Aptech Ltd Mumbai v. Dcit 8 1 Mumbai

In The Income Tax Appellate Tribunal A Bench Mumbai Before Shri G S Pannu Accountant Member And Shri Saktijit Dey Judicial Member Ita No 6654 Mum 2013 Assessment Year 20 1 0 1 1 M S Aptech Limited A 65 Midc Marol Andheri E Mumbai 400 093 Pan Aadca 0602 L Appellant V S Dy Commissioner Of Income Tax Circle 8 1 Mumbai Respondent Assessee By Shri S C Tiwari A W Ms Rutuja Pawar Revenue By Rajesh Kumar Yadav Date Of Hearing 09 1 0 201 7 Date Of Order 04 12 2017 O R D E R Per Saktijit Dey J M A Foresaid Appeal By The Assessee Is Against The Order Dated 18 Th September 2013 Passed By The Learned Commissioner Appeals 16 Mumbai For The Assessment Year 2010 11 2 I N Ground No 1 The Assessee Has Challenged The Disallowance Of 21 96 361 Under Section 14 A Of The Income Tax Act 1961 For Short The Act R W Rule 8 D Of The Income Tax Rules 1962 2 M S Aptech Limited 3 Briefly Stated The Facts Are The Assessee A Company Filed Its Return Of Income For The Impugned Assessment Year On 9 Th October 2010 Declaring Nil Income After Claiming Carry Forward Of Current Years Loss Of 10 81 32 278 During The Assessment Proceedings The Assessing Officer On Verifying The Balance Sheet Of The Prev Ious Year Found That The Assessee Has Invested In Equity Shares Of Company The Income From Which Will Not Form Part Of Total Income He Therefore Called Upon The Assessee To Explain Why Disallowance Of Expenditure Under Section 14 A R W Rule 8 D Should No T Be Made In Respect Of Such Exempt Income Yielding Assets In Response The Assessee Objected To The Proposed Disallowance By Stating That No Expenditure Was Incurred For Making Such Investments As Far As The Interest Expenditure Is Concerned It Was Sub Mitted That Netting Off Has To Be Allowed The Assessing Officer However Did Not Find Merit In The Submissions Of The Assessee And Proceeded To Compute Disallowance In Terms Of Rule 8 D Which Was Quantified At 21 96 361 4 While Challenging The Aforesaid Disallowance Before The First Appellate Authority The Assessee Submitted That Since It Had Sufficient Interest Free Funds Available For Making The Investments In Equity Shares Disallowance Of Interest Expenditure Should Not Be Made As Far As Administ Rative Expenditure Is Concern Ed It Was Submitted No Specific Expenditure Was Incurred For Investment 3 M S Aptech Limited Activities After Considering The Submissions Of The Assessee Learned Commissioner Appeals Did Not Find Merit In The Same Accordingly He Confirmed T He Disallowance Made By The Assessing Officer However He Directed The Assessing Officer To Exc L U D E The Investment S From Disallowance Under Section 14 A Where The Assessee Had Offered The Dividend Income For Taxation 5 Learned Authorised Representative Sub Mitted Before Us In The Relevant Previous Year The Assessee Has Not Earned Any Exempt Income Byway Of Dividend Therefore No Disallowance Under Section 14 A Should Be Made 6 Learned Departmental Representative Relied Upon The Observations Of The Assessin G Officer 7 We Have Heard Rival Contentions And Perused The Material Available On Record The Specific Contention Of The Assessee Before Us Is In The Relevant Previous Year It Has Not Earned Any Exempt Income By Way Of Dividend In Fact The Learned Coun Sel For The Assessee Has Made This Contention In Writing Before Us On A Perusal Of The Impugned Assessment Order Or Even The Order Of The First Appellate Authority We Do Not Find Any Finding Of Fact Recorded By Them That In The Relevant Previous Year The Assessee Has Earned Any Exempt Income By Way Of Dividend It Appears From The Orders Of The 4 M S Aptech Limited Departmental Authorities That The Disallowance Under Section 14 A R W Rule 8 D Has Been Made Considering The Fact That Investment S Made By The Assessee In The Equity