U/S 14A OF THE ACT. THE AO IN PURSUANCE TO DIRECTIONS GIVEN U/S 263 COMPUTED DISALLOW ANCE U/S 8D OF ` 8 50 243/- . HE PLACED RELIANCE ON THE DECISION OF ITAT DELHI BENCH (SPECIAL BENCH) IN THE CASE OF M/S. CHEMINVEST LT D. VS ITO ITA 3 NO. 87/DEL/2008 WHEREIN IT WAS HELD THAT EXPENSES ARE TO BE DISALLOWED IN RESPECT OF INVESTMENT INCOME WHICH DOES N OT FORM PART OF TOTAL INCOME. ON APPEAL LD. CIT(A) OBSERVED THAT ASSESSEE HAD NOT PROVED BEFORE THE AO DURING THE ASSTT. PROCEEDING TH AT INVESTMENTS WERE MADE OUT OF INTEREST FREE FUNDS. IN THE OPINION OF LD. CIT(A) THE AO HAD TAKEN MOST REASONABLE APPROACH AND HAD MADE DI SALLOWANCE AS PER THE DIRECTIONS OF CIT GIVEN IN HIS ORDER U/S 263 OF THE ACT. HE ALSO OBSERVED THAT EVEN DURING THE APPELLATE PROCEEDI NGS THE ASSESSEE HAD NOT PRODUCED ANY EVIDENCE TO SUBSTANTIATE TH AT INVESTMENTS WERE MADE OUT OF INTEREST FREE FUNDS. LD. C IT(A) RELYING ON THE DECISION OF ITAT SPECIAL BENCH IN THE CASE OF M/S. CHEMINVEST LTD. VS ITO UPHELD THE DISALLOWANCE. 3. BEFORE US LD. AR OF THE ASSESSEE SUBMITTED THAT INVESTM ENT IN SHARES AMOUNTING TO ` 2 92 88 500/- IN EARLIER YEARS W ERE MADE OUT OF OWN FUNDS. THE AO IN EARLIER YEARS HAS NOT DISALLOWED A NY INTEREST. HE FURTHER SUBMITTED THAT AS PER THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF M/S. GODREJ & BOYCE MFG. CO. LT D. REPORTED IN 328 ITR 81 AND THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF MAXOPP INVESTMENT LTD. VS. CIT REPORTED IN 203 TAXMA N 364 THE PROVISION OF RULE 8D ARE APPLICABLE FROM ASSTT. YEAR 2 008-09. HE THEREFORE SUBMITTED THAT SINCE RULE 8D IS NOT APPLICA BLE FOR ASTT. YEAR 2006-07 THE CIT(A) IS NOT JUSTIFIED IN CONFIRMING TH E DISALLOWANCE OF ` 4 8 50 243/- UNDER SECTION 14A OF THE INCOME TAX ACT 1 961 READ WITH RULE 8D OF INCOME TAX RULES 1962. 4. ON THE OTHER HAND LD. SR. DR SUPPORTED THE ORDER OF LD. CIT(A). 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH T HE MATERIAL AVAILABLE ON RECORD. HONBLE DELHI HIGH COURT IN TH E CASE OF MAXOPP INVESTMENT LTD. (SUPRA) HAS HELD THAT SUB SECTION (2) & (3) OF SECTION 14A WERE INTRODUCED WITH PROSPECTIVE EFFECT FROM ASSTT . YEAR 2007-08 ONWARDS BUT THEY WOULD BE WORKABLE ONLY WITH EFFECT FROM THE DATE OF INTRODUCTION OF RULE 8D WHICH GAVE CONTENT TO EXPRE SSION SUCH METHOD AS MAY BE PRESCRIBED APPEARED IN SECTION 14A O F THE ACT. HONBLE DELHI HIGH COURT FURTHER HELD THAT IT WOULD NOT MEAN THAT PRIOR TO THAT PERIOD THE AO SHALL NOT BE SATISFIED HI MSELF WITH THE CORRECTNESS OF CLAIM OF ASSESSEE WITH REGARD TO SUCH EXPEN DITURE. HONBLE BOMBAYI HIGH COURT IN THE CASE OF GODREJ & B OYCE MFG. CO. LTD. (SUPRA) HAS ALSO EXPRESSED SIMILAR VIEW. SINCE THE A SSTT. YEAR INVOLVED IN THE APPEAL BEFORE US IS 2006-07 AND THE A O HAS NOT EXAMINED THE CASE AS TO WHEN THE INVESTMENT WAS MADE IN THE SHARES OF THE ASSESSEE. LD. CIT(A) HAS ALSO NOT EXAMINED T HIS ISSUE. WE THEREFORE FEEL IT APPROPRIATE TO SET ASIDE THE M ATTER TO THE FILE OF AO WITH THE DIRECTIONS TO EXAMINE THE CLAIM OF ASSESSEE FOR DISALLOWANCE U/S 14A OF THE ACT. THE ASSESSEE WILL FILE T HE RELEVANT 5 EVIDENCE BEFORE AO WHO WILL DECIDE THE ISSUE AFTER AF FORDING THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD. WE ORD ER ACCORDINGLY. 6. IN THE RESULT APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 29.3.2012. SD/- SD/- (U.B.S. BEDI) JUDICIAL MEMBER (K.D. RANJAN) ACCOUNTANT MEMBER DATED : 29.3.2012 VEENA COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER DEPUTY REGISTRAR ITAT