The DCIT, Circle-4(1)(1),, Ahmedabad v. Suzlon Energy Ltd.,, Ahmedabad

ITA 972/AHD/2018 | 2014-2015
Pronouncement Date: 18-11-2019 | Result: Dismissed

Appeal Details

RSA Number 97220514 RSA 2018
Assessee PAN AADCS0472N
Bench Ahmedabad
Appeal Number ITA 972/AHD/2018
Duration Of Justice 1 year(s) 7 month(s)
Appellant The DCIT, Circle-4(1)(1),, Ahmedabad
Respondent Suzlon Energy Ltd.,, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 18-11-2019
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 18-11-2019
Last Hearing Date 16-10-2019
First Hearing Date 16-10-2019
Assessment Year 2014-2015
Appeal Filed On 17-04-2018
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH BEFORE: SHR I RAJPAL YADAV JUDICIAL MEMBER AND SHRI AMARJIT SINGH ACCOUNTANT MEMBER THE DCIT CIRCLE - 4(1)(1) AHMEDABAD (APPELLANT) VS SUZLAN ENERGY LTD. SUZLAN - 5 SHRIMALI SOCIETY NR. SHRI KRISHNA CENTRE NAVRANGPURA AHMEDABAD - 380015 PAN: AADCS0472N (RESPONDENT) REVENUE BY : S H RI N.R. SONI CIT - D . R. ASSESSEE BY: SHRI TUSHAR P. HEMANI A.R. DATE OF HEARING : 16 - 10 - 2 019 DATE OF PRONOUNCEMENT : 18 - 11 - 2 019 / ORDER P ER : AMARJIT SINGH ACCOUN TANT MEMBER : - THIS ASSESSEE S APPEAL FOR A.Y. 2014 - 15 ARI SES FROM ORDER OF THE CIT(A) - 8 AHMEDABAD DATED 1 6 - 02 - 2 018 IN PROCEEDINGS UNDER SECTION 1 4 3(3) OF THE INCOME TAX ACT 1961; IN SHORT THE ACT . 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - 1. 'THAT THE ID. CIT(APPEAL) HAS ERRED IN LAW AND ON FACTS IN REDUCING AN AMOUNT OF RS.12 38 24 693/ - FROM THE RETURNED LOSS WHICH WAS DISALLOWED BY THE ASSESSEE COMPANY SUO MOTU U/S. 14A OF THE INCOME TAX ACT 1961 WHILE FILING OF THE RE TURNED OF INCOME.' I T A NO . 972 / A HD/20 18 A SS ESSMENT YEAR 2014 - 15 I.T.A NO. 972 /AHD/20 18 A.Y. 2014 - 15 PAGE NO DCIT VS. SUZLAN ENERGY LTD. 2 2. 'THAT THE ID CLT(APPEAL) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION AMOUNTING TO RS.12 38 24 693/ - MADE ON ACCOUNT OF DISALLOWANCE U/S. 14A OF THE INCOME TAX ACT 1961 IN BOOK PROFIT U/S. 115JB OF THE INCOME TAX A CT 1961' 3. 'THAT THE ID. CIT(A) FAILED TO APPRECIATE CBDT'S CIRCULAR NO. 5 OF 2014 IN WHICH THE BOARD HAS CLARIFIED THAT DISALLOWANCE UNDER SECTION 14A OF THE INCOME TAX ACT 1961 READ WITH RULE 8D OF THE INCOME TAX ACT 1962 NEEDS TO BE MADE EV EN IN A CASE WHERE THE ASSESSEE DID NOT EARN EXEMPT INCOME DURING THE PARTICULAR YEAR.' 3. THE FACT IN BRIEF IS THAT ASSESSE E HAS SUO MOTU DISALLOWED A SUM OF RS.12 38 24 6 3 9/ - U/S. 14A R.W. RULE 8D OF THE I.T. RULE 1962 IN THE COMPUTATION OF INCOM E ATTACHED TO THE RETURN OF INCOME. D URING THE