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Income Tax Appellate Tribunal, MUMBAI BENCHES “E”, MUMBAI
Before: Shri Shamim Yahya & Shri Pawan Singhand
आदेश / O R D E R Per Shamim Yahya (Accountant Member) This appeal by the Revenue is directed against order of the Ld. CIT(A)-18, Mumbai, dated 29/09/2017 and pertains to Assessment Year 2013-14. The grounds of appeal raised by the Revenue are as under:-
1. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in relying on the decision of the ITAT for Assessment Year 2011-12 in the assessee’s own case. Department had not accepted the decision of Hon’ble ITAT for Assessment Year 2011-12 on merit. However, the appeal was not file because of low tax effect. “2. On the facts and circumstances of the case and in law, the Ld. CIT(A) has ignored the decision given in assessment for the earlier year are not binding either on the assessee or the department in subsequent year. In the decision of radhasaomi Satsang, (2002-TIOL-745-SC-IT) the Hon’ble Supreme Court acknowledged that there is no res judicata as regards assessment orders and assessment for one year may not bind the officer for the next year. This is consistent with view of the Hon’ble Supreme Court “there is no such thing as res judicata in Income Tax matters.
The brief, facts of the case are that the assessee has e- filed its return of income for A.Y. 2013-14 on 26/09/2013 declaring total income of Rs.10,31,30,930/- Further the case was selected for scrutiny hence, notice u/s. 143(2) was issued and served on the assessee. In response to the same, the assessee filed basic details such as copy of return, audit report, profit & loss account, balance sheet and accompanying enclosures. The assessee is engaged in the business of investment and finance. For the relevant year, the assessee has credited to the profit & loss account receipts aggregating to Rs.56,01,85,732/- on account of income from PMS, commission, interest etc. after debiting various expenses such as expenses relating to PMS and other expenses, net profit of Rs.52,15,61,232/- has been debited to the profit & loss account. After claiming exemption in respect of dividend receipts, deduction under Chapter VIA on account of donation u/s. 80G etc., total income of Rs.10,31,30,930/- has been offered for taxation.
In the assessment u/s 143(3), total income is determined at Rs. 10,94,00,380/-.
During the course of assessment proceedings, it was noticed that the appellant had made investments in exempt income yielding assets amounting to Rs. 1,77,03,02,692/- as on 31/03/2013. The ensuing dividend of Rs. 41,87,68,957/- has been claimed as exempt by virtue of Section 10(38) of the Act. In the computation of total income, the assessee has suo moto made disallowance of Rs. 45,028/- u/s. 14A of the Act. In this regard, during the course of assessment proceedings, the assessee was asked to furnish detailed working of the disallowance of Rs. 45,028/- worked out u/s. 14A with respect to expenses incurred in relation to exempt income. From the details submitted by the assessee before the Assessing Officer, it was noticed that the said disallowance has not been worked out in accordance with the method prescribed in Rule 8D of the Income-tax Rules, 1962. Further, it was seen that in the computation of income the assessee has restricted disallowance u/s. 14A to Rs. 45,028/- i.e. 100% of certain expenses debited to the profit & loss account. The assessee contended before the Assessing Officer that only administrative expenses and not portfolio related expenses should he considered for disallowance u/s. 14A of the Act.
However, the AO rejected these contentions and computed disallowance as per Rule-8D amounting to Rs.63,13,100/-.
The assessee filed appeal before the Ld. CIT(A). The Ld. CIT(A) after considering the submissions of the assessee, deleted the additions holding as under:-
“I have perused the assessment order and the submissions made by the Appellant. It is seen that the Appellant has received dividend income of Rs.41,87,68,957/- from investment and claim the same as exempt u/s. 10(34) of the Income Tax Act, 1961. Besides the above, investment has been made in partnership firms. Further, the Appellant has also held certain investments as per portfolio management scheme and treated the same as stock-in-trade. The Assessing officer observed that the appellant has not worked out the disallowance u/s 14A in accordance with Rule 8D and therefore being dissatisfied with the working of the appellant recomputed the disallowance u/s 14A resorting to the method laid down in Rule 8D. On the other hand, the appellant contended that the appellant is a financing company, and has executed portfolio management activities and there are no expenses incurred for the investments made income from which is not taxable. Therefore, apportioning of other expenses debited in the P&L a/c have been considered for computing disallowance u/s 14A in the case of M/s. Viditi Investment Pvt. Ltd. for A.Y. 2011-12. I have perused the order dated 17.12.2015 of the Hon'ble Mumbai ITAT in the case of M/s. Viditi Investment Pvt. Ltd, for A.Y. 2011-12. 1 find that the Hon'ble ITAT had directed the Assessing Officer to restrict the disallowance u/s 14A to the amount of other expenditure debited to P & L A/c following the stand of the Revenue taken for preceding three years the relevant paras of which have been reproduced by the appellant above. 6.3.1 The facts and circumstances in this assessment year are similar to the facts and circumstances of assessment year 2011- 12, Therefore,, respectfully following the maxim laid down by the Hon’ble ITAT in the decision referred Supra, I direct the Assessing Officer to restrict the disallowance made u/s 14A to the extent of ‘other expenses’ debited to the profit & loss account at Rs.67,468/-. Accordingly, ground No.1 to 3 are allowed.”
Against above order revenue is in appeal before us.
We have heard both the counsel and perused the records. We find that in this case the Ld. CIT(A) has followed the earlier tribunal order for the proposition that the disallowance under section 14A cannot exceed the expenditure incurred and booked in this regard. The Revenue is now aggrieved that it has not accepted those ITAT Order’s. We find that it is not the case that those ITAT order’s have any defect or they are reversed by honourable High Court. Just because revenue has not accepted those ITAT order’s the same does not cease to have value as precedent. Since, the issue is covered by the order of ITAT, hence, we do not find any infirmity in the Ld. CIT(A) following the same.
Accordingly, we uphold the order of Ld. CIT(A).
In the result, the appeal by the revenue stands dismissed.
Order pronounced in the Open Court on 24/04/2019
Sd/- Sd/- (Pawan Singh) (Shamim Yahya) �या�यक सद�य / JUDICIAL MEMBER लेखा सद�य / ACCOUNTANT MEMBER मुंबई Mumbai; �दनांक Dated : 24/04/2019 f{x~{tÜ? P.S/.�न.स. आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant (Respective assessee) 2. ��यथ� / The Respondent. 3. आयकर आयु�त(अपील) / The CIT, Mumbai. 4. आयकर आयु�त / CIT(A)- , Mumbai, 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, मुंबई / DR, ITAT, Mumbai 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER, स�या�पत ��त //True Copy//