ASST CIT 10(3), MUMBAI v. BAYER BIO SCIENCE P.LTD, MUMBAI

ITA 783/MUM/2013 | 2008-2009
Pronouncement Date: 21-04-2014 | Result: Partly Allowed

Appeal Details

RSA Number 78319914 RSA 2013
Assessee PAN AAACP3459M
Bench Mumbai
Appeal Number ITA 783/MUM/2013
Duration Of Justice 1 year(s) 2 month(s) 21 day(s)
Appellant ASST CIT 10(3), MUMBAI
Respondent BAYER BIO SCIENCE P.LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 21-04-2014
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 21-04-2014
Assessment Year 2008-2009
Appeal Filed On 30-01-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B MUMBAI . . BEFORE SHRI I.P. BANSAL JUDICIAL MEMBER AND SHRI SANJAY ARORA ACCOUNTANT MEMBER . / ITA NO.783/MUM/2013 / ASSESSMENT YEAR 2008-09 THE DCIT 10(3) ROOM NO.451 4 TH FLOOR AAYKAR BHAVAN MAHARSHI KARVE ROAD MUMBAI 400020 / VS. M/S. BAYER BIO SCIENCE PVT. LTD. BAYER HOUSE CENTRAL AVENUE HIRANANDANI GARDENS POWAI MUMBAI 400 076 ! ./ ' ./ PAN/GIR NO. : AAACP 3459M ( !# / APPELLANT ) .. ( $%!# / RESPONDENT ) C.O. NO.53/MUM/2014 (ARISING OUT OF ITA NO.783/MUM/ 2013 ASSESSMENT YEAR 2008-09) M/S. BAYER BIO SCIENCE PVT. LTD. BAYER HOUSE CENTRAL AVENEUE HIRANANDANI GARDENS POWAI MUMBAI 400 076 / VS. THE DCIT 10(3) ROOM NO.451 4 TH FLOOR AAYKAR BHAVAN MAHARSHI KARVE ROAD MUMBAI 400020 ! ./ ' ./ PAN/GIR NO. : AAACP 3459M CROSS OBJECTOR .. APPELLANT IN APPEAL !# & / APPELLANT BY: SHRI P.S.NAIK $%!# ' & / RESPONDENT BY : NONE ' () / DATE OF HEARING : 21/04/2014 * ' () / DATE OF PRONOUNCEMENT : 21/04/2014 . / ITA NO.783/MUM/2013 / ASSESSMENT YEAR 2008-09 & C.O.NO.53/MUM/2014 2 / O R D E R PER I.P.BANSAL J.M: THE APPEAL IS FILED BY THE REVENUE AND CROSS OBJE CTION IS FILED BY THE ASSESSEE. BOTH ARE DIRECTED AGAINST ORDER PASSED B Y LD. CIT(A)-22 MUMBAI DATED 23/11/2012 FOR ASSESSMENT YEAR 2008-09. GROU NDS OF APPEAL RAISED IN THE APPEAL AS WELL AS CROSS OBJECTION READ AS UNDER : GROUNDS OF REVENUES APPEAL: (1) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW THE LD. CIT(A) WAS RIGHT IN ALLOWING THE ADDITIONAL CLA IMS OF THE ASSESSEE WITHOUT FILING REVISED RETURN OF INCOME IN VIEW OF RATIO CO NTAINED IN THE CASE OF GOETZ INDIA LTD. VS. CIT 284 ITR 323. (2) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AS WELL AS IN LAW THE LD. CIT(A) IS RIGHT IN NOT UPHOLDING THE DISALLOWANCE U /S. 14A FOLLOWING THE PROVISIONS OF RULE 8D AND RATIO CONTAINED IN THE CASE OF GODRE J & BOYCE MFG. CO. LTD. VS. DCIT (234 CTR 1 (BOM)] (3) THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. GROUNDS OF ASSESSEES CROSS OBJECTION: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-XXII (LEARNED CIT(A)) WHILE DISPOSING THE APPEAL UNDER SECTION 250 OF THE INCOME-TAX ACT 196 1 (THE