COUR SE OF ASSESSMENT THE ASSESSEE HAS PLEADED BEFORE THE ASSESSING OFFICER THAT IT HAS NOT CLAIMED ANY EXEMPT INCOME THEREFORE AS PER THE DECISION OF HON BLE GUJARAT HIGH COURT IN THE CASE OF CORRTECH ENER GY PVT. LTD. NO DISALLOWANCE U/S. 14A IS WARRANTED. THE ASSESSEE HAS ALSO SUBMITTED THAT DISALLOWANCE U/S. 14A CANNOT BE MADE TO THE BOOK PROFITS COMPUTED U/S. 115JB(2) OF THE ACT. THE ASSESSING OFFICER HAS NOT AGREED WITH THE SUBMISSION OF THE ASSESSEE AND ALSO ADDED THE SUM OF RS. 12 38 24 6 3 9/ - TO THE BOOK PROFIT COMPUTED U/S. 115JB OF THE ACT. 4. THE ASSESSEE HAS PREFERRED APPEAL BEFORE THE LD. CIT(A). T HE LD. CIT(A) AFTER FOLLOWING JUDGMENT OF JURISDICTIONAL HIGH C OURT IN THE CASE OF CIT VS. CORRTECH ENERGY PVT. LTD. AND OTHE R JUDGMENTS REPORTED AT PAGE NO. 9 OF THE CIT(A) ORDER DELETED THE SUO MOTU DISALLOWANCE OF RS. 12 38 24 639/ - MADE BY THE ASSESSING OFFICER U/S. 14A OF THE ACT. THE LD. CIT(A) AFTER FOLLOWING THE JUDGMENT OF J URISDICTION AL H IGH C OURT IN THE CASE OF ALEMBIC LTD. IN IT A NO. 1249 OF 2014 HAS ALSO HELD THAT THE DISALLOWANCE U/S. 14A OF THE ACT CANNOT BE ADDED TO BOOK PROFIT CALCULATED U/S. 115JB OF THE ACT. I.T.A NO. 972 /AHD/20 18 A.Y. 2014 - 15 PAGE NO DCIT VS. SUZLAN ENERGY LTD. 3 5. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US THE LD. COUNSEL HAS CONTENDED THAT THE IDENTICAL ISSUE HAS BEEN ADJUDICATED BY T H E HON BLE JURISDICTIONAL HIGH COURT IN FAVOUR OF THE ASSESSEE VIDE TAX APPEAL NO. 553 & 554 OF 2017 IN THE CASE OF PR. CIT VS. ALEMBIC LTD. DATED 28 - 08 - 2017. THE LD. COUNSEL H AS ALSO CONTENDED THAT THE CO - ORDINATE BENCH OF THE ITAT IN THE CASE OF GREENLAND PVT. LTD. VS. DCIT DATED 04 - 06.2019 HAS DECIDED THE SIMILAR ISSUE IN FAVOUR OF THE ASSESSEE. THE LD. DEPARTMENTAL REPRESENTATIVE I S FAIR ENOUGH NOT TO CONTRADICT THE AFORESA ID SUBMISSION S MADE BY THE LD. COUNSEL. WITH THE ASSISTANCE OF LD. REPRESENTATIVES WE HAVE GONE THROUGH THE AFORESAID JUDICIAL PRONOUNCEMENT S REFERRED BY THE LD. COUNSEL AND IT IS N OTICED THAT CO - ORDINATE BENCH IN THE DECISION OF GREENLAND PVT. LTD. HA S ADJUDICATE D THE SIMILAR ISSUE ON IDENTICAL FACTS IN FAVOUR OF THE ASSESSEE. THE RELEVANT PART OF DECISION IS REPRODUCED AS UNDER: - 2. WHEN THE APPEAL WAS CALLED OUT FOR HEARING LEARNED REPRESENTATIVES FAIRLY AGREED THAT THE ABOVE ISSUES ARE FULLY COVE RED IN FAVOUR OF THE ASSESSEE BY THE DECISION DATED 14.11.2018 OF THE CO - ORDINATE BENCH IN ASSESSEE S OWN CASES FOR THE TWO IMMEDIATELY PRECEDING ASSESSMENT YEARS. VIDE THE AFORESAID ORDER THE CO - ORDINATE BENCH HAS INTER ALIA OBSERVED AS FOLLOWS: - 6 . WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. THE SUBSTANTIVE QUESTION ARISES IN THE REVENUE'S APPEAL IS TO ASCERTAIN THE CORRECTNESS OF THE ACTION OF THE CIT(A) IN REFUSING TO ENDORSE THE ACTION OF T HE AO FOR RESORTING TO DISALLOWANCE UNDER S.14 A OF THE ACT . TWO BROAD ISSUES EMERGES IN THE CONTEXT OF THE CASE; (I) WHETHER THE DISALLOWANCE UNDER S.14A IS MAINTAINABLE WHERE ADMITTEDLY NO EXEMPT INCOM E I.E. DIVIDEND WAS EARNED BY THE ASSESSEE IN THE RELEVANT ASSESSMENT YEAR AND (II) WHETHER THE CIT(A) WAS JUSTIFIED IN GOING BEYOND THE RETURN OF INCOME AND REMOVE THE DISALLOWANCE WHICH THE ASSESSEE ITSELF HAS MADE WHILE FILING THE RETURN OF INCOME. IN O THER WORDS WHETHER THE ACTION OF THE CIT(A) IN BRINGING DOWN THE INCOME RETURNED BY THE ASSESSEE AND GRANTING RELIEF ON THE ISSUES NOT RAISED AT THE TIME OF FILING ORIGINAL RETURN OF INCOME OR BY WAY OF REVISED RETURN AT A SUBSEQUENT STAGE IS JUSTIFIED IN LAW OR NOT. 7. THE FIRST ISSUE FRAMED ABOVE APPEARS QUITE SIMPLE AS WE SEE. WHILE ADJUDICATING THE ISSUE WE TAKE NOTE OF CBDT CIRCULAR NO. 5/2014 DATED 11/02/2014 WHICH SEEKS TO EMPHASIZE THAT ALL EXPENSES PERTAINING TO AN EXEMPT INCOME IS REQUIRED TO B E DISALLOWED NOTWITHSTANDING THE FACT THAT NO CORRESPONDING TAX FREE INCOME HAS BEEN EARNED DURING THE FINANCIAL YEAR. NOTWITHSTANDING THE AFORESAID CIRCULAR VARIOUS COURTS HAVE HELD THAT SECTION 14A O F THE ACT DISALLOWANCE CANNOT BE KICKED WHEN THERE WAS NO EXEMPT INCOME EARNED BY THE ASSESSEE AS IS THE CASE IN THE PRESENT APPEALS. HON'BLE DELHI HIGH I.T.A NO. 972 /AHD/20 18 A.Y. 2014 - 15 PAGE NO DCIT VS. SUZLAN ENERGY LTD. 4 COURT IN PCIT VS IL&FS ENERGY DEVELOPMENT COMPANY LTD. (2017) 84 TAXMAN.COM 186(DELHI) AND THE HON'BLE MADRAS HIGH COURT IN CIT V. CHETTINAD LOGISTICS (P .) LIMITED (2017) 80 TAXMANN.COM 221(MADRAS) HAVE EXPRESSED A CLEAR DISAGREEMENT WITH CBDT CIRCULAR AND HELD THAT WHERE THERE IS NO EXEMPT INCOME IN RE LEVANT YEAR THERE CANNOT BE A DISALLOWANCE OF EXPENDITURE UNDER S.14 A OF THE ACT . SIMILAR PROPOSITION HAS BEEN LAID DOWN BY THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CORRTECH ENERGY (P.) LTD (2014) 45 TAXMANN.COM. 116 (GUJ) AND PR.CIT VS. INDIA GELATINE AND CHEMICALS LTD. (2016) 66 TAXMANN.COM 356 (GUJ). THE AFORESAID JUDICIAL FIAT WAS REITERATED BY THE HON'BLE DELHI HIGH COURT IN THE CASE OF JOI NT INVESTMENTS PVT. LTD. VS. CIT REPORTED IN 372 ITR 692 (DELHI) WHEREIN HON'BLE DELHI HIGH COURT HAS CATEGORICALLY RULED THAT DISALLOWANCE UNDER S.14 A OF THE ACT CANNOT EXCEED THE AMOUNT OF TAX EXEMPT INCOME. NOTABLY THE SLP