M/s. Delhi Towers Ltd., New Delhi v. DCIT, New Delhi

ITA 5296/DEL/2015 | 2011-2012
Pronouncement Date: 22-11-2017 | Result: Allowed

Appeal Details

RSA Number 529620114 RSA 2015
Assessee PAN AAACD0082E
Bench Delhi
Appeal Number ITA 5296/DEL/2015
Duration Of Justice 2 year(s) 2 month(s) 27 day(s)
Appellant M/s. Delhi Towers Ltd., New Delhi
Respondent DCIT, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 22-11-2017
Appeal Filed By Assessee
Tags No record found
Order Result Allowed
Bench Allotted F
Tribunal Order Date 22-11-2017
Assessment Year 2011-2012
Appeal Filed On 26-08-2015
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : F : NEW DELHI BEFORE SHRI R.S. SYAL VICE PRESIDENT AND SMT BEENA PILLAI JUDICIAL MEMBER ITA NO.5296/DEL/2015 ASSESSMENT YEAR: 2011-12 DELHI TOWERS LTD. 1110-ANSAL BHAWAN NEW DELHI. PAN: AAACD0082E VS. DCIT CENTRAL CIRCLE-8 NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI A.T. PANDA ADVOCATE DEPARTMENT BY : SHRI ATIQ AHMAD SR. DR DATE OF HEARING : 21.11.2017 DATE OF PRONOUNCEMENT : 22.11.2017 ORDER PER R.S. SYAL VP: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER PASSED BY THE CIT(A) ON 08.06.2015 IN RELATION TO THE ASSESSM ENT YEAR 2011-12. ITA NO.5296/DEL/2015 2 2. THE ONLY ISSUE RAISED IN THIS APPEAL IS AGAINST CONFIRMATION OF DISALLOWANCE OF RS.2 56 520/- MADE BY THE ASSESSING OFFICER U/S 14A OF THE INCOME-TAX ACT 1961 (HEREINAFTER ALSO CALLED THE ACT). 3. BRIEFLY STATED THE FACTS AS RECORDED IN PARA 2 OF THE ASSESSMENT ORDER ARE THAT THE ASSESSEE EARNED EXEMPT DIVIDEND INCOME OF RS.29 11 810/-. NO DISALLOWANCE WAS OFFERED U/S 14 A OF THE ACT. ON BEING CALLED UPON TO STATE THE REASONS FOR NOT OFFE RING ANY DISALLOWANCE THE ASSESSEE FURNISHED A REPLY WHICH HAS NOT BEEN DISCUSSED IN THE ASSESSMENT ORDER. THE ASSESSING OFFICER FOUND THE ASSESSEES REPLY DEVOID OF ANY MERITS IN VIEW OF SUB-SECTION (2) AND SUB-SECTION (3) OF SECTION 14A. HE THEREAFTER COMPUTED DISALLOWANCE U/S 14A READ WITH RULE 8D AT RS.2 82 046/-. THE LD. CIT(A) DEALT WIT H THIS ISSUE IN PARA 4.1.2. OF HIS ORDER. HE CHARACTERIZED THE ASSESSME NT ORDER CRYPTIC INASMUCH AS THE ASSESSING OFFICER DID NOT BOTHER TO GIVE ANY SATISFACTION. CONSIDERING THE MANDATE OF THE HON'B LE JURISDICTIONAL HIGH COURT IN THE CASE OF MAXOPP INVESTMENTS LTD. VS. CIT (2012) 347 ITR 272 (DEL) AND THAT OF THE HON'BLE BOMBAY HIGH COURT IN GODREJ & ITA NO.5296/DEL/2015 3 BOYCE MANUFACTURING COMPANY LTD. (2010) 328 ITR 81 (BOM) THE LD. CIT(A) HELD THAT SINCE THE ASSESSING OFFICER DID NO T ARRIVE AT THE REQUISITE SATISFACTION AND ACCORDINGLY NO DISALLOWA NCE U/S 14A COULD BE MADE. THEREAFTER HE RESTRICTED THE DISALLOWANCE T O RS.2 56 520/- AT THE RATE OF 0.5% OF INVESTMENTS BY NOTICING THAT THE AS SESSEES CLAIM COULD NOT BE ACCEPTED THAT IT DID NOT INCUR ANY EXPENDITU RE. THE ASSESSEE IS AGGRIEVED AGAINST THE SUSTENANCE OF SUCH DISALLOWAN CE. 4. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE REL EVANT MATERIAL ON RECORD. IT IS FOUND FROM THE ASSESSMENT ORDER THAT THE ASSESSING OFFICER DID NOT RECORD ANY SATISFACTION IN TERMS OF SECTION 14A(2) WHICH PROVIDES THAT THE ASSESSING OFFICER SHALL DETERMINE THE AMOUNT OF EXPENDITURE INCURRED IN RELATION TO EXEMPT INCOME I F HE: HAVING REGARD TO THE ACCOUNTS OF THE ASSESSEE IS NOT SATISFIED W ITH THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE IN RESPECT OF SUCH EXPENDITUR E IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THIS ACT. IT IS OBVIOUS FROM SUB-SECTION (2) OF SECTION 14A THAT RE CORDING OF ITA NO.5296/DEL/2015 4 SATISFACTION BY THE ASSESSING OFFICER IS SINE QUA NON FOR WORKING OUT DISALLOWANCE