Ita-356-2019 (O&M v. Vy]Whether On The Facts And In The Circumstances Of Thecase, The Ld. Itat Is Justified In Directing

ITA-356-2019 (O&M) IN THE HIGH COURT OF PUNJAB AND HARYANAAT CHANDIGARH 102 ITA-356-2019 (O&M)Date of Decision : 29.1.2020 The Pr. Commissione of Income Tax-2 eee APpPellant 0!+&1& M/s. Agri King Tractors and Equipments Pvt. Ltd. ...... Respondent CORAM : HON'BLE MR.JUSTICE AJAY TEWARI* HON'BLE MR.JUSTICE AVNEESH JHINGAN<<< Present ;Ms. Urvashi Dhugga, Senior Standing counselfor the appellant. <<< AJAY TEWARI, J. (Oral) inThis appeal has been filed by the Revenue under Section260-A of the Income Tax Act, 1961(for short ‘the Act’) against the orderdated 18.3.2019 of the Income Tax Appellate Tribunal Division BenchChandigarh, in ITA No. 1280/Chd/2018 (Annexure A-3) for A.Y. 2015-2016 and claiming following substantial questions of law :- aWhether on the facts and in the circumstances of thecase, the order of the Ld. ITAT in directing the assessingofficer to verify the claim of the assessee having not earnedany exempt income in the year under consideration andallow the relief accordingly is not perverse and the _ legalissues raised by revenue before it should be reinstated anddecided on merits 2? 11.Whether on the facts and in the circumstances of thecase, the Ld. ITAT 1s justified in directing the assessingofficer to verify the claim of the assessee having not earnedany exempt income in the year under consideration andallow the relief accordingly, ignoring the legislative intent ITA-356-2019 (O&M) expressed in CBDIT's Circular No. 5/2014 dated 11.02.2014which explicitly states that expenses relatable to earning ofexempt income have to be considered for disallowanceirrespective of the fact whether any such income has beenearned during F.Y. or not as confirmed by Apex Court inMaxopp Investment Ltd. vs. CIT, 91 Taxman.com 154 (SC) ?111.Whether on the facts and in the circumstances of thecase, the Ld. ITAT 1s justified in directing the assessingofficer to verify the claim of the assessee having not earnedany exempt income in the year under consideration andallow the relief accordingly, without appreciating the factthat applicability ofsection 14A or Rule &D does not dependon earning of income as held by Supreme Court in the caseof CIT vs. Rajender Prasad Moody (19678), 115 ITR 519 ?” lV.Whether on the facts and in the circumstances of thecase, the order of the Ld. ITAT is justified in directing theassessing officer to verify the claim of the assessee havingnot earned any exempt income in the year underconsideration and allow the relief accordingly, withoutappreciating the fact that there is no such restrictionstipulated either in section 14A of the Income Tax Act orRule SD of the Income Tax Rule ?” VnWhether on the facts and in the circumstances of thecase, the Ld. ITAT 1s justified in directing the assessingofficer to verify the claim of the assessee having not earnedany exempt income in the year under consideration andallow the relief accordingly>ignoring the principal ofapportionment regardless of exempt income laid down byLd. Supreme Court decision in CIT vs. Walfort Share andstock Brokers P. Ltd: 326 ITR (SC) and upheld by the Ld.Supreme Court in 91 Taxmann.com 154 (SC) 2” VY]Whether on the facts and in the circumstances of thecase, the Ld. ITAT is justified in directing the assessingofficer to verify the claim of the assessee having not earnedany exempt income in the year under consideration and ITA-356-2019 (O&M) allow the relief accordingly, whereas the addition wasrestricted by Ld. CIT (A) ignoring the fact that Ld. SupremeCourt of India in Civil Appeal No. 1423 of 2015 filed byAvon Cycles Ltd. decided with Maxopp Investment Ltd. andmany Other cases has decided the issue in favour of thedepartment? VY]Whether on the facts and in the circumstances of thecase, the Ld. ITAT is justified in directing the assessingofficer to verify the claim of the assessee having not earnedany exempt income in the year under consideration and ITA-356-2019 (O&M) allow the relief accordingly, whereas the addition wasrestricted by Ld. CIT (A) ignoring the fact that Ld. SupremeCourt of India in Civil Appeal No. 1423 of 2015 filed byAvon Cycles Ltd. decided with Maxopp Investment Ltd. andmany Other cases has decided the issue in favour of thedepartment? V11Whether on the facts and in the circumstances of thecase and in law, Ld. ITAT has erred in directing theassessing officer to verify the claim of the assessee havingnot earned any exempt income in the year underconsideration and allow the relief accordingly becauseorder ofLd. CIT Appeal is perverse in holding that it is nowres integra’ that disallowance u/s 14A cannot exceed exemptincome, when Supreme Court has upheld the principles ofapportionment ?