MAHINDRA HOLDINGS LTD, MUMBAI V. ACIT CIR 6(3), MUMBAI

ITA 1209/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84060 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-11-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 05-11-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 12-02-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: BHAKTI SHAH
• Keywords: Earning of tax free income
• Section: 14A; 10

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BE NCH, MUMBAI . . , !' , # $ BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ./I .T.A. NO.1209/MUM/2013 ( % % % % / ASSESSMENT YEAR : 2009-10 M/S. MAHINDRA HOLDINGS LTD., MAHINDRA TOWERS, P.K. KURNE CHOWK, DR. G.M. BHOSALE MARG, WORLI, MUMBAI-400 018 / VS. THE ACIT, CIRCLE 6(3), AAYAKAR BHAVAN, MUMBAI & # ./ '( ./ PAN/GIR NO. : AAFCM 3584K ( &) / APPELLANT ) .. ( *+&) / RESPONDENT ) &) , / APPELLANT BY: SHRI MS. BHAKTI SHAH *+&) - , / RESPONDENT BY: SHRI VIJAYKUMAR - ./# / DATE OF HEARING :05.11.2014 01% - ./# / DATE OF PRONOUNCEMENT :05.11.2014 2 / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE LD. CIT(A)-12, MUMBAI DT.6.11.2012 PERTAINING TO A.Y.20 09-10. 2. THE SOLE GRIEVANCE OF THE ASSESSEE IS THAT THE L D. CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF INTEREST AND OTHER A DMINISTRATIVE EXPENDITURE U/S. 14A TO THE TUNE OF RS. 29,65,022/- . ITA NO. 1209/M/2013 2 3. THE ASSESSEE IS IN THE BUSINESS OF PROMOTING, MO BILIZING & MANAGING CAPITAL, SAVINGS AND INVESTMENT AND CARRYI NG OUT BUSINESS AS FINANCER & INVESTORS FOR THE MAHINDRA & MAHINDRA GR OUP OF COMPANIES. THE RETURN OF INCOME DECLARING TOTAL INCOME AT RS. 1,18,40,273/- WAS FILED ON 30.9.2009. THE RETURN WAS SELECTED FOR SC RUTINY AND STATUTORY NOTICES WERE ACCORDINGLY ISSUED AND SERVED UPON THE ASSESSEE. 3.1. ON PERUSAL OF THE COMPUTATION OF INCOME, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS CLAIMED AN AMOUNT OF RS. 1,09,70,345/- AS DIVIDEND EXEMPT U/S. 10 OF THE ACT. THE AO FURTHER NOTICED THAT THE ASSESSEE HAS SUO-MOTO DISALLOWED RS. 27,00,000/- U/ S. 14A OF THE ACT. THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS OF EX PENDITURE INCURRED OR ATTRIBUTABLE FOR EARNING EXEMPT INCOME. THE ASSESSE E FILED A DETAILED REPLY AND CLAIMED THAT IT HAS NOT INCURRED ANY EXPE NDITURE FOR THE PURPOSE OF EARNING EXEMPT INCOME. IT WAS POINTED OUT THAT THE ASSESSEE HAS ALREADY DISALLOWED RS. 27 LAKHS, THEREFORE, NO FURT HER DISALLOWANCE IS TO BE MADE. 3.2. THE SUBMISSION MADE BY THE ASSESSEE DID NOT FA VOUR WITH THE AO WHO PROCEEDED TO COMPUTE THE DISALLOWANCE U/S. 14A R.W. RULE 8D AND COMPUTED THE DISALLOWANCE OF RS. 56,65,022/-, DEDUC TING THE DISALLOWANCE MADE BY THE ASSESSEE RS. 27 LAKHS, THE TOTAL DISALLOWANCE WAS MADE AT RS. 29,65,022/-. 4. AGGRIEVED BY THIS, THE ASSESSEE CARRIED THE MATT ER BEFORE THE LD. CIT(A) BUT WITHOUT ANY SUCCESS. 5. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO THE BALANCE SHEET OF THE ASSESSEE AND POINTED OUT T HAT THE ASSESSEE WAS ITA NO. 1209/M/2013 3 HAVING SUFFICIENT OWN FUNDS TO MAKE THE INVESTMENT THEREFORE, THERE IS NO OCCASION FOR CONSIDERING THE INTEREST FOR THE PURPO SE OF MAKING DISALLOWANCE U/S. 14A OF THE ACT. THE LD. COUNSEL FOR THE ASSESSEE FURTHER DREW OUR ATTENTION TO THE EXPENDITURE CLAIM ED UNDER THE HEAD OTHER EXPENSES AND POINTED OUT THAT LOSS ON SALE OF INVESTMENT AND STAMP DUTY AND REGISTRATION CHARGES HAVE ALREADY BE EN DISALLOWED BY THE ASSESSEE WHILE COMPUTING ITS TAXABLE INCOME, THEREF ORE THESE SUO MOTO DISALLOWANCES MADE BY THE ASSESSEE SHOULD BE CONSID ERED WHILE COMPUTING THE DISALLOWANCE. 6. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE FINDINGS OF THE REVENUE AUTHORITIES. 7. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTH ORITIES BELOW AND THE RELEVANT DOCUMENTARY EVIDENCES BROUGHT ON RECOR D AND BROUGHT TO OUR NOTICE. THERE IS NO DENIAL THAT ASSESSEES OWN FUN DS ARE MUCH MORE THAN THE INVESTMENT MADE BY THE ASSESSEE. DRAWING SUPPOR T FROM THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS RELIANCE UTILITIES & POWER LTD. 313 ITR 340, IN OUR CONSIDER ED OPINION, THIS IS NOT A FIT CASE FOR CONSIDERING INTEREST EXPENSES FOR TH E PURPOSE OF DISALLOWANCE U/S. 14A R.W. RULE 8D OF THE ACT. IN SO FAR AS OTHER EXPENSES ARE CONCERNED, WE FIND FORCE IN THE CONTEN TION OF THE LD. COUNSEL. IN THE COMPUTATION OF INCOME, THE ASSESSE E HAS SUO MOTO DISALLOWED STAMP DUTY AND REGISTRATION CHARGES OF R S. 2,25,000/- AND LOSS ON SALE OF INVESTMENT AT RS. 3,23,44,976/- IN ADDIT ION TO THE DISALLOWANCE OUT OF INTEREST AT RS. 27 LAKHS. CONSIDERING ALL T HESE FACTS IN TOTALITY, WE DIRECT THE AO TO RECOMPUTE THE DISALLOWANCE AFTER T AKING INTO CONSIDERATION THE AUDITORS REMUNERATION AT RS. 1,70 ,760/-, LEGAL AND PROFESSIONAL CHARGES AT RS. 49,000/- AND MISCELLAN EOUS EXPENSES & ITA NO. 1209/M/2013 4 PROFESSIONAL TAX AT RS. 4,760/-. WE FURTHER DIRECT THE AO TO RESTRICT THE DISALLOWANCE TO THE TOTAL ACTUAL EXPENDITURE INCURR ED AND CLAIMED BY THE ASSESSEE. FOR THIS PROPOSITION, WE DRAW SUPPORT FR OM THE DECISION OF THE CO ORDINATE BENCH IN ITA NOS. 3464/M/2011 & 4294/DE L/2012. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH NOVEMBER, 2014 SD/- SD/- (I.P. BANSAL ) (N.K. BILLAIYA) / JUDICIAL MEMBER # / ACCOUNTANT MEMBER MUMBAI; 3 DATED : 05/11/2014 . . ./ RJ , SR. PS 2 2 2 2 - -- - *. *. *. *. 4%. 4%. 4%. 4%. / COPY OF THE ORDER FORWARDED TO : 1. &) / THE APPELLANT 2. *+&) / THE RESPONDENT. 3. 5 ( ) / THE CIT(A)- 4. 5 / CIT 5. 67 *. , , / DR, ITAT, MUMBAI 6. 78 9 / GUARD FILE. 2 2 2 2 / BY ORDER, +. *. //TRUE COPY// : :: : / ; ; ; ; ' ' ' ' (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI