INDAGE ENGINEERING P.LTD, MUMBAI V. ITO 6(1)(3), MUMBAI

ITA 1659/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1711 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 28-01-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 10-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Earning of tax free income
• Section: 14A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI , , , , BEFORE SHRI RAJENDRA, AM AND SHRI AMARJIT SINGH, JM / I.T.A. NO.1659/MUM/2014 ( / ASSESSMENT YEAR: 2009-10) M/S. INDAGE ENGINEERING PVT. LTD. 82, INDAGE HOUSE, DR.A.B.ROAD, WORLI, MUMBAI - 400018 / VS. INC OME TAX OFFICER 6(1)(3) AAYAKAR BHAVAN, M.K.ROAD, MUMBAI - 400020 ./ ./PAN/GIR NO. : AAACI0965P ( /APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING: 07.11.2016 /DATE OF PRONOUNCEMENT: 30.11.2016 / O R D E R PER AMARJIT SINGH, JM: THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 23.12.2013 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) 14, MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y.2009-10. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- ASSESSEE BY: NONE DEPARTMENT BY: SHRI G. K. MISHRA ITA NO.1659/M/2014 A.Y. 2009-10 2 1. AGAINST ADDITION OF RS.2,973,874/- AS PER THE PROVISIONS OF SECTION 14A READ WITH RULE 8D OF THE INCOME-TAX ACT, 1961 (ACT) A) THE COMMISSIONER OF INCOME-TAX (APPEALS) 14, MUMBAI [HEREINAFTER REFERRED TO AS CIT(A)] ERRED IN ENHANCING THE DISALLOWANCE TO RS.2,973,874/- WITHOUT CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND IGNORING THE JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE APPELLANT. B) THE CIT(A) ERRED IN DISREGARDING THE FACT THAT THE APPELLANT HAD PROVIDED THE DETAILS OF EXPENDITURE FOR EARNING THE EXEMPT INCOME AND IN COMPUTING THE DISALLOWANCE UNDER RULE 8D WITHOUT EXAMINING THE CORRECTNESS OF THE CLAIM WITH THE BOOKS OF ACCOUNTS OF THE APPELLANT. THE CIT(A) SHOULD HAVE RESTRICTED THE DISALLOWANCE ONLY TO THE EXTENT OF EXPENDITURE ACTUALLY INCURRED BY THE APPELLANT FOR EARNING THE EXEMPT INCOME I.E. RS.82,617/-. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED E-RETURN OF INCOME AT RS.11,98,365/- CLAIMING REFUND OF RS.23,150/-. THE RETURN WAS PROCESSED U/S.143(1) OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT) ON 31.12.2010 AND THE DEMAND OF RS.4,27,153/- WAS RAISED. THE CASE WAS SELECTED FOR SCRUTINY AND ACCORDINGLY, NOTICE U/S.143(2) OF THE ACT WAS ISSUED ON 18.08.2010 AND THE SAME WAS SERVED UPON THE ASSESSEE ON 23.09.2010. SUBSEQUENTLY, NOTICE U/S.142(1) WAS ISSUED ON 30.06.2011 CALLING FOR SPECIFIC DETAILS / DOCUMENTS. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF WIDE-RANGING, MULTIDISCIPLINARY CONSULTANCY, KNOW- HOW AND TURNKEY SERVICES SPANNING MANY DIVERSE FIELDS LIKE CIVIL, STRUCTURAL AND MECHANICAL ENGINEERING, CHEMICALS AND FERTILIZERS. IN THE RELEVANT ASSESSMENT YEAR, THE ASSESSEE RECEIVED THE DIVIDEND INCOME TO THE TUNE OF RS.14,52,000/- AND CLAIMED AS EXEMPT INCOME. THE ASSESSEE CLAIMED THE DEMAT CHARGES TO THE TUNE OF RS.82,617/- WHICH WAS DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE. THE ASSESSING OFFICER WAS ALSO OF ITA NO.1659/M/2014 A.Y. 2009-10 3 THE VIEW THAT THE ASSESSEE MADE THE INVESTMENTS IN QUOTED AND UNQUOTED SHARES TO THE TUNE OF RS.52,87,75,196/- DURING THE SAID PERIOD. THE ASSESSING OFFICER ASSESSED THE PROPORTIONATE EXPENSES TO THE EXTENT OF 9.97% OF TOTAL EXPENSES OF RS.52,52,100/- WHICH COMES TO RS.5,23,634/- AND ADDED TO THE INCOME OF THE ASSESSEE. ON APPEAL, THE CIT(A) APPLIED THE SECTION 14A R.W. RULE 8D OF THE ACT AND ASSESSED THE EXPENDITURE TO THE TUNE OF RS.29,73,874 RS.5,23,634/- = RS.24,50,240/-. THEREFORE THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. ISSUE NO.1:- 4. UNDER THIS ISSUE THE ASSESSEE HAS CHALLENGED THE EXPENDITURE INCURRED TO EARN THE EXEMPT INCOME TO THE TUNE OF RS.29,73,834/- THE EXEMPT INCOME OF THE ASSESSEE WAS TO THE TUNE OF RS.14,52,000/- WHEREAS THE EXPENDITURE HAS BEEN ASSESSED TO THE TUNE OF RS.29,73,834/-. THE EXPENSES COULD NOT BE ASSESSED MORE THAN THE EXEMPT INCOME I.E.14,52,000/-. THE ORDER OF THE ASSESSING OFFICER NOWHERE SPEAKS ABOUT THE DISCREDIT OF THE ACCOUNT BOOKS OF THE ASSESSEE. IN THIS REGARD, IN VIEW OF THE CBDT CIRCULAR NO.14 OF 2006 AND COMMISSIONER OF INCOME TAX VS. RELIANCE UTILITIES AND POWER LTD 313 ITR 340 (BOMBAY HIGH COURT) WE ARE OF THE OF THE VIEW THAT THE ASSESSMENT MADE BY THE ASSESSING OFFICER AND CIT(A) IS WITHOUT ANY REASONABLE BASIS, WITHOUT DISCREDITING THE ACCOUNT BOOK OF THE ASSESSEE, THEREFORE, WE SET ASIDE THIS ISSUE AND RESTORE THIS ISSUE ON THE FILE OF THE ASSESSING OFFICER TO RE-EXAMINE THE MATTER AFRESH BY GIVING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE IN ACCORDANCE WITH LAW. ACCORDINGLY, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. ITA NO.1659/M/2014 A.Y. 2009-10 4 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS HEREBY ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH NOVEMBER , 2016. 30 , 2016 SD/- SD/- (RAJENDERA) (AMARJIT SINGH) / ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBAI; DATED : 30 , 2016 , MP / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A)- 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / /(DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI