SAMCO SECURITIES LIMITED, MUMBAI V. CIT (A) NFAC, DELHI

ITA 1328/MUM/2023

AI Insights

Samco Securities Ltd. appealed against the order of the National Faceless Appeal Centre (NFAC), which confirmed a disallowance of Rs. 1,51,214 under section 14A of the Income Tax Act, 1961. The disallowance was initially made by the assessing officer during the assessment for the assessment year 2016-17, noting that the assessee had not made any disallowance under section 14A despite having earned exempt income from investments. The CIT(A) upheld this decision, leading to the appeal before the Tribunal. The Tribunal found that the assessing officer had not considered the assessee's alternative claim regarding the method of calculating the disallowance and restored the matter for verification.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 130125 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 05-07-2023
• Assessment Year: 2016-2017
• Appeal Filed On: 18-04-2023
• Other Referred Cases: Ameya Logistics Pvt. Ltd. v. Dy. CIT, ACB India Ltd. Vs. ACIT, PTC India Ltd. v. DCIT, ACIT v. Vireet Investment Pvt. Ltd., Dy. CIT v. Diamond Co. Ltd., Yashoda Health Care Services P. Ltd. v. DCIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice; Rule 8D
• Section: 143(3); 14A

Judgement Text

P a g e | 1 ITA No.1328/Mum/2023 Samco Securities Ltd. Vs. NFAC IN THE INCOME TAX APPELLATE TRIBUNAL “G” BENCH, MUMBAI BEFORE SHRI ABY T VARKEY, JUDICIAL MEMBER & SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ITA No.1328/Mum/2023 (A.Y. 2016-17) Samco Securities Ltd. A/1004, Naman Midtown, Senapati Bapat Road, Prabhadevi Mumbai – 400013 Vs. National Faceless Appeal Centre (NFAC) स्थायी लेखा सं./जीआइआर सं./PAN/GIR No: AAICS2455A Appellant .. Respondent [ Appellant by : None Respondent by : Ram Krishna Kedia Date of Hearing 06.07.2023 Date of Pronouncement 18.07.2023 आदेश / O R D E R Per Amarjit Singh (AM): This appeal filed by the assesse is directed against the order passed by the NFAC, Delhi, dated 20.02.2023 for A.Y. 2016-17. The assessee has raised the following grounds before us: “1. On facts and circumstances of the case and in law, the Ld. CIT(A) has erred in confirming disallowance u/s. 14A of Rs. 1,51,214/- made by the Ld AO, without appreciating facts, submissions and evidences in proper perspective and without assigning any proper reasons 2. On facts and circumstances of the case and in law, the Ld. CIT(A) has erred in passing order which is bad in law and violating the principle of natural justice as Ld CIT(A) passed order without giving opportunity of virtual online hearing and also without disposing ground no. 3 of appeal regarding "assessment order contrary to the principle of natural justice". P a g e | 2 ITA No.1328/Mum/2023 Samco Securities Ltd. Vs. NFAC 3. The appellant carves leave to add to, amend, alter or delete all or any of the foregoing grounds of appeal.” 2. The solitary issue in the grounds of appeal filed by the assessee is related to confirming disallowance u/s 14A of the Act of Rs.1,51,214/- . 3. The fact in brief is that the assessing officer completed the assessment u/s 143(3) by assessing the total income at Rs.390,655/-. During the course of assessment on perusal of the balance sheet the assessing officer noticed that assessee company has made investment in equity share of Rs.302,42,807/-. The assessee has shown dividend income from investment in equity share and mutual fund to the amount Rs.401,277/- and claimed the same as exempt u/s 10(34) of the Act. The AO noticed that assessee has not made any disallowance u/s 14A of the Act. The assessing officer has computed the disallowance u/s 14A r.w.Rule 8D to the amount of Rs.151,214/- and added to the total income of the assessee. 4. Aggrieved, the assessee filed the appeal before the ld. CIT(A). However, the ld. CIT(A) has dismissed the appeal before the ld. CIT(A). 5. Heard the ld. D.R and perused the written submission filed by the assessee. During the course of appellate proceeding before us the assesse has filed written submission vide dated 04.07.2023 along with paper book. In the paper book the assessee has placed on record copies of balance sheet profit and loss account for the financial year 2015-16, computation of income for assessment year 2016-17 and copy of letter dated 26.11.2018 submitted by the assessee to the assessing officer on 28.11.2018. The assesse explained that it had made investment from its own tax free funds available from share capital and reserves and no investment was made out of borrowed funds on which the exempt income was earned. In this regard, we have perused the submission of P a g e | 3 ITA No.1328/Mum/2023 Samco Securities Ltd. Vs. NFAC the assessee made before the assessing officer vide letter dated 26.11.2018 placed in the paper book wherein the assessee has mentioned that it had made investment out of its own funds and therefore, no disallowance should be made u/s 14A of the Act. We have perused the computation made by the assessing officer at para 4.12 of the assessment order and noticed that assessing officer has only made disallowance as per Rule 8D(2)(iii) to the amount of Rs.151,214/- pertaining to the administrative expenditure and assessing officer has not made any disallowance under Rule 8D(2)(i) and 8D(2)(ii). However, the assessee in its alternative submission has submitted that for making disallowance u/s 14A the investment from which exempt income is required to be considered instead of average of total investment. In this regard, the assesse has placed reliance on the following judicial pronouncements. “Ameya Logistics Pvt. Ltd. v. Dy. CIT (2020) 83 ITR 46(SN) (Mum.)(Trib.) ACB India Ltd. Vs. ACIT, [2015] 62 taxmann.com 71 (Delhi) PTC India Ltd. v. DCIT (2019) 69 ITR 37(SN.) (Delhi) (Trib.) ACIT v. Vireet Investment Pvt. Ltd. (2017) 165 ITD 27/58 ITR 313/154 DTR 241/188 TTJ 1 (SB) (Delhi)(Trib.) Dy. CIT v. Diamond Co. Ltd. (2017) 162 ITD 131 (Kol.) (Trib.) Yashoda Health Care Services P. Ltd. v. DCIT (2017) 54 ITR 26 (Hyd.) (Trib.)” 6. We consider that the AO has not decided the alternative claim of the assessee. To compute the exempt income after taking into consideration the investment on which the exempt income earned instead of average of total investment. This fact required to be verified. Therefore, we restore this alternative contention of the assessee to the assessing officer for verifying the claim of the assesse to restrict the disallowance to the extent of average investment from which exempt income was received instead of total investment, therefore, the ground of appeal of the assessee is allowed for statistical purposes. P a g e | 4 ITA No.1328/Mum/2023 Samco Securities Ltd. Vs. NFAC 7. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 18.07.2023 Sd/- Sd/- (Aby T Varkey) (Amarjit Singh) Judicial Member Accountant Member Place: Mumbai Date 18.07.2023 Rohit: PS आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : 1. अपीलाथी / The Appellant 2. प्रत्यथी / The Respondent. 3. आयकर आयुक्त / CIT 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. सत्यावपि प्रवि //True Copy// आदेशानुसार/ BY ORDER, उि/सहायक िंजीकार (Dy./Asstt. Registrar) आयकर अिीिीय अतिकरण/ ITAT, Bench, Mumbai.