Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, “F”, BENCH MUMBAI
Before: SHRI VIKAS AWASTHY & SHRI G. MANJUNATHA
IN THE INCOME TAX APPELLATE TRIBUNAL “F”, BENCH MUMBAI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ITA No.3708 & 3709/Mum/2018 (Assessment Years :2013-14 & 2014-15) DCIT-5(2)(1) Vs. M/s JSW Infrastructure Ltd. Room No.571, 5th Floor JSW Centre BKC Aaykar Bhawan, M.K.Road Bandra (East) Mumbai-400 020 Mumbai-400 051
PAN/GIR No.AABCJ6721D (Appellant) .. Respondent)
Assessee by Rishabh Shah Revenue by Sushil Kumar Poddar
Date of Hearing 05/11/2019 Date of Pronouncement 08 /11/2019 आदेश आदेश / O R D E R आदेश आदेश PER G.MANJUNATHA (A.M):
These two appeals filed by the revenue are directed against separate, but identical orders of the Commissioner of Income Tax (Appeals) -10, Mumbai, both dated 22/02/2018 for the Assessment Years (AY) 2013-14 and 2014-15. Since, facts are identical and issues are common, for the sake of convenience, these appeals were heard together and are disposed-off by this consolidated order.
ITA No. 3709/Mum/2018:-
The revenue has more or less raised common grounds of appeal for both assessment years. Therefore, for the sake of brevity, grounds of appeal filed for AY 2013-14 are reproduced herein under:-
2 ITA No.3708 & 3709/Mum/2018 M/s. JSW Infrastructure Ltd.
i. Whether on the facts and circumstances of the case and in Law the Ld. CIT(A) erred in not confirming the disallowance made u/s 80IA without appreciating the fact that the assessee made no such claim in its return u/s 139(1) which was mandatory in view of the provisions of section 80A(5) read with section 80AC. ii. Whether on the facts and in the circumstances of the case and in law the Ld.CIT(A) was justified in deleting the addition made under Rule 8D(2) of the Income Tax Rules, 1962 holding that no exempt income has been earned, during the year without appreciating the fact that CBDT after analyzing section 14A vis-à-vis Rule 8D has clarified in circular no.5/2014 dated 11.02.2014 that ‘Rule 8D read with section 14A of the Income tax Act, 1961 provides for disallowance of the expenditure even where taxpayer in a particular year has not earned any exempt income. iii. Whether on the facts and circumstances of the case and I Law the Ld.CIT(A) erred in not confirming the disallowance made u/s 14A r.w.s. 8D to Boo Profit as per clause (f) to Explanation 1 u/s 115JB of the Income Tax Act, 1961 overlooking the judgment of Hon’ble Delhi High Court in the case of CIT (Central Circle-II) Vs. Goetz (India) Ltd in ITA No.1179+/2010, dated 09.12.2013 1. The appellant prays that the order of the Ld.CIT(A) be set aside and the order of the AO be restored. 2. The appellant craves leave to amend or alter any ground or add any other grounds which may be necessary.
Brief facts of the case are that the assesse company is engaged in the business of developing and operating mechanized modern ports. It also provides project management and consultancy services to its subsidiaries for developing port facilities for which it receives consultancy income. The assessee has filed its return of income for AY 2013-14 on 29/11/2013, declaring total income of Rs.16,69,00,180/- under normal provisions of the Act, and book profit of Rs.51,66,41,582/- under the provision of section 115JB of the I.T.Act,1961. The assessee has claimed deduction u/s 80IA of Rs. 37,18,20,551/-, in respect of profits of its Goa undertaking in original return filed u/s 139(1) of the I.T.Act, 1961. Subsequently, the assesee has filed revised return u/s 139(5) and has claimed additional deduction u/s 80IA of the Act, for Rs. 11,28,18,375/-, in
