DCIT CIR 3(1), MUMBAI v. DOME BELL ELECTRONICS INDIA LTD, MUMBAI

ITA 4655/MUM/2014 | 2007-2008
Pronouncement Date: 21-10-2016 | Result: Dismissed

Appeal Details

RSA Number 465519914 RSA 2014
Assessee PAN AAACD6266G
Bench Mumbai
Appeal Number ITA 4655/MUM/2014
Duration Of Justice 2 year(s) 3 month(s) 14 day(s)
Appellant DCIT CIR 3(1), MUMBAI
Respondent DOME BELL ELECTRONICS INDIA LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 21-10-2016
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 21-10-2016
Date Of Final Hearing 08-04-2015
Next Hearing Date 08-04-2015
Assessment Year 2007-2008
Appeal Filed On 07-07-2014
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D MUMBAI BEFORE SHRI SANJAY GARG JUDICIAL MEMBER AND SHRI ASHWANI TANEJA ACCOUNTANT MEMBER ITA NO.2317/M/2012 ASSESSMENT YEAR: 2007-08 M/S. DOME BELL ELECTRONICS (INDIA) LTD. 171-C MITTAL COURT NARIMAN POINT MUMBAI 400 021 PAN: AAACD6266G VS. DY. COMMISSIONER OF INCOME TAX CIRCLE 3(1) ROOM NO.607 6 TH FLOOR AAYAKAR BHAVAN MUMBAI - 400020 (APPELLANT) (RESPONDENT) ITA NO.4655/M/2014 ASSESSMENT YEAR: 2007-08 DY. COMMISSIONER OF INCOME TAX CIRCLE 3(1) ROOM NO.607 6 TH FLOOR AAYAKAR BHAVAN MUMBAI - 400020 VS. M/S. DOME BELL ELECTRONICS INDIA LTD. 171-C MITTAL COURT 17 TH FLOOR NARIMAN POINT MUMBAI - 21 PAN: AAACD6266G (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI VIJAY MEHTA A.R. REVENUE BY : SHRI K. KRISHNA MURTY D.R. DATE OF HEARING : 18.10.2016 DATE OF PRONOUNCEMENT : 21.10.2016 O R D E R PER SANJAY GARG JUDICIAL MEMBER: THE ABOVE CAPTIONED APPEALS ONE BY THE ASSESSEE AN D THE OTHER BY THE REVENUE ARE RELATED TO THE SAME ASSESSMENT YEAR 200 7-08. THE ASSESSEE HAS COME IN APPEAL AGAINST THE ORDER OF THE COMMISSIONE R OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] D ATED 20.01.2012 DISMISSING THE APPEAL OF THE ASSESSEE AGAINST THE ORDER OF THE ASSESSING OFFICER (HEREINAFTER REFERRED TO AS THE AO) DATED 30.07.201 0 PASSED UNDER SECTION 154 OF THE INCOME TAX ACT. ITA NO.2317/M/2012 & ITA NO.4655/M/2014 M/S. DOME BELL ELECTRONICS INDIA LTD. 2 ON THE OTHER HAND THE REVENUE HAS COME IN APPEAL A GAINST THE ORDER OF THE LD. CIT(A) DATED 30.08.2013 ALLOWING THE APPLIC ATION OF THE ASSESSEE MOVED UNDER SECTION 154 OF THE ACT. SINCE THE FACT S AND ISSUE INVOLVED THEREIN ARE INTERLINKED HENCE BOTH THE APPEALS HAVE BEEN H EARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY HAD FILED THE RETURN OF INCOME ON 31.10.2007 DECLARING TOTAL INCO ME AT LOSS OF RS.45 54 07 974/- UNDER THE NORMAL PROVISIONS OF TH E INCOME TAX ACT 1961 AND BOOK PROFIT OF RS.30 72 665/- UNDER THE PROVISI ONS OF SECTION 115JB OF THE ACT. THE REGULAR ASSESSMENT U/S. 143(3) OF THE ACT WAS COMPLETED VIDE ORDER DATED 31.12.2009 AND AFTER MAKING CERTAIN DISALLOWA NCES TOTAL INCOME WAS ASSESSED AT