~ 711Whether on the facts and in the circumstances of thecase and in law, Ld. ITAT has erred in directing theassessing officer to verify the claim of the assessee havingnot earned any exempt income in the year underconsideration and allow the relief accordingly ignoring thelegality of CBDT Circular No. 5 of 2014 which 1s inconsonance with legislative intent behind Section 14A andthe charging sections 4 and 5 of the Income Tax Act, 1961,which lay down that total income under the Act wouldinclude income from all sources whether “received”,deemed to be _ received”, “accrued” or “deemed _accrue’ ? 2 Vide this appeal learned counsel for the appellant haschallenged the matter remanding back to the Assessing officer to veritythe facts whether the respondent had erred in exemption. A perusal of theorder of the Tribunal reveals as follows :- 4 |Ld. AR submitted that subject to verification, the ordermay be upheld. Inviting attention to ITA 1281/CHD/2018 itwas submitted that similar direction on same Set offacts had ITA-356-2019 (O&M) been prayed for in the said appeals also. The ld. CIT-DRShri A. Gupta on perusing the record, posed no objection, itwas submitted that the appeal has to be argued by Sr. DR.In view thereof, a pass over was granted. In the next round,the ld. Sr. DR relied upon the assessment order andposed noobjection to the prayerfor remandfor verification of thefactofearning exempt income. 5 We have heard the rival submissions and perused thematerial available on record. Since facts, submissions andposition oflaw remain identical to what has been considerediInITA 1281/CHD/2018, accordingly for similar reasons, theissue herein also is remanded to the AO with the identicaldirections. The relevantfinding is extracted hereinunder :- “4, Considering the submissions of the parties, we areof the view that the departmental objection to the remand bythe CIT (A) to the AO directing him to verify the facts hasstatutory support. Admittedly, the appeal being decided bythe ld. CIT(A) was to be decided in terms of the statutorymandate as set out in Section 250 and 251 of the Income TaxAct, 1961. A perusal of the Statute shows that the power ofthe CIT(A) set aside the issue has been omitted from sub-section (1) ofSection 251 by the Finance Act, 2001. The ld.CIT (A) in the exercise of his power in terms of clause (a) ofsub-section (1) of Section 251 has been empowered in anappeal to either confirm, reduce, enhance or annul theassessment however the power to set aside is no longervested in his office. It is seen that the ld. CIT(A) at bestcould have carried out an enquiry himself or direct the AOto make further enquiry himself or direct the AO to makefurther enquiry and obtain a Remand Report as set out insub-section (4) of section 250 of the Income Tax Act,1961which sets out the procedure to be followed while exercisingthe powers of CIT (A).The relevant provision is extractedhereunderfor the sake ofcompleteness: “Procedure in appeal. 5 Section 250(1).....(2).....(3)..... “Procedure in appeal. 5 Section 250(1).....(2).....(3)..... (4) The Commissioner (Appeals) may, beforedisposing of any appeal, make such further inquiry as hethinksfit, or may direct the Assessing Officer to makefurtherinquiry and report the result of the same to be theCommissioner (Appeals). (5)... iWe find that the ld. CIT (A) in the facts of the presentcase has not followed the statutory provisions as admittedthe CIT(A) was not empowered to remand the issue to theAO and he was duty bound to pass an order after verifyingthe records or obtaining a remand report if need be.Accordingly, considering the submissions of the partiesbefore the Bench, we deem it appropriate to uphold thedirection with the above observation and direct the AO togrant relief in accordance with law after verifying the claimof the assessee having not earned any exempt income in theyear under consideration. Said order was pronounced in theOpen Court at the time ofhearing itself.” 3,In this view of the matter, no substantial question of lawproposed arises. Consequently, the appeal stands dismissed. 4Since the main case has been dismissed, the pendingapplication, if any, also stands disposed of. (AJAY TEWARIT) JUDGE 29.1 2020anuradha (AVNEESH JHINGAN)JUDGE Whether speaking/reasoned#Yes/NoWhether reportable#Yes/No