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Income Tax Appellate Tribunal, “D ”, BENCH MUMBAI
Before: SHRI R.C.SHARMA, AM & SHRI SANDEEP GOSAIN, JM
आदेश / O R D E R PER R.C.SHARMA (A.M): This is an appeal filed by the assessee against the order of CIT(A)- 8 Mumbai dated 27/02/2015 for A.Y.2011-12 in the matter of order passed u/s.143(3) of the Income Tax Act, 1961. 2. Before the Tribunal assessee has filed the addition grounds which reads as under:- “The Appellant most respectfully submits that the following additional grounds of appeal -which are without prejudice to the original grounds of appeal filed: On the facts and in the circumstances of the case and in law, the Appellant prays that the interest income of Rs.1,30,99,452/- earned or accrued during AY 2011-12 on investment made in tax-free bonds issued by India M/s. Enam Asset Management Co. Pvt. Ltd., Infrastructure Finance Co. Ltd., inadvertently offered to tax, be allowed as exempt income u/s. 10(15)(iv) of the Income-tax Act, 1961 and the learned Assessing Officer be directed to reduce the total income accordingly. Without prejudice to Ground no. 1 above, on the facts and in the circumstances of the case and in law, assuming without accepting that the interest income of Rs.l,30,99,452 on investment made in tax-free bonds issued by India Infrastructure Finance Co. Ltd, is not exempted u/s. 10(15)(iv) of the Act, then the Appellant prays that the investment in such tax-free bonds not be considered while computing the amount of "average value of investment, income from which does not or shall not form part of total income" for the purpose of determining disallowance of expenditure in relation to exempt income u/s. 14A read with Rule 8D(2)(ii) and Rule 8D(2)(iii) of the Income-tax Rules, 1962 and the learned Assessing Officer be directed to reduce the total income accordingly.
3. It was contended by learned AR that the assessee invested Rs.25,39,59,863 in bonds issued by India Infrastructure Finance Co. Ltd. ("IIFCL") carrying a rate of interest of 6.85% during TV 2009-10 and FY 2010-11. The interest on such bonds has been exempted u/s. 10(l5)(iv) of the Act vide CBDT notification No. 9/2009 [S.O. 99(E)] dated January 1, 2009. The assessee earned tax-free interest income of Rs.1,30,99,452 on such bonds during FY 2010-11 relevant to AY 2011-12 which was inadvertently offered to tax in the Return of Income for the year under consideration. He invited our attention to the fact that sufficient and relevant materials pertaining to such interest income and investment in the corresponding tax free bonds are available on record, therefore, in view of the decision of Hon’ble Supreme Court in case of National Thermal Power Company Ltd., 229 ITR 383, the additional ground should be accepted and decided on merit. Reliance was also placed on the M/s. Enam Asset Management Co. Pvt. Ltd., decision of Supreme Court in case of Jute Corporation of India Ltd., 187 ITR 688 and Taylor Instrument Co. (India) Ltd., 198 ITR 1.
4. Learned AR also placed reliance on the decision of Hon’ble Bombay High Court in the case of CIT v. Pruthvi Brokers & Shareholders Pvt. Ltd. [2012] 23 taxmann.com 23. 5. We have carefully gone through the decision of Hon’ble Bombay High Court in case of Pruthvi Brokers & Shareholders Pvt. Ltd., wherein it was held that even though deduction was not claimed in the tax return, the assessee is entitled to claim the same before the appellate authorities. The Hon'ble Bombay High Court has also discussed the judgements of the Hon'ble Supreme Court in the case of Jute Corporation of India Ltd. v. CIT (supra.), National Thermal Power Co. Ltd. v. CIT (supra.), Goetze (India) Ltd. v. CIT [2006] 157 Taxman 1 (SC), etc. and made the following observations: "13. The underlined observations in the above passage do not curtail the ambit of the jurisdiction of the appellate authorities stipulated earlier. They do not restrict the new/additional grounds that may be taken by the assessee before the appellate authorities to those that were not available when the return was filed or even when the assessment order was made. The sentence read as a whole entitles an assessee to raise new grounds /make additional claims :- "if the ground so raised could not have been raised at that particular stage when the return was filed or when the assessment order was made...." "or" if "the ground became available on account of change of circumstances or law"
M/s. Enam Asset Management Co. Pvt. Ltd., The appellate authorities, therefore, have jurisdiction to deal not merely with additional grounds, which became available on account of change of circumstances or law, but with additional grounds which were available when the return was filed. The first part viz. "if the ground so raised could not have been raised at that particular stage when the return was filed or when the assessment order was made..." clearly re/ate to cases where the ground was available when the return was filed and the assessment order was made but "could not have been raised" at that stage. The words are "could not have been raised" and not "were not in existence". Grounds which were not in existence when the return was filed or when the assessment order was made fall within the second category viz. where "the ground became available on account of change of circumstances or law."
The facts in Jute Corpn. of India Ltd. (supra) various judgments referred to therein as well as in subsequent cases, which we will refer to, establishes this beyond doubt. In many of the cases, the grounds were, in fact, available when the return was filed and/or the assessment order was made. In Jute Corpn. of India Ltd. (supra) the ground was available when the return was filed. The assessee did not claim any deduction of its liability to pay purchase tax as it entertained a belief that it was not liable to pay purchase tax under the Bengal Raw Jute Taxation Act, 1941. Thus, the ground existed when the return was filed. The assessment order was even made and received by the assessee. It is only after the appeal was filed that the assessee claimed a deduction in respect of the amount paid towards the purchase tax under the said Act. It is also significant to note that the assessee's entitlement to claim deduction had been held to be valid in view of an earlier judgment of the Supreme Court in Kedarnath Jute Mfg. Co, Ltd. v. CIT [1971] 82 ITR 363. This was, therefore, a case of error in perception/judgment. Despite the same, the Supreme Court upheld the decision of the Appellate Assistant Commissioner in allowing the deduction. The words "could not have been raised" must, therefore, be construed liberally and not strictly.
The conclusion that the error in not claiming the deduction in the return of income was inadvertent cannot be faulted for more than one reason. It is a finding of fact which cannot be termed perverse. There is nothing on record that militates against the finding. The appellant has not suggested, much less established that the omission was deliberate, mala- fide or even otherwise. The inference that the omission was inadvertent is, therefore, irresistible.”
In the instant case it is clear from the record that all the facts and figures were available in the record, therefore, additional claim of the assessee deserves to be admitted in view of the decision of the Hon’ble M/s. Enam Asset Management Co. Pvt. Ltd., Supreme Court as well as Hon’ble Bombay High Court in case of Pruthvi Brokers and Shareholders Pvt. Ltd., We observe that such interest income is exempted as per CBDT Notification No.9/2009 dated 07/01/2009. We also observe that the interest earned on bonds issued by IIFCL has been claimed and allowed as 10(15)(iv) of the Act in subsequent years, i.e., in AY 2012-13, AY 2013-14 and AY 2014-15. The facts and law pertaining to the said matter remain the same throughout all the years including the year under consideration. The Revenue Authorities have consistently accepted that the interest earned on bonds issued by IIFCL is exempt u/s. 10(15)(iv) of the Act in the subsequent years. In view of these facts, the principle of consistency is applicable in the instant case and the facts and law remaining the same, a contrary view on the said matter in the year under consideration would result in injustice to the assessee. Accordingly, we direct the AO to allow exemption of interest income of Rs. 1,30,99,452/- u/s. 10(15)(iv) of the IT Act.
Assessee is also aggrieved for disallowance made u/s.14A r.w.Rule 8D2(iii). We observe that AO has taken average investment without reducing there from investment not earning any exempt income. In view of the decision of ITAT Special Bench in case of Vireet Investment, we direct the AO to exclude investment not earning any exempt income while computing disallowance under Rule 8D(2)(iii). We direct accordingly.
M/s. Enam Asset Management Co. Pvt. Ltd., 8. In Ground No.2, assessee is aggrieved for not allowing TDS credit. TDS credit of Rs.2,51,56,066 was allowed as against Rs.2,55,02,956 claimed in the Return of Income i.e., short credit of Rs.3,46,890/-. Accordingly, we direct the AO to give TDS credit of Rs.3,46,890/- after due verification. 9. In the result, appeal of the assessee is allowed in part.