RS.NIL. WHILE MAKING THE ABOVE ASSESSM ENT THE AO HAD DISALLOWED THE INTEREST EXPENDITURE OF RS.35 76 50 244/- UNDER SECTION 36(1)(III) OF THE ACT HOLDING THAT THE SAID EXPENDI TURE WAS NOT INCURRED FOR BUSINESS PURPOSES BUT IT WAS ATTRIBUTABLE TO THE SH ARE INVESTMENT IN THE SAME COMPANY FROM WHICH THE FUNDS WERE BORROWED. FURTHER THAT THE SAME AT THE MOST WAS ATTRIBUTABLE TO EARNING OF TAX EXEMPT INCO ME. WHILE MAKING THE SAID DISALLOWANCE THE AO FURTHER MADE A PASSING REFEREN CE IN THE ASSESSMENT ORDER THAT EVEN OTHERWISE THE SAID INTEREST EXPENDITURE W AS DISALLOWABLE UNDER PROVISIONS OF SECTION 14A OF THE ACT. HOWEVER SIN CE THE PROVISIONS OF SECTION 115JB WERE APPLICABLE IN THE CASE OF THE ASSESSEE THE AO COMPUTED THE BOOK PROFITS AT RS.6 73 88 383/- UNDER SECTION 115JB OF THE ACT. 3. THEREAFTER THE ASSESSEE MOVED AN APPLICATION BE FORE THE AO PLEADING THAT A MISTAKE APPARENT ON RECORD HAS OCCURRED IN T HE ASSESSMENT ORDER. IT WAS PLEADED THAT THE TAX EXEMPT INCOME OF RS.4 89 47 04 4/- HAS TO BE EXCLUDED WHILE COMPUTING THE BOOK PROFIT UNDER SECTION 115JB OF THE ACT. THE AO ACCEPTED THE CLAIM OF THE ASSESSEE. HE HOWEVER N OTED THAT AS PER EXPLANATION (1) CLAUSE (F) OF SECTION 115JB WHILE COMPUTING BO OK PROFIT THE AMOUNT OF EXPENDITURE RELATABLE TO ANY INCOME TO WHICH SECTIO N 10 (OTHER THAN THE ITA NO.2317/M/2012 & ITA NO.4655/M/2014 M/S. DOME BELL ELECTRONICS INDIA LTD. 3 PROVISIONS CONTAINED IN CLAUSE (38) THEREOF) OR SEC TION 11 OR SECTION 12 APPLY IS TO BE ADDED IN BOOK PROFIT IF IT IS DEBITED TO PROFIT AND LOSS ACCOUNT. HE ACCORDINGLY DISALLOWED THE INTEREST EXPENDITURE (WH ICH WAS EARLIER DISALLOWED UNDER THE PROVISIONS OF SECTION 36(1)(III) OF THE A CT UNDER NORMAL PROVISIONS) RELATABLE TO EARNING OF THE EXEMPT INCOME AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE WHILE COMPUTING BOOK PROFITS UNDER SEC TION 115JB OF THE ACT. 4. BEING AGGRIEVED BY THE SAID ORDER OF THE AO THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A) WHICH HAS BEEN DISMISS ED BY THE LD. CIT(A) VIDE IMPUGNED ORDER DATED 20.01.12. THE ASSESSEE THUS HAS COME IN APPEAL BEFORE US AGAINST THE SAID ORDER OF THE LD. CIT(A). 5. IT IS PERTINENT TO MENTION HERE THAT AFTER THE D ISMISSAL OF HIS APPEAL VIDE ORDER DATED 20.01.2012 THE ASSESSEE MOVED A RECTIF ICATION APPLICATION UNDER SECTION 154 OF THE ACT BEFORE THE LD. CIT(A) PLEADI NG THAT IT WAS A DEBATABLE ISSUE AS TO WHETHER THE DISALLOWANCE MADE UNDER SEC TION 14A IN RELATION TO THE EXPENDITURE INCURRED FOR THE PURPOSE OF EARNING OF EXEMPT INCOME CAN BE ADDED WHILE COMPUTING THE BOOK PROFITS UNDER SECTIO N 115JB OF THE ACT. IT HAS BEEN FURTHER PLEADED THAT THE AO WAS NOT SUPPOSED T O MAKE ADDITION IN RESPECT OF THE ABOVE STATED DEBATABLE ISSUE AS THE SAME WAS NOT A MISTAKE APPARENT FROM RECORD. 