TMI Blog2018 (9) TMI 1751X X X X Extracts X X X X X X X X Extracts X X X X ..... come during the relevant previous year on investments - decided in favour of assessee - I.T.A. No.3715/Mum/2018 - - - Dated:- 26-9-2018 - SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER For The Assessee : Shri. Siddharth Shah For The Revenue : Shri. C.S. Sharma, DR ORDER PER RAMIT KOCHAR, Accountant Member: This appeal, filed by assessee, being ITA No. 3715/Mum/2018, is directed against appellate order dated 31.03.2018 passed by learned Commissioner of Income Tax (Appeals)-18, Mumbai (hereinafter called the CIT(A) ), for assessment year 2014-15, the appellate proceedings had arisen before learned CIT(A) from assessment order dated 28.12.2016 passed by learned Assessing Officer (hereinafter called the AO ) u/s 143(3) of the Income-tax Act, 1961 (hereinafter called the Act ) for AY 2014-15. 2. The grounds of appeal raised by the assessee in the memo of appeal filed with the Income-Tax Appellate Tribunal, Mumbai (hereinafter called the tribunal ) read as under:- 1. On the facts and in the circumstances of the case and in law, the Commissioner of Income-tax (Appeals) erred in upholding the disallowance under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of appeal 4. We have heard both the rival parties and gone through the grounds of appeal no. 3 and 4 raised by the assessee vide additional grounds of appeal before the tribunal. We are of the considered view that both this additional grounds of appeal are purely legal grounds which does not required investigations into fresh facts and are requires to be admitted in the interest of substantial justice keeping in view ratio of decision of Hon ble Supreme Court in the case of NTPC Ltd.(supra). Thus we are admitting both the additional grounds of appeal to be adjudicated on merits in accordance with law.We order accordingly. 5. The assessee is engaged in the business of trading exports, trading in empty vegetables capsules research and development in veterinary medicine on lab scale for Zoetis USA and its affiliates. The assessee filed its return of income originally for impugned assessment year on 30.11.2004 , wherein in the return of income so filed it made a suo-moto disallowance u/s 14A of the 1961 Act of ₹ 3,67,78,220/- by applying Rule 8D(2)(iii) of the Income-tax Rules, 1962. Later on the assessee revised its return of income on 30.03.3016 u/s 139(5) of the 1961 A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lid revised return u/s. 139(5). 4.3.4 It must be noted that revised return is filed u/s. 139(5). For appreciating the issue in proper perspective, the provisions of sub section 5 of section 139 are reproduced below: 5) If any person, having furnished a return under sub-section (1) or sub-section (4), discovers any omission or any wrong statement therein, he may furnish a revised return at any time before (the expiry of one year) from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier.} 4.3.5 It may be noted from section 139{5) that there are three ingredients to be fulfilled. One, the Assessee should discover. Two, discovery should be of omission. Three, discovery should be of any wrong statement in the original return of income. 4.3.6 The term discovers as per Oxford English dictionary means the finding out or bringing to light that which was previously unknown . The term omission connotes an unintentional act or neglect to perform what the law requires (Addl. CIT vs. Radhe Shyam (ALL) (01 Taxman 29). The term wrong statement means statement which is factually incorrect or false statement. 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the said suo-moto disallowance of ₹ 3,67,78,220/- and claimed refund of ₹ 3,64,53,580/-. The appellant has furnished Note claiming to be reasons for filing revised return. The Note to the revised return is as under: As on 31st March 2014, the company is holding investment of ₹ 73,556.44 lakhs in its wholly owned subsidiary Pfizer Animal Health India Ltd. During the year, the company has not earned any exempt income in the form of dividend. Further, the said investments made by the company are strategic in nature. Based on the above, the company believes that provisions of Section 14A of I. T. Act, are not applicable to it and therefore no disallowance ought to be made u/s. 14A of the Act in the computation of income. Accordingly, the company has filed a revised return of income for not considering any disallowance u/s.MA of the Act as made in the original return of Income. 4.3.10 Now, it has to be seen whether there was any omission or wrong statement in the original return of income. Since, the disallowance of ₹ 3,67,78,220/- u/s. 14A r.w Rule 8D is based on the audited books of account and worked out by the auditor, it cannot be said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to disallowance u/s.l4A r.w Rule 8D and no revised return was filed. Therefore, the facts of A.Y. 2006-07 are distinguishable from A.Y. 2014-15. 4.3.16 In the light of the foregoing, disallowance of ₹ 3,67,78,220/- u/s. 14A r.w Rule 8D is hereby sustained. 4.4 In the result, Ground No's. 1 to 7 are dismissed. 5, In the result, for statistical purpose the appeal is dismissed. 7. Aggrieved by the appellate order dated 31.03.2018 passed by learned CIT(A), the assessee filed second appeal with tribunal. 8. The Ld. Counsel for the assessee submitted that the assessee has not earned any exempt income during the impugned assessment year under consideration . It is submitted that keeping in view ratio of decision of Hon ble Delhi High Court in the case of Cheminvest Ltd.v. CIT reported in (2015) 378 ITR 33(Del) , decision of Hon ble Madras High Court in the case CIT v. Chettinad Logistics Private Limited (2017) 248 taxman 55(Mad. HC) and decision of Hon ble Bombay High Court in the case of Pr. CIT v. Ballarpur Industries Limited in ITA no. 51 of 2016 dated 13.10.2016, the additions as were made by the authorities below of ₹ 3,67,78,220/- need to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve heard rival contentions and perused the material on record including cited case laws and orders of authorities below. We have observed that the assessee is engaged in the business of trading exports , trading in empty vegetables capsules research and development in veterinary medicine on lab scale for Zoetis USA and its affiliates. The assessee filed its return of income originally for impugned assessment year 2014-15 on 30.11.2014 wherein it made suo-moto disallowance u/s 14A of the 1961 Act of ₹ 3,67,78,220/- by applying Rule 8D(2)(iii) of the 1962 Rules. The said disallowance u/s 14A of the 1961 Act read with Rule 8D(2)(iii) of the 1962 Rule was supported by the tax-audit report dated 28-11-2014 issued by tax-auditor in form no. 3CA and 3CD computed @ 0.5% the average investments held by the assessee , detailed as hereunder :- The said tax-audit report is placed in paper book/page number 27-58. Incidentally, the assessee has made investment in only one company namely Zoetis India Limited ( Formerly known as Pfizer Animal Health India Limited) to the tune of ₹ 735.56 crores as at 31-03-2014( Previous Year ₹ 735.56 crores as at 31-03-2013) . Thus, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of Hon ble Gujarat High Court in the case of CIT v. Corrtech Energy Private Limited (2014) 45 taxmann.com 116(Guj.) which also held that in case there is no claim for exemption made by the tax-payer,there cannot be any expenses to be disallowed . The said decision was pronounced by Hon ble Gujarat High Court on 24-03-2014 which was even prior to filing of original return of income by the assessee on 30-03-2014. The assessee also placed reliance on following decisions of Hon ble Courts/tribunal while making submissions before the AO vide letter dated 22-12-2016:- a) CIT v. Lakhani Marketing (2014) 49 taxmann.com 257(P H HC). b) CIT v. Delite Enterprises (Bom. HC) ITA no. 110 of 2009) c) Siva Industries Holdings Limited v. ACIT (2011) 11 taxmann.com 404(Chennai-trib.) d) Alliance Infrastructure Projects Private Limited v. DCIT (ITA No. 220, 1043 and 1217 , 234(Bang.)/2013) e) Shree Shyamkamal Finance Leasing Company Private Limited v. ITO (2008) 21 SOT 42(Mum) f) ACIT v. Lafarge India Holdings Private Limited (2008) 19 SOT 121(Mum.) The assessee had filed revised return of income u/s 139(5) and the aforesaid cause shown by the assessee is held to be bonaf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by learned CIT(A) to reject revised return of income was the case of Sharavathy Conductors Private Limited(Supra). In the said case revised return of income was filed after expiry of limitation period provided u/s 139(5) of the 1961 Act and then prayers were made before learned CCIT for condonation of delay u/s 119(2)(b) of the 1961 Act which application was rejected by learned CCIT and the Hon ble Karnataka High Court held that condonation of delay is discretionary and a fair exercise of discretion by authorities cannot be interfered by High Courts in extra jurisdiction under Article 226 of the Constitution of India unless such exercise of discretion is found to be arbitrary and secondly the claim of the taxpayer filed by the tax-payer was held to be debatable. In the instant case, the revised return of income was filed within time prescribed u/s 139(5) of the 1961 Act and secondly the Courts/tribunals are consistently taking a view that in case no exempt income is received or receivable on exempt income, no disallowance u/s 14A is warranted. Thus the assessee s action in revising its return of income in line with decision of several Courts and tribunal is held to be bonafide and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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