UTI INFRASTUCTURE TECHNOLGOY AND SERVICES LTD,MUMBAI vs. DCIT 10(3), MUMBAI

PDF · subscribers
ITA 1033/MUM/2016Status: HeardITAT Mumbai27 April 2018AY 2011-1210 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal dismissed all grounds raised by the assessee. Regarding Ground No. 1, the Tribunal upheld the CIT(A)'s finding that the AO had made the disallowance strictly as per Rule 8D and the assessee had not provided any information or rebutted the calculation of average investments. The disallowance upheld was Rs. 22,15,988/-. For Ground No. 2, the Tribunal agreed with the CIT(A) that the AO had rightly treated the amount as a mere provision and that the AO had rectified the additions. The Tribunal found no new facts or contrary judgments to deviate from the CIT(A)'s findings. On Ground No. 3, the Tribunal affirmed the CIT(A)'s decision to add rent income as business income, relying on the Supreme Court judgments in Shambu Investments Ltd. and Chennai Properties & Investment, and noting that the tax audit report included 'renting activities' in the assessee's business. For Ground No. 4, the Tribunal concurred with the CIT(A) that expenses must be accounted for in the year to which they pertain, and the assessee failed to prove these were for prior period income. The Tribunal found the CIT(A)'s findings judicious and well-reasoned for all grounds. Grounds 5 and 6 were considered general and required no specific adjudication. The appeal was dismissed.

What were the facts?

The assessee, UTI Infrastructure Technology and Services Ltd., filed an appeal before the Income Tax Appellate Tribunal (ITAT), Mumbai, challenging the order of the Commissioner of Income Tax (Appeals)-24, Mumbai, for Assessment Year 2011-12. The assessee is a Government Company engaged in various services including renting of immovable property. The Assessing Officer (AO) had made additions to the income, which were partly allowed by the CIT(A). The assessee raised grounds relating to disallowance under Section 14A, provision for excess processing SUUTI, addition of rent income, and disallowance of prior period expenses. The appeal was heard ex-parte as the assessee's representative did not appear.

What were the issues?

The Income Tax Appellate Tribunal had to decide the following questions: 1. Whether the disallowance of Rs. 14,75,806/- under Section 14A read with Rule 8D by the CIT(A) was justified. 2. Whether the disallowance of Rs. 2,06,27,007/- being provision for excess processing SUUTI by the CIT(A) was correct. 3. Whether the addition of Rs. 43,38,769/- as Rent Income and treating it as Business Income by the CIT(A) was erroneous. 4. Whether the disallowance of Rs. 18,26,702/- being prior period expenses by the CIT(A) was justified. Assessee's contentions (as per grounds of appeal): The assessee contended that the CIT(A) erred in disallowing Rs. 14,75,806/- under Section 14A, disallowing Rs. 2,06,27,007/- as provision for excess processing SUUTI, adding Rs. 43,38,769/- as rent income and treating it as business income, and disallowing Rs. 18,26,702/- as prior period expenses. The assessee also sought a stay on recovery proceedings. Revenue's contentions: The Revenue, through the Learned DR, argued in support of the orders passed by the lower authorities. No specific authorities or precedents were mentioned by the Revenue in the judgment.

Which sections of the Income-tax Act were involved?

Section 14A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “F”

Before: SHRI SANDEEP GOSAIN, JM & SHRI N. K. PRADHAN, AM

For Appellant: Ms. Pooja Swaroop, DR i 26/04/2018

आदेश / O R D E R

Per Sandeep Gosain, Judicial Member:

1.

The present Appealfiled by the assesseeis against the order of Commissioner of Income Tax (Appeals)-24, Mumbai, dated 31.12.15 for AY 2011-12 on the grounds mentioned herein below:-

UTI Infrastructure Technology and Services Ltd. 1) The Learned Commissioner of Income Tax (Appeals) has erred in disallowing a sum of Rs. 14,75,806/- u/s 14A as per rule 8D.

2) The Learned Commissioner of Income Tax (Appeals) has erred in disallowing a sum of Rs. 2,06,27,007/- being provision for excess processing SUUTI (foreclosure).

3) The Learned Commissioner of Income Tax (Appeals) has erred in adding a sum of Rs. 43,38,769/- as Rent Income and treated as Business Income ignoring the facts and material placed on record and wrongly arriving at income figure.

6) The Learned Commissioner of Income Tax (Appeals) has erred in disallowing a sum of Rs. 18,26,702/- being prior period expenses.

7) Recovery proceedings for recovery of demand raised maybe stayed

8) The Appellant reserves the right to add, to delete and / or amend any of the foregoing grounds..

2.

At the very outset, it is noticed that none has appeared on behalf of assessee in spite of several calls and even no UTI Infrastructure Technology and Services Ltd. application for adjournment was moved. On the other hand Ld. DR is present in the court and is ready with arguments. Therefore we have decided to proceed with the hearing of the case ex-parte with the assistance of the Ld. DR and the material placed on record.

3.

As per the facts of the present case, the assessee is as Government Company as per the Companies Act, 1956 and engaged in the business of services like services ion the capacity of Registrar and transfer agent, issuance of PAN/EPIC/DL, cards on behalf of the government, real estate agent, consulting engineer, interior decorators, architect maintenance or repairs, management consultant, technical inspection & certification services and renting of immovable property service. The return of income was e-filed on 26.09.11 declaring total income of Rs. 38,79,24,680/-. Subsequently, the case was selected for scrutiny and after serving statutory notice and seeking reply, order of assessment u/s 143(3) was passed by AO thereby making addition.

UTI Infrastructure Technology and Services Ltd. Aggrieved by the order of AO, assessee preferred appeal before Ld. CIT(A) and Ld. CIT(A) after considering the case of both the parties, partly allowed the appeal of the assessee. Now before us, the assessee has preferred the appeal by raising the above grounds.

