INDIA INFRASTRUCTURE DEVELOPERS LTD, MUMBAI V. DCIT CIR 2(2), MUMBAI

ITA 1168/MUM/2011

• Counselvise Citation: 116819914 RSA 2011
• Duration Of Justice: 3 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-04-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 01-04-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 08-02-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ASHOK SURI
• Assessee Lawyers: HEENA DOSHI
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

, VKBZ VKBZ VKBZ VKBZ INCOME TAX APPELLATE TRIBUNAL,MUMBAI - I BENCH. .. , ! , BEFORE S/SH.I.P.BANSAL, JUDICIAL MEMBE R & RAJENDRA,ACCOUNTANT MEMBER /. ITA NO.1168/MUM/2011, ' ' ' ' # # # # / ASSESSMENT YEAR-2007-08 INDIA INFRASTRUCTURE DEVELOPERS LTD., TAXATION DEPARTMENT, L&T HOUSE, N.M.MARG, BALLARD ESTATE, MUMBAI-400020 VS D CIT CIR 2(2), R.NO.577 , 5 TH FLOOR, AAYAKAR BHAVAN, M.K.MARG,MUMBAI-400020 PAN: AAACI4598Q ( $% / APPELLANT) ( &'$% / RESPONDENT) '() '() '() '() * * * * / ASSESSEE BY : MS. HEENA DOSHI + * / REVENUE BY : SHRI ASHOK SURI ' ' ' ' + ++ + ), ), ), ), / DATE OF HEARING : 01-04-2014 -.# + ), / DATE OF PRONOUNCEMENT : 01-04-2014 ' ' ' ' , 1961 + ++ + 254 )1( )/) )/) )/) )/) 0 0 0 0 ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA,AM ! ! ! ! ' ' ' ' : CHALLENGING THE ORDER DT. 02.11.2010 OF THE CIT(A)- 5,MUMBAI, ASSESSEE-COMPANY HAS FILED FOLLOWING GROUNDS OF APPEAL : 1.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE DISALL OWANCE UNDER SECTION 14A OF THE ACT EVEN THOUGH INCOME CLAIMED AS EXEMPT DURING THE YEAR IS NIL. 2.THE APPELLANT COMPANY CRAVES LEAVE TO ADD TO, ALT ER OR MODIFY ANY OF THE ABOVE GROUNDS OF APPEAL. 2. ASSESSEE-COMPANY,ENGAGED IN THE BUSINESS OF LEASING AND INVESTMENT,FILED ITS RETURN OF INCOME ON 06.01.2007 DECLARING TOTAL INCOME OF RS. 54.75 C RORES.ASSESSING OFFICER (AO) FINALISED THE ASSESSMENT ON 30.11.2009 DETERMINING THE TOTAL INCO ME OF THE ASSESSEE AT RS. 56.49 CRORES. DURING THE ASSESSMENT PROCEEDINGS, AO FOUND THAT AS SESSEE HAD SHOWN INVESTMENT OF RS. 66.68 CRORES IN TAX-FREE-BONDS AND SHARES OF COMPANIES, T HAT INCOME FROM SAID INVESTMENTS WAS NOT INCLUDIBLE IN THE TOTAL INCOME AS PER THE PROVISION S OF CHAPTER III OF THE ACT. HE ASKED THE ASSESSEE TO CLAIM AS TO WHY THE EXPENSES SHOULD NOT BE DISAL LOWED U/S. 14A OF THE ACT R.W.RULE 8D OF INCOME TAX RULE 1962 (RULES).AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, HE WORKED OUT THE DISALLOWANCE IN TERMS OF CLAUSE (III) OF SUB-RU LE 2 OF RULE 8D @ HALF PERCENT OF THE AVERAGE VALUE OF TOTAL INVESTMENT . 