3 ITA No.3708 & 3709/Mum/2018 M/s. JSW Infrastructure Ltd.
respect of profits and gains of its Jaigarh undertaking. The case was selected for scrutiny and during the course of assessment proceedings, the Ld. AO noticed that the assessee has made additional claim of deduction u/s 80IA of Rs.11,28,18,375/- in respect of profits and gains of Jaigarh undertaking and such claim has been made in the revised return without making any claim in original return therefore, he opined that deduction claimed u/s 80IA is not available in view of specific provision of section 80A(5) r.w.s. 80AC of the I.T.Act, 1961. While doing so, the Ld. AO has relied upon the decision of ITAT, Mumbai Bench, in the case of Dwarakadas G. Panchmatiya Vs ACIT (2015) 153 ITD 625, where it was held that as per the provision of section 80AC, before claiming deduction of any income filing of return before the due date specified u/s 139(1) is mandatory and not directory. Therefore, rejected additional claim of deduction u/s 80IA of Rs.11,28,18,375/- in respect of profits of Jaigarh undertaking. Similarly, the Ld. AO has made additions towards disallowance of expenditure incurred in relation to exempt income u/s 14A by invoking provisions of Rule 8D(2) of I.T.Rules 1962 and determined total disallowances of Rs.13,30,85,624/- under the provisions of Rule 8D(2)(ii) & (iii) of I.T.Rules 1962.
Aggrieved by the assessment order, the assessee preferred an appeal before the Ld.CIT(A). Before the Ld.CIT(A), the assessee has challenged additions made by the Ld. AO towards disallowance of deduction claimed u/s 80IA, in respect Jaigarh undertaking, in light of certain judicial precedents. The assessee has also challenged additions made by the AO towards disallowances of expenditure incurred in relation to exempt income u/s 14A, on the
4 ITA No.3708 & 3709/Mum/2018 M/s. JSW Infrastructure Ltd.
ground that the assesee has not earned any exempt income for the year under consideration and hence, no disallowance could be made towards expenditure incurred in relation to exempt income. The Ld.CIT(A) after considering relevant submissions of the assessee and also by relied upon various judicial precedents, including in the decision of ITAT, Chennai Bench, in the case of ACIT vs Precot Meridian Limited (2014) 148 ITD 229 deleted additions made by the AO towards disallowances of deduction claimed u/s 80IA of the I.T.Act, 1961 by holding that a plain reading of section 80AC makes it clear that from the AY 2006-07 on wards deduction claimed u/s 80IA shall not be allowed, unless the assessee furnished a return on or before the due date specified under sub section (1) of section 139, but nowhere in the section, it was provided that unless, the assessee makes a claim in its return filed u/s 139(1), the said claim is allowable. We, further observed that when, assessee filed original return within due date specified u/s 139(1) and subsequently files a revision return under the provision of section 139(5) to rectify any omission or any wrong statement made in the return filed u/s 139(1), the same can take the character of original return and hence, the assessee entitled for additional deduction claimed u/s 80IA of the I.T.Act, 1961. The relevant findings of the CIT(A) are as under:-
6.3 1 I have considered the submission of the appellant, carefully gone through the order of the AO, perused the material on record, and referred to the case laws relied upon by the appellant and the AO. 6.3.2 In this regard, f find that The Hon'ble Chennai Tribunal in the case of ACIT vs Precot Meridian Limited dismissed revenue's appeal by holding that "7. With regard to the submission of the Departmental Representative that in view of the provisions of section 80AC,
5 ITA No.3708 & 3709/Mum/2018 M/s. JSW Infrastructure Ltd.
unless the assessee files return under section 139(1) claiming deduction under section 80A, such claim is not allowable, we are not inclined to accept this view for the following reasons:- 8. We reproduce the provisions of section 80AC for better understanding -"80AC. Where in computing the total income of an assessee of the previous year relevant to the assessment year commencing on the 1st day of April, 2016 or any subsequent assessment year, any deduction is admissible under section 80-IA or section 801-IAB or section 80-IC [or section 80-ID or section 80- IE], no such deduction shall be allowed to him unless he furnishes a return of his income for such assessment year on or before the due date specified under sub-section (1) of section 139.]" 9. A plain reading of section 80AC makes it clear that from the assessment year 2006-07, deduction claimed under section 80IA/80IB/80IC/80ID/80IE shall not be allowed unless the assessee furnishes a return ort or before due date specified under of sub-section (1) of section 139. Nowhere in the section it was provided that unless the assessee makes a claim in its return filed under section 139(1). The said claim Js allowable. The section does not speak of a claim to be made in the return filed under section 139(1). The section speaks_ of filing a return within the, time specified under section 139(1) and nothing else. Here the assessee fifed a return under section 139(1) within due date specified but no claim was made under section 80IA in such return. However, a revised return was filed under section 139(5) on 30.03.2010 claiming deduction under section 80IA at 37,27928/.r The section says unless the assessee files a return under section 139(10 within The due date, deduction under section 80IA/80IB/80IC/80ID/80IE shall not be allowed and at the same time section 139(5) provides for filing a revised return, when the assessee discovers any omission or any wrong statement made in the return already filed under sub-section (1) of Section 139 or return filed under sub-section(1) of section 142. This revised return can be fifed at any time before expiry of one year from the end of the relevant assessment year or before the completion of assessment, whichever is earlier". 10. In the case of the assessee, it had filed a revised return on 30/03/2010 which is before expiry of one year from the relevant assessment year and therefore the return filed is a valid return as per the provisions section 139(5), as the original return was filed under section 139111 within due date prescribed. Ln fact the assessee complied with the provisions of section 80AC of the Act by filing its original return on 29/09/2008 which is within the due date specified under section 139(1) of the Act. In view of our above observations, the submission of the Departmental Representative that since the assessee had not made any claim in its original return filed under section 139(1), no deduction is allowable under section 80IA of the Act, in view of the provisions of
6 ITA No.3708 & 3709/Mum/2018 M/s. JSW Infrastructure Ltd.
section 80AC, has no force. In the circumstances, we sustain the order of the Commissioner of Income Tax (Appeals) in allowing tie claim of the assessee under section BOIA of the Act.' 6.3.3 The appellant has also brought to my notice the decision of the Hon'ble Mumbai Tribunal in the case Kamdhenu Builders & Developers vs. Additional Commissioner of income Tax dated 27/01/2016 wherein observing with reference To deduction u/s 80IB(10) that "Section 80A(5) only requires filing of return, nowhere it suggests that claim should be made in the original return and not by way of revised return. When the original return of income has been filed well within the due date, the revised return filed thereafter before the completion of assessment proceedings, is a valid return of income to be considered by the AO. The assessee has Been given opportunity to file revised return u/s. 139(4) for removal of the any defect in the original return." and that "both the original return was filed well within the time limit prescribed under the law and the revised return filed before the AO completing the assessment that the assessee has fulfilled all the conditions u/s 80IB(10), therefore, entitled for deduction in respect of-housing project." allowed assessee's claim for deduction u/s.80IB(10) of The Act. 6.3.4 It is also observed Further that the Hon'ble Kolkata Tribunal in the case DCIT vs Mackintosh Burn Ltd wherein the assessee has filed revised return and claimed deduction u/s 80IA, has held that "Since The assessee had filed its return of income before the due date specified u/s. 139(1) of the Act for the relevant year, the question of denying the benefit u/s 80IA of the Act does not arise." 6.3.5 In the present case The appellant had filed its original return of income on 29/11/2013 claiming a deduction u/s 80IA of Rs. 37,1320,551/- and the return was revised on 30/12/2014 claiming an enhanced deduction of Rs. 48,46,38,926/- (Difference being additional claim of Jaigarh undertaking). The original return was filed well within the time limit prescribed under the law and the revised return filed before the AO completing the assessment Hence, the decision of Mumbai Tribunal in the case of Dwarkadas G. Panchatiya vs. ACIT-25(1), is distinguishable on facts since in that case the assessee had failed to file a valid return of income u/s. 139(1) within the time limits and hence it was held that the requirement of law i e. section 80AC rw s. 139{1) & 139(1B) was not satisfied.
6.3.6 Thus The facts of the case in the present case are identical to the facts of the case before the Hon'ble Tribunals as discussed above. Therefore the appellant is eligible for deduction u/s 80IA of the Act. The Hon'ble Supreme Court in The case of Anchor Pressings (P) Ltd vs CIT (1986) 161 ITR 159 has held that if on the basis of material placed on the record, the assessee s entitled to claim any deduction but forget to make his claim in the return or in the course of assessment proceedings then assessee is entitled to make such claim by moving application under section 154 for rectification since non-grating of deduction/exemption would amount to mistake apparent from record.
7 ITA No.3708 & 3709/Mum/2018 M/s. JSW Infrastructure Ltd.
Insofar as, disallowance of expenditure incurred in relation to exempt income u/s 14A, the Ld.CIT(A) by following the decision of Hon’ble Delhi High Court, in the case of Joint investment Private Limited vs CIT (215) 372 ITR 694 held that disallowance contemplated u/s 14A cannot shallow entire exempt income earned for the year under consideration. Further, when assesee has not earned any exempt income for the year under consideration, the question of disallowances of expenditure incurred in relation to such exempt income does not arise and accordingly, deleted additions made by the AO towards disallowances of expenditure incurred in relation to exempt income. Aggrieved by the Ld.CIT(A) order, the revenue is in appeal before us.
First issue that came up for our consideration from ground No.1 of revenue appeal is deduction claimed u/s 80IA, in respect of Jaigarh unit. The facts with regard to the impugned disputes are that the assessee has filed original return u/s 139(1) and claimed deduction u/s 80IA, in respect of GOA unit. Subsequently, the assesse has filed a revised return within time specified u/s 139(5) and made additional claim of deduction u/s 80IA for Rs.11,28,18,375/-, in respect of Jaigarh unit. The Ld. AO has disallowed additional claim of deduction u/s 80IA only on the ground that said claim was not made in the original return filed u/s 139(1) and in view of specific provision of section 80A(5) r.ws. 80AC, any deduction claimed without filing return on or before the due date specified u/s 139(1) shall not be allowed.
8 ITA No.3708 & 3709/Mum/2018 M/s. JSW Infrastructure Ltd.
The Ld. DR submitted that the Ld.CIT(A) was erred in deleting the additions made by the Ld. AO towards disallowances of deduction claimed u/s 80IA of the I.T.Act, 1961 without appreciating and understanding the provisions of section 80AC that if, the findings of the Ld.CIT(A) are accepted, then the purpose of introduction of provision of section 80AC in the statue book is defeated. The Ld. DR, further submitted that although, the ld.CIT(A) has followed few decisions of the Ld. ITAT to come to the conclusion that nowhere, in the section mandates that deduction should be claimed in the return filed, but if you go through the provision of section 80AC, the main purpose behind insertion of said provision into the statue book is to deny the benefit or deduction, if the person claims said deduction without filing return within due date specified u/s 139(1) of the I.T.Act, 1961. He further submitted that the Ld.CIT(A) without considering these aspects deleted additions made by the AO, on the ground that once, return has been filed u/s 139(1), then the assesee can claim deduction by filing revised return within due date specified u/s 139(5) of the I.T.Act, 1961.
The Ld. AR for the assesse, on the other hand, strongly supporting order of the Ld.CIT(A) submitted that the issue is squarely covered in favour of the assessee by the decision of ITAT in number of case, where the law has been explained in light of provision of section 80AC and held that as per the provision of section 80AC filing of return within due date specified u/s 139(1) is mandatory, but there is no stipulation as to claiming deduction in the return of income, as long as, the claim is within due date specified under sub section (5) of section 139, then the assessee is entitled for deduction u/s 80IA of the I.T.Act, 1961. The Ld.CIT(A) after
9 ITA No.3708 & 3709/Mum/2018 M/s. JSW Infrastructure Ltd.
considering relevant facts has rightly deleted additions made by the AO towards disallowances of deduction claimed u/s 80IA and his order should be upheld.
