DCIT 2(1)(1), MUMBAI V. DSP ADIKO HOLDING P.LTD, MUMBAI

ITA 1094/MUM/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5430 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2012-2013
• Appeal Filed On: 16-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAM TIWARI LD
• Assessee Lawyers: MADHUR AGARWAL LD AR
• Keywords: Earning of tax free income
• Section: 143(3); 14A; 115JB

Judgement Text

ITA NOS.1094 &1159/MUM/2017 DSP ADIKO HOLDING PRIVATE LIMITED & DSP HMK HOLDINGS PRIVATE LIMITED ASSESSMENT YEAR-2012-13 IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI , BEFORE SHRI SAKTIJIT DEY, JM AND SHRI MANOJ KUMAR AGGARWAL, AM I.T.A. NO.1094/MUM/2017 ( ASSESSMENT YEAR:2012-13) DEPUTY COMMISSIONER OF INCOME TAX - 2(1)(1) ROOM NO.561, 5 TH FLOOR, AAYKAR BHAVAN, M.K.ROAD MUMBAI-400 020 VS. DSP ADIKO HOLDING PRIVATE LIMITED 11 TH FLOOR, MAFATLAL CENTRE NARIMAN POINT MUMBAI-400 021 ! ' PAN/GIR NO.AAACA-3438-M ( !# APPELLANT ) : ( $%!# RESPONDENT ) & I.T.A. NO.1159/MUM/2017 ( ASSESSMENT YEAR:2012-13) DEPUTY COMMISSIONER OF INCOME TAX - 2(1)(1) ROOM NO.561, 5 TH FLOOR, AAYKAR BHAVAN, M.K.ROAD MUMBAI-400 020 VS. DSP HMK HOLDING LIMITED 1 ST FLOOR, MAFATLAL CENTRE NARIMAN POINT MUMBAI-400 021 ! ' PAN/GIR NO.AAACH-1037-K ( !# APPELLANT ) : ( $%!# RESPONDENT ) REVENUE BY : RAM TIWARI,LD.DR ASSESSEE BY : MADHUR AGARWAL, LD.AR & DATE OF HEARING : 18/07/2018 '() / DATE OF PRONOUNCEMENT : 25/07/2018 ITA NOS.1094 &1159/MUM/2017 DSP ADIKO HOLDING PRIVATE LIMITED & DSP HMK HOLDINGS PRIVATE LIMITED ASSESSMENT YEARS-2012-13 2 O R D E R PER BENCH 1. AFORESAID APPEALS BY REVENUE FOR ASSESSMENT YEAR [A Y] 2012-13 CONTEST SEPARATE ORDERS OF LD. FIRST APPELLATE AUTH ORITY. SINCE COMMON ISSUES ARE INVOLVED AND FACTS ARE IDENTICAL, WE DIS POSE-OFF THE SAME BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENC E & BREVITY. ITA NO. 1094/MUM/2017 AY 2012-13 : DSP ADIKO HOLDIN GS PVT. LTD. 2. THE REVENUE, AGGRIEVED BY THE ORDER OF LD. COMMI SSIONER OF INCOME-TAX (APPEALS)-03 [CIT(A)], MUMBAI, APPEAL NO.CIT(A)-3/ACIT- 2(1)(1)/IT-03/2016-17 DATED 09/11/2016, HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN RESTRICTING THE DISALLOWANCE U/S.14A OF TH E I.T. ACT R.W.S. 8D MADE BY THE AO WITHOUT APPRECIATING THAT IT WAS CORRECTLY WORKE D OUT AS PER THE METHOD OF CALCULATION PRESCRIBED IN RULE 8D OF THE INCOME TAX RULES, 1962. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN RESTRICTING THE DISALLOWANCE U/S.14A OF TH E I.T. ACT OF THE R.W.S. 8D MADE BY THE AO WITHOUT APPRECIATING THAT THE METHOD OF W ORKING OF DISALLOWANCE IS HELD AS REASONABLE METHOD BY JURISDICTIONAL HIGH COURT I N THE CASE OF GODREJ & BOYCE MFG. CO.LTD. VS CIT 328 ITR 81 (BOM). 3. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING THE DECISION OF THE CIT(A) MAY BE SET ASIDE AND THAT OF THE AO R ESTORED. THE ASSESSMENT FOR IMPUGNED AY WAS FRAMED BY LD. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 2(1)(1), MUMBAI [AO] U/S 143(3) ON 23/02/2015 W HEREIN THE INCOME OF THE ASSESSEE WAS ASSESSED AT RS.746.76 LACS UNDER NORMAL PROVISIONS AND RS.1260. 