TATA MOTORS LTD ,MUMBAI vs. DY CIT (LTU)-2, MUMBAI

स्थधयी लेखध सं./जीआइआर सं./PAN/GIR No. : AAACT2727Q (अपीलाथी /Appellant) (प्रत्यथी / Respondent) .. Assessee by: Shri Yogesh Khawas Revenue by: Shri V. Justin (DR) सुनवाई की तारीख / Date of Hearing: 04/03/2020 घोषणा की तारीख /Date of Pronouncement: 20/03/2020 आदेश / O R D E R

PER AMARJIT SINGH, JM:

Order passed u/s. 143(3) r.w.s 263 of the Act is invalid and bad in law 1.1 On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in not adjudicating the ground raised by the appellant on the merits of the case on the reason that the main appeal preferred before the Hon'ble ITAT against the order u/s. 263 of the Act is pending for adjudication by the Hon'ble ITAT. Without Prejudice to the above Disallowance of expenses related to Nano Project at Singur Plant: Rs. 43,82,54,995/- 2.1 On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in not adjudicating the ground raised by the appellant on the merits of the case on the reason that the main appeal preferred before the Hon’ble ITAT against the proceedings u/s. 263 of the Act is pending for adjudication by the Hon'ble ITAT.

3. Additional Disallowance u/s. 14A of the Act read with Rule 8D of the Income-tax Rules, 1962: Rs. 24,17,00,000/- 3.1 On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in not adjudicating the ground raised by the appellant on the merits of the case on the reason that the main appeal preferred 2 A.Y. 2009-10 before the Hon'ble ITAT against the proceedings u/s. 263 of the Act is pending for adjudication by the Hon'ble ITAT.

4. Additional Disallowance u/s. 14A read with Rule 8D of the Income Tax Rules, 1962, in computation of Book Profit u/s. 115JB of the Income-tax Act: Rs. 24,17,00,000/- 4.1 On the facts and in the circumstances of the case and in law, the learned CIT(A) failed to appreciate and ought to have held that for the purpose of clause (f) to Explanation 1 of section 115JB(2) of the Act, only actual expense, if any, incurred for earning exempt income and debited to Statement of Profit and Loss account could be added to the book profit as per the provisions of section 115JB of the Act. The learned CIT(A) ought to have considered the Hon’ble Special Bench ruling in the case of ACIT vs Vireet Investments 58 ITR(T) 313 being relied upon by the appellant. 4.2 On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in law and on facts in affirming the action of the AO of making adjustment to book profit in respect of disallowance made u/s. 14A of the Act without appreciating the fact that the mechanism under Section 14A of the Act to compute the disallowance basis Rule 8D, is applicable only for computation of income under Chapter IV of the Act and cannot be applied for the purpose of computation of book profit u/s. 115JB of the Act. 4.3 On the facts and in the circumstances of the case and in law, the learned CIT(A) ought to have appreciated that the provisions of Chapter XII-B of the Act is a separate code in itself and other provisions of the Act does not affect the computation of book profit under Chapter XII-B of the Act and hence the additional disallowance of Rs. 24,17,00,000 computed basis the Rule 8D cannot be imported into while computing the book profit u/s. 115JB of the Act. 4.4 On the fads and in the circumstances of the case and in law, the learned CIT(A) has erred in law and on facts that the AO has not erred in making additional disallowance u/s. 14A of the Act r.w.r. 8D of the Rules in computation of book profit u/s. 115JB of the Act inasmuch as the AO has certainly exceeded its jurisdiction by enhancing the disallowance u/s. 14A r.w.r 8D of the Act while computing book profit u/s. 115JB of the Act in the absence of any specific direction given by the Hon'ble CIT vide order passed u/s. 263 of the Act. 4.5 On the facts and in the circumstances of the case and in law, the learned CIT(A) failed to appreciate and ought to have held that interest on R&D expenditure which is considered for computation of disallowance u/s. 14A of the Act r.w.r. 8D of the Rules was capitalized in books of account and same was not debited to Statement of Profit and Loss account, accordingly the same cannot be added back while computing book profit u/s. 115JB of the Act in the absence of any such adjustment as per Explanation 1 to section 115JB of the Act.”

