TWINKLE ENVIRO TECH P.LTD, MUMBAI V. ASST CIT CEN CIR 2(4), MUMBAI

ITA 1230/MUM/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 8600 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-07-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2013-2014
• Appeal Filed On: 01-03-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN
• Keywords: Earning of tax free income
• Section: 14A; 201; 13

Judgement Text

T HE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA ( A M) & SHRI AMARJIT SINGH (JM) I.T.A. NO. 1230 /MUM/ 201 8 (ASSESSMENT YEAR 20 13 - 1 4 ) TWINKLE ENVIRO TECH PVT. LTD. 317/318, PARVATI INDUSTRIAL ESTATE SUN MILL COMPOUND LOWER P AREL WEST MUMBAI - 400 013. PAN : AAACT4038N V S . ACIT, CENTRAL CIRCLE 2(4) ROOM NO. 804, 8 TH FLOOR, PRATISHTHA BHAVAN CHURCHGATE MUMBAI - 400 020. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY NONE DEPARTMENT BY SHR I V. JUSTIN DATE OF HEARING 5.3 . 20 2 0 DATE OF PRONOUNCEMENT 16.07 . 20 20 O R D E R PER SHAMIM YAHYA (AM) : - THI S APPEAL BY THE ASSESSEE IS DIRECTED BY THE ORDER OF LEARNED CIT(A) DATED 2.1.2018 AND PERTAINS TO ASSESSMENT YEAR 2013 - 14. 2. THE GROUND RAISED IS THAT LEARNED CIT(A) ER RED IN CONFIRMING THE ADDITION ON ACCOUNT OF DISALLOWANCE OF RS. 1,05,58,432/ - UNDER SECTION 14A. 3. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF SELLING HOLIDAY PLANS . D URING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT ASSESSEE HAS INCOME OF RS. 23,94,788 WHICH WAS CLAIMED EXEMPT. THE ASSESSEE OFFICER FURTHER NOTED THAT ASSESSEE HAS PAID AN AMOUNT OF RS. 2,33,56,424/ - AS INTEREST ON LOANS. HE FURTHER NOTED THAT ASSESSEE COMPANY ON ITS BALANCE SHEET HAS SHOWN TOTAL INVESTMENT AT RS. 1,27,69 , 08,04 9/ - . ASSESSEE WAS ASKED TO EXPLAIN ABOUT THE DISALLOWANCE UNDER SECTION 14 A . THE ASSESSEE STATED THAT ASSESSEE HAS NOT MADE THE INVESTMENT WITH THE PURPOSE OF EARNING INCOME. THAT THE S AME WAS 2 DONE TO AC QUIRE STRATEGIC STAKE IN THE COMPANIES. HOWEVER THE ASSESSING OFFICER WAS NOT CONVINCED , HE APPLIED RULE 8 D AND CAME TO THE TOTAL DI SALLOWANCE OF RS. 1,05,58,432/ - . 4. UPON ASSESSEE'S APPEAL IN THIS REGARD LEARNED CIT ( APPEALS ) CONFIRMED THE AFORESAID DISA LLOWANCE OF RS. 1,05,58,432/ - . 5. AGAI NST THE ABOVE ORDER THE ASSESSEE HAS FILED APPEAL BEFORE US. WE HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE. NONE A PPEARED ON BEHALF OF THE ASSESSEE DESPITE NOTICE . U PON CAREFUL CONSIDERATION WE NOTE THAT T HE A SSESSEE HAS EARNED EXEMPT INCOME OF RS. 23,94,788/ - . THE REASONING OF THE ASSESSEE FOR NOT DISALLOWING ANY SUM UNDER SECTION 14 A IS THAT THE SAID INVESTMENT WAS MADE TO A CQUIRE STRATEG IC INVESTMENT . WE FIND THAT THE AFORESAID RE ASONING IS NO MORE SUSTAINA BLE IN VIEW OF THE HON'BLE SUPREME COURT DECISION IN THE CASE OF MAXOPP INVESTMENT LTD. (CIVIL APPEAL NOS. 104 - 109 OF 2015) . HOWEVER, WE NOTE THAT THE ASSESSEE HAS EARNED EXEMPT INCOME OF RS. 23,94,788/ - . HOWEVER, THE TOTAL DISALLOWANCE OF RS. 1,05,58,432/ - . WE NOTE THAT HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF DELITE ENTERPRISES (APPEAL NO. 110 OF 2009 DATED 26.2.2009) HAS AGREED WITH THE DELHI HIGH COURT DECISION IN THE CHEMINVEST LTD.( ITA 749/2014) THAT DISALLOWANCE U/S. 14A CANNOT EXCEED THE EXE MPT INCOME. HENCE, WE DIRECT THAT THE DISALLOWANCE I N THIS CASE SHOULD NOT EXCEED THE EXEMPT INCOME EARNED. 6. ACCORDINGLY, THIS APPEAL FILED BY THE ASSESSEE STANDS PARTLY ALLOWED. ORDER HAS BE EN PRONOUNCED UNDER RULE 34(4) OF ITAT RULES ON 16.07.2020 . SD/ - SD/ - ( AMARJIT SINGH) (SH A MIM YAHYA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 16.07 . 20 20 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 3 2. THE RE SPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR ) PS ITAT, MUMBAI