3. IN THE APPELLANT PROCEEDINGS, ASSESSEE-COMPANY ARGU ED THAT IT HAD NOT EARNED AND CLAIMED AS EXEMPT AND DIVIDEND INCOME ON INVESTMENTS,THAT QUES TION OF DISALLOWANCE U/S. 14A OF THE ACT DID NOT ARISE AT ALL. RELIANCE WAS PLACED ON THE DECISI ON OF HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MANUFACTURING CO. LTD. AFTER CONSIDE RING THE SUBMISSION OF THE ASSESSEE AND THE ASSESSMENT ORDER, FIRST APPELLATE AUTHORITY (FAA) H ELD THAT MAIN THRUST OF SECTION 14A OF THE ACT WAS ON DISALLOWANCE OF EXPENDITURE INCURRED ON THE VALUE OF INVESTMENT THAT YIELDED EXEMPT INCOME ARISING OUT OF SHARES, BONDS AND MUTUAL FUND S ETC, THAT THE FOCUS OF DISALLOWANCE WAS ON EXPENDITURE ON THE SOURCE OF INVESTMENTS, THAT THE PROVISIONS OF SECTION 14A WOULD COME INTO PLAY 2 ITA NO.1168/MUM/2011 INDIA INFRASTRUCTURE DEVELOPER S LTD. IRRESPECTIVE OF THE FACT WHETHER THE INVESTMENT YIE LDED INCOME OR NOT. HE RELIED UPON THE DECISION OF THE SPECIAL BENCH OF ITAT DELHI DELIVERED IN THE CASE OF CHEMINVEST LTD. (317 ITR 86-80). REFERRING TO THE DECISION OF GODREJ & BOYCE MANUFAC TURING CO. LTD., HE HELD THAT PROVISIONS OF RULE 8D WOULD APPLY FROM ASSESSMENT YEAR (AY) 2008- 09 ONLY, THAT PRIOR TO AY 2008-09 AO HAD TO ADOPT A REASONABLE BASIS OR METHODS FOR MAKI NG DISALLOWANCE. 4 .BEFORE US, AUTHORISED REPRESENTATIVE (AR) FAIRLY C ONCEDED THAT THE MATTER IS ISSUED AGAINST THE ASSESSEE BY THE DECISION OF THE SPECIAL BENCH OF DE LHI TRIBUNAL. DEPARTMENTAL REPRESENTATIVE (DR) SUPPORTED THE ORDER OF THE FAA. 5 .AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE ARE OF THE OPINION THAT FAA HAS FOLLOWED THE DECISION OF THE SAID BENCH OF DELHI ITAT AS WELL AS THE JUDGMENT DELIVERED BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MAN UFACTURING CO. LTD., HE HAD DIRECTED THE AO TO WORK OUT THE DISALLOWANCE IN TERMS OF THE DIR ECTIONS OF HONBLE JURISDICTIONAL HIGH COURT. THEREFORE, IN OUR OPINION, HIS ORDER DOES NOT SUFFE R FROM ANY LEGAL INFIRMITY.RESPECTFULLY, FOLLOWING THE ABOVE REFERRED ORDER OF THE BOMBAY HI GH COURT, WE DECIDE THE EFFECTIVE GROUND OF APPEAL AGAINST THE ASSESSEE. AS A RESULT,APPEAL FILED BY THE ASSESSEE-COMPANY ST ANDS DISMISSED. 1)2 '() + ' 3 + ) 45. ORDER PRONOUNC ED IN THE OPEN COURT ON 1 ST APRIL,2014 . 0 + -.# 6 7' 01 &5 ,201 4 . + / 8 SD/- SD/- ( .. / I.P. BANSAL) ( ! ! ! ! / RAJENDRA) / JUDICIAL MEMBER /ACCOUNTANT MEMBER / MUMBAI, 7' /DATE: 01.04 . 2014. SK 0 0 0 0 + ++ + &)9 &)9 &)9 &)9 : 9#) : 9#) : 9#) : 9#) / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / $% 2. RESPONDENT / &'$% 3. THE CONCERNED CIT(A)/ ; < , 4. THE CONCERNED CIT / ; < 5. DR I BENCH, ITAT, MUMBAI / 9=/ &)' VKBZ VKBZ VKBZ VKBZ , . . . 6. GUARD FILE/ / 1 '9) '9) '9) '9) &) &)&) &) //TRUE COPY// 0' / BY ORDER, > / 4 DY./ASST. REGISTRAR , /ITAT, MUMBAI