CIT v. DLF Ltd. - Taxpublishers.in

Case Laws Analysis
Distinguished on Pr. CIT v. LG Electronics India (P) Ltd. 2018 TaxPub(DT) 4991 (Del-HC)
Relied on Thomson Press (India) Ltd. v. CIT 2015 TaxPub(DT) 4049 (Del-HC)
Applied on GAIL India Ltd. v. CIT 2015 TaxPub(DT) 3516 (Del-Trib)

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The Tax PublishersITA Nos. 236/2010 & 384/2010 2013 TaxPub(DT) 0340 (Del-HC) : (2013) 049 (I) ITCL 0513 : (2013) 350 ITR 0555 INCOME TAX ACT, 1961 --Revision under section 263--Erroneous and prejudicial order Disallowance under section 14A not made by assessing officer--The assessee was in real estate and development business. For the assessment years 2002-03, its returned income was Rs. 11.44 crores. The assessing officer issued notice under sections 143 (2) and 142 (1) eliciting information which was furnished. The total income determined by the assessing officer was Rs. 13.99 crores, which included various disallowance and additions. After the assessment was framed, a notice was issued under section 263 by the Commissioner. This was in respect of disallowance as far as it concerns a dividend income (for which an exemption has been claimed under section 10 (33)) received by the assessee. The dividend had been received from DLF Power Limited, a sister concern. After considering the submissions of the assessee, and the views of the Revenue, the Commissioner held that it is clear from the assessment records that the assessing officer has not examined in the course of the assessment proceedings the issue relating to disallowance of expenditure relating to exempted dividend income as was required under section 14A. In the circumstances, the assessment order dated 31-3-2005 under section 143(3) of the IT Act, 1961, for the assessment year 2002-03, is held to be erroneous and prejudicial to the interests of revenue within the meaning of section 263. However, in order to take a final view on this issue, further enquiries will be necessary which can be conducted only by the assessing officer and, therefore, it is not possible for this court to record conclusive findings on this issue at this stage. In the circumstances, it is considered fair and reasonable to set aside the assessment on this limited point for fresh adjudication and decision. *Held:* In this case, the record reveals that the assessing officer had issued notice, and held proceedings on several dates of hearing before proceeding to frame assessment. He added nearly Rs. 2 crores to the income at that time. The Commissioner took the view that the assessment order disclosed an error, in that the deduction under section 14A had not been made. Now, while the statutory direction to the assessing officer to calculate, proportionately, the expenditure which an assessee may incur to obtain dividend income, for purposes of disallowance, cannot be lost sight of, equally, such a requirement has to be viewed in the context and circumstances of each given case. In the present case, it was repeatedly emphasized that the assessee's dividend income was confined to what it received from investment made in a sister concern, and that only one dividend warrant was received. These facts, in the opinion of this court, were material, and had been given weightage by the Tribunal in its impugned order. There is no dispute that the investment to the sister concern, was not questioned; even the Commissioner has not sought to undermine this aspect. Equally, there is no material to say that apart from that single dividend warrant, any other dividend income was received. Furthermore, there is nothing on record to say that the assessee had to expend effort, or specially allocate resources to keep track of its investments, especially dividend yielding ones. In these circumstances, it can be said that whether the deduction under section 14A was warranted, was a debatable fact. In any event, even if it were not debatable, the error by the assessing officer is not 'unsustainable'. Possibly, he could have taken another view; yet, that he did not do so, would not render his opinion an unsustainable one, warranting exercise of section 263. SUBSCRIBE FOR FULL CONTENT

The Tax PublishersITA Nos. 236/2010 & 384/2010
2013 TaxPub(DT) 0340 (Del-HC) : (2013) 049 (I) ITCL 0513 : (2013) 350 ITR 0555

INCOME TAX ACT, 1961

--Revision under section 263--Erroneous and prejudicial order Disallowance under section 14A not made by assessing officer--The assessee was in real estate and development business. For the assessment years 2002-03, its returned income was Rs. 11.44 crores. The assessing officer issued notice under sections 143 (2) and 142 (1) eliciting information which was furnished. The total income determined by the assessing officer was Rs. 13.99 crores, which included various disallowance and additions. After the assessment was framed, a notice was issued under section 263 by the Commissioner. This was in respect of disallowance as far as it concerns a dividend income (for which an exemption has been claimed under section 10 (33)) received by the assessee. The dividend had been received from DLF Power Limited, a sister concern. After considering the submissions of the assessee, and the views of the Revenue, the Commissioner held that it is clear from the assessment records that the assessing officer has not examined in the course of the assessment proceedings the issue relating to disallowance of expenditure relating to exempted dividend income as was required under section 14A. In the circumstances, the assessment order dated 31-3-2005 under section 143(3) of the IT Act, 1961, for the assessment year 2002-03, is held to be erroneous and prejudicial to the interests of revenue within the meaning of section 263. However, in order to take a final view on this issue, further enquiries will be necessary which can be conducted only by the assessing officer and, therefore, it is not possible for this court to record conclusive findings on this issue at this stage. In the circumstances, it is considered fair and reasonable to set aside the assessment on this limited point for fresh adjudication and decision. Held: In this case, the record reveals that the assessing officer had issued notice, and held proceedings on several dates of hearing before proceeding to frame assessment. He added nearly Rs. 2 crores to the income at that time. The Commissioner took the view that the assessment order disclosed an error, in that the deduction under section 14A had not been made. Now, while the statutory direction to the assessing officer to calculate, proportionately, the expenditure which an assessee may incur to obtain dividend income, for purposes of disallowance, cannot be lost sight of, equally, such a requirement has to be viewed in the context and circumstances of each given case. In the present case, it was repeatedly emphasized that the assessee's dividend income was confined to what it received from investment made in a sister concern, and that only one dividend warrant was received. These facts, in the opinion of this court, were material, and had been given weightage by the Tribunal in its impugned order. There is no dispute that the investment to the sister concern, was not questioned; even the Commissioner has not sought to undermine this aspect. Equally, there is no material to say that apart from that single dividend warrant, any other dividend income was received. Furthermore, there is nothing on record to say that the assessee had to expend effort, or specially allocate resources to keep track of its investments, especially dividend yielding ones. In these circumstances, it can be said that whether the deduction under section 14A was warranted, was a debatable fact. In any event, even if it were not debatable, the error by the assessing officer is not 'unsustainable'. Possibly, he could have taken another view; yet, that he did not do so, would not render his opinion an unsustainable one, warranting exercise of section 263.