We have heard both the parties, perused the material available on record and gone through orders of the authorities below along with case laws cited by both parties. We find that the Ld.CIT(A) has recorded categorical finding, in light of provision of section 80AC and held that nowhere, in the section, it was provided that unless, the assesee makes a claim in its return filed u/s 139(1), the said claim is allowable. We further observed that as per provision of section 80AC, it is mandatory for the assessee to file return of income on or before due date specified u/s 139(1) to claim the benefit of any deduction provided u/s 80IA/80IB/80IC/80D and 80IE, but nowhere in the said section, it was provided that unless, the assessee makes claim for deduction in the return filed u/s 139(1), the said claim is allowable. We further noted that the Ld.CIT(A) recorded categorical finding, in light of the decision of ITAT Chennai bench , in the case of ACIT vs Precot Meridian Ltd. (supra), where it was held that, once original return is filed u/s 139(1) within due date specified under the Act, then any deduction claimed in the revised return filed within due date specified u/s 139(5) shall be allowed. We, further noted that the Ld.CIT(A) had also taken a support from the decision of ITAT, Mumbai bench, in the case of Kamadhenu Builders & Developers vs Addl.CIT, where it was observed that section 80A(5) only requires filing of return, but nowhere it suggest that claim should be made in the original return and not by way of original return, further when the original return of income was filed within the due date, then the revised return filed, thereafter before completion of assessment
10 ITA No.3708 & 3709/Mum/2018 M/s. JSW Infrastructure Ltd.
proceedings is to be considered by the AO, because the Act has been given opportunity to the assessee to file revised return u/s 139(4) for removal of any defect or any omissions in the original return and that if both the returns were filed within time limit prescribed under the law, then conditions prescribed u/s 80IB (10) of the I.T.Act, 1961are fulfilled. In this case, the assessee has filed a return u/s 139(1) within due date specified date, but the claim for deduction u/s 80IA, in respect of second unit was not made, however a revised return was filed u/s 139(5) within due date specified under the Act and made additional claim for deduction, in respect of second unit. When original return was filed within due date specified u/s 139(1), then any revised return filed within the due date specified u/s 139(5) to rectify any mistakes or omissions or wrong statements made in the return already filed u/s 139(1), then the revised return takes, the nature of the original return filed within due date specified u/s 139(1) and consequently, the assessee fulfills the conditions prescribed u/s 80AC of the Act, in order to be eligible for deduction u/s 80IA of the I.T.Act, 1961. The Ld.CIT(A) after considering relevant facts has rightly deleted additions made by the AO towards disallowances of deduction claimed u/s 80IAof the I.T.Act 1961. We do not see any reasons to interfere in the order of the Ld.CIT(A) and hence, we are inclined to uphold the findings of the Ld.CIT(A) and reject ground taken by the revenue.
The next issue that came up of our consideration from ground No.2 of revenue appeal is disallowance of expenditure incurred in relation to exempt income. We find that the Ld.CIT(A) has recorded categorical findings, in light of the decision of Hon’ble Delhi High Court in the case of Joint Investment Pvt.Ltd.vs CIT (2015) 372 ITR
11 ITA No.3708 & 3709/Mum/2018 M/s. JSW Infrastructure Ltd.
694 and held that disallowance contemplated u/s 14A cannot exceed the amount of exempt income and further, it was held in the case of CIT vs Holcim India Pvt.Ltd.(2014) 90 CCH 81 that there can be no disallowance u/s 14A in the absence of any exempt income. We find that the Ld. DR for the revenue did not dispute the fact that there is no exempt income earned for the year under consideration. When there is no exempt income, the question of disallowance of expenditure incurred in relation to said exempt income does not arise. This legal proposition is supported by the decision of Hon’ble Bombay High Court in the case of CIT vs M/s. Ballarpur Industries Ltd. in ITA no.51 of 2016, where it was categorically held that provision of section 14A of the I.T.Act, 1961 would not apply, in case, there is no exempt income was received or receivable during the relevant previous year. Further, the Hon’ble Supreme Court, in the case of CIT vs Chettinad Logistics Pvt.Ltd.(2018) 257 taxmann.com 2 (SC), while dismissed SLP filed by the revenue held that section 14A cannot be invoked, where no exempt income earned by the assessee in relevant assessment year. Therefore, we are of considered view that there is no error in the findings recorded filed by CIT(A), while deleting additions made towards disallowances of expenditure incurred in relation to exempt income . Hence, we are inclined to uphold the findings of Ld.CIT(A) and reject, the ground taken by the revenue.