Ground No. 1. 4. This groundraised by the assesseerelates to challenging the order of Ld. CIT(A)in disallowing a sum of Rs. 14,75,806/- u/s 14A as per rule 8D.

5.

We have heard Ld. DR and we have also perused the material placed on record as well as the orders passed by revenue authorities. We find that Ld. CIT(A) has dealt with the above grounds raised by the assessee in para no. 2.4.1 & 2.4.2 ofits order. After having gone through the order passed by Ld. CIT(A), we find that Ld. CIT had rightly concluded that AO had made the disallowance strictly as per Rule 8D and since the assessee had not provided any information or rebutted the calculation made by Ld. AO in respect of average amount of UTI Infrastructure Technology and Services Ltd. investments. Therefore, in such circumstances, we are of the view that Ld. CIT(A) has rightly upheld the order passed by the AO in respect of disallowance of Rs. 22,15,988/-. Moreover, no new facts or contrary judgments have been brought on record before us in order to controvert or rebut the findings so recorded by Ld CIT (A). Therefore, there are no reasons for us to interfere into or deviate from the findings recorded by the Ld. CIT (A). Hence, we are of the considered view that the findings so recorded by the Ld. CIT (A) are judicious and are well reasoned. Resultantly, this grounds raised by the assessee stands dismissed.

Ground No. 2. 6. This ground raised by the assessee relates to challenging the order of Ld. CIT(A) in disallowing a sum of Rs. 2,06,27,007/- being provision for excess processing SUUTI.

7.

We have heard Ld. DR and we have also perused the material placed on record as well as the orders passed by revenue authorities. We find that Ld. CIT(A) has dealt with the above

UTI Infrastructure Technology and Services Ltd. ground raised by the assessee in para no. 2.4.3 of its order. After having gone through the order passed by Ld. CIT(A), we find that Ld. CIT had rightly upheld the order of AO and concluded that AO had made the disallowance as he found that it was merely a provision. And while doing so, Ld. CIT(A) had considered the order sheet noting dated 28.12.15, wherein it was reflected that the AO had already rectified the additions made and hence, considering the above fact, the said ground was rightly dismissed by Ld. CIT(A) thereby upholding the order of AO. Moreover, no new facts or contrary judgments have been brought on record before us in order to controvert or rebut the findings so recorded by Ld CIT (A). Therefore, there are no reasons for us to interfere into or deviate from the findings recorded by the Ld. CIT (A). Hence, we are of the considered view that the findings so recorded by the Ld. CIT (A) are judicious and are well reasoned. Resultantly, this grounds raised by the assessee stands dismissed.

UTI Infrastructure Technology and Services Ltd. Ground No. 3. 8. This ground raised by the assessee relates to challenging the order of Ld. CIT(A) in adding a sum of Rs. 43,38,769/- as Rent Income and treated as Business Income ignoring the facts and material placed on record and wrongly arriving at income figure.

9.

We have heard Ld. DR and we have also perused the material placed on record as well as the orders passed by revenue authorities. We find that Ld. CIT(A) has dealt with the above ground raised by the assessee in para no. 2.4.4 & 2.4.5 of its order. After having gone through the order passed by Ld. CIT(A), we find that Ld. CIT(A) while relying upon the judgment of Hon’ble Supreme Court in the case of Shambu Investments Ltd. 249 ITR 47 and Chennai Properties & Investment Vrs. Cit (TS-238-SC-2015)/(2015) 56 taxmann.com456(SC) had rightly upheld the order of AO and also after appreciating the fact that AO had made the addition as he found that as per tax audit report, the business of the assessee company included ‘renting activities’.

UTI Infrastructure Technology and Services Ltd. Moreover, no new facts or contrary judgments have been brought on record before us in order to controvert or rebut the findings so recorded by Ld CIT (A). Therefore, there are no reasons for us to interfere into or deviate from the findings recorded by the Ld. CIT (A). Hence, we are of the considered view that the findings so recorded by the Ld. CIT (A) are judicious and are well reasoned. Resultantly, this grounds raised by the assessee stands dismissed.

Ground No. 4 (wrongly numbered as Gr. No. 6). 10. This ground raised by the assessee relates to challenging the order of Ld. CIT(A) in disallowing a sum of Rs. 18,26,702/- being prior period expenses.

11.

We have heard Ld. DR and we have also perused the material placed on record as well as the orders passed by revenue authorities. We find that Ld. CIT(A) has dealt with the above ground raised by the assessee in para no. 2.4.9 & 2.4.10 of its order. After having gone through the order passed by Ld. CIT(A), we find that Ld. CIT had rightly upheld the order of UTI Infrastructure Technology and Services Ltd. AOafter appreciating the fact that as per accounting principles, any income or expenditure has to be charged and brought to tax or allowed only in the year of business to which it pertains. Since the assessee has not been able to prove that these expenses were provided for to meet the prior period income, therefore the said ground was rightly dismissed by Ld. CIT(A). Moreover, no new facts or contrary judgments have been brought on record before us in order to controvert or rebut the findings so recorded by Ld CIT (A). Therefore, there are no reasons for us to interfere into or deviate from the findings recorded by the Ld. CIT (A). Hence, we are of the considered view that the findings so recorded by the Ld. CIT (A) are judicious and are well reasoned. Resultantly, this grounds raised by the assessee stands dismissed.

Ground No. 5 & 6 (wrongly number as Gr. No. 7 & 8) 12. These grounds are general in nature, thus requires no specific adjudication.

More judgments on Section 14A

All 15,875 judgments and leading authorities on Section 14A →

Recent GST High Court judgments

Search GST case law →