METRO SHOES LTD, MUMBAI V. ADDL CIT RG 2(2), MUMBAI

ITA 1455/MUM/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2889 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 4 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 01-04-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 22-02-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUM BAI . . , , !' #$, % , & BEFORE SHRI R.C.SHARMA, AM AND SHRI AMARJIT SINGH, JM / I.T.A. NO.1455/MUM/2013 ( %' ( / ASSESSMENT YEAR: 2009-10) METRO SHOES LTD. METRO HOUSE, 3 RD FLOOR, SHAHID BHAGAT SINGH MARG, COLABA CAUSEWAY, COLABA, MUMBAI - 400001 ' / VS. ADDL. COMMR. OF INCOME TAX RANGE 2(2) 577, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI - 400020 ./ ./ PAN/GIR NO. : AAACM4754E ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING: 01.04.2016 !' /DATE OF PRONOUNCEMENT:24.06.2016 #$ / O R D E R PER AMARJIT SINGH, JM: THIS IS AN APPEAL AGAINST THE ORDER DATED 30.11.201 2 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) 5, MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y.2 009-10. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- ASSESSEE BY: SHRI D.V.LAKHANI DEPARTMENT BY: SHRI N. P. SINGH ITA NO.1455/M/2013 A.Y. 2009-10 2 1. ON THE FACTS & CIRCUMSTANCES OF THE CASE THE L EARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF RS.5,20,150/- U/S.14 A READ WITH RULE 8D. THE APPELLANT PRAYS THAT THE ADDITIO N CONFIRMED BY THE COMMISSIONER OF INCOME TAX (APPEAL S) MAY BE DELETED. 2. ON THE FACTS & CIRCUMSTANCES OF THE CASE THE APP ELLANT PRAYS THAT AS THE APPELLANT HAS NOT INCURRED ANY EXPENDITURE IN EARNING EXEMPT INCOME NO DISALLOWANC E SHOULD BE MADE U/S.14A. THE ADDITION CONFIRMED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) MAY BE ADDED. 3. THE ASSESSEE FILED THE RETURN OF INCOME DECLARIN G TOTAL INCOME TO THE TUNE OF RS.30,75,79,929/- ON 16.09.2009. TH E CASE WAS SELECTED FOR SCRUTINY AND NOTICE U/S.143(2) OF THE INCOME TA X ACT, 1961 (IN SHORT THE ACT) WAS ISSUED 24.08.2010 AND SERVED U PON THE ASSESSEE ON 03.09.2010. THE NOTICE U/S.142(1) OF THE ACT WA S ISSUED ON 14.02.2011 BY THE DY. CIT, CIR. 2(2), MUMBAI ALONG WITH THE QUESTIONNAIRE. THEREAFTER THE NOTICE WAS ISSUED ON 18.07.2011. THE ASSESSING OFFICER DISALLOWED THE EXPENDITURE TO THE TUNE OF RS.6,24,119/- INCURRED TO EARN THE EXEMPT INCOME TO THE TUNE OF RS.91,42,234/- AND THE SAID EXPENDITURE TO EARN THE EXEMPT INCOME WAS CONFIRMED BY THE CIT(A), THEREFORE, THE ASSESSE E HAS FILED THE APPEAL BEFORE US. ISSUE NO.1&2:- ITA NO.1455/M/2013 A.Y. 2009-10 3 4. WE HAVE HEARD THE ARGUMENTS ADVANCED BY THE LEAR NED REPRESENTATIVE OF THE PARTIES AND PERUSED THE RECOR D CAREFULLY. THE SOLE CONTENTION OF THE ASSESSEE IS THAT THE CIT(A) HAS WRONGLY CONFIRMED THE DISALLOWANCE OF RS.5,20,150/- U/S.14A READ WITH RULE 8D OF THE ACT. THE LEARNED REPRESENTATIVE OF THE A SSESSEE HAS ARGUED THAT THE ISSUE HAS DULY BEEN COVERED BY THE ASSESSE ES OWN CASE DECIDED BY THE INCOME TAX APPELLATE TRIBUNAL, MUMBA I BENCH IN ITA NO.7095.M.2011 FOR THE A.Y.2008-09. THE FINDING OF THE HONBLE TRIBUNAL IS HEREBY REPRODUCED BELOW FOR READY REFER ENCE:- 6. CONSIDERING THE FACTS OF THE CASE, WE DO NOT AG REE WITH LD. A.R. THAT NO EXPENSE SAID TO HAVE BEEN INCURRED BY THE ASSESSEE FOR EARNING THE DIVIDEND INCOME FROM MUTUA L FUND SCHEME PARTICULARLY WHEN ASSESSEE HAS PUT SUBSTANTIAL AMOUNT IN MUTUAL FUND AND ADMITTEDLY HA D UNDERTAKEN 12 TRANSACTIONS FROM WHICH DIVIDEND INCO ME HAS BEEN EARNED. THEREFORE, SOME ADMINISTRATIVE EXPENSES IS SAID TO HAVE BEEN INCURRED BY THE ASSES SEE IN EARNING THE DIVIDEND INCOME WHICH IS EXEMPT FROM TA X. WE CONSIDER IT PRUDENT TO RESTRICT THE DISALLOWANCE UNDER SECTION 14A R.W.RULE 8D TO 2% OF EXEMPT INCOME I.E. 2% OF RS.41,54,959/- WHICH COMES TO RS.83,100/-. HENC E, GROUND IS ALLOWED IN PART BY RESTRICTING THE DISALL OWANCE ITA NO.1455/M/2013 A.Y. 2009-10 4 TO RS.83,100/- AS AGAINST RS.3,61,977/- SUSTAINED B Y LD CIT(A). 5. IN THE ASSESSMENT YEAR UNDER CONSIDERATION THERE IS NO CHANGE OF CIRCUMSTANCES IN CONNECTION WITH THE INVESTMENT TO EARN THE EXEMPT INCOME. NO DISTINGUISHABLE FACTS WERE PLACED ON RE CORD. IN THE SIMILAR CIRCUMSTANCES THE CO-ORDINATE BENCH OF MUMB AI HAS ALREADY TAKEN THE VIEW IN CONNECTION WITH THE DISALLOWANCE OF EXPENSES TO EARN THE EXEMPT INCOME IN THE ASSESSEES OWN CASE D ECIDED BY THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH IN ITA NO.7095.M.2011 FOR THE A.Y.2008-09. WE DOES NOT FI ND ANY GROUND TO DIFFER WITH THE OPINION TAKEN BY THE TRIBUNAL. THEREFORE, IN VIEW OF THE OBSERVATIONS MADE ABOVE WE ALSO FIND PROPER TO RESTRICT THE DISALLOWANCE U/S.14A READ WITH RULE 8D TO THE EXTEN T OF 2% OF EXEMPT INCOME I.E.6,11,947/- WHICH COME TO THE TUN E OF RS.12,240/-. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS HEREBY ALLOWED IN PART . ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH JUNE , 2016. SD/- SD/- (R.C.SHARMA) (AMARJIT SINGH) # / ACCOUNTANT MEMBER %& # /JUDICIAL MEMBER ' ( MUMBAI; )# DATED : 24 TH JUNE, 2016 MP MP MP MP ITA NO.1455/M/2013 A.Y. 2009-10 5 * +%'#, -,(' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. * ( ) / THE CIT(A)- 4. * / CIT 5. -./ &&01 , 01' , ' ( / DR, ITAT, MUMBAI 6. /34 5 / GUARD FILE. ' / BY ORDER, - & //TRUE COPY// ./$ ! /(DY./ASSTT. REGISTRAR) , ' ( / ITAT, MUMBAI