ACT) HAS ERRED IN : - NOT APPRECIATING THE FACT THAT NO FURTHER EXPENSES OTHER THAN RS.91 000/- SUO MOTU DISALLOWED ARE RELATABLE TO EXEMPT INCOME AND ACCORDINGLY NO FURTHER DISALLOWANCE IS WARRANTED UNDER SECTION 14A OF THE ACT; AND - UPHOLDING DISALLOWANCE UNDER SECTION 14A OF THE ACT READ WITH PARA (III) OF SUB-RULE (2) OF RULE 8D OF THE INCOME-TAX RULES 19 62 (THE RULES) TOWARDS ADMINISTRATIVE AND MANAGERIAL EXPENDITURE FOR EARNI NG EXEMPT INCOME. BBSPL CRAVES LEAVE TO ADD AND/ OR TO ALTER AMEND RESCIND MODIFY THE GROUNDS HEREIN ABOVE OR PRODUCE FURTHER DOCUMENTS BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. . / ITA NO.783/MUM/2013 / ASSESSMENT YEAR 2008-09 & C.O.NO.53/MUM/2014 3 2. THE AFOREMENTIONED APPEAL AND CROSS OBJECTION WE RE FIXED FOR HEARING ON 21/4/2014. HOWEVER NONE APPEARED ON BEHALF OF THE ASSESSEE ON THE FIXED DATE OF HEARING THEREFORE WE PROCEED TO DECIDE T HE APPEAL AS WELL AS CROSS OBJECTION AFTER HEARING LD.DR AND CONSIDERING THE M ATERIAL AVAILABLE ON RECORD. 3. GROUND NO.1 OF THE REVENUES APPEAL RELATES TO A DDITIONAL CLAIMS MADE BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PRO CEEDINGS WHICH WERE DENIED TO BE ADMITTED BY THE AO ON THE BASIS OF DEC ISION OF HONBLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. VS. CIT 284 ITR 323(SC). THE CLAIMS ARE AS UNDER: (1) TAX DEPRECIATION RS. 2658/- (2) AMOUNT WRONGLY ADDED BACK IN THE RETURN OF INCOME WHICH WAS NOT DEBITED TO P&L ACCOUNT NOR ADDED BACK IN THE COMPUTATION OF INCOME. RS. 7 44 486/- 3.1 AGGRIEVED THE ASSESSEE FILED AN APPEAL BEFORE LD. CIT(A) CLAIMING THAT THESE AMOUNTS WERE WRONGLY DISALLOWED BY THE ASSESS EE IN THE RETURN OF INCOME EVEN THOUGH THESE WERE NOT DEBITED TO P&L ACCOUNT. LD. CIT(A) HAS ACCEPTED SUCH CLAIM OF THE ASSESSEE ON THE BASIS OF DECISION IN THE CASE OF NTPC AND JUTE CORPORATION OF INDIA. LD. CIT(A) HAS ALSO RE FERRED TO CBDT CIRCULAR NO.49 DATED 11/4/1955 VIDE WHICH IT HAS BEEN INSTRUCTED THAT IT IS PART OF THE DUTY OF TAX OFFICERS TO ASSIST TAX PAYERS IN EVERY REASO NABLE MANNER PARTICULARLY IN THE MATTER OF CLAIMING AND SECURING RELIEF. LD. C IT(A) HAS OBSERVED THAT AS ASSESSEE HAS INADVERTENTLY MADE THE MISTAKE IN DISA LLOWING THESE TWO TYPOGRAPHICAL ERRORS AND THEY WERE NOT DEBITED TO T HE P&L ACCOUNT THE SAME WERE LIABLE TO BE ALLOWED. THE REVENUE IS AGGRIEV ED HENCE HAS FILED AFOREMENTIONED GROUNDS. 