2015 (10) TMI 737 - AT - Income Tax

Procedure when assessee claims identical question of law is pending before High Court or Supreme Court u/s 158A - Amount received as a result of Indenture - whether Indenture signed by Late Sint. Bachoobai Woronzow, transferring her rights arising out of an agreement of 2 January, 1995 with developers, does not result in Capital Gain in the hands of the Assessee? - said question of law arising from the aforesaid receipts is identical with the question of law arising out in the present appeal before this Tribunal for A.Y. 2007-08 - Held that - We find that the issue involved in the year under consideration are identical to the issue of earlier two AY.s., that the AO has not given any reason for not agreeing with the proposal of the assessee to keep the issue in abeyance till the appeal filed by the department is not adjudicated by the Hon ble Bombay High Court. In our opinion, the provisions of section 158A of the Act cast a duty upon the AO and the Appellate Authorities pass a reasoned order. A reasoned order presupposes application of mind by the authority concerned i.e.A0/Appellate Authority. They are required to elaborate the reasons as to why they oppose or accept the proposal submitted by the assessee.A one liner submission- I agree/I do not agree is a bald statement and is of no judicial value. As stated earlier such an order is not subject to appeal or revision. Therefore, it becomes more important that the authority handling such application devote some time and pass an order that could show as to how and why it arrived at a particular conclusion. In our opinion the comment of the AO opposing the proposal of the assessee falls under that category. It is to remembered that the Central Board of Direct Taxes have advised the officers of the department to avoid unnecessary litigation. In our opinion, the proposal made by the assessee is justified and no harm would be caused to the AO if the issue is kept in abeyance till the final decision of the Hon ble Court is delivered. As a result, we admit the declaration made by the assessee. Issue of nature of advance received by the assessee is to be kept in abeyance and has to be decided after receiving the order of the Hon ble Bombay High Court for the earlier two AY.s. Appeal filed by the AO are kept in abeyance, as per the provisions of section 158 A of the Act. No useful purpose will be served in calling the comments of the AO on identical declaration filed by the assessee u/s 158A for the assessment year under consideration. Hence we dispense with the formality of seeking again the comment of the AO in view of the observations made by the Tribunal on similar declaration filed under section 158A in relation to A.Y. 2006-07. We admit the declaration filed by the assessee and dispose off this ground of appeal with the direction the AO will decide/ apply the findings/directions as will be given in the order of the Hon ble Bombay High Court on the question of law framed by the Hon ble Bombay High Court - Decided in favour of assessee as directed Disallowance under section 14A - CIT(A) restricted the disallowance to the extent of expenditure claimed by the assessee in the P & L account - Held that - CIT(A) has observed that the total expenses debited in the P & L account is at ₹ 57,492/-. The AO himself has restricted the amount of disallowance to that extent. As per law, the disallowance of expenditure cannot go beyond the total expenditure claimed by the assessee in the P & L account. Under such circumstances, there is no infirmity in the order of the Ld. CIT(A) in restricting the total disallowance under section 14A to the extent of total expenditure debited in the P & L account. - Decided against revenue.

Summary

Issues Involved:
1. Appeal by the Revenue against the order of the Commissioner of Income Tax (Appeals) for assessment year 2007-08.
2. Dispute regarding the sum of Rs. 85 lakhs received by the assessee as sale proceeds and its tax treatment.
3. Disallowance under section 14A of the Act.
4. Cross objections raised by the assessee.

Issue 1: Appeal by the Revenue
The Revenue contested the order of the CIT(A) regarding the tax treatment of Rs. 85 lakhs received by the assessee as sale proceeds, arguing it should be considered as business income. The Revenue also challenged the CIT(A)'s reliance on a previous ITAT decision and the restriction of disallowance under section 14A. The Tribunal noted that the Revenue had filed appeals for earlier years on similar issues before the Bombay High Court. The Tribunal emphasized the need for reasoned orders from the authorities and upheld the assessee's request to keep the appeal in abeyance pending the High Court's decision on the identical issue from previous years. The Tribunal admitted the assessee's declaration under section 158A and directed the AO to apply the High Court's decision to the present case.

Issue 2: Disallowance under Section 14A
The Revenue raised a ground related to the disallowance under section 14A of the Act. The CIT(A) had restricted the disallowance to the total expenditure claimed by the assessee in the Profit & Loss account, which the AO had also limited. The Tribunal affirmed the CIT(A)'s decision, stating that the disallowance cannot exceed the total expenditure claimed. Consequently, the Tribunal dismissed this ground of appeal by the Revenue.

Issue 3: Cross Objections by the Assessee
The assessee raised cross objections challenging the CIT(A)'s decision on the tax treatment of amounts received and the disposal of penalty appeal proceedings. However, due to the declaration made by the assessee under section 158A, rendering the cross objections moot, the Tribunal dismissed the cross objections raised by the assessee.

In conclusion, the Tribunal upheld the decision to keep the appeal in abeyance pending the High Court's ruling, dismissed the Revenue's appeal on the disallowance under section 14A, and rejected the cross objections raised by the assessee due to their becoming infructuous. The judgment provided detailed reasoning and legal analysis for each issue raised, ensuring a fair and thorough examination of the matters at hand.