M/s. Bry Air (Asia) Pvt. Ltd., New Delhi v. DCIT, New Delhi

ITA 4756/DEL/2013 | 2005-2006
Pronouncement Date: 28-11-2014 | Result: Allowed

Appeal Details

RSA Number 475620114 RSA 2013
Assessee PAN AAACB4050A
Bench Delhi
Appeal Number ITA 4756/DEL/2013
Duration Of Justice 1 year(s) 3 month(s) 19 day(s)
Appellant M/s. Bry Air (Asia) Pvt. Ltd., New Delhi
Respondent DCIT, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 28-11-2014
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 28-11-2014
Date Of Final Hearing 25-11-2014
Next Hearing Date 25-11-2014
Assessment Year 2005-2006
Appeal Filed On 08-08-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: A NEW DELHI BEFORE SMT DIVA SINGH JUDICIAL MEMBER AND SH. T.S.KAPOOR ACCOUNTANT MEMBER I.T.A .NO. - 4756 /DEL/201 3 (ASSESSMENT YEAR - 2 005 - 06 ) M/S BRY AIR (ASIA) PVT. LTD. 20 RAJPUR ROAD DELHI - 110054. P AN - AAACB4050A (APPELLANT) VS DCIT CIRCLE - 3(1) C.R. BUILDING NEW DELHI - 110002 (RESPONDENT) APPELLANT BY SH. S.K.BAJAJ CA RESPONDENT BY MS. Y.KAKKAR DR ORDER PER DIVA SINGH JM TH E PRESENT APPEAL FILED BY THE ASSESSEE A SSAILS THE CORRECTION OF THE ORDER DATED 0 2 . 0 5 .201 3 OF THE CIT(A) - VIII NEW DELHI PERTAINING TO 2005 - 06 ASSESSMENT YEAR ON THE FOLLOWING GROUND S : - 1.A. THAT THE LD. CIT(A) HAS ERRED BOTH IN FACTS AND IN LAW WHILE SUSTAINING THE ADDITION OF RS.2 99 721 UNDER SECTION 14A. 1.B. THAT THE LD. CIT(A) SUSTAINED THE ADDITION OF RS.2 99 721/ - MADE BY THE ASSESSING OFFICER UNDER SECTION 14A READ WITH RULE 8D WITHOUT RECORDING ANY REASON OR BASIS. 2. THAT THE APPELLANT CRAVES LEAVE TO ADD DELETE OR AMEND ANY OF THE GROUNDS OF APPEAL ON OR BEFORE THE DISPOSAL OF THE PRESENT APPEAL. 2. THE ASSESSEE I N THE YEAR UNDER CONSIDERATION IS STATED TO BE ENGAGED IN THE BUSINESS OF MANUFACTURING OF ENVIRONMENTAL CONTROL SYSTEMS WHICH INCLUDES DEHUMIDIFIES HEAT RECOVERY SYSTEMS ETC FOR THE LAST 15 YEARS RETURNED AN INCOME OF RS.5 71 76 257/ - . THE AO IN THE FIRST ROUND CONSIDERING THE FACT THAT THE NO EXP ENDITURE WAS SHOWN TO HAVE BEEN INCURRED FOR EARNING DIVIDEND INCOME OF RS. 74 17 337/ - WHICH WAS EXEMPT ED FROM TAX U/S 10(34) ; AND 2 I.T.A .NO. - 4756/DEL/2013 CLAIMED LONG TERM CAPITAL GAIN ON SHARE/MUTUAL FUND OF RS.16 63 564/ - U/S 10(38) MADE A PROPORTIONATE DISALLOWANCE U/S 14 A AMOUNTING TO RS.18 81 048/ - . THIS WAS RESTRICTED T O R S . 6 5 9 4 8 . 0 0 IN APPEAL BY THE CIT(A) AND FURTHER CHALLENGED BY THE REVENUE B EFORE THE TRIBUNAL WHEREIN THE CO - ORDINATE BENCH VIDE THEIR ORDER DATED 17.12.2009 REMANDED THE MATTER BACK TO THE AO . THE AO APPLYING RULE 8D MADE A DISALLOWANCE OF RS.2 99 721/ - . THE SAID ADDITION AS A RESULT OF THE DISALLOWANCE WAS CONFIRMED BY THE CIT(A) H O LD ING THAT QUANTIFICATION O F EXPENSES RELATABLE TO DIVIDEND INCOME HA D NOT BEEN MADE BY THE ASSESSEE AND IN THE CIRCUMSTANCES THE QUAN TIFICATION AND ALLOCATION BY THE AO WAS JUSTIFIED. 