MIRC ELECTRONICS LTD, MUMBAI V. ASST CIT CEN CIR 36, MUMBAI

ITA 1104/MUM/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2900 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 03-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHAITANYA S ANJARIA LD
• Assessee Lawyers: RAKESH MOHAN LD
• Keywords: Earning of tax free income
• Section: 143(3); 14A

Judgement Text

ITA.NO.1104/MUM/2016 MIRC ELECTRONICS LTD. ASSESSMENT YEAR 2009-10 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI , , BEFORE HONBLE SHRI MAHAVIR SINGH, JM AND HONBLE SHRIMANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.1104/MUM/2016 ( / ASSESSMENT YEAR: 2009-10) MIRC ELECTRONIC LIMITED G-1, MIDC ONIDA HOUSE MAHAKALI CAVES ROAD ANDHERI (EAST) MUMBAI-400 093 / VS. ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-36 MUMBAI ./ ./PAN/GIR NO. AAACM-8055-A ( ' /APPELLANT ) : ( #$ ' / RESPONDENT ) ASSESSEE BY : RAKESH MOHAN, LD. AR REVENUE BY : CHAITANYA S. ANJARIA, LD. DR / DATE OF HEARING : 15/10/2018 / DATE OF PRONOUNCEMENT : 02/11/2018 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2009-10 CONTEST THE ORDER OF THE LD. COMMISSIONER OF INCOME -TAX (APPEALS)-53 [CIT(A)], MUMBAI, APPEAL NO.CIT(A)-53/DCCC-36/IT-652/2011-12 DATED 27/11/2015 QUA CONFIRMATION OF DISALLOWANCE U/S 14A FOR RS.12.99 LACS. THE ASSESSMENT FOR IMPUGNED AY WAS FRAMED BY LD. ASSISTANT ITA.NO.1104/MUM/2016 MIRC ELECTRONICS LTD. ASSESSMENT YEAR 2009-10 2 COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-36, MUMB AI [AO] U/S 143(3) ON 28/12/2011 WHEREIN THE INCOME OF THE ASSESSEE WA S ASSESSED AT RS.105.37 LACS AFTER CERTAIN ADDITIONS / DISALLOWAN CES AS AGAINST NIL RETURN E-FILED BY THE ASSESSEE ON 29/09/2009. DURING IMPUGNED AY, THE BEING RESIDENT CORPORATE ENTITY WAS ENGAGED IN THE MANUFACTURING OF TV SETS. THE ONLY ISSUE UNDER APPEAL IS DISALLOWANCE U/S 14A . 2. DURING ASSESSMENT PROCEEDINGS, IT WAS NOTED THAT THE ASSESSEE EARNED EXEMPT DIVIDEND INCOME OF RS.5.02 LACS AND A GAINST THE SAME OFFERED SUO-MOTO DISALLOWANCE OF RS.20,073/-. THE WORKING OF THE SA ME AS PLACED ON PAGE NUMBER 42 OF THE PAPER-BOOK REVEAL THAT THE SAME HAS BEEN COMPUTED @1% OF FINANCE HEAD SALARY. HOWEVER, LD. AO, APPLYING RULE 8D, WORKED OUT EXPENSE DISALLOWANCE O F RS.13.19 LACS U/R 8D(2)(III) COMPUTED @0.5% OF AVERAGE VALUE OF I NVESTMENTS. AFTER ADJUSTING SUO-MOTO DISALLOWANCE OF RS.0.20 LACS AS OFFERED BY THE ASSESSEE, THE NET DISALLOWANCE SO ADDED TO THE INCO ME OF THE ASSESSEE WAS RS.12.99 LACS. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITHO UT ANY SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 27/11/2 015 WHEREIN THE STAND OF LD. AO WAS CONFIRMED, AGAINST WHICH THE AS SESSEE IS IN FURTHER APPEAL BEFORE US. 4. THE LD. AUTHORIZED REPRESENTATIVE [AR] FOR ASSES SEE, SHRI RAKESH MOHAN DREW OUR ATTENTION TO THE FACT THAT THE RULE 8D HAS BEEN APPLIED MECHANICALLY BY LD. AO WITHOUT POINTING OUT ANY ERR OR IN THE SUO-MOTO DISALLOWANCE AS OFFERED BY THE ASSESSEE IN THE COMPUTATION OF IN COME. RELIANCE HAS BEEN PLACED ON THE ORDER OF THIS TRIBU NAL IN ASSESSEES OWN CASE FOR AY 2008-09, 2010-11 & 2011-12, THE COP IES OF WHICH HAVE ITA.NO.1104/MUM/2016 MIRC ELECTRONICS LTD. ASSESSMENT YEAR 2009-10 3 BEEN PLACED ON RECORD. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE [DR] SUPPORTED THE STAND OF LOWER AUTHORITIES. 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED RELEVANT MATERIAL ON RECORD. UPON DUE CONSIDERATION , WE FIND THAT LD. AO HAS ARRIVED AT AGGREGATE DISALLOWANCE OF RS.13.19 L ACS U/R 8D AGAINST EXEMPT INCOME OF RS.5.02 LACS EARNED BY THE ASSESSE E DURING IMPUGNED AY, WHICH, IN OUR OPINION, WAS NOT JUSTIFI ED. SECONDLY, LD. AO, BEFORE APPLYING RULE 8D, HAS NOT RECORDED ANY SATIS FACTION AS TO HOW THE COMPUTATIONS MADE BY THE ASSESSEE WERE ERRONEOUS OR NOT ACCEPTABLE. THE STATUTORY PROVISIONS OF SECTION 14A CAST ONUS O N LD. AO TO VERIFY THE CORRECTNESS OF ASSESSEES CLAIM HAVING REGARDS TO T HE ACCOUNTS OF THE ASSESSEE AND IF NOT SATISFIED, RECORD DISSATISFACTI ON BEFORE PROCEEDING TO APPLY RULE 8D. THIS EXERCISE, IN OUR OPINION, HAS N OT BEEN CARRIED OUT BY LD. AO AS EVIDENT FROM QUANTUM ASSESSMENT ORDER. TH EREFORE, THE REVENUE FAILED TO FULFILL THE BASIS REQUIREMENT TO ASSUME JURISDICTION U/R 8D. HENCE, BY DELETING THE IMPUGNED ADDITIONS OF RS .12.99 LACS, WE ALLOW THE APPEAL. 6. THE APPEAL STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 ND NOVEMBER, 2018 SD/- SD/- (MAHAVIR SINGH) (MA NOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 02/11/2018 SR.PS:-THIRUMALESH ! / COPY OF THE ORDER FORWARDED TO : 1. ' / THE APPELLANT ITA.NO.1104/MUM/2016 MIRC ELECTRONICS LTD. ASSESSMENT YEAR 2009-10 4 2. #$ ' / THE RESPONDENT 3. * ( ) / THE CIT(A) 4. * / CIT CONCERNED 5. +,#&- , - , / DR, ITAT, MUMBAI 6. ,./0 / GUARD FILE / BY ORDER, ITA.NO.1104/MUM/2016 MIRC ELECTRONICS LTD. ASSESSMENT YEAR 2009-10 5 / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI SR. NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATION SHEETS ARE ATTACHED SELF- TYPED O N OWN COMPUTER / LAPTOP BY THE MEMBER SR.PS/PS 2 DRAFT DICTATED ON NOT APPLICABLE SR.PS/PS 3 DRAFT PLACED BEFORE AUTHOR NOT APPLICABLE SR.PS/ PS 4 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 5 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/A M 6 APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 7 ORDER PRONOUNCEMENT ON SR.PS/PS 8 FILE SENT TO THE BENCH CLERK SR.PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE AR 11 DATE OF DISPATCH OF ORDER