6. THE LD. CIT(A) VIDE ORDER DATED 30.08.13 ACCEPTE D THE APPLICATION OF THE ASSESSEE MOVED UNDER SECTION 154 OF THE ACT AND WHILE RELYING UPON VARIOUS CASE LAWS HELD THAT THE ISSUE WAS A DEBATAB LE ISSUE AND AS SUCH IT CANNOT BE SAID THAT THERE WAS ANY MISTAKE APPARENT FROM RECORD WHICH MAY JUSTIFY THE ACTION OF THE AO IN RECTIFYING THE ORDE R AND THEREBY ADDING THE DISALLOWANCE OF EXPENDITURE MADE UNDER SECTION 14A WHILE COMPUTING THE BOOK PROFITS UNDER SECTION 115JB OF THE ACT. HE AL SO HELD THAT EVEN OTHERWISE IN THE ASSESSMENT UNDER NORMAL PROVISIONS THE AO H AD DISALLOWED THE EXPENDITURE UNDER SECTION 36(1)(III) OF THE ACT AND AS PER THE PROVISIONS OF ITA NO.2317/M/2012 & ITA NO.4655/M/2014 M/S. DOME BELL ELECTRONICS INDIA LTD. 4 SECTION 115JB OF THE ACT THE SAME COULD NOT BE ADD ED INTO THE BOOK PROFITS. HE ACCORDINGLY DIRECTED THE AO TO DELETE THE ADDITI ON IN RESPECT OF INTEREST EXPENDITURE WHILE COMPUTING THE BOOK PROFITS UNDER SECTION 115JB OF THE ACT. AGGRIEVED BY THE ABOVE ORDER OF THE LD. CIT(A) THE REVENUE HAS COME IN THE PRESENT APPEAL. 7. AFTER CONSIDERING THE RIVAL CONTENTIONS WE FIND THAT SO FAR AS THE APPEAL OF THE ASSESSEE IS CONCERNED THE ASSESSEE AT THIS STAGE IS NOT LEFT WITH ANY GRIEVANCE AS THE RECTIFICATION APPLICATION MOVED BY THE ASSESSEE UNDER SECTION 154 OF THE ACT IN RELATION TO THE IMPUGNED ORDER OF THE LD. CIT(A) DATED 20.01.2012 HAS BEEN ACCEPTED BY THE LD. CIT(A) AND THE IMPUGNED ADDITIONS HAVE BEEN DELETED. HENCE THE IMPUGNED ORDER OF TH E LD. CIT(A) HAS STOOD MODIFIED AND SUBSTITUTED WITH HIS ORDER DATED 30.08 .13. SINCE THE ASSESSEE HAS NOT BEEN LEFT WITH ANY GRIEVANCE ON THIS ISSUE THE PRESENT APPEAL OF THE ASSESSEE HAS BECOME INFRUCTUOUS AND THE SAME IS ACC ORDINGLY DISMISSED. 8. SO FAR AS THE APPEAL OF THE REVENUE IS CONCERNED WE FIND THAT THE ISSUE REGARDING THE DISALLOWANCE OF EXPENDITURE INCURRED IN RELATION TO EARNING OF EXEMPT INCOME MADE UNDER SECTION 14A OF THE ACT UND ER THE NORMAL PROVISIONS OF THE ACT WHETHER CAN BE ADDED INTO THE INCOME OF THE ASSESSEE WHILE COMPUTING BOOK PROFITS UNDER SECTION 115JB OF THE ACT IS A DEBATABLE ISSUE. IT HAS BEEN BROUGHT TO OUR KNOWLEDGE THAT T HE SAID ISSUE IS PENDING DECISION BEFORE THE SPECIAL BENCH OF THE TRIBUNAL I N ITA NO.502/DEL/2012 IN THE CASE OF VIREET INV.(P) LTD. DELHI. AN IDENTICA L ISSUE AS TO WHETHER THE DISALLOWANCE MADE BY THE AO UNDER SECTION 14A UNDER NORMAL PROVISIONS IS TO BE ADDED WHILE COMPUTING THE BOOK PROFITS UNDER SEC TION 115JB IS A DEBATABLE ISSUE OR WHETHER THE AO CAN BE JUSTIFIED IN MAKING THE ADDITIONS RELATING TO THE ABOVE ISSUE UNDER SECTION 154 OF THE ACT CAME INTO CONSIDERATION BEFORE THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF M /S. BEEKAYLON SYNTHETICS PVT. LTD. IN ITA NO.7558/M/2013 VIDE ORDER DATED 3 1.07.2015. THE TRIBUNAL