3. At the very outset, the Ld. Representative of the assessee has argued that the present appeal has been filed against the order passed by the CIT(A) in view of the provisions u/s 143(3) r.w. Section 263 of the Act and the Hon’ble ITAT has quashed the proceeding u/s 263 of the Act by virtue of order dated 03.09.2019, therefore, in the said circumstances, the order in 3 A.Y. 2009-10 question nowhere remains in existence in accordance with law, hence, the appeal has become infructuous. However, on the other hand, the Ld. Representative of the Department has admitted this fact that the proceeding u/s 263 of the Act has been quashed by Hon’ble ITAT by virtue of order dated 03.09.2019. Since the order in question has been accrued in pursuance of order of the AO passed u/s 143(3) r.w. Section 263 of the Act dated 29.07.2016 and the proceeding u/s 263 of the Act has been quashed by Hon’ble ITAT by virtue of order dated 03.09.2019 in ITA. No.3727/M/2016, therefore, proceeding nowhere remains in existence and has become infructuous. Accordingly, the appeal is hereby dismissed being infructuous. Reasons for delay in pronouncement of order 6.1 Before parting, we would like to enumerate the circumstances which have led to delay in pronouncement of this order. The hearing of the matter was concluded on 07/02/2020 and in terms of Rule 34(5) of Income Tax (Appellate Tribunal) Rules, 1963, the matter was required to be pronounced within a total period of 90 days. As per sub-clause (c) of Rule 34(5), every endeavor was to be made to pronounce the order within 60 days after conclusion of hearing. However, where it is not practicable to do so on the ground of exceptional and extraordinary circumstances, the bench could fix a future date of pronouncement of the order which shall not ordinarily be a day beyond a further period of 30 days. Thus, a period of 60 days has been provided under the extant rule for pronouncement of the order. This period could be extended by the bench on the ground of exceptional and extraordinary circumstances. However, the extended period shall not ordinarily exceed a period of 30 days. 6.2 Although the order was well drafted as well as approved before the expiry of 90 days, however, unfortunately, on 24/03/2020, a nationwide lockdown was imposed by the Government of India in view of adverse circumstances created by pandemic covid-19 in the country. The lockdown was extended from time to time which crippled the functioning of most of the government departments including 4 A.Y. 2009-10 Income Tax Appellate Tribunal (ITAT). The situation led to unprecedented disruption of judicial work all over the country and the order could not be pronounced despite lapse of considerable period of time. The situation created by pandemic covid-19 could be termed as unprecedented and beyond the control of any human being. The situation, thus created by this pandemic, could never be termed as ordinary circumstances and would warrant exclusion of lockdown period for the purpose of aforesaid rule governing the pronouncement of the order. Accordingly, the order is being pronounced now after the re-opening of the offices. 6.3 Faced with similar facts and circumstances, the co-ordinate bench of this Tribunal comprising-off of Hon’ble President and Hon’ble Vice President, in its recent decision titled as DCIT V/s JSW Limited (ITA Nos. 6264 & 6103/Mum/2018) order dated 14/05/2020 held as under: - 7. However, before we part with the matter, we must deal with one procedural issue as well. While hearing of these appeals was concluded on 7th January 2020, this order thereon is being pronounced today on 14th day of May, 2020, much after the expiry of 90 days from the date of conclusion of hearing. We are also alive to the fact that rule 34(5) of the Income Tax Appellate Tribunal Rules 1963, which deals with pronouncement of orders, provides as follows: (5)The pronouncement may be in any of the following manners: — (a) The Bench may pronounce the order immediately upon the conclusion of the hearing. (b) In case where the order is not pronounced immediately on the conclusion of the hearing, the Bench shall give a date for pronouncement. (c) In a case where no date of pronouncement is given by the Bench, every endeavour shall be made by the Bench to pronounce the order within 60 days from the date on which the hearing of the case was concluded but, where it is not practicable so to do on the ground of exceptional and extraordinary circumstances of the case, the Bench shall fix a future day for pronouncement of the order, and such date shall not ordinarily (emphasis supplied by us now) be a day beyond a further period of 30 days and due notice of the day so fixed shall be given on the notice board.