Shares Of Companies Would Give Rise To Exempt Income Thus Prima Facie Assessees Claim Contention That It Has Not Earned Any Exempt Income By Way Of Dividend In The Relevant Previous Year Appears To Be Correct That Being The Case Following The Deci Sion Of The Honble Delhi High Court In Cheminvest Ltd V S Cit 378 Itr 33 And The Consistent View Of The Different Benches Of The Tribunal We Delete The Addition Made By The Assessing Officer And Sustained By The Learned Commissioner Appe Als 8 In G Round No 2 The Assessee Has Challenged Disallowance Of Deduction Claimed Of 22 70 225 On Account Of Provision For Leave Encashment 9 Brief Facts Are During The Assessment Proceedings The Assessing Officer Noticing That The Assessee Has Debited An Amount Of 22 70 225 Towards Provisions For Leave Encashment Called Upon The Assessee To Explain Why It Should Not Be Disallowed In Terms Of Section 43 B F After Considering The Submissions Of The Assessee The Assessing Officer Disallowed The Deduction Claimed Since It Was Not Actually Paid In The Relevant Previous Year 5 M S Aptech Limited 10 T Hough The Assessee Challenged The Disallowance Before The First Appellate Authority He Also Confirmed The Disallowance 11 T He Learned Authorised Representative Submitted Before Us That The Assessing Officer May Be Directed To Allo W Assessees Claim Of Deduction On Actual Payment 12 Learned Departmental Representative S Upported The Decision Of The Learned Commissioner Appeals 13 We Have Heard Rival Contentions And Perused The Material Available On Record As Could Be Seen Deduction Claimed By The Assessee Was Disallowed On The Reasoning That The Amount Was Not Actually Paid By The Assessee In The Relevant Previous Year As Per Section 43 B F Of The Act Which Was Introduced To The Statute By Finance Act 2001 W E F 1 St April 2002 Any Sum Payable By The Assessee As An Employer In Lieu Of Any Leave At The Credit Of His Employee Is Allowable In The Relevant Previous Year Wherein Such Amount Was Actually Paid K Eeping In View The Aforesaid Statutory Provision We Direct The Assessing Officer To Verify Assessees Claim And Allow It In The Assessment Year Wherein The Assessee Has Actually Paid The Amount Towards Leave Encashment This Ground Is Allowed For Statistical Purposes 6 M S Aptech Limited 14 Grounds No 3 4 And 5 Being General In Nature Do Not Require Adjudication 15 Besides The Aforesaid Grounds The Assessee Has Raised Following Effective Additional Grounds 1 That O N The Facts And In The Circumstances Of The Case The Appellant Be Allowed Deduction Of Provision For Bad And Doubtful Debts Of 5 95 24 304 In Computation Of Book Profit Under Section 115 Jb Erroneously Included By The Assessing Officer 2 That On The Facts And In The Circumstances Of The Case And In Law The Appellant Be Allowed Credit Of Tax Of 1 60 00 000 Paid By The Appell Ant On 31 03 2009 Erroneously Not Allowed By The Assessing Officer 3 That On The Facts And In The Circumstances Of The Case And In Law Levy Of Interest Under Section 234 B And 234 C Corresponding To The Tax Of 1 60 00 000 Paid By The Appellant On 31 0 3 2009 Be Deleted 16 Additional Grounds No 4 And 5 Being General In Nature Do Not Require Adjudication 17 As Far As Additional Grounds No 1 2 And 3 Are Concerned The Learned Authorised Representative Submitted Adjudication Of These Grounds Do Not Require Investigation Into Fresh Facts And Can Be Decided On The Basis Of Facts And Material Already Available On Record Hence Additional Grounds May Be Admitted For Adjudication 18 Learned Departmental Representative Opposing Admission Of Additional Ground Submitted The Additional Grounds Raised By The 7 M S Aptech Limited Assessee Involve Factual Issues Hence Requires Examination Of Facts Therefore Such Grounds Should Not Be Admitted 19 We Have Heard Rival Contentions And Perused The Material Available On Record As Far As The Additional Ground No 1 Is Concerned It Pertains To Disallowance Of Deduction Claimed For Write Off Of Provisions For Bad And Doubtful Debts Of 5 95 24 304 We F Ind From The Facts On Record The Aforesaid Amo Unt Of 5 95 24 304 Was Claimed As Deduction By The Assessee While Computing The Book Profit Under Section 115 Jb Of The Act For The Assessment Year 2004 05 And The Disallowance Made By The Assessing Officer Was Sustained By The Tribunal It Is The Conten Tion Of The Learned Authorised Representative Before Us That In View Of Subsequent Decision Of The Honble Supreme Court In Vijaya Bank Ltd V S Cit 2009 323 Itr 126 Sc The Assessee Has Raised The Additional Ground We Find That In Assessment Year 20 04 05 Though The Assessing Officer Disallowed The Aforesaid Deduction Claimed By The Assessee However The Learned Commissioner Appeals Delete The Addition Subsequently While Deciding The Revenues Appeal The Tribunal Restored The Disallowance Ad Dition Made By The Assessing Officer Taking Note Of The Explanation I Of Section 115 Jb Which Speaks Of Addition To The Book Profit Of Any Amount In The Nature Of Provisions Made For Meeting Liabilities Other Than Ascertained Liabilities Thus As Could B E Seen The Issue Raised By 8 M S Aptech Limited The Assessee Did Not Require Investigation Into Fresh Facts And Can Be Decided On The Basis Of Facts Already Available In The Records Of The Department Therefore We Admit This Additional Ground For Adjudication As Far As The Merits Of The Issue Is Concerned The Learned Authorised Representative Submitted The Tribunal Did Not Allow Assessees Claim As It Was In The Nature Of Provision He Submitted In The Impugned Assessment Year Also The Assessee Has Not Actually Written O Ff The Provision He Submitted The Assessing Officer May Be Directed To Allow Assessees Claim In The Assessment Year Wherein The Amount Is Actually Written Off In View Of The Aforesaid Submissions Of The Assessee We Restore The Issue To The File Of The Assessing Officer To Examine Assessees Claim And Allow It In The Year Of Actual Write Off Subject To Fulfillment Of Other Conditions Of The Act This Ground Is Allowed For Statistical Purposes 20 As Far As Additional Grounds No 2 And 3 Are Concerned The Facts Are The Assessee On 31 St March 2009 Paid An Amount Of 1 60 Crore Through Challan Towards Payment Of Advance Tax For The Assessment Year 2009 10 Subsequently Assessee Vide Letter Dated 20 Th February 2009 Stated Before The Assessing Officer That The Said Amount Was Wrongly Paid Towards Advance Tax For Assessment Year 2009 10 And The Assessee Actually Intended To Pay The Said Amount For Assessment Year 2010 11 He Further Submitted That It Wi Ll Not Claim Credit For The 9 M S Aptech Limited Said Amount In Assessment Year 2009 10 And Requested The Assessing Officer To Credit The Said Amount Towards Assessees Tax Liability For Assessment Year 2010 11 Keeping With Its Declaration Assessee Filed Its Return Of Income For The Assessment Year 2009 10 Without Claiming Credit For The Tax Paid Of 1 60 Crore However While Filing The Return Of Income For Assessment Year 2010 11 The Assessee Claimed Credit For The Tax Paid Of 1 60 Crore And Adjusted It Against The Tax Liability For The Assessment Year 2010 11 Since The Assessee Did Not Claim Credit For The Amount Of 1 60 Crore In Assessment Year 2009 10 The Assessing Officer While Processing The Return Of Income For The Said Assessment Year Did Not Give Credit For The Said Amount Whereas While Processing The Return Of Income For The Assessment Year 2010 11 Under Section 143 1 On 15 Th April 2011 The Assessing Officer Did Not Allow Credit For The Amount Of 1 60 Crore Thus The Tax Paid Of 1 60 Crore Was Neith Er