4. WE HAVE HEARD LD. DR AND CAREFULLY GONE THROUGH THE ASSESSMENT ORDER AND ORDER PASSED BY LD. CIT(A). IN OUR OPINION WE FIND NO INFIRMITY IN THE VIEW . / ITA NO.783/MUM/2013 / ASSESSMENT YEAR 2008-09 & C.O.NO.53/MUM/2014 4 TAKEN BY LD. CIT(A) THAT WITHOUT FILING THE REVISED RETURN THE ASSESSEE COULD MAKE THESE CLAIMS AND AS SUCH DECISION OF LD. CIT(A ) IS IN ACCORDANCE WITH THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE O F CIT VS. PRUTHVI BROKERS & SHARE HOLDERS PVT. 349 ITR 336 WHEREIN IT HAS BE EN HELD THAT AN ASSESSEE IS ENTITLED TO RAISE NOT MERELY ADDITIONAL LEGAL SUB MISSIONS BEFORE THE APPELLATE AUTHORITY BUT IS ALSO ENTITLED TO RAISE ADDITIONAL CLAIMS BEFORE THEM. THE APPELLATE AUTHORITIES HAVE JURISDICTION TO DEAL NOT MERELY WITH ADDITIONAL GROUNDS WHICH BECAME AVAILABLE ON ACCOUNT OF CHANG E OF CIRCUMSTANCES OR LAW BUT WITH ADDITIONAL GROUNDS WHICH WERE AVAILAB LE WHEN THE RETURN WAS FILED. THE WORDS COULD NOT HAVE BEEN RAISED MUS T BE CONSTRUED LIBERALLY AND NOT STRICTLY. FOR THIS PURPOSE THEIR LORDSHIPS HAV E ALSO CONSIDERED THE DECISIONS OF HONBLE SUPREME COURT IN THE CASE OF N ATIONAL THERMAL POWER COMPANY VS. CIT 229 ITR 383 AND DECISION IN THE CA SE JUTE CORPORATION OF INDIA VS. CIT 187 ITR 688. THEREFORE WE FIND NO INFIRMITY IN THE OBSERVATION OF LD. CIT(A) THAT EVEN WITHOUT FILING REVISED RETURN THE ASSESSEE COULD MAKE THESE CLAIMS. HOWEVER AS POINTED OUT BY LD. DR DU RING THE COURSE OF HEARING THAT IN PARA 2.1 THE LD. CIT(A) HAS OBSERVED THAT AO HAD STATED THAT ASSESSEE HAD DEBITED THIS AMOUNT IN P&L ACCOUNT ALSO AND IT WAS POINTED OUT THAT THIS OBSERVATION WILL BE CONTRARY TO THE FINDINGS OF L D. CIT(A) THAT THESE WERE NOT DEBITED TO P&L ACCOUNT. IN THIS VIEW OF THE SITUAT ION WE CONSIDER IT JUST AND PROPER TO RESTORE THIS ISSUE TO THE FILE OF AO FOR VERIFICATION OF THE FACT THAT WHETHER OR NOT THESE AMOUNTS WERE DEBITED TO P&L A CCOUNT MAINTAINED BY THE ASSESSEE. IF THESE AMOUNTS ARE NOT DEBITED TO P& L ACCOUNT AND ARE WRONGLY ADDED IN THE COMPUTATION OF INCOME THEN THE RELIEF GRANTED BY LD. CIT(A) WILL BE CONFIRMED OTHERWISE THE AO WILL BE FREE TO RE- ADJUDICATE THIS MATTER AFTER GIVING THE ASSESSEE A REASONABLE OPPORTUNITY OF HEA RING. WITH THESE OBSERVATIONS GROUND NO.1 IS DISPOSED OFF. 5. GROUND NO.2 OF REVENUES APPEAL AND THE SOLE GRO UND RAISED BY THE ASSESSEE IN ITS CROSS OBJECTION IS A COMMON ISSUE I.E. DISALLOWANCE MADE UNDER . / ITA NO.783/MUM/2013 / ASSESSMENT YEAR 2008-09 & C.O.NO.53/MUM/2014 5 SECTION 14A R.W.R 8D OF THE INCOME TAX ACT 1961. THE ASSESSEE AT ITS OWN DISALLOWED A SUM OF RS.91 000/- UNDER THE PROVISION S OF SECTION 14A OF THE ACT. HOWEVER AO COMPUTED THE DISALLOWANCE AS PER RULE 8 D AT A SUM OF RS.6 83 165/-. THE DISALLOWANCE WAS CONTESTED IN THE APPEAL FILED BEFORE LD. CIT(A) WHO FOLLOWING THE ORDER GIVEN BY ITAT IN RE SPECT OF ASSESSMENT YEAR 2007-08 HAS HELD THAT NO INTEREST IS REQUIRED TO BE DISALLOWED AS ASSESSEES INVESTMENT IS LESS THAN ASSESSEES SHARE CAPITAL AN D RESERVES. LD. CIT(A) HAS HELD THAT IN RESPECT OF INTEREST