The next issue that came up of our consideration from ground No.3 of revenue appeal is re-computation of book profit u/s 115JB of the I.T.Act 1961, in respect of disallowance of expenditure incurred in relation to exempt income u/s 14A of the I.T.Act, 1961. We find that the Ld.CIT(A) has deleted adjustments made by the AO to book
12 ITA No.3708 & 3709/Mum/2018 M/s. JSW Infrastructure Ltd.
profit computed u/s 115JB of the I.T.Act, 1961, in respect of 14A disallowances by following the decision of Hon’ble Bombay High Court in the case of CIT vs Bengal Finance and Investments Pvt.Ltd. in ITA No. 337 of 2013, where it was held that amount disallowed u/s 14A of the Act, cannot be added to arrive at book profit for purpose of section 115JB of the Act,1961. Further, the Ld.CIT(A) had also relied upon the decision of ITAT special bench, Delhi,in the case of ACIT vs Vireet Investment Pvt.Ltd. 82 taxmann.com 415, where it was held that computation under clause (f) of Explanation (1) to section 115JB(2) is to be made without resorting to computation as contemplated u/s 14A r.w.s.Rule 8D. We find that the finding of facts recorded by the Ld.CIT(A), in light of above two decisions is in accordance with law and does not called for any interference from our side and hence, we are inclined to uphold the findings of Ld.CIT(A) and reject ground taken by the revenue.
In the result, appeal filed by the revenue is dismissed.
ITA No.3708/Mum/2018
The revenue has raised the following grounds of appeal. i. Whether on the facts and in the circumstances of the case and in law the Ld.CIT(A) was justified in deleting the addition made under Rule 8D(2) of the Income Tax Rules 1962 holding that no exempt income has been earned, without appreciating the fact that CBDT after analyzing section 14A vis-à-vis Rule 8D has clarified in circular no.5/2014 dated 11.02.2014 that ‘Rule 8D read with section 14A of the Income –tax Act, 1961 provides for disallowance of the expenditure even where taxpayer in a particular year has not earned any exempt income. ii. Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) erred in not confirming the disallowance made u/s 14A r.w.r. 8D to Book Profit as per clause (f) to Explanation 1 u/s 115JB of the Income Tax Act 1961 overlooking the judgment of Hon’ble Delhi
13 ITA No.3708 & 3709/Mum/2018 M/s. JSW Infrastructure Ltd.
High Court in the case of CIT (Central Circle-II) vs. Goetz (India) Ltd in ITA No.1179/2010 dated 09.12.2013. 1. The appellant prays that the order of the Ld.CIT(A) be set aside and the order of the AO be restored. 2. The appellant craves leave to amend or alter any ground or add any other grounds which may be necessary.
The facts and issues involved in this appeal is relates to disallowances of expenditure incurred in relation to exempt income u/s 14A r.w.Rule 8D of I.T.Rules 1962 and further, adjustments to book profit computed u/s 115JB of the I.T.Act, 1961, in respect of disallowances made u/s 14A of the I.T.Act, 1961. We find that similar issue has been decided by us in ITA No.3709/Mum/2018 for AY 2013-14. The reasons given by us in preceding paragraph shall mutatis mutandis apply to this appeal also. Therefore, for similar reasons, we are inclined to uphold the order of the Ld.CIT(A) and dismissed appeal filed by the revenue.
As a result, both appeals filed by the revenue are dismissed.
Order pronounced in the open court on this 08 /11/2019
Sd/- Sd/- (VIKAS AWASTHY) (G. MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated 08 /11/2019 Thirumalesh Sr.PS Copy of the Order forwarded to : The Appellant 1. The Respondent. 2. The CIT(A), Mumbai. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. 6.
14 ITA No.3708 & 3709/Mum/2018 M/s. JSW Infrastructure Ltd.
स�यािपत �ित //True Copy// BY ORDER,
(Asstt. Registrar) ITAT, Mumbai