Credited In Assessment Year 2009 10 Nor In 2010 11 Therefore The Assessee Filed An Application For Rectification Under Section 154 Before The Assessing Officer On 2 Nd January 2013 Requested For Giving Credit Of 1 60 Crore Towards Tax Liability For Assessment Year 2010 11 Along With The Said Application The Assessee Also Submitted Indemnity Bond By De C L A R Ing That It Had Not Claimed The Credit Of The Amount Of 1 60 Crore In The Assessment Year 2009 10 As It Appears The Rectification Application Fi Led By The 10 M S Aptech Limited Assessee Remained Cold Shelved And While Giving Effect To The Order Of The Learned Commissioner Appeals Order Arising Out Of Regular Assessment Done Under Section 143 3 Of The Act For The Assessment Year 2010 11 The Assessing Officer Vide O Rder Dated 30 Th September 2015 Held That The Tax Paid Of 1 60 Crore Can Only Be Credited Towards Advance Tax For The Assessment Year 2009 10 And Not For Assessment Year 2010 11 Thus As A Result Of Such Decision Of The Assessing Officer In Allowing Cre Dit For The Tax Paid Of 1 60 Crore In Assessment Year 2009 10 The Assessee Became Liable To Pay Interest Under Section 23 4 B And 234 C Of The Act For Short Fall In Payment Of Advance Tax Thus As Could Be Seen From The Aforesaid Facts The Assessees Req Uest For Giving Credit For The Tax Paid Of 1 60 Crore Was Pending Before The Assessing Officer Since 22 Nd September 2009 However The Assessing Officer H As Not Taken Care To Atleast Look Into The Claim Of The Assessee Further Even After The Assessee F Iled A Rectification Application Under Section 154 Again Requesting The Assessing Officer To Allow Credit For Tax Paid Of 1 60 Crore In Assessment Year 2010 11 The Assessing Officer Was Least Bothered To Look Into The Assessees Claim Only After The Di Sposal Of Assessees Appeal For Assessment Year 2010 11 By The First Appellate Authority The Assessing Officer While Giving Effect To The Directions Of The Learned Commissioner Appeals Has Decided To Credit The Amount Of 1 60 11 M S Aptech Limited Crore For The Assessment Year 2009 10 In The Process Six Long Years Have Passed From The Date Assessee Claimed Before The Assessing Officer To Credit The Tax Payment Of 1 60 Crore Towards Advance Tax For Assessment Year 2010 11 It Is Apparent Due To Inaction Of The Assessing Officer In Giving Credit To The Tax Paid Of 1 60 Crore In A Particular Assessment Year The Assessee Was Saddled With The Levy Of Interest Under Section 234 B And 234 C Had The Assessing Officer Decided Assessees Claim M Ade Vide Letter Dated 22 Nd September 2009 Within A Reasonable Time The Assessee Could Have Taken Appropriate Steps For Either Payment Of Advance Tax F Or Impugned Assessment Year Or Other Remedial Measures In The Matter However Since This Issue Is Raised For The First Time Before Us While Admitting The Additional Grounds We Are Inclined To Restore The Matter To The File Of The Assessing Officer For Verifying Assessees Claim In Accordance With Law As Already Observed By Us A Prompt Action On The Part Of The Assessing Officer In Disposing Off Assessees Request For Giving Credit To The Tax Paid Of 1 60 Crore In Assessment Year 2010 11 Would Have Saved The Assessee From Unnecessary Hardship Therefore While Deciding This Issue The Assessing Officer Must Consi Der This Aspect These Grounds Are Allowed For Statistical Purposes 12 M S Aptech Limited 21 In The Result Assessees Appeal Is Partly Allowed Order Pronounced In The Open Court On 04 12 2017 Sd G S Pannu Accountant Member Sd Saktijit Dey Judicial Member Mumbai Dated 04 12 2017 Copy Of The Order Forwarded To 1 The Assessee 2 The Revenue 3 The Cit A 4 The Cit Mumbai City Concerned 5 The Dr Itat Mumbai 6 Guard File True Copy By Order Pradeep J Chowdhury Sr Private Secretary Dy Asstt Registrar Itat Mumbai