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Income Tax Appellate Tribunal, DELHI BENCH ‘B’, NEW DELHI
Before: Sh. Amit ShuklaDr. B. R. R. Kumar
Per Dr. B. R. R. Kumar, Accountant Member:
The present appeal has been filed by the assessee against the order of the ld. CIT, Faridabad dated 31.03.2014.
Following grounds have been raised by the assessee: “1. That having regard to facts & circumstances of the case, ld. CIT has erred in law and on facts in assuming jurisdiction u/s 263 and has further erred in making disallowance u/s 14A and that too Rs.6,71,300/-.
That in any case and in any view of the matter, order passed u/s 263 and disallowance u/s 14A at Rs.6,71,300/- is bad in law and against the facts and circumstances of the case.”
ITA No. 4630/Del/2016 2 Dhandaai Investment Pvt. Ltd. 3. The appeal has been filed with a delay of 808 days. It was submitted that in the revision order passed u/s 263, direction was given by ld. CIT- Faridabad to the AO pursuant to which assessment order was passed u/s 263/143(3) dated 25.03.2015, against which assessee preferred an appeal before ld. CIT (A), Gurgaon on 20.04.2015. The said appeal was heard and decided by the ld. CIT (A) vide order dated 14.06.2016 wherein it was held that CIT (A) did not have jurisdiction to decide this appeal as the issue was decided by ld. CIT in order u/s 263. Then, the assessee filed appeal before the Tribunal on 31.08.2016.
The ld. DR argued that this is not a fit case for condonation of delay.
We find that the ld. CIT-Faridabad has not given any direction to the AO as pleaded by the ld. AR in the written submission.
This is one of the rare cases where the ld. CIT has enhanced and modified the order passed u/s 143(3) and determined tax and interest payable in the order passed u/s 263 itself. On receipt of the order u/s 263, the AO has again initiated proceedings u/s 143(3) and consequently the procedure under the Act have been duly followed bringing the same amount to tax which has already stands modified by the ld. CIT in order u/s 263. The ld. CIT (A) denied to entertain the appeal filed by the assessee against the order u/s 143(3) on the grounds that the appeal before him is not maintainable.
Since, the ld. CIT (A) denied to entertain the appeal filed by the assessee against the order u/s 143(3) passed
ITA No. 4630/Del/2016 3 Dhandaai Investment Pvt. Ltd. purportedly giving effect to the order of the ld. CIT u/s 263, the only recourse to the assessee is to file appeal before the Tribunal against the order u/s 263. We have considered the entire events holistically. Since, the assessee has bonafide reasons to prefer appeal before the ld. CIT (A) which was preferred in time, the delay in filing the appeal against the order u/s 263 is hereby condoned owing to the sequence of mystification of the orders u/s 263 dated 31.03.2014, u/s 143(3) dated 25.03.2015, u/s 250(6) dated 14.06.2016. Since, the assessee filed appeal on 31.08.2016 after passing of the order u/s 250(6), we hereby admit the appeal of the assessee.
Delay condoned.
Brief facts of the case are that the assessee company e- filed its return of income on 22.10.2009 declaring total income of Rs. 1,30,96,002/-. The case was selected for scrutiny under CASS. After issue of statutory notices and hearings, the returned income was accepted u/s 143(3) of the Income Tax Act, 1961 on 28.12.2011 by ACIT Circle-1(1), Gurgaon.
Subsequently, the ld. PCIT, on perusal of Schedule 4 of the accounts noticed that during the year the assessee has invested an amount of Rs.13,42,60,000/- and determined the disallowance an amount of Rs.6,71,300/- @ 0.5% in accordance with the provisions of Rule 8D(2)(iii) to Section 14A.
Before us, the ld. AR argued that out of the investment of Rs.13,42,60,000/- only an amount of Rs.18,00,000/- yielded profit of Rs.21,93,755/- and hence only the investments yielded
ITA No. 4630/Del/2016 4 Dhandaai Investment Pvt. Ltd. exempt income should be considered for computation of disallowance under Rule 8D(2)(iii).
The ld. DR argued that the entire investments have to be considered as a single lot for determination of disallowance.
We find that the Special Bench of ITAT Delhi in the case of ACIT Vs. Vireet Investments Pvt. Ltd. [2017 (6) TMI 1124] authored by a Member of this Bench held that only those investments are to be considered for computing the average value of investment which have yielded exempt income during the year. Following the said judgment, we hereby hold that interests of justice would be well served by computing the disallowance @ 0.5% on the average investment of Rs.18,00,000/- (opening balance – Nil) made in M/s Lakshaya Investment only which has yielded the profits. In the result, the disallowance determined by the ld. PCIT stands modified to Rs.45,000/-.
The appeal of the assessee is treated as allowed. Order Pronounced in the Open Court on 31/08/2020.
Sd/- Sd/- (Amit Shukla) (Dr. B. R. R. Kumar) Judicial Member Accountant Member Dated: 31/08/2020 *Subodh* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR