INCOME TAX OFFICER, WARD-7-3, JAIPUR vs. M/S MAYUR LEATHER PRODUCTS LTD., JAIPUR

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ITA 1109/JPR/2018Status: DisposedITAT Jaipur31 October 2018AY 2011-123 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the appeal filed by the revenue was not maintainable. It found no merit in the revenue's contention that the case fell under an exception in CBDT Circular No. 3 of 2018, as the issue did not involve any notification or circular being held illegal.

What were the facts?

The revenue appealed against the CIT(A)'s order which granted relief of Rs. 3,10,000/- out of a total disallowance of Rs. 3,18,500/- made under Section 14A read with Rule 8D. The revenue argued that the CIT(A)'s decision contravened CBDT Circular 05/2014 and Supreme Court rulings.

What were the issues?

Whether the CIT(A) was justified in reducing the disallowance under Section 14A, and whether the revenue's appeal was maintainable in light of CBDT circulars and tax effect.

Which sections of the Income-tax Act were involved?

Section 14A

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Income Tax Appellate Tribunal, JAIPUR BENCHES “A”, JAIPUR

Before: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM vk;dj vihy la-@ITA No. 1109/JP/2018

Hearing: 31/10/2018Pronounced: 31/10/2018

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES “A”, JAIPUR Jh fot; iky jko] U;kf;d lnL; ,oa Jh foØe flag ;kno] ys[kk lnL; ds le{k BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM vk;dj vihy la-@ITA No. 1109/JP/2018 fu/kZkj.k o"kZ@Assessment Year : 2011-12 cuke D.C.I.T., M/s Mayur Leather Products Ltd., Circle-7, Vs. 65-67, Udhyog Vihar, Jaitpura Industrial Jaipur. Area, Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AABCM 1848 A vihykFkhZ@Appellant izR;FkhZ@Respondent jktLo dh vksj ls@ Revenue by : Shri Anup Singh (JCIT) fu/kZkfjrh dh vksj ls@ Assessee by : Adj. application rejected. lquokbZ dh rkjh[k@ Date of Hearing: 31/10/2018 mn?kks"k.kk dh rkjh[k@Date of Pronouncement : 31/10/2018 vkns'k@ ORDER

PER: VIJAY PAL RAO, J.M.: This appeal by the revenue is directed against the order dated 10/07/2018 of ld. CIT(A)-3, Jaipur for the A.Y. 2011-12. The revenue has raised following grounds of appeal: “1. On the facts and in the circumstances of the case, whether finding given by the Ld. CIT(A) in giving relief of Rs. 3,10,000/- out of total disallowance of Rs. 3,18,500/- made u/s 14A r.w. Rule 8D, was not in contravention to the provisions of Section 14A of the Income Tax Act, 1961 and clarification issued by the CBDT vide Circular 05/2014 dated 11.02.2014? 2. On the facts and in the circumstances of the case, whether Ld. CIT(A) was justified in giving relief of Rs. 3,10,000/- out of total disallowance of Rs. 3,18,500/- made u/s 14A r.w. Rule 8D by stating that disallowance u/s 14A cannot exceed more that exempt income declared during the relevant year even though this finding was in contravention to the CBDT’s Circular 05/2014 dated 11.02.2014 wherein it has been clearly

2 ITA No. 1109/JP/2018 DCIT Vs. Mayur Leather Products Ltd.

mentioned that disallowance u/s 14A is applicable even where taxpayer in a particular year has not earned any exempt income?

3.

On the facts and in the circumstances of the case, whether Ld. CIT(A) was justified in giving relief of Rs. 3,10,000/- out of total disallowance of Rs. 3,18,500/- made u/s 14A r.w. Rule 8D by ignoring the ratio of decision awarded by various courts including the Hon’ble Apex Court in the case of M/s Maxopp Investment Ltd. vs. CIT (2018) 91 Taxmann.com 154 wherein it is clearly held that the dominant purpose for which investment is made by the assessee is not relevant since this investment in shares resulted in exempt income?

4.

The appellant craves leave to add, alter, amend, withdraw or insert any ground or grounds of appeal before or at the time of hearing of the appeal.”

2.

The assessee sought adjournment of the hearing, however, the tax effect

in the department’s appeal is not exceeding the limit as provided in the CBDT Circular No. 3 of 2018 dated 11th July, 2018, therefore, the request for

adjournment was turndown and appeal of the department is heard ex parte.

3.

Though the ld. DR has accepted that the tax effect involved in this appeal

is not exceeding Rs. 20.00 lacs as prescribed in the CBDT Circular No. 3/2018 dated 11th July, 2018, however, as it is mentioned in the grounds, the present

case fall in the exception under para 10(b) of the said circular.

4.

There is no dispute that that the tax effect in the revenue’s appeal is very

less as the relief of Rs. 3.10 lacs was given by the ld. CIT(A). However, the ld DR

has contended that the matter falls in the exception under para 10(b) of the

CBDT circular. We do not find merit in this contention of the ld AR as the issue of

disallowance U/s 14A, which was deleted by the ld. CIT(A) does not involve any

notification, instruction or circular issued by the CBDT has been held to be illegal

3 ITA No. 1109/JP/2018 DCIT Vs. Mayur Leather Products Ltd. or ultra vires. Therefore, in our considered opinion that the present appeal is not covered by the exception in para 10(b) claimed by the department or any other exception prescribed in the said CBDT Circular No. 3 of 2018 dated 11th July, 2018. Accordingly, the appeal of the department is liable to be dismissed as not maintainable.

Order pronounced in the open court on 31/10/2018.

Sd/- Sd/- ¼foØe flag ;kno½ ¼fot; iky jko½ (VIKRAM SINGH YADAV) (VIJAY PAL RAO) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 31st October, 2018 *Ranjan आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. vihykFkhZ@The Appellant- The D.C.I.T., Circle-7, Jaipur. 2. izR;FkhZ@ The Respondent- M/s Mayur Leather Products Ltd., Jaipur. 3. vk;dj vk;qDr@ CIT 4. vk;dj vk;qDr@ CIT(A) 5. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण]जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 6. xkMZ QkbZy@ Guard File (ITA No. 1109/JP/2018) vkns'kkuqlkj@ By order,

सहायक पंजीकार@Aेेज. त्महपेजतंत

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