HELD THAT THE AO IS NOT EMPOWERED UNDER SECTION 154 OF THE ACT TO MAKE ITA NO.2317/M/2012 & ITA NO.4655/M/2014 M/S. DOME BELL ELECTRONICS INDIA LTD. 5 ADDITION ON THIS DEBATABLE ISSUE AS THE SAME CANNOT BE SAID TO BE A MISTAKE APPARENT ON RECORD. THE RELEVANT PART OF THE ORDER OF THE TRIBUNAL FOR THE SAKE OF CONVENIENCE IS REPRODUCED AS UNDER: 6. THE ABOVE DECISIONS CITED BY BOTH THE SIDES SHO W THAT THE ISSUE IS QUITE DEBATABLE WHICH HAS YET TO BE SETTLED BY THE HIGH C OURTS/SUPREME COURT. THERE ARE CONTRARY DECISIONS OF THE TRIBUNAL IN FAVOUR OF BOTH THE PARTIES. UNDER SUCH CIRCUMSTANCES IN OUR VIEW IT WAS BEYOND THE POWER S OF THE AO EXERCISABLE UNDER SECTION 154 TO MAKE AN ADDITION ON A DEBATABLE ISSU E THE ORIGINAL ASSESSMENT IN THIS CASE HAD BEEN COMPLETED UNDER SECTION 143(3) O F THE ACT. MERELY BECAUSE THE OTHER VIEW IS POSSIBLE THAT ITSELF CANNOT BE A GROU ND TO RECTIFY THE ORDER UNDER SECTION 154 OF THE ACT AS THE SAME CANNOT BE SAID T O BE A MISTAKE APPARENT ON RECORD. SIMILARLY THE ADDITION MADE ON ACCOUNT OF PROVISION FOR DOUBTFUL DEBTS WHETHER TO BE ADDED WHILE COMPUTING BOOK PROFITS UN DER SECTION 115JB HAS BEEN A QUITE DEBATABLE ISSUE. UNDER SUCH CIRCUMSTANCES T HE INVOKING OF PROVISIONS OF SECTION 154 BY THE AO ON DEBATABLE ISSUE WAS BEYOND HIS JURISDICTION.. IN OUR VIEW IT IS NOT A CASE OF ANY MISTAKE APPARENT ON THE REC ORD. THE AO PASSED THE ASSESSMENT ORDER U/S 143(3) OF THE ACT ON THE BASIS OF MATERIAL AVAILABLE BEFORE HIM. IT HAS BEEN TIME AND AGAIN HELD BY THE HIGHER COURTS THAT IF THE ALLEGED MISTAKES REQUIRE INVESTIGATION INTO FACTS OR DETERM INATION OF LAW OR DISCUSSION OF DEBATABLE POINTS ARE INVOLVED OR TWO OPINIONS ARE P OSSIBLE ON THE ISSUE THEN SUCH POINTED MISTAKES CANNOT BE SAID TO BE MISTAKES APPA RENT ON RECORD WHICH CAN BE RECTIFIED UNDER SECTION 154 OF THE INCOME TAX ACT. HENCE THE ORDER PASSED BY THE AO UNDER SECTION 154 IS NOT SUSTAINABLE IN THE EYES OF LAW AND THE SAME IS ACCORDINGLY SET ASIDE. 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS HER EBY ALLOWED. 9. RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE TRIBUNAL THIS ISSUE IS ACCORDINGLY DECIDED IN FAVOUR OF THE ASSESSEE AND A GAINST THE REVENUE. 10. WE THEREFORE DO NOT FIND ANY MERIT IN THE APP EAL OF THE REVENUE AND THE SAME IS ACCORDINGLY DISMISSED. 11. IN THE RESULT THE APPEAL OF THE ASSESSEE AS WE LL AS THAT OF REVENUE IS HEREBY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21.10.2016. SD/- SD/- (ASHWANI TANEJA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED: 21.10.2016. * KISHORE SR. P.S. ITA NO.2317/M/2012 & ITA NO.4655/M/2014 M/S. DOME BELL ELECTRONICS INDIA LTD. 6 COPY TO: THE APPELLANT THE RESPONDENT THE CIT CONCERNED MUMBAI THE CIT (A) CONCERNED MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR ITAT MUMBAI.