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Income Tax Appellate Tribunal, “L” BENCH, MUMBAI
Before: SHRI SHAMIM YAHYA, AM & SHRI SANDEEP GOSAIN, JM
O R D E R Per Shamim Yahya, A. M.: This appeal by the assessee is directed against order of the ld. Commissioner of Income Tax (Appeals)-52, Mumbai dated 30.06.2016 and pertains to assessment year 2011-12.
2. The grounds of appeal read as under: 1. The learned CIT (A) erred in not admitting the additional grounds relating to disallowance u/s I4-A holding that the said disallowance was in the original
(A.Y. 2011-12) M/s. Saryu Properties and Hotels Pvt. Ltd. vs. DCIT assessment order dated 30.12.2013. And appellant should have included appeal on this point against the original assessment order dated 30.12.2013 in the appeal should have.
The learned CIT (A) erred in not condoning the delay in filing appeal on this point.
3. The learned CIT (A) erred in not deleting the disallowance of Rs. 72.72,6987- made by the Assessing Officer u/s 14-A of the Income Tax Act.
4. The learned CIT (A) failed to take into account the following facts. a) Investment in shares and in capital contribution in the partnership firm was less than funds available in share capital and reserve and surplus. b) During the relevant year appellant had not received any exempted income either as dividend or share of pro fit from the firm.
5. The learned CIT(A) erred in not taking into account the following decisions on the point of Jurisdictional High Court:
a) CIT vs. HDFC Bank Ltd. 366 1TR 505 (BOM) b) CIT vs. Reliance Utilities and Power 313 1TR 340 (BOM) c) HDFC vs. DCIT 383 ITR 529 (BOM)
6. The learned CIT(A) erred in not taking into account following decisions holding that disallowance u/s 14(A)cannot exceed exempted income
i) DAGA Global Chemicals vs ACIT-1TA No. 5592/M/12 dated 02.02.2013 ii) Sahara India Fin. Corp. vs DCIT (2014)-105 DTR 1 (DEL) iii) CIT vs Gujarat Narmade Valley-221 Taxman 479 (GUJ)
It is prayed that the additional grounds relating to disallowances u/s 14-A may be admitted and the disallowance of Rs.72.72.698/- made by the Assessing Officer u/s 14-A be deleted.
In this case, the assessee appealed before the ld. Commissioner of Income Tax (Appeals) against the reassessment order passed by the assessing officer dated 15.02.2016.
(A.Y. 2011-12) M/s. Saryu Properties and Hotels Pvt. Ltd. vs. DCIT 4. During the course of appellate proceedings, the assessee raised revised grounds before the ld. Commissioner of Income Tax (Appeals) as under:
During the course of the appellate proceedings the assessee also filed revised grounds of appeal
in respect of disallowance made u/s 14A of the act , as under : "1. The order passed by the Assessing Officer u/s.143(3) r.w.s. 147 is bad in law.
2. The Learned Assessing Officer erred in making an addition Rs.65,29,714/- on account of alleged bogus purchases of goods made from 12 parties.
3. The Learned Assessing Officer failed to appreciate (i) that the payment for the said purchases had been made by A/c, Payee Cheques; (ii) that the goods were received for the running of the Appellant's Hotels and (Hi) that as he held in ITO vs. Kanchwala Gems 33 SOT 27 (JP) once the transaction is over, the Appellant ceases to have control over seller to produced him before the Assessing Officer.
4. At para 5.2 of the order the Assessing Officer states that the 12 parties' statements had been recorded by Sales Tax Authorities which prove that the parties are genuine and their identity stands proved and therefore they should be deemed to have accepted the cheque payments made by the Appellant.
5. It is requested that additions of Rs.65,29,714/- may be deleted.
6. The learned AO erred in making an addition of -Rs.65,29,714/-being disallowance made on account of alleged bogus purchases to the book profit.
7. The learned Assessing Officer erred in disallowing an amount of Rs. 72,72,698/- u/s, 14-A of the Act.
8. The learned Assessing Officer failed to appreciate that the when appellant company had not received any exempt income, there cannot be any disallowance u/s. 14-A as held in CIT Vs. Corrtech Energy P. Ltd. (2015) - 372 ITR 97 (GUJ) Delite Enterprise (P) Ltd. - 366 ITR 505 (BOM) &, 383 ITR 529 (BOM)
9. The learned Assessing Officer failed to appreciate that the when appellant had enough Surplus of interest free funds, no disallowance u/s. 14-A can be made as held in CIT Vs. HDFC Bank Ltd. - 366 JTR 505 (BOM) 7 383 ITR 529 (BOM)
The ld. Commissioner of Income Tax (Appeals) adjudicated the above grounds as under:
(A.Y. 2011-12) M/s. Saryu Properties and Hotels Pvt. Ltd. vs. DCIT 13. From the above it is quite clear that grounds no 1 to 6 are the same which were taken originally and have been adjudicated in the foregoing paras. However the grounds no 7, 8 and 9 are additional grounds. The Ld. AR argued that these grounds were left out inadvertently while filing the appeal of the assessee on 10/03/2016 and therefore may be admitted. I have considered the facts of the case. It appears from the assessment order that no addition u/s 14A as such has been made in the assessment order dated 15/02/2016 , which is the subject matter of the present appeal and therefore this issue of disallowance does not emanate from the assessment order under dispute . In fact while filing this appeal as on 10/03/2016, the assessee did not even raise any grounds relating to disallowance u/s 14A and therefore the assessee could not have raised this issue by filing a revised ground of appeal in this regard, during the course of the appellate proceedings.
14. It is however gathered the addition u/s 14A was made by the AO, while completing the original assessment vide order dated 30/12/2013 . However no appeal was filed by the appellant against the said assessment order and therefore in a way the addition made u/s 14A had already reached finality before the reassessment was made u/s 147 vide order dated 15/02/2016. Therefore the assessee is ineligible to rake up this issue now when the matter has already reached finality. Consequently the additional grounds taken (7, 8,and 9 of revised grounds) by the assessee in respect of disallowance u/s 14A are not admitted and therefore not adjudicated . Consequently various submissions made by the assessee in this regard are also not considered. Therefore these grounds are rejected.
Against the above order, the assessee is in appeal before us.
We have heard both the counsel and perused the records. We find that there was no issue of disallowance u/s. 14A in the reassessment order passed by the assessing officer which was in appeal before the ld. Commissioner of Income Tax (Appeals). Hence, the ld. Commissioner of Income Tax (Appeals) is quite correct in holding that he was not in a position to entertain any such ground. We find that the issue relating to disallowance u/s. 14A was in the original assessment order passed on (A.Y. 2011-12) M/s. Saryu Properties and Hotels Pvt. Ltd. vs. DCIT 30.12.2013. Hence, the ld. Commissioner of Income Tax (Appeals) is quite correct that the assessee should have raised the ground against that decision in appeal against that assessment order. There is no question of condonation of delay as raised by the assessee as when the addition was not made in the reassessment order; there was no occasion for the ld. Commissioner of Income Tax (Appeals) to consider the issue relating to disallowance u/s. 14A. Accordingly, we do not find any infirmity in order of the ld. Commissioner of Income Tax (Appeals). Accordingly, we uphold the same.