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Income Tax Appellate Tribunal, DELHI BENCHES: D: NEW DELHI
Before: SHRI N.K. SAINI & SHRI LALIET KUMAR
This is an appeal filed by the assessee arises against the order dated 12/03/2013 passed by the ld. CIT(A)-19, New Delhi for the A.Y. 2009-10, wherein the assessee has raised following grounds of appeal:
“1. Learned Commissioner of Income tax (Appeals) was wrong in rejecting appeal filed by the appellant company and order passed by the CIT(A) was bad in law.
Topscore Tradevariety Pvt. Ltd. Vs ITO 2. Learned CIT(A) precipitately dismissing the appeal of the assessee without providing adequate and reasonable opportunity of being heard. 3. That the learned CIT(A) was erred in not considering the ground relating to disallowance of Rs. 702, 204/- U/s 14A read with Rule 8D of the Rules in place of Rs. 292,974 representing the total actual expenditure claimed by the appellant company in its return of income.”
In this case, the A.O. has disallowed U/s 14A of the Income Tax Act, 1961 (in short the Act) read with Rule 8D of the Income Tax Rules, 1962 (in short the Rules) to the tune of Rs. 7,02,204/- as against the amount of Rs. 2,92,974/- (computation restricted by the assessee itself).
Against the order of the A.O., the assessee preferred appeal before the ld. CIT(A), who had dismissed the appeal of the assessee by observing as under:-
“In the Form No., 35 filed on 16/2/2012, the name and address of the appellant is given as “M/s Topscore Tradevariety Pvt. Ltd. (now merged with Avantha Realty Ltd.)”. The assessment order dated 23/11/2011, the name of the assessee is given as “M/s Topscore Tradevariety “(P) Ltd.”. As per the copy of return filed, the return was filed on 08/09/2009 in the name of M/s Topscore Tradevariety Pvt. Ltd. It, therefore, appears that after the assessment U/s 143(3), M/s Topscore Tradevariety Pvt. Ltd. merged with M/s Avantha Realty Ltd. In that case, M/s Topscore
Topscore Tradevariety Pvt. Ltd. Vs ITO Tradevariety Pvt. Ltd. is no longer in existence. The appellant has not furnished details of merger such as the date of merger, etc. and has failed to explain why the appeal should be admitted if the appellant company has ceased to exist. In view of these facts, the appeal is not admitted.”
Now the assessee is in appeal before us. As is clear from the order passed by the ld. CIT(A) that the assessee has failed to bring on record the details of merger of M/s Topscore Tradevariety Pvt. Ltd. with M/s Avantha Realty Ltd., therefore, first appellate authority has dismissed the appeal only on the ground that the assessment was framed in the name of M/s Topscore Tradevariety Pvt. Ltd. and the appeal was also preferred in the name of M/s Topscore Tradevariety Pvt. Ltd. (now merged with M/s Avantha Realty Ltd but no document in suppory of merger was filled .
4.1 The ld AR has drawn our attention to the order passed by the Hon’ble Delhi High Court dated 18/10/2011 whereby the scheme of amalgamation was approved from the pointed date i.e. 01/4/2010. Further, the ld AR has submitted that in terms of the order passed by the Tribunal in the case of M/s Gillette Group India Pvt. Ltd. in for A.Y. 2008-09.
The disallowance is required to be restricted to the extent of actual expenditure claimed by the assessee. For that purposes, the ld AR has Topscore Tradevariety Pvt. Ltd. Vs ITO drawn our attention to paragraph No. 6 of the order passed in ITA No.
267/Del/2012, which is as under:-
“6. From the above, it is evident that as per sub-section (1) of Section 14A, no deduction is to be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of total income. Sub-section (2) of Section 14A provides the procedure for determination of such expenditure by the Assessing Officer. The Board has also prescribed Rule 8D for determining the expenditure incurred by the assessee for earning of exempt income. Thus, the disallowance can be made under sub-section (1) for the expenditure incurred for earning of exempt income. In the case under appeal before us, from the perusal of the assessee’s profit & loss account, it is evident that the total expenditure incurred was Rs. 49,04,028/- only. Thus, the assessee claimed the deduction for the expenditure of Rs. 49,04,028/- which is debited to the profit & loss account. The disallowance cannot exceed the expenditure actually claimed by the assessee. We, therefore, accept the assessee’s contention that the disallowance made by the Assessing Officer and sustained by the learned CIT(A) in excess of total expenditure debited to profit & loss account was unjustified. Accordingly, we restrict the disallowance to the extent of expenditure actually claimed by the assessee i.e. Rs. 49,04,028/-.”
Topscore Tradevariety Pvt. Ltd. Vs ITO 5. At the outset, the ld Sr. DR has submitted that the appeal is not filed by the Managing Director of the company and further in view of the failure of the assessee to provide the details of merger to the CIT(A), the matter is required to be remanded back. In rebuttal, today i.e. 30/11/2016, the ld AR of the assessee has filed e-mail communication from the company dated 29/11/2016 stating that there is no provision of Managing Director in the company.
We have heard the rival contentions of both the parties and perused the material available on the record. Since the basis of dismissal of the appeal by the ld. CIT(A) was non-furnishing of the details of merger. The ld AR has already placed on record the copy of the order passed by the Hon’ble Delhi High Court dated 18/10/2011 on the paper book from page 65 to 105 and has also drawn our attention to the order passed by the Tribunal in (supra), it would be in the interest of justice, if the matter is remanded back to the file of the ld. CIT(A) with a direction to examine the documents, now placed before us in the form of order of Hon’ble High Court as well as of the Tribunal in the case of ITA 267/Del/2012 (supra). While deciding the appeal the ld CIT(A) shall have the due regard to the judgment of the Coordinate Bench in the case of M/s Gillatte Group India Pvt. Ltd. (supra) and shall decide the case on the basis
Topscore Tradevariety Pvt. Ltd. Vs ITO of the finding given by the Tribunal in the said matter . In the light of the above, the case is restored back to the file of the ld. CIT(A) to decide the matter in light of the observations made hereinabove. Thus, the appeal of the assessee is allowed for statistical purposes only.
In the result, the appeal of the assessee is allowed for statistical purposes only.
The order pronounced in the open court on 30/11/2016.