3. AGGRIEVED BY THIS THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 4. WE HAVE HEARD THE LD. AR AND THE L D . SR. DR . O N A CONSIDERATION OF THE SUBMISSIONS OF THE PARTIES WE ARE OF THE VIEW THAT THE AUTHORI TIES B E L O W HAVE MISDIRECTED THEMSELVES RULE 8 - D IN THE YEAR UNDER CONSIDERATION COULD NOT HAVE BEEN APPLIED AS PER THE CLEAR MANDATE OF LAW AS SETTLED BY THE JUDGEMENT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF MAXOPP INVESTMENT 347 ITR 272 (DEL.). IT IS F URTHER SEEN THAT FOLLOWING THE DIRECTIONS LAID DOWN IN PARA 42 OF THE SAME THE ISSUE NEED TO BE RESTORED TO THE AO TO DO THE NEEDFUL. WE SET OUT THE SPECIFIC PARA WHICH MANDATES A REMAND ON THE ISSUE : - 42. THUS THE FACT THAT WE HAVE HELD THAT SUB - SECTIONS (2) & (3) OF SECTION 14A AND RULE 8D WOULD OPERATE PROSPECTIVELY (AND NOT RETROSPECTIVELY) DOES NOT MEAN THAT THE ASSESSING OFFICER IS NOT TO SATISFY HIMSELF WITH THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE WITH REGARD TO SUCH EXPENDITURE. I F HE IS SATISFIED THAT THE ASSESSEE HAS CORRECTLY REFLECTED THE AMOUNT OF SUCH EXPENDITURE HE HAS TO DO NOTHING FURTHER. ON THE OTHER HAND IF HE IS SATISFIED ON AN OBJECTIVE ANALYSIS AND FOR COGENT REASONS THAT THE AMOUNT OF SUCH EXPENDITURE AS CLAIMED B Y THE ASSESSEE IS NOT CORRECT HE IS REQUIRED TO DETERMINE THE AMOUNT OF SUCH EXPENDITURE ON THE BASIS OF A REASONABLE AND ACCEPTABLE METHOD OF APPORTIONMENT. IT WOULD BE APPROPRIATE TO RECALL THE WORDS OF THE SUPREME COURT IN WALFORT (SUPRA) TO THE FOLLOW ING EFFECT: - THE THEORY OF APPORTIONMENT OF EXPENDITURE BETWEEN TAXABLE AND NON - TAXABLE HAS IN PRINCIPLE BEEN NOW WIDENED UNDER SECTION 14A.' SO EVEN FOR THE PRE - RULE8D PERIOD WHENEVER THE ISSUE OF SECTION 14A ARISES BEFORE AN ASSESSING OFFICER HE HA S FIRST OF ALL TO ASCERTAIN THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE IN RESPECT OF THE EXPENDITURE INCURRED IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME 3 I.T.A .NO. - 4756/DEL/2013 UNDER THE SAID ACT. EVEN WHERE THE ASSESSEE CLAIMS THAT NO EXPENDITURE HAS BEEN INCURRED IN RELATION TO INCOME WHICH DOES NOT FORM PART OF TOTAL INCOME THE ASSESSING OFFICER WILL HAVE TO VERIFY THE COR RECT NESS OF SUCH CLAIM. IN CASE THE ASSESSING OFFICER IS SATISFIED WITH THE CLAIM OF THE ASSESSEE WITH REGARD TO THE EXPENDITURE OR NO EXPENDITURE AS THE CASE MAY BE THE ASSESSING OFFICER IS TO ACCEPT THE CLAIM OF THE ASSESSEE INSOFAR AS THE QUANTUM OF DISALLOWANCE UNDER SECTION 14A IS CONCERNED. IN SUCH EVENTUALITY THE ASSESSING OFFICER CANNOT EMBARK UPON A DETERMINATION OF THE AMOUNT OF EXPENDITURE FOR THE PURPOSES OF SECTION 14A(1). IN CASE THE ASSESSING OFFICER IS NOT ON THE BASIS OF OBJECTIVE CRITERIA AND AFTER GIVING THE ASSESSEE A REASONABLE OPPORTUNITY SATISFIED WITH THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE HE SHA LL HAVE TO REJECT THE CLAIM AND STATE THE REASONS FOR DOING SO. HAVING DONE SO THE ASSESSING OFFICER WILL HAVE TO DETERMINE THE AMOUNT OF EXPENDITURE INCURRED IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THE SAID ACT. HE IS REQ UIRED TO DO SO ON THE BASIS OF A REASONABLE AND ACCEPTABLE METHOD OF APPORTIONMENT. 4.1. NEEDLESS TO SAY THAT THE AO SHALL PASS A SPEAKING ORDER AFTER GIVING THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD. THE SAID ORDER WAS PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING IN THE PRESENCE OF THE PARTIES. 5 . IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 2 8 T H OF NOVEMBER 2014. S D / - S D / - ( T.S.KAPOOR ) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 2 8 / 11 /2014 *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI