THE PR. COMMISSIONER OF INCOME TAX -5 vs. JAYPEE VENTRUES P. LTD

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ITA/75/2018HC DelhiDLHC01488149201723 January 2018Bench: HON'BLE MR. JUSTICE S. RAVINDRA BHAT,HON'BLE MR. JUSTICE A. K. CHAWLA2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the appeal filed by the Revenue had no merit. The Court noted that the CIT(A) and ITAT had set aside the AO's disallowance, relying on the decision in Maxopp Investment Ltd. Vs. Commissioner of Income Tax (2012) 347 ITR 272 (Delhi). This decision held that the AO did not reject the assessee's explanation with reasons. The Court further observed that the reasoning in Maxopp Investment was subsequently followed in Godrej & Boyce Vs. CIT, 328 ITR 81 (Bom), and affirmed by the Supreme Court in CIT Vs. Godrej Boyce, 394 ITR 449. Since the findings of fact were concurrent and the question of law was covered by the High Court's own judgment, the appeal was dismissed.

What were the facts?

The assessee, Jaypee Ventures P. Ltd., claimed dividend income of ₹34,81,86,873/- for Assessment Year 2008-09. The Assessing Officer (AO) issued a show cause notice regarding proportionate disallowance of expenses under Section 14A of the Income Tax Act, 1961. Unsatisfied with the assessee's explanation, the AO disallowed ₹3,23,90,104/- by applying Rule 8D(3) of the Income Tax Rules. The Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal (ITAT) set aside the AO's disallowance. The Revenue, represented by the Pr. Commissioner of Income Tax -5, has appealed this decision to the High Court.

What were the issues?

1. Whether the disallowance made under Section 14A of the Income Tax Act, 1961, to the tune of ₹3,07,63,450/- is justified? Assessee's Contention: The assessee argued that the AO did not reject its explanation regarding the disallowance offered by it for no reasons. The assessee relied on the decision of the Delhi High Court in Maxopp Investment Ltd. Vs. Commissioner of Income Tax. Revenue's Contention: The revenue contended that the disallowance made under Section 14A was justified. The specific arguments of the revenue are not explicitly detailed in the judgment beyond the fact that they are challenging the ITAT's decision.

Which sections of the Income-tax Act were involved?

Section 14A

AI-generated summary — verify with the full judgment below

$~34 * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA 75/2018

THE PR. COMMISSIONER OF INCOME TAX -5..... Appellant Through Mr. Puneet Rai and Mr. Richir Bhatia, Advs.

versus

JAYPEE VENTRUES P. LTD

..... Respondent

Through

CORAM: HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE A. K. CHAWLA

O R D E R %

23.01.2018

The solitary question of law urged in this appeal is with respect to the disallowance made under Section 14A of the Income Tax Act, 1961 (‘the Act’) by the Revenue to the tune of `3,07,63,450/-. The assesee/respondent, had for Assessment Year 2008-09, claimed a dividend of ` 34,81,86,873/-. Upon inquiry, it was asked by show cause notice as to why proportionate expenses by way of disallowance under Section 14A ought not to be added back to its income. Unsatisfied with the explanation, the Assessing Officer (AO) disallowed a sum of ` 3,23,90,104/-. In order to do so, the AO applied the Rule 8D sub-clause (3) of the Income Tax Rules. The CIT(A) and the Income Tax Appellate Tribunal (ITAT) however, set aside the findings of the AO. Firstly, relying upon the decision of this Court in Maxopp Investment Ltd. Vs. Commissioner of Income Tax,

(2012) 347 ITR 272 (Delhi). It was held that the AO did not reject the explanation given by the assessee with respect to the disallowance offered by it for no reasons. This Court notices that the reasoning in Maxopp Investment (supra) was later followed in Godrej & Boyce Vs. CIT, 328 ITR 81 (Bom). It was later affirmed by the judgment of the Hon’ble Supreme Court in CIT Vs. Godrej Boyce, 394 ITR 449.

Since the findings of facts are concurrent and question of law is covered by the judgment of this Court, there is no merit in the appeal. It is accordingly dismissed.

S. RAVINDRA BHAT, J

A. K. CHAWLA, J JANUARY 23, 2018 rc

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