FILED AGAINST THE DECISION OF HON'BLE MADRAS HIGH COURT IN CHETTINAD LOGISTICS (SUPRA) HAS BEEN DISMISSED BY HON'BLE SUPREME COURT IN CIT VS. CHETTINAD LOGISTICS (P .) LTD. (20 18) 95 TAXMANN.COM 250 (SC). HENCE IN CONFORMITY WITH THE JUDICIAL PRECEDENTS WE FIND SUBSTANTIAL MERIT IN THE CONCLUSION DRAWN BY THE CIT(A) WHICH ESSENTIALLY HOLDS THAT SECTION 14A OF THE ACT CAN BE TRIGGERED ONLY IF ASSESSEE SEEKS TO SQUARE OFF EXPENDITURE AGAINST THE INCOME WHICH DOES NOT FORM PART OF TOTAL INCOME UNDER THE ACT AND SECTION 14A OF THE ACT CANNOT BE INVOKED WHERE NO EXEMPT INCOME WAS EARNED IN THE RELEVANT ASSESSMENT YEARS. IN CONSONANCE WITH THE JUDICIAL PRECEDENTS WE DO NOT SEE ANY INFIRMITY IN THE CONCLUSION DRAWN BY THE CIT(A) FOR NON - APPLICABILITY OF SECTION 14A OF THE ACT IN THE FACTS OF THE CASE. 8. WE SHALL NOW TURN TO THE SECOND ISSUE RAISED ON BEHALF OF THE REVENUE REGARDING PROPRIETY OF THE ACTION OF THE CIT(A) IN GRANTING RELIEF ON THE DISALLOWANCE (SUO MOTO MADE BY THE ASSESSEE) BEYOND THE RETURN OF INCOME AND IN T HE ABSENCE OF ANY FORMAL REVISED RETURN. THE CIT(A) HAS DISCUSSED THIS ASPECT IN VERY GREAT DETAIL IN PARA 2.5 TO 2.28 OF ITS ORDER. WE ARE NOT INCLINED TO REITERATE THE FINDINGS OF THE CIT(A). HOWEVER WE FULLY ENDORSE THE OBSERVATIONS OF THE CIT(A) WHICH ESSENTIALLY HOLDS THAT THE MISTAKE OR INADVERTENCE ON THE PART OF THE ASSESSEE WHEREBY AN INCOME NOT TAXABLE HAS BEEN WRONGLY OFFERED FOR TAX WILL NOT OPERATE AS ANY KIND OF ESTOPPEL AGAINST THE ASSESSEE AND REGARDLESS OF WHETHER THE REVISED RETURN WAS F ILED OR NOT. ONCE THE ASSESSEE IS IN A POSITION TO SHOW THAT IT HAS BEEN OVER ASSESSED UNDER THE PROVISIONS OF THE ACT EVEN ON ACCOUNT OF ASSESSEE'S OWN MISTAKE OR OTHERWISE THE REVENUE IS UNDER DUTY TO ASSESS CORRECT INCOME. 9. IT IS TRITE THAT THE AUTH ORITIES UNDER THE ACT ARE UNDER SACROSANCT OBLIGATION TO ACT IN ACCORDANCE WITH LAW. TAX CAN BE COLLECTED ONLY AS PROVIDED UNDER THE ACT. IF AN ASSESSEE UNDER A MISTAKE MIS - CONCEPTION OR NOT BEING PROPERLY INSTRUCTED IS OVER ASSESSED THE AUTHORITIES UN DER THE ACT ARE REQUIRED TO ENSURE THAT ONLY LEGITIMATE TAX DUES ARE COLLECTED. THIS IS THE VIEW WHICH FLOWS FROM INNUMERABLE JUDGMENTS INCLUDING CIT VS. SHELLY PRODUCTS (2003) 261 ITR 367 ( SC) S. R. KOSHTI VS. CIT (2005) 276 ITR 165 ( GUJ) ESTER INDUSTRIES VS. CIT (2009) 185 TAXMAN 266 (DELHI) AND CIT VS. PRUTHVI BROKERS & SHAREHOLDERS (P.) LTD. [2012] 349 ITR 336 (BOM). THE ESSENCE OF THESE DECISIONS ARE THAT MERE ADMISSION ON THE PART OF THE ASSESSEE WITH RESPECT TO AN ADDITION/DISALLOWANCE IN ITS ORIGINAL RETURN OR IN REVISED RETURN WOULD NOT IPSO FACTO BAR AN ASSESSEE FROM CLAIMING AN EXPENSE OR DISPUTING AN ADDITION IF IT IS OTHERWISE PERMISSIBLE UNDER LAW. IT IS THUS WELL SETTLED THAT IF A PARTICULAR INCOME IS NOT TAXABLE UNDER THE ACT IT CANNOT BE TAXED ON THE BASIS OF ESTOPPEL OR ANY OTHER EQUITABLE DOCTRINE. THE REVENUE AUTHORITIES CANNOT ENFORCE UNTENABLE ACTIONS OF THE ASSESSEE AGAINST IT WHICH LED TO DECLARATION OF INCOME OF HIGHER AMOUNT INCORRECTLY. IT IS THUS OPEN TO ASSESSEE TO SHOW THAT IT WAS OVER ASSESSED IN CORRECTLY OWING TO ITS OWN MISTAKE. 10. SO VIEWED WE DO NOT SEE ANY PO TENCY IN THE ARGUMENT LAID ON BEHALF OF THE REVENUE THAT THE CIT(A) ALLEGEDLY COMMITTED ERROR IN GRANTING TOTAL RELIEF IN THE MATTER OF I.T.A NO. 972 /AHD/20 18 A.Y. 2014 - 15 PAGE NO DCIT VS. SUZLAN ENERGY LTD. 5 DISALLOWANCE UNDER S.14 A OF THE ACT . IN OUR CONSIDERED VIEW THE A CTION OF THE CIT(A) IN GRANTING RELIEF UNDER S.14 A OF THE ACT ON ACCOUNT SUO MOTO DISALLOWANCE BY THE ASSESSEE AND THEREBY GRANTING RELIEF HIGHER THAN CLAIMED IN THE RETURN OF INCOME CANNOT BE FAULTED I N LAW. 3. WE SEE NO REASONS TO TAKE ANY OTHER VIEW OF THE MATTER THAN THE VIEW SO TAKEN BY THE CO - ORDINATE BENCH. RESPECTFULLY FOLLOWING THE COORDINATE BENCH DECISION IN ASSESSEE S OWN CASE FOR THE EARLIER ASSESSMENT YEARS WE UPHOLD THE PLEA OF THE ASS ESSEE. THE ASSESSEE GETS THE RELIEF ACCORDINGLY. CONSIDERING THE FACTS FINDINGS AND DECISION OF THE CO - ORDINATE BENCH AS CITED ABOVE WE DO NOT FIND ANY SUBSTANCE IN THE APPEAL OF THE REVENUE. ACCORDINGLY THIS GROUND OF APPEAL OF THE REVENUE IS REJECTED. REGARDING OTHER GROUND OF APPEAL A FTER CONSIDERING THE DECISION OF CO - ORDINATE BENCH OF THE ITAT IN THE CASE OF THE ASSESSEE FOR A.Y. 2010 - 11 VIDE ITA NO. 2791 & 2530/AHD/2014 AND THE DECISION OF THE SPECIAL BENCH DELHI ITAT IN THE CASE OF AC IT VS. VINEET INVESTMENT PVT. LTD. WE OBSERVE THAT EXPENDITURE INCURRED TO EARN EXEMPT INCOME NOT TO BE ADDED FOR COMPUTING BOOK PROFIT U/S. 115JB OF THE ACT. THEREFORE WE DO NOT FIND ANY INFIRMITY IN THE DECISION OF LD. CIT(A) HOLDING THAT THE DISALLOWA NCE U/S. 14A CANNOT BE ADDED TO BOOK PROFIT CALCULATED U/S. 115JB OF THE ACT. 6. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 18 - 11 - 201 9 SD/ - SD/ - ( RAJPAL YADAV ) ( A MARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 18 /11 /2019 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE I.T.A NO. 972 /AHD/20 18 A.Y. 2014 - 15 PAGE NO DCIT VS. SUZLAN ENERGY LTD. 6 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR ITAT AHMEDABAD 6. G UARD FILE. BY ORDER/ /