EXPENDITURE NO DIS ALLOWANCE WAS CALLED FOR. HOWEVER LD. CIT(A) UPHELD THE DISALLOWANCE IN RESP ECT OF ADMINISTRATIVE AND MANAGERIAL EXPENDITURE WHICH HAS BEEN COMPUTED TO 0 .5% OF AVERAGE INVESTMENT AND HE HAS DIRECTED THE AO TO RE-CALCULA TE THE DISALLOWANCE. IT IS IN THIS MANNER LD. CIT(A) HAS DISPOSED OF THE GRIEVANC E OF THE ASSESSEE. THE DEPARTMENT IN ITS APPEAL IS AGGRIEVED BY THE DELET ED DISALLOWANCE OF INTEREST FACTOR. 5.1 THE ASSESSEE IN ITS CROSS OBJECTION HAS RAISED THE GRIEVANCE THAT THE DISALLOWANCE SHOULD BE RESTRICTED ONLY TO SUO-MOTU DISALLOWANCE MADE BY THE ASSESSEE AT RS.91 000/-. 6. WE HAVE HEARD LD. DR AND ALSO CAREFULLY GONE THR OUGH THE ASSESSMENT ORDER AS WELL AS ORDER PASSED BY LD. CIT(A). SO FA R AS IT RELATES TO INTEREST COMPONENT THE RELIEF HAS BEEN GRANTED BY LD. CIT(A) ON THE BASIS OF TRIBUNAL ORDER FOR ASSESSMENT YEAR 2007-08 IN WHICH IT WAS FOUND THAT SHARE CAPITAL AND RESERVE OF THE ASSESSEE WAS IN EXCESS OF INVEST MENT MADE BY THE ASSESSEE IN THE SHARES FROM WHERE TAX FREE INCOME HAS BEEN E ARNED. IN ABSENCE OF ANY MATERIAL BROUGHT ON RECORD TO SUGGEST THAT THE FA CTS HAVE CHANGED FOR THE YEAR UNDER CONSIDERATION WE DECLINE TO INTERFERE I N THE RELIEF GRANTED BY LD.CIT(A) AND GROUNDS OF THE REVENUE IS DISMISSED. . / ITA NO.783/MUM/2013 / ASSESSMENT YEAR 2008-09 & C.O.NO.53/MUM/2014 6 6.1 SO FAR AS IT RELATES TO CONTENTION OF THE ASSES SEE THAT LD. CIT(A) HAS COMMITTED AN ERROR IN UPHOLDING THE DISALLOWANCE TO THE EXTENT OF 0.5% OF ADMINISTRATIVE AND MANAGERIAL EXPENDITURE WE FOUND THAT ASSESSEE HAS NOT MADE OUT ANY CASE FOR ACCEPTANCE OF DISALLOWANCE OF RS.91 000/- ONLY. FOR THE YEAR UNDER CONSIDERATION RULE 8D IS APPLICABLE AND LD. CIT(A) HAS DIRECTED THE AO TO MAKE THE DISALLOWANCE OF ADMINISTRATIVE A ND MANAGERIAL EXPENDITURE AS PER RULE 8D. THEREFORE THE CLAIM OF THE ASSES SEE IS ALSO DISMISSED AND FINDINGS OF LD. CIT(A) IN THIS REGARD ARE UPHELD. ACCORDINGLY ASSESSEES GROUNDS OF CROSS OBJECTION ARE DISMISSED. 7. IN THE RESULT REVENUES APPEAL IS PARTLY ALLOWE D FOR STATISTICAL PURPOSES IN THE MANNER AFORESAID AND CROSS OBJECTION FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21/04 /2014 ' * - ./ 21 /04/2014 ' 0 1 SD/- SD/- ( / SANJAY ARORA ) ( . . / I.P. BANSAL ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; . DATED 21/04/2014 . / ITA NO.783/MUM/2013 / ASSESSMENT YEAR 2008-09 & C.O.NO.53/MUM/2014 7 ' '' ' $(2 $(2 $(2 $(2 32 ( 32 ( 32 ( 32 ( / COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $%!# / THE RESPONDENT. 3. 4 ( ) / THE CIT(A)- 4. 4 / CIT 5. 250 $( / DR ITAT MUMBAI 6. 06 7 / GUARD FILE. / BY ORDER %2( $( //TRUE COPY// 8 88 8 / 9 9 9 9 (DY./ASSTT. REGISTRAR) / ITAT MUMBAI . . ./ VM SR. PS