THE DCIT, CIRCLE-4(1)(2), AHMEDABAD vs. M/S. TGB BANQUEST AND HOTELS LIMITED, AHMEDABAD

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ITA 1017/AHD/2017Status: DisposedITAT Ahmedabad18 June 2019AY 2013-144 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the deletion of disallowance under Section 14A, following the jurisdictional High Court's decision that no disallowance is permissible if there is no tax-free income. The grant of depreciation on goodwill was also upheld based on previous High Court rulings in the assessee's own case. The cross-objection was rejected as time-barred.

What were the facts?

The Revenue appealed against the deletion of disallowance under Section 14A and the grant of depreciation on goodwill. The assessee filed a cross-objection which was found to be time-barred.

What were the issues?

Whether disallowance under Section 14A is permissible without tax-free income, and whether depreciation on goodwill is allowable.

Which sections of the Income-tax Act were involved?

Section 14A,Section 143(2),Section 253(5)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

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Income Tax Appellate Tribunal, AHMEDABAD – BENCH ‘D’

Before: SHRI RAJPAL YADAV & SHRI RIFAUR RAHMAN

For Appellant: Shri S.N. Divatia, AR
Hearing: 17/06/2019

Heard together (2 matters)

ITA No.1017/Ahd/2017
CO No.14/Ahd/2019

Read from the judgment's own cause title. This page is filed under one of them.

आयकर अपील�य अ�धकरण, अहमदाबाद �यायपीठ - अहमदाबाद । IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD – BENCH ‘D’

BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI RIFAUR RAHMAN, ACCOUNTANT MEMBER

आयकर अपील सं./ ITA No.1017/Ahd/2017 With CO No.14/Ahd/2019 �नधा�रण वष�/Asstt. Year: 2013-14 DCIT, Cir.4(1)(2) Vs. M/s.TGB Banquets and Hotels Ltd. Ahmedabad. 380, The Grand Bhagwati, S.G. Highway, Bodakdev Ahmedabad 380 054. PAN : AABCB 6825 A

अपीलाथ�/ (Appellant) �त् यथ�/ (Respondent)

Assessee by : Shri S.N. Divatia, AR Revenue by : Smt.Smiti Samant, Sr.DR सुनवाई क� तार�ख/Date of Hearing : 17/06/2019 घोषणा क� तार�ख /Date of Pronouncement: 18 /06/2019 आदेश/O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER:

Revenue is in appeal before the Tribunal against order of the ld.CIT(A)-8, Ahmedabad dated 21.2.2017 passed for the Asstt.Year 2013-14. On receipt of notice in Revenue’s appeal, the assessee has filed Cross objection bearing no.CO 14/ahd/2019.

2.

In the first ground of appeal, Revenue has pleaded that the ld.CIT(A) has erred in deleting the disallowance of Rs.31,67,820/- which was added by the AO with the aid of section 14A of the Income Tax Act, 1961.

ITA No.1017/Ahd/2017 with CO 2 3. Brief facts of the case are that the assessee has filed its return of income on 30.3.2015 declaring total income at Rs.24,36,97,633/-. The case of the assessee was selected for scrutiny assessment and notice under section 143(2) was issued and served upon the assessee. On scrutiny of the accounts, the ld.AO has observed that the assessee has made huge investment in shares, but did not work out any disallowance required to be made under section 14A r.w. rule 8D of the Income Tax Act. He therefore worked out disallowance at Rs.31,67,820/-. On appeal, it was contended before the ld.CIT(A) that disallowance under section 14A r.w. Rule 8D could be made in respect of expenditure which are relatable to earning of tax free income. But in this year, there is no tax free income. Therefore, as per the decision of Hon’ble Gujarat High Court in the case of CIT Vs. Corretech Energy P.Ltd., 372 ITR 97 no disallowance requires to be made. The ld.CIT(A) has followed this decision and deleted the disallowance.

4.

With the assistance of the ld.representatives, we have gone through the record carefully. Hon’ble jurisdictional High Court in the case of CIT Vs. Corrtech Energy (supra) has propounded that if there is no tax free income in a year to the assessee, then no disallowance on account of expenditure deserves to be made under section 14A r.w. Rule 8D of the Income Tax Act. The ld.CIT(A) has rightly considered the judgment of Hon’ble jurisdictional High Court and has rightly placed on it. Therefore, no interference is called in the order of the ld.CIT(A) on this issue.

ITA No.1017/Ahd/2017 with CO 3 5. In the next ground of appeal, the grievance of the Revenue is that the ld.CIT(A) has erred in granting depreciation on goodwill.

6.

The ld.counsel for the assessee at the very outset submitted that in the asstt.Year 2007-08, dispute on similar issue travelled upto the Hon’ble Gujarat High Court and the Hon’ble Court in Tax Appeal No.470 of 2012 decided on 31.6.2016 has held the allowance of depreciation to the assessee on goodwill. We find that decision of the ITAT passed in ITA No.1549/Ahd/2012 dated 2.11.2012 in the assessee’s own case was relied upon by the assessee. It is also pointed out that in the Asstt.Year 2007-08 the Tribunal has decided the issue in ITA No.1312/Ahd/2011 vide order dated 28.2.2012 in favour of the assessee. This order of the Tribunal has been upheld by the Hon’ble Gujarat High Court in Tax Appeal no.470 of 2012 and others. Considering the ld.CIT(A)’s order, we are of the view that the ld.CIT(A) has placed its reliance on the decision of jurisdictional High Court in the assessee’s own case while granting the depreciation on goodwill, and did not commit any mistake either construing the judgment or appreciating the facts of the issue. Therefore, no interference is called for on this issue.

7.

So far as CO is concerned, Registry has pointed out that CO is time barred by 263 days. No application for condonation of delay has been filed by the assessee. No doubt as per sub-section (5) of section 253, Tribunal may admit an appeal or permit filing of memorandum of cross-objection after expiry of relevant period, if it is satisfied that there was a “sufficient cause” for not presenting it within that period. That since no application is being

ITA No.1017/Ahd/2017 with CO 4 submitted by the assessee therefore, no reasonable cause is discernible for filing CO after expiry of time limit. Accordingly, CO is rejected.

8.

In the result, appeal of the Revenue and CO of the assessee, both are dismissed.

Order pronounced in the Court on 18th June, 2019.

Sd/- Sd/- (RIFAUR RAHMAN) (RAJPAL YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER

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