CAMELOT TRADING P.LTD, MUMBAI V. DCIT CEN CIR 6(4), MUMBAI

ITA 1419/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9470 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 01-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAM TIWARI
• Assessee Lawyers: SUNI HIRAWAT
• Keywords: Earning of tax free income
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH H, MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.1419/MUM/2017 (ASSESSMENT YEAR- 2012-13) M/S CAMELOT TRADING PVT. LTD. 64- H/2, BANSILAL BUILDING, 1 ST FLOOR, JSS ROAD, OPERA HOUSE, MUMBAI-400004 PAN: AABCC1902B VS. D.C.I.T, CC- 6(4), 19 TH FLOOR, AIR INDIA BUILDING, NARIMAN POINT, MUMBAI- 21. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SUNI HIRAWAT ( AR) REVENUE BY : SHRI RAM TIWARI (DR) DATE OF HEARING : 24.08.2017 DATE OF PRONOUNCEMENT : 29.09.2017 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER: 1. THIS APPEAL BY ASSESSEE U/S 253 OF THE INCOME-TAX A CT (THE ACT) IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-54 [FOR SHORT THE LD. CIT(A)], MUMBAI DATED 19.12.2016 FOR THE AY 2012-13. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. ON FACTS AND IN LAW, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) [HEREINAFTER REFERRED TO AS 'LD. CIT(A)'] HAD ERRED IN CONFIRMING THE DISALLOWANCE OF RS.2,76,955/- U/S.14A MADE BY THE L EARNED ASSESSING OFFICER. UNDER THE FACTS AND CIRCUMSTANCES OF THE MATTER, TH E LD. CIT(A) OUGHT TO HAVE DELETED DISALLOWANCE OF RS.2,76,955/-. 2. ON FACTS AND IN LAW, THE LD. CIT(A) HAD ERRED IN INCLUDING THE VALUE OF SHARES HELD AS STOCK-IN-TRADE WHILE COMPUTING DISAL LOWANCE AS PER RULE 8D R.W.S. 14A OF THE I.T. ACT. UNDER THE FACTS AND CIR CUMSTANCES OF THE MATTER, THE ITA NO.1419/M/ 2017 M/S CAMELOT TRADING PVT. LTD. 2 LD. CIT(A) OUGHT TO HAVE EXCLUDED THE SHARES HELD A S STOCK-IN-TRADE FROM THE PURVIEW OF RULE 8D R.W.S. 14A. 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, VARY, OMIT, SUBSTITUTE OR AMEND THE ABOVE GROUNDS OF APPEAL, AT ANY TIME BEFORE OR AT, THE TIME OF HEARING OF THE APPEAL, SO AS TO ENABLE THE HON. ITAT TO DECIDE THI S APPEAL ACCORDING TO LAW. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED RETURN OF INCOME FOR RELEVANT AY ON 28.09.2012 DECLARING NIL INCOME. THE ASSESSME NT WAS COMPLETED U/S 143(3) OF THE ACT ON 17.03.2015. DURING THE ASSESSM ENT PROCEEDING, THE ASSESSING OFFICER (AO) ASKED THE ASSESSEE AS TO WHY THE DISALLOWANCE U/S 14A OF THE ACT BE NOT MADE. THE ASSESSEE IN ITS REP LY DATED 26.02.2015 CONTENDED THAT DURING THE YEAR, THERE WAS NO THERE SHOULD NOT BE ANY DISALLOWANCE. IT WAS FURTHER CONTENDED ON BEHALF OF THE ASSESSEE, THE ASSESSEE IS IN THE BUSINESS OF SHARE TRADING FOR WH ICH THE PROVISION OF SECTION 14A WILL NOT APPLY. THE ASSESSEE WITHOUT PREJUDICE CONTENDED THAT THERE IS NO INTEREST PAYMENT AND THERE SHOULD BE NO DISALLOW ANCE TOWARDS THE INTEREST THE ACTUAL EXPENSES DEBITED TO THE PROFIT AND LOSS ACCOUNT IS ONLY RS.2,76,955/-. THE CONTENTION OF THE ASSESSEE WAS N OT ACCEPTED BY THE AO AND THE AO MADE THE DISALLOWANCE OF RS. 2,76,955/-. ON APPEAL BEFORE THE LD. CIT(A), THE ACTION OF AO WAS SUSTAINED. FURTHER , AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE FILED THE PRESENT APPEAL BEFORE US. 3. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVE (AR ) OF THE ASSESSEE AND LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR THE REVENU E AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. AR OF THE ASS ESSEE ARGUED THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS NOT EARNED ANY EXEMPT INCOME ITA NO.1419/M/ 2017 M/S CAMELOT TRADING PVT. LTD. 3 AND NO DISALLOWANCE IS WARRANTED. IT WAS FURTHER AR GUED THAT THERE WAS NO INVESTMENT MADE DURING THE YEAR AND THERE SHOULD NO T BE ANY DISALLOWANCE U/S 14A OF THE ACT. IN SUPPORT OF SUBMISSION, THE L D. AR OF THE ASSESSEE ARGUED THAT HIS CASE IS COVERED BY THE DECISION OF SPECIAL BENCH IN CHEMINVEST VS ITO (2009) ITD 318 (SB). ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SUPPORTED THE ORDER OF AUTHORITIES BELO W. 4. WE HAVE CONSIDERED THE RIVAL CONTENTION OF BOTH THE PARTIES AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THERE IS NO DISPUT E THAT THE ASSESSEE HAS NO EXEMPT INCOME DURING THE FINANCIAL YEAR (FY) RELEVA NT TO THE PRESENT AY. FURTHER, THE ASSESSEE HAS NOT MADE ANY INVESTMENT A CTIVITY IN THE INVESTMENT ACCOUNT. THE ASSESSEE IN ALTERNATIVE CONTENDED THAT ON THE BASIS OF .5% OF THE AVERAGE INVESTMENT COMES TO RS. 4,06,326/- AND ACTU AL EXPENSES DEBITED TO PROFIT & LOSS A/C IS RS. 2,76,955/-. THE AO INSTEAD OF CONSIDERING THE CONTENTION OF THE ASSESSEE THAT NO INVESTMENT WAS M ADE DURING THE RELEVANT AY AND THE ASSESSEE HAS NOT EARNED ANY EXEMPT INCOM E; THERE CANNOT BE ANY DISALLOWANCE U/S 14A OF THE ACT DISALLOWED RS.2,76, 955/-. THE HONBLE MADRAS HIGH COURT IN CASE OF REDINGTON (I) PVT. LTD . VS. ACIT [2017] 77 TAXMANN.COM 257 (MAD) HELD THAT WHERE THERE IS NO E XEMPT INCOME IN THE YEAR, THERE CANNOT BE A DISALLOWANCE OF EXPENDITURE IN RELATION TO AN ASSUMED INCOME. THUS, CONSIDERING THE FACT OF THE PRESENT C ASE WHEN THE ASSESSEE HAS NOT EARNED ANY EXEMPT INCOME DURING THE RELEVANT YE AR, THERE CANNOT BE ITA NO.1419/M/ 2017 M/S CAMELOT TRADING PVT. LTD. 4 DISALLOWANCE U/S 14A IN RELATION TO ANY ASSUMED INC OME. HENCE, THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE ALLOWED. 5. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH DAY OF SEPTEMBER 2017. SD/- SD/- (G.S. PANNU) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 29/09/2017 S.K.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT.REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //RUE COPY/