DCIT, New Delhi v. M/s. DARCL Logistics Ltd., New Delhi

ITA 5651/DEL/2015 | 2011-2012
Pronouncement Date: 08-11-2017 | Result: Dismissed

Appeal Details

RSA Number 565120114 RSA 2015
Assessee PAN AAACD2086J
Bench Delhi
Appeal Number ITA 5651/DEL/2015
Duration Of Justice 2 year(s) 1 month(s) 3 day(s)
Appellant DCIT, New Delhi
Respondent M/s. DARCL Logistics Ltd., New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 08-11-2017
Appeal Filed By Department
Tags No record found
Order Result Dismissed
Bench Allotted E
Tribunal Order Date 08-11-2017
Assessment Year 2011-2012
Appeal Filed On 05-10-2015
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E : NEW DELHI) BEFORE HONBLE PRESIDENT SHRI G.D. AGRAWAL AND SHRI KULDIP SINGH JUDICIAL MEMBER ITA NO.5651/DEL./2015 (ASSESSMENT YEAR : 2011-12) DCIT CIRCLE 7 (1) VS. M/S. DARCL LOGISTICS LIMIT ED NEW DELHI. M 2 HIMLAND HOUSE KARAMPURA COMMERCIAL COMPLEX NEW DELHI. (PAN : AAACD2086J) CO NO.445/DEL/2015 (IN ITA NO.5651/DEL./2015) (ASSESSMENT YEAR : 2011-12) M/S. DARCL LOGISTICS LIMITED VS. DCIT CIRCLE 7 (1 ) M 2 HIMLAND HOUSE NEW DELHI. KARAMPURA COMMERCIAL COMPLEX NEW DELHI. (PAN : AAACD2086J) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K.M. GUPTA ADVOCATE REVENUE BY : SHRI ARUN KUMAR YADAV SENIOR DR DATE OF HEARING : 31.10.2017 DATE OF ORDER : 08.11.2017 O R D E R PER KULDIP SINGH JUDICIAL MEMBER : ITA NO.5651/DEL./2015 CO NO.445/DEL/2015 2 THE AFORESAID APPEAL FILED BY THE REVENUE AND CROSS OBJECTIONS FILED BY THE ASSESSEE ARE BEING DISPOSED OFF BY WAY OF CONSOLIDATED ORDER TO AVOID REPETITION OF DISCUSSIO N. 2. THE APPELLANT DEPUTY COMMISSIONER OF INCOME-TAX CIRCLE 7 (1) NEW DELHI (HEREINAFTER REFERRED TO AS THE R EVENUE) IN ITA NO.5651/DEL/2015 BY FILING THE PRESENT APPEAL SOUGH T TO SET ASIDE THE IMPUGNED ORDER DATED 07.07.2015 PASSED BY THE C OMMISSIONER OF INCOME-TAX (APPEALS)-3 NEW DELHI QUA THE ASSESS MENT YEAR 2011-12 ON THE GROUND THAT :- WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW LD. CIT (A) HAS ERRED IN RESTRICTED THE DIS ALLOWANCE OF RS.45 50 271/- MADE BY THE AO TO RS.3 46 535/- UNDE R RULE 8D(III) READ WITH SECTION 14A OF THE ACT. 3. THE OBJECTOR M/S. DARCL LOGISTICS LIMITED BY F ILING THE PRESENT CROSS OBJECTIONS CHALLENGED THE IMPUGNED OR DER DATED 07.07.2015 PASSED BY THE COMMISSIONER OF INCOME-TA X (APPEALS)- 3 NEW DELHI QUA THE ASSESSMENT YEAR 2011-12 ON THE GROUNDS INTER ALIA THAT :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD. CIT (A) HAS ERRED IN AFFIRMING THE DIS ALLOWANCE OF INR 3 46 535 1- BY APPLYING THE PROVISIONS OF RULE SO(2)(III) READ WITH SECTION 14A OF THE INCOME TAX ACT 1961 ( 'THE ACT') WITHOUT APPRECIATING THE FACT THAT NO EXPENDITURE W AS INCURRED BY THE RESPONDENT ASSESSEE FOR EARNING EXEMPT DIVIDEND INCOME OF INR 36 532/- DURING THE SUBJECT YEAR. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD. CIT (A) HAS ERRED IN AFFIRMING THE DIS ALLOWANCE OF INR 3 46 535/- BY APPLYING RULE SO READ WITH SECTIO N 14A OF THE ACT WITHOUT APPRECIATING THAT THE LD. AO HAVING RE GARD TO THE ITA NO.5651/DEL./2015 CO NO.445/DEL/2015 3 ACCOUNTS OF THE RESPONDENT ASSESSEE HAS FAILED TO RECORD HIS DIS- SATISFACTION WITH RESPECT TO CORRECTNESS OF CLAIM M ADE BY THE RESPONDENT ASSESSEE THAT NO EXPENDITURE HAS BEEN IN CURRED IN RELATION EARNING EXEMPT DIVIDEND INCOME OF INR 36 5 32/- DURING THE SUBJECT YEAR BEFORE INVOKING RULE 8D. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW AND WITHOUT PREJUDICE TO THE ABOVE GROUNDS OF A PPEAL THE LD. CIT(A) HAS ERRED IN NOT RESTRICTING THE DISALLOWANC E UNDER SECTION 14A OF THE ACT UPTO THE EXTENT OF EXEMPT DI VIDEND INCOME OF INR 36 532/- RECEIVED BY THE RESPONDENT ASSESSEE IN VIEW OF DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF JOINT INVESTMENTS PVT. LTD. VS. CIT (ITA NO. 117/2015) AN D MUMBAI ITAT IN THE CASE OF DAGA GLOBAL CHEMICALS PVT. LTD. VS. ACTT (ITA NO. 5592/MUM/2012). 4. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICATION OF THE CONTROVERSY AT HAND ARE : ASSESSEE IS INTO THE BUSI NESS OF TRANSPORTATION OF GOODS AND MATERIAL THROUGH ROAD T RANSPORT WITH HEAVY VEHICLES HIRED FROM MARKET AND WITH ITS OWN F LEETS OF TRUCKS AS WELL AS THROUGH RAIL TRANSPORTATION. ASSESSING OFFICER BY INVOKING THE PROVISIONS CONTAINED UNDER SECTION 14A OF THE INCOME-TAX ACT 1961 (FOR SHORT THE ACT) MADE DIS ALLOWANCE OF RS.45 50 271/- DURING THE YEAR UNDER ASSESSMENT BY REJECTING THE CONTENTIONS RAISED BY THE ASSESSEE COMPANY THAT ALL THE INVESTMENTS ON WHICH THE ASSESSEE COMPANY HAS RECEIVED DIVIDEND S ARE OLD INVESTMENTS AND THE ASSESSEE COMPANY HAS NOT INCURR ED ANY EXPENSES TO EARN THE SAME AS THE DIVIDENDS ARE DIRE CTLY CREDITED IN THE BANK ACCOUNT OF THE ASSESSEE COMPANY THROUGH EC S. 5. CONSEQUENTLY THE AO COMPUTED THE INCOME OF THE ASSESSEE COMPANY AS UNDER :- ITA NO.5651/DEL./2015 CO NO.445/DEL/2015 4 CLA- USE PARTICULARS AMOUNT (IN CRS.) I. EXPENDITURE DIRECTLY RELATED TO EXEMPT INCOME NIL II. DISALLOWANCE OF INTEREST EXPENDITURE A. INTEREST EXPENDITUR E INCURRED DURING THE YEAR B. AVERAGE VALUE OF INVESTMENT C. AVERAGE OF TOTAL ASSETS DISALLOWANCE =A* B/C 250084647 68282461+70331501 2 4794955816+3451333395 2 250084647X69306981 4123144606 69306981 4123144606 4203736 III AGGREGATE OF OPENING AND CLOSING VALUE OF INVESTMENT (AVERAGE VALUE OF INVESTMENT) % OF ABOVE AS PER RULE 8D 0.5% OF 69306981 346535 TOTAL DISALLOWANCE [AGGREGATE OF (I) (II) & (III) 4550271 5. ASSESSEE CARRIED THE MATTER BY WAY OF FILING APP EAL BEFORE THE LD. CIT (A) WHO HAS PARTLY ALLOWED THE APPEAL B Y DELETING THE ADDITION TO RS.42 03 736/- MADE U/S 14A READ WITH R ULE 8D OF THE INCOME-TAX RULES 1962 (FOR SHORT THE RULES). CI T (A) CONSEQUENTLY RESTRICTED THE ADDITION TO RS.3 46 535 /- ON ACCOUNT OF ITA NO.5651/DEL./2015 CO NO.445/DEL/2015 5 DISALLOWANCE OF ADMINISTRATIVE EXPENSES TO EARN THE EXEMPT INCOME. FEELING AGGRIEVED THE REVENUE HAS CHALLENG ED THE DELETION OF RS.42 03 736/- BY WAY OF FILING THE APP EAL. AT THE SAME TIME THE ASSESSEE COMPANY HAS ALSO CHALLENGED THE IMPUGNED ORDER PASSED BY LD. CIT (A) TO THE EXTENT OF SUSTAI NING THE ADDITION OF RS.3 46 535/- BY FILING CROSS OBJECTION. 6. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 7. LD. DR FOR THE REVENUE CHALLENGING THE IMPUGNED ORDER PASSED BY LD. CIT (A) RELIED UPON THE ASSESSMENT OR DER. 8. HOWEVER ON THE OTHER HAND THE LD. AR FOR THE A SSESSEE COMPANY TO REPEL THE ARGUMENTS ADDRESSED BY THE LD. DR CONTENDED THAT SECTION 14A IS NOT ATTRACTED IN THIS CASE AS T HE ASSESSEE COMPANY HAS RECEIVED DIVIDEND ON OLD INVESTMENT OF RS.69 86 434/- ON WHICH NO EXPENSES HAVE BEEN INCUR RED. THE LD. AR FOR THE ASSESSEE COMPANY FURTHER CONTENDED THAT IN THE AY 2009-10 SIMILAR DISALLOWANCE HAS BEEN DELETED BY T HE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.5031/DEL/2012 ORDER DATECX30.04.2014 ; THAT THE ASSESSEE COMPANY HAS ONLY MADE AN INVESTMENT OF RS.5 00 000/- DURING THE YEAR UNDER A SSESSMENT THAT ITA NO.5651/DEL./2015 CO NO.445/DEL/2015 6 TOO OUT OF ITS OWN FUNDS; THAT DISALLOWANCE TO THE TUNE OF RS.3 46 535/- (ACTUAL AMOUNT IS RS.43 228/-) MADE B Y THE LD. CIT (A) IS NOT SUSTAINABLE. 9. UNDISPUTEDLY ASSESSEE COMPANY HAS RECEIVED DIVI DEND INCOME OF RS.43 228/- DURING THE YEAR UNDER ASSESSM ENT AS PER SCHEDULE 17 BROUGHT ON RECORD DURING THE COURSE OF ARGUMENT. IT IS ALSO NOT IN DISPUTE THAT ALL OTHER INVESTMENT CONSI DERED BY THE AO FOR APPORTIONMENT OF EXPENSES U/S 14A READ WITH RUL E 8D ARE OLD INVESTMENTS. IT IS ALSO NOT IN DISPUTE THAT THE AS SESSEE COMPANY HAS INVESTED AN AMOUNT OF RS.5 00 000/- ONLY DURING THE YEAR UNDER ASSESSMENT THAT TOO OUT OF ITS OWN FUNDS. 10. IN THE BACKDROP OF THE AFORESAID FACTS AND CIRC UMSTANCES OF THE CASE WE ARE OF THE CONSIDERED VIEW THAT THERE IS NO ILLEGALITY OR PERVERSITY IN THE DELETION OF ADDITION OF RS.42 03 736/- BY THE LD. CIT (A) AS THE PROVISIONS CONTAINED U/S 14A READ WI TH RULE 8D ARE NOT ATTRACTED. 11. SO FAR AS QUESTION OF RESTRICTING THE DISALLOWA NCE TO RS.3 46 535/- (ACTUAL AMOUNT IS RS.43 228/-) AS MAD E BY LD. CIT (A) ON ACCOUNT OF ADMINISTRATIVE EXPENSES IS CONCER NED WHEN THE LD. CIT (A) HAS RECORDED CATEGORIC FINDING THAT INV ESTMENT OF RS.5 00 000/- WAS MADE BY THE ASSESSEE COMPANY OUT OF ITS OWN SURPLUS FUNDS SUCH DISALLOWANCE CAN BE MADE TO TH E EXTENT OF ITA NO.5651/DEL./2015 CO NO.445/DEL/2015 7 EXEMPT INCOME ONLY AS HAS BEEN HELD BY HONBLE DELH I HIGH COURT IN CASE CITED AS CHEMINVEST LTD. VS. CIT (2015) 378 ITR 33 (DEL.) 12. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE WE AR E OF THE CONSIDERED VIEW THAT THE IMPUGNED ORDER PASSED BY L D. CIT (A) TO THE EXTENT OF DELETION OF ADDITION OF RS.42 03 736/ - DOES NOT SUFFER FROM ANY ILLEGALITY OR PERVERSITY. HOWEVER FINDIN GS RETURNED BY LD. CIT (A) QUA RESTRICTING THE DISALLOWANCE TO THE TUN E OF RS.3 46 535/- (ACTUAL AMOUNT IS RS.43 228/-) ON ACC OUNT OF ADMINISTRATIVE EXPENSES ARE NOT SUSTAINABLE TO THE EXTENT THAT THE DISALLOWANCE CAN ONLY BE RESTRICTED TO THE EXTENT O F EXEMPT INCOME ONLY. CONSEQUENTLY APPEAL FILED BY THE REVENUE IS DISMISSED AND CROSS OBJECTIONS FILED BY THE ASSESSEE ARE ALLOWED. AO IS DIRECTED TO RESTRICT THE DISALLOWANCE TO THE EXTENT OF EXEMP T INCOME WHICH IS RS.43 228/-. ORDER PRONOUNCED IN OPEN COURT ON THIS 8 TH DAY OF NOVEMBER 2017. SD/- SD/- (G.D. AGRAWAL) (KULDIP SINGH) PRESIDENT JUDICIAL MEMBER DATED THE 8 TH DAY OF NOVEMBER 2017 TS ITA NO.5651/DEL./2015 CO NO.445/DEL/2015 8 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-3 NEW DELHI. 5.CIT(ITAT) NEW DELHI. AR ITAT NEW DELHI.