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TMI Blog2018 (12) TMI 916X X X X Extracts X X X X X X X X Extracts X X X X ..... Delhi in the case of Vireet Investments (P. ) Ltd. (supra) and considering the facts in entirety, we quash the revision proceedings as the assessment order is neither erroneous nor prejudicial to the interest of the Revenue. Accordingly, we quash the revision order - decided in favour of assessee. - ITA No. 1213/Mum/2018 - - - Dated:- 13-12-2018 - SRI MAHAVIR SINGH, JM AND SRI NK PRADHAN, AM For The Appellant : Ms. Arati Vissanji, AR For The Respondent : Shri R.Manjunatha Swamy, DR ORDER PER MAHAVIR SINGH, JM: This appeal filed by the assessee is arising out of the revision order passed by the Principal Commissioner of Income Tax-2, Mumbai [in short PCIT], vide No. Nil dated 27. 12. 2017. The Assessment was framed by the Deputy Commissioner of Income Tax, Circle-2(3)(1), Mumbai (in short DCIT/AO ) for the AY 2012-13 vide order dated 30. 03. 2016 under section 143(3) read with section 144C(3) of the Income Tax Act, 1961 (hereinafter the Act ). 2. The only issue in this appeal of assessee is against the revision order passed by PCIT under section 263 of the Act directing the AO to determine the expenses relatable to exempt income and disallow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in his Order under appeal has not demolished the following well-settled propositions in law having relevance on the validity of the Order passed u/s. 263 of the Act: (i) Distinction has to be drawn where the AO does not conduct the inquiry and where the AO conducts the inquiry which may be inadequate; (ii) The conclusion drawn by the AO cannot be said to be erroneous where the extract from the assessment record demonstrates that the AO had called for details and after examining the same has accepted the contention of the appellant; (iii) When two views are possible, the interpretation that favours the appellant should prevail; (iv) Where AO had applied one of the possible views, Section 263 cannot be invoked. (v) Every loss of Revenue as a consequence of an order of the AO cannot be treated as prejudicial to the interest of Revenue. (vi) Pre requisite conditions for invoking revision proceedings that assessment order passed by the AC) is not only erroneous but also prejudicial to the interest of Revenue. Without prejudice to the above and in the alternate 2. Computation of book profit u/s. 115JB of the Act 2. 1 In the facts and circu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (ii) An amount equal to one-half percent of the average of the value of investment, income from which does not or shall not form part of the total income, as appearing in the balance sheet of the assessee, on the first day and the last day of the previous year . 185 . 07 Total disallowance under section 14A 1175 . 70 Thus total disallowance as per section 14A r. w Rule 8D works out to ₹ 1175. 70 crores. It can be seen from the computation of total income that assessee has already disallowed a sum of ₹ 873. 24 crores under section 14A. Hence, he sum of ₹ 302. 46 cores (₹ 1175. 70 crores (₹ 873. 24 crores) is disallowed and added to the total income of the assessee. 4. The AO also noted the contention of the assessee regarding apportionment providing under section 14A of the Act and observed that no disallowance can be made while computing book profit under section 115JB of the Act. The AO recorded the same as under: - Computation of Book Profit under section 115JB Disallowance under sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered while computing book profit under section 115JB of the Act. 7. But the PCIT was not satisfied and directed the AO to determine the expenses incurred in relation to exempt income while computing the book profit under section 115JB(2) of the Act read with clause F of explanation I to the said section. The PCIT observed in para 8 to 11 as under: - 8. It is observed that the Hon'ble Delhi High Court in its decision in the case of Goetz India Ltd, reported in 361 ITR 505 held that while computing Book Profit disallowance under section 14A is required to be made. However, in its later judgment the Hon'ble Delhi High Court in the case of Bhushan Steel Ltd, (ITA No. 593 594/2015) has taken a contrary view. It is noticed that the latter decision has been rendered without considering the binding decision of coordinate bench of equal strength. The Hon ble Special Bench of ITAT Delhi, in its decision in the case of the case of Vireet Investment (P. ) Ltd. , reported in 62 taxmann. com 415 (Delhi - Trib. ) (SB) has noted that the Delhi High Court in two different cases, had taken a contrary view on the issue of applicability of provisions of section 14A read with Ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cessary opportunity of hearing will be provided to the assessee before passing the fresh assessment order. The Assessing Officer may take into consideration the binding judicial decisions on the aforesaid issue which may become available at the time of passing of the fresh assessment order. Aggrieved, now assessee came in second appeal before Tribunal. 