U/S 14A. 5. THE HON'BLE JURISDICTIONAL HIGH COURT IN CIT VS. HERO MANAGEMENT SERVICES LTD. (2014) 360 ITR 68 (DEL) HAS HELD THAT: FURTHER TO INVOKE RULE 8D THE ASSESSING OFFICER HAS TO FIRST RECORD A FINDING THAT HE WAS NOT SATISFIED WITH THE CORRECTNESS OF THE CLAIM FOR EXPENDITURE MADE BY THE ASSESSEE IN RELATION TO INCOME WHICH DID NOT FO RM PART OF THE TOTAL INCOME UNDER THE ACT. NO SUCH SATISFACTION HAS BEE N RECORDED BY THE ASSESSING OFFICER. IN THE LIGHT OF THIS CATEGORIC AL FINDING THE HON'BLE HIGH COURT DELETED THE DISALLOWANCE MADE U/S 14A. SIMILAR VIEW HAS BEEN TAKEN IN MAXOPP INVESTMENTS LTD. (SUPRA) IN WHICH IT HAS BEEN HELD THAT: THE REQUIREMENT OF THE ASSESSING OFFICE R EMBARKING UPON A DETERMINATION OF THE AMOUNT OF EXPENDITURE INCURRED IN RELATION TO EXEMPT INCOME WOULD BE TRIGGERED ONLY IF THE ASSESSING OFFICER RETURNS A FINDING THAT HE IS NOT SATISFIED WITH THE CORRECT NESS OF THE CLAIM OF THE ASSESSEE IN RESPECT OF SUCH EXPENDITURE. THEREFORE THE CONDITION PRECEDENT FOR THE ASSESSING OFFICER ENTERING UPON A DETERMINATION OF THE ITA NO.5296/DEL/2015 5 AMOUNT OF THE EXPENDITURE INCURRED IN RELATION TO E XEMPT INCOME IS THAT THE ASSESSING OFFICER MUST RECORD THAT HE IS NOT SA TISFIED WITH THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE IN RESPECT OF SUCH EXPENDITURE. IN VIEW OF THE FOREGOING DISCUSSION IT BECOMES VIV ID THAT THE ASSESSING OFFICER MUST RECORD SATISFACTION IN TERMS OF SUB-SE CTION (2) OF SECTION 14A BEFORE COMMENCING TO WORK OUT THE AMOUNT OF DIS ALLOWANCE U/S 14A OF THE ACT. 6. ADVERTING TO THE FACTS OF THE INSTANT CASE WE FIND IT AS A MATTER OF FACT THAT THE ASSESSING OFFICER IN FACT DID NOT R ECORD ANY SATISFACTION AS STIPULATED U/S 14A(2). FIRSTLY HE REPRODUCED SUB- SECTIONS (2) AND (3) OF SECTION 14A AND THEREAFTER STARTED COMPUTING DISA LLOWANCE UNDER RULE 8D. THE LD. CIT(A) HAS DEVOTED SIX PARAS NAMELY 4.1.2 TO 4.1.6 FOR REACHING AT THE CONCLUSION THAT THE ASSESSING OFFIC ER DID NOT RECORD ANY SATISFACTION WHICH IS A PRE-CONDITION FOR MAKING D ISALLOWANCE U/S 14A. NOTWITHSTANDING HIS FINDING RECORDED IN THESE SIX P ARAS THE LD. CIT(A) VIDE PARA 4.1.7 STILL PROCEEDED TO RESTRICT DISALL OWANCE AT 0.5% OF INVESTMENT BEING THE LAST LIMB OF RULE 8D. WHEN THE PRE-REQUISITE ITA NO.5296/DEL/2015 6 CONDITION FOR MAKING DISALLOWANCE U/S 14A BEING TH E RECORDING OF THE SATISFACTION BY THE ASSESSING OFFICER NOT ACCEPTING THE CORRECTNESS OF THE ASSESSEES CLAIM WAS LACKING THE LD. CIT(A) SHOU LD NOT HAVE COME TO THE STAGE OF COMPUTATION OF THE AMOUNT OF DISALLOWA NCE. AS THE JURISDICTIONAL CONDITION FOR MAKING DISALLOWANCE U/ S 14A WAS WANTING THE LD. CIT(A) OUGHT TO HAVE DELETED THE ENTIRE ADD ITION INSTEAD OF RESTRICTING IT TO A LOWER LEVEL. THE REVENUE APPEAR S TO HAVE ACCEPTED THE LD. CIT(A)S ORDER ON THE QUESTION OF NOT RECORDING OF SATISFACTION BY THE AO INASMUCH AS NOTHING HAS BEEN BROUGHT TO OUR NOTICE BY THE LD. DR TO DEMONSTRATE THAT THE DEPARTMENT HAS PREFERRED ANY APPEAL ON THIS SCORE BEFORE THE TRIBUNAL. THE PICTURE WHICH THERE FORE EMERGES IS THAT THE ASSESSING OFFICER DID NOT RECORD ANY SATISFACTI ON AS STIPULATED IN SUB- SECTION (2) OF SECTION 14A AND AS THE SEQUITUR THE DISALLOWANCE U/S 14A COULD NOT HAVE BEEN MADE. WE THEREFORE DELETE THE SUSTENANCE OF ADDITION TO THE TUNE OF RS.2 56 520/-. ITA NO.5296/DEL/2015 7 7. IN THE RESULT THE APPEAL FILED BY THE ASS ESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND NOVEMBER 2017. SD/- SD/- [BEENA PILLAI] [R.S. SYAL] JUDICIAL MEMBER VICE PRESIDENT DATED 22 ND NOVEMBER 2017. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR ITAT AR ITAT NEW DELHI.