ITO 8(1)3, MUMBAI V. DHIRANAND ENGINEERS P.LTD, MUMBAI

ITA 1533/MUM/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100509 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 5 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 03-08-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 22-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANDEEP DAHIYA
• Keywords: Earning of tax free income; Tax effect
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ' D ' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI SANJAY ARORA , ACCOUNTANT MEMBER ITA NO. 1533/MUM/2011 (ASSESSMENT YEAR: 2006 - 07 ) INCOME TAX OFFICER - 8(1) - 3 VS. M/S. DHIRANANAD ENGINEERS P. LTD. ROOM NO. 206, AYAKAR BHAVAN M.K. ROAD, MUMBAI 400020 503, B - WING, GAZDAR APT. JUHU TARA ROAD, JUHU MUMBAI 400020 PAN - AABCD4411A APPELLANT RESPONDENT APPELLANT BY: SHRI SANDEEP DAHIYA RESPONDENT BY: NONE DATE OF HEARING: 03.08. 2015 DATE OF PRONOUNCEMENT: 03.08.2015 O R D E R PER D. MANMOHAN, V.P. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) - 16, MUMBAI AND IT PERTAINS TO A.Y. 2006 - 07. 2. FOLLOWING GROUNDS WERE URGED BEFORE US: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE OF INTEREST OF RS.7,51,728/ - PAID ON UNSECURED LOANS WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAD INVESTED THE BORROWED FUNDS FOR GENERAT ING INCOME WHICH IS EXEMPT FROM TAX AND BY IGNORING THE PROVISIONS OF SECTION 14A OF THE ACT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE MADE BY THE AO WITHOUT CONSIDERING THE DECISIO N OF THE ITAT, DELHI B SPECIAL BENCH IN THE CASE OF CHEMINVEST LTD. VS INCOME TAX OFFICER (2009) 124 TTJ (DEL) ITA NO. 1533/MUM/2011 M/S. DHIRANANAD ENGINEERS P. LTD. 2 (SB) 577, WHEREIN IT IS HELD THAT THE DISALLOWANCES U/S 14A CAN BE MADE IN A YEAR IN WHICH NO EXEMPT INCOME HAS BEEN EARNED OR RECEIVED BY THE ASSESSEE. 3. AS COULD BE NOTICED FROM THE ASSESSMENT ORDER , THE ASSESSEE DECLARED NET LOSS OF ` 14,91,125/ - WHEREAS THE AO REDUCED THE LOSS TO ` 7,39,397/ - BY MAKING ADDITION OF ` 7,51,728/ - REFERABLE TO EXPENDITURE INCURRED FOR EARNING EXEMPT INCOME, BY INVOKI NG THE PROVISIONS OF SECTION 14A OF THE ACT. SINCE THERE IS NO TAX EFFECT INVOLVED THE BENCH CALLED UPON THE LEARNED D.R. TO FURNISH THE DETAILS AS TO WHAT IS THE TAX EFFECT INVOLVED IN THE PRESENT APPEAL. IT MAY BE NOTICED THAT THE LEARNED CIT(A) DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE ON THE GROUND THAT THERE BEING NO EXEMPT INCOME PROVISIONS OF SECTION 14A CANNOT BE INVOKED. 4. AT THE TIME OF HEARING THE LEARNED D.R. SUBMITTED THAT THE DISALLOWANCE UNDER DISPUTE IS ONLY ` 7,51,728/ - AND @ 30% THE TAX EFF ECT WOULD BE LESS THAN ` 3,00,000/ - . HE ALSO ADMITTED THAT THE RULING CIRCULAR OF THE CBDT AT THAT POINT OF TIME AUTHORISE S THE AO TO FILE AN APPEAL ONLY IF THE TAX EFFECT IS MORE THAN ` 3,00,000/ - . 5. HAVING REGARD TO THE CIRCUMSTANCES OF THE CASE WE DISMISS THE APPEAL FILED BY THE REVENUE ON THE GROUND THAT THE TAX EFFECT BEING LESS THAN ` 3,00,000/ - REVENUE SHOULD HAVE GONE BY THE CIRCULAR ISSUED BY THE CBDT, IN WHICH EVENT APPEAL COULD NOT HAVE BEEN FILED AGAINST THE ORDER OF THE CIT(A), ON THE GROUN D OF TAX EFFECT. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD AUGUST, 2015. SD/ - SD/ - ( SANJAY ARORA ) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI, DATED: 3 RD AUGUST, 2015 ITA NO. 1533/MUM/2011 M/S. DHIRANANAD ENGINEERS P. LTD. 3 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 16 , MUMBAI 4. THE CIT 8 , MUMBAI CITY 5. THE DR, D BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.