8. Before us, the learned Counsel for the assessee Ms. Arati Vissanji argued on behalf of assessee and reiterated the same arguments made before PCIT during revision proceedings. On the other hand, the learned Sr. DR Shri R Manjunatha Swamy only relied on the following case laws: - (i) Deniel Merchants P. Ltd. Anr Vs. ITO Anr in Special Leave to Appeal (C) No(s). 23976/2017 dtd. 29. 11. 2017. (ii) Horizon Investment Co. Ltd. Vs. CIT in ITA No. 1593/Mum/2013 dated 27. 06. 2014. (iii) Arvee International Vs. ACIT (2006) in ITA No. 3543/Mum/2003 dated 13th January, 2006. (iv) CIT vs. Amitabh Bacchan (2016 384 ITR 200 (SC) dated 11. 05. 2016. (v) CIT vs. Ballarpur Industries Ltd. (2017 TaxPub(DT) 4015 (Bom-HC) dated 31. 07. 2017. 9. We have heard rival contentions and gone through the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were liable to be taxed . . falls to be. determined under the first question. The second question only relates to the amount of ₹ 7, 000 which was the cash credit item which represented an unexplained entry in the books of account of the assessees. In respect of that amount, the Income-tax Officer held that the explanation of the assessee was untrue and the Appellate Assistant Commissioner and the Tribunal agreed with the view. The Income-tax Appellate Tribunal is the final fact finding authority and normally to should record its conclusion on every disputed question raised before, it setting out its reasons in support of its conclusion. But, in failing to record reasons, when the Appellate Tribunal fully agrees with the view expressed by the Appellate Assistant Commissioner and has no other ground to record in support of its conclusion, it does not act illegally or irregularly, merely because it does not repeat the grounds of the Appellate Assistant Commissioner on which the decision was given against the assessee or the department. The criticism made by the High Court that the Tribunal had failed to perform its duty merely affirming, the conclusion of the Appellate Assist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer does not have the jurisdiction to go behind the net profit shown in the profit and loss account except to the extent provided in the Explanation to Section 115J. The Court declines to frame a question on the above issue. Thus, this decision is also on the same issue taking contrary view. Under such circumstances the issue before us is as to follow which decision. Ld. CIT(DR) in course of hearing filed the decision of Tribunal in the case of Goetze (India) Ltd. (supra) and referred to para 6 of the said decision which is reproduced hereunder:- 6. Coming to the sustenance of disallowance of ₹ 88, 290/- u/s 115JB, the Commissioner of Income-tax (Appeals) has upheld the ITA Nos. 1213/Mum/2018 disallowance under clause (f) of Explanation to section 115JB(2) of the Act. Under section 115JB of the Act, the assessee is required to pay tax on its book profit subject to certain conditions. The books profit is to be determined u/s 115JB(2) as per Part II III of Schedule VI to Company's Act, 1956. Explanation (I) to section II5JB(2) defines the expression book profit and means the net profit as shown in the P L A/c for the relevant pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been dismissed in-limine at the threshold on the ground of delay in filing the said Review Petition and, therefore, does not constitute a binding precedent. In support of his contention he has relied on the commentary of Kanga Palkhivala, vol. I, Vllth Edn. , page 43 which is reproduced hereunder:- 43. Circumstances that Destroy or Weaken the Binding Force of Precedent. A precedent losses all or some of its binding force in the following circumstances: ( i) if it is reversed or overruled by a higher court - reversal occurs when the same decision is taken on appeal and is reversed by the higher court, while overruling occurs when the higher court declares in another case that the earlier case was wrong decided; (ii) when it is affirmed or reversed on a different ground, depending on the circumstances of such affirmation or reversal; (iii) when the legislature enacts a state that is inconsistent with the precedent; (iv) when it is inconsistent with the earlier decisions of a higher court or a court of the same rank; (v) if it is a precedent sub silentio or not fully argued; (vi) when it is rendered per incuriam, i. e. , in ignorance of a s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt. A decision or judgement can also be per incuriam if it is not possible to reconcile its ratio with that of a previously pronounced judgement of a co-equal or larger Bench, or if the decision of a High Court is not in consonance with the views of this Court. It must immediately be clarified that the per incuriam rule is strictly and correctly applicable to the 'ratio decidendi' and not to 'obiter dicta'. It is often encountered in High Courts that two are more mutually irreconcilable decisions of the Supreme Court are cited at the Bar. We think that the inviolable recourse is to apply the earliest view as the succeeding ones would fall in the category of 'per incuriam'. Thus, both paras 12 and para 15 cited above, in the Supreme Court judgement in Sandeep Kumar Bafna 's case (supra) hold very clearly that the earlier decision is to be followed and not the later one of co-qual bench - when given in ignorance of the earlier decision -which in the present case - makes it very clear that the decision rendered in the case of Goetze should be followed and not the later decision given in the case of Bhushan Steel. Further, the Hon'ble Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dice to his submission that the decision in the case of Goetze (India) Ltd. (supra) on this issue was by of concession, submitted that in case of conflict/divergent view expressed in two separate pronouncements of a Court by a Bench of co-equal strength, the decision being later in point of time is binding on the lower courts. In support of this proposition of law he has relied on following decisions :- 1. Bhika Ram v. Union of India [1999] 238 ITR 113 (Delhi). 2. Govindanaik G. Kalaghtigi v. West Patent Press Co. Ltd. : AIR 1980 Kar 92 (FB). 3. Vasant Tatoba Hargude v. Dikkaya Muttaya Pujari : AIR 1980 Bom. 341. 4. Peedikkakumbhi Joseph v. Special Tahsildar : 2001 (1) KLT 747 (FB). 5. Datamatics Financial Services Ltd. v. Jt. CIT [2005] 95 ITD 23 (Mum. - Trib. ) The second proposition advanced by Ld. Senior Counsel is that in case of conflict/divergent view expressed in two separate pronouncements of a Court by a Bench of co-equal strength, the lower Court shall follow the judgment which appears to it to state the law more elaborately and accurately, in this regard he has relied on following decisions :- 1. Indo Swiss Time Ltd. v. Umrao AI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urse would be to follow the decision of Hon'ble Supreme Court in the case of CIT v. Vegetable Products Ltd. [1973] 88 ITR 192. In this case the facts were like this. The relevant assessment year was 1960-61. In that regard the Income-tax Officer issued a notice under section 22(2) of the Indian Income-tax Act, 1922 on June 1, 1960, served on assessee on June 13, 1960, requiring the assessee to submit its return on or before July 18, 1960. Assessee sought extension of time for submitting its return which was extended by ITO for two months with rider for no further extension. The assessee failed to furnish the Return of Income within the extended time. Thereafter, a notice under section 28(3) of the 1922 Act was served on the assessee on January 16, 1961. On the very next day, viz. , January 17, 1961, the assessee filed its return for the assessment year in question. The assessment was completed by ITO on October 31, 1962. Meanwhile, on April 1, 1962, the Income-tax Act, 1962( came into force. As under the provisions of section 297(2)(g) of the Act the proceedings for the imposition of the penalty had to be initiated and completed under the Act, a fresh notice was served on the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uestion referred to us in favour of asssessee by holding that the computation under clause (f) of Explanation 1 to section 115JB(2). is to be made without resorting to the computation as contemplated u/s 14A read with Rule 8D of the Income-tax Rules, 1962. 10. We have noted that the Special bench in the case of Vireet Investments (P. ) Ltd. (supra) has finally taken the view that the view beneficial to the assessee is to be taken while deciding the issue in term of the decision of Hon ble Supreme Court in the case of CIT vs. Vegetable Products Ltd. [1973] 88 ITR 192. In view of the above given facts and circumstances of the case, we are of the view that the AO has considered the issue during the original assessment proceedings and form a view permissible under law that no disallowance relatable to exempt income can be made under section 14A read with Rule 8D of the Rules while computing the book profit under section 115JB of the Act. We find that this issue is squarely covered in favour of assessee and against Revenue by the decision of Special Bench of this ITAT Delhi in the case of Vireet Investments (P. ) Ltd. (supra) and considering the facts in entirety, we quash the re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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