50 LACS FOR THE PURPOSE OF MINIMUM ALTERNATIVE TAX [MAT] U/S 115JB AFTER CERTAIN ADDITIONS / DISALLOWANCES AS AGAINST NORMAL RETURNE D INCOME OF RS.379.61 LACS E-FILED BY THE ASSESSEE ON 28/09/2012. THE INCOME ITA NOS.1094 &1159/MUM/2017 DSP ADIKO HOLDING PRIVATE LIMITED & DSP HMK HOLDINGS PRIVATE LIMITED ASSESSMENT YEARS-2012-13 3 OFFERED U/S 115JB WAS RS.893.35 LACS. AS EVIDENT FR OM THE GROUNDS OF APPEAL, THE ONLY SUBJECT MATTER OF THE APPEAL IS DI SALLOWANCE U/S14A. DURING THE IMPUGNED AY, THE ASSESSEE BEING RESIDENT CORPORATE ASSESSEE WAS ENGAGED IN THE BUSINESS OF INVESTMENT AND REGISTERED WITH RBI AS NON BANKING FINANCE COMPANY [NBFC]. 3. DURING ASSESSMENT PROCEEDINGS, IT WAS NOTED THAT THE ASSESSEE EARNED EXEMPT INCOME OF RS. 22.88 CRORES IN THE SHA PE OF DIVIDEND AND LONG TERM CAPITAL GAINS WHICH CALLED FOR DISALLOWAN CE U/S 14A. AGAINST THE SAME, THE ASSESSEE HAD MADE SUO-MOTO DISALLOWANCE OF RS.6.99 LACS AND DEFENDED THE SAME ON THE STRENGTH OF TRIBU NALS ORDER IN EARLIER YEARS. HOWEVER, NOT CONVINCED, LD. AO, APPLYING RUL E 8D, WORKED OUT AGGREGATE DISALLOWANCE OF RS.374.14 LACS WHICH COMP RISED-OFF OF DIRECT EXPENSE DISALLOWANCE U/R 8D(2)(I) FOR RS.0.11 LACS AND INDIRECT EXPENSE DISALLOWANCE U/R 8D(2)(III) FOR RS.374.03 LACS. AFT ER ADJUSTING SUO-MOTO DISALLOWANCE OF RS.6.99, THE NET DISALLOWANCE WORKE D OUT WAS RS.367.15 LACS WHICH WAS ADDED TO THE INCOME OF THE ASSESSEE WHILE ARRIVING AT INCOME UNDER NORMAL PROVISIONS AS WELL AS U/S 115JB . 4. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH PARTIAL SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 09/11/2 016 WHEREIN IT WAS, INTER-ALIA, SUBMITTED THAT THE NET EXPENDITURE AS CLAIMED BY T HE ASSESSEE WAS ONLY RS.12.16 LACS AND THEREFORE, THE DISALLOWA NCE, IF ANY, WHICH HAS TO BE MADE IS TO BE RESTRICTED TO THAT AMOUNT O NLY. THE RELIANCE WAS PLACED ON THE DECISION OF THIS TRIBUNAL, IN THIS RE GARD, FOR EARLIER AYS. THE MATTER WAS CONCLUDED BY LD. CIT(A) BY MAKING FOLLOW ING OBSERVATIONS:- 7. GROUND NO.2 RELATES TO DISALLOWANCE OF RS.3,67,15,0 98/- U/S 14A READ WITH RULE 8D OF THE IT RULES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ITA NOS.1094 &1159/MUM/2017 DSP ADIKO HOLDING PRIVATE LIMITED & DSP HMK HOLDINGS PRIVATE LIMITED ASSESSMENT YEARS-2012-13 4 AO HAS OBSERVED THAT THE APPELLANT HAS RECEIVED DIV IDEND ON MUTUAL FUNDS RS.22,21,29,894/-, DIVIDEND ON SHARES RS.64,67,124/ - AND LONG TERM CAPITAL GAINS U/S 10(38) RS.2,17,545/-. THE AO HAS CALCULAT ED DISALLOWANCE U/S 14A READ WITH RULE 8D(2)(III) OF RS.3,74,03,615/- AND DISALL OWED AN AMOUNT OF RS.3,67,15,098/-, AFTER GIVING RELIEF OF RS.6,99,55 0/- U/S 14A FOR WHICH THE DETAILS AND THE BASIS OF WORKING HAS BEEN SUBMITTED BEFORE THE AO. FURTHER, THE HONBLE ITAT D BENCH IN THE APPELLANTS OWN CASE FOR EARL IER YEARS, HAS HELD THAT THE EXPENDITURE WORKED OUT BY THE APPELLANT IS REASONAB LE TO MAKE DISALLOWANCE U/S 14A RED WITH RULE 8D. SINCE NO FURTHER APPEAL WAS F ILED BY THE DEPARTMENT AGAINST THE ITAT DECISION THE FINDING OF THE ITAT MAY BE AC CEPTED. IT WAS FURTHER SUBMITTED THAT DISALLOWANCE UNDER RULE 8D READ WITH RULE 14A (2) CANNOT EXCEED THE TOTAL EXPENSES CLAIMED BY THE APPELLANT. 7.1 I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND FACTS OF THE CASE. RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE ITAT D BENCH IN THE APPELLANTS OWN CASE AND THE FACT THAT THE MISTAKE IN THE CALCU LATION OR CORRECTNESS OF THE EXPENSES CLAIMED BY THE APPELLANT. IN VIEW OF THE S AME, THE DISALLOWANCE MADE BY THE APPELLANT TO THE EXTENT OF RS.12,16,823/-, IS C ONFIRMED AS DISALLOWED BY THE APPELLANT ON PROPORTIONATE BASIS AND THE BALANCE OF RS.3,54,98,275/-, IS DELETED. IN VIEW OF THE SAME , GROUND NO.2 IS ALLOWED. AGGRIEVED, THE REVENUE IS IN FURTHER APPEAL BEFORE US. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED RELEVANT MATERIAL ON RECORD. THE FACT THAT THE ASSESSEE CLAIMED NET E XPENDITURE OF RS.12.16 LACS DURING IMPUGNED AY REMAIN UNDISPUTED. AGAINST THE SAME, THE DISALLOWANCE WORKED OUT BY LD. AO WAS RS. 374.14 LACS WHICH WAS NOT, AT ALL, JUSTIFIED. THE LD. CIT(A) HA S RESTRICTED THE SAME TO RS.12.16 LACS, WHICH IS FAIR & LOGICAL. UPON PERUSA L OF TRIBUNALS ORDER FOR AY 2008-09, WE FIND THAT THE SUO-MOTO DISALLOWANCE AS MADE BY THE ASSESSEE HAS BEEN ACCEPTED BY THE TRIBUNAL. FOLLOWI NG THE SAME, THE MATTER FOR AYS 2009-10 & 2011-12 HAS BEEN REMITTED BACK TO THE FILE OF LD. AO FOR RE-ADJUDICATION IN TERMS OF RATIO OF TRI BUNALS DECISION FOR AY 2008-09. 6. HENCE, UPON DUE CONSIDERATION OF FACTUAL MATRIX, WE SEE NO REASONS TO INTERFERE WITH THE ORDER OF LD. FIRST AP PELLATE AUTHORITY. ITA NOS.1094 &1159/MUM/2017 DSP ADIKO HOLDING PRIVATE LIMITED & DSP HMK HOLDINGS PRIVATE LIMITED ASSESSMENT YEARS-2012-13 5 7. THE REVENUES APPEAL STAND DISMISSED. ITA NO. 1159/MUM/2017 AY 2012-13 : DSP HMK HOLDINGS PVT. LTD. 8. SIMILARLY AGGRIEVED, THE REVENUE IS IN APPEAL WI TH SIMILAR GROUNDS AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-03 [CIT(A)], MUMBAI, APPEAL NO.CIT(A)-3/ACIT-2(1)(1)/IT-05/2016-17 DATED 09/11/2016. 9. IN THIS YEAR, THE CAPTIONED ASSESSEE HAS SUFFERE D NET DISALLOWANCE OF RS.375.45 LACS AFTER ADJUSTMENT OF SUO-MOTO DISALLOWANCE OF RS.4.75 LACS AS MADE BY THE ASSESSEE. UPON FURTHER APPEAL, THE LD. CIT(A) HAS RESTRICTED THE SAME TO RS.6.46 LACS ON SIMILAR REAS ONING AND BY PLACING RELIANCE ON THE STAND OF THIS TRIBUNAL FOR EARLIER YEARS. 10. FACTS BEING IDENTICAL, TAKING THE SAME STAND, W E CONFIRM THE ACTION OF LD. CIT(A). 11. THE REVENUES APPEAL STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH JULY, 2018 SD/- SD/- (SAKTIJIT DEY) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER *& MUMBAI; DATED : 25.07.2018 SR.PS:-THIRUMALESH ITA NOS.1094 &1159/MUM/2017 DSP ADIKO HOLDING PRIVATE LIMITED & DSP HMK HOLDINGS PRIVATE LIMITED ASSESSMENT YEARS-2012-13 6 ! COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $%!# / THE RESPONDENT 3. / THE CIT(A) 4. / CIT CONCERNED 5. + ,$ - -) *& / DR, ITAT, MUMBAI 6. , ./0 & GUARD FILE ' / BY ORDER, # '$% (DY./ASSTT.REGISTRAR) *& / ITAT, MUMBAI