DCIT 1(3), MUMBAI V. TIFCO HOLDING LTD, MUMBAI

ITA 1798/MUM/2014

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 2112 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 14-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K L KANAK
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL E BE NCH, MUMBAI BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER / I .T.A. NO.1798/MUM/2014 ( / ASSESSMENT YEAR:2010-11 THE DCIT 1(3), AAYAKAR BHAVAN, MUMBAI-400 020 / VS. M/S. TIFCO HOLDING LTD., MANDLIK HOUSE, MANDLIK ROAD, COLABA, MUMBAI-400 001 / I .T.A. NO.2243/MUM/2014 ( / ASSESSMENT YEAR:2010-11 M/S. TIFCO HOLDING LTD., MANDLIK HOUSE, MANDLIK ROAD, COLABA, MUMBAI-400 001 / VS. THE DCIT 1(3), AAYAKAR BHAVAN, MUMBAI-400 020 ./ ./ PAN/GIR NO. : AAACT 4065F ( / APPELLANT ) .. ( / RESPONDENT ) / REVENUE BY: SHRI K.L. KANAK / ASSESSEE BY: SHRI DHARMESH SHAH / DATE OF HEARING :24.09.2015 / DATE OF PRONOUNCEMENT :07.10.2015 / O R D E R PER N.K. BILLAIYA, AM: THESE ARE CROSS APPEALS BY THE REVENUE AND THE ASSE SSEE PREFERRED AGAINST THE VERY SAME ORDER OF THE LD. C IT(A)-2, MUMBAI DATED 21.11.2013 PERTAINING TO ASSESSMENT YEAR 2010 -11. AS BOTH ITA. NOS.1798 & 2243/M/14 2 THESE APPEALS INVOLVED COMMON ISSUES, THEY WERE HEA RD TOGETHER AND DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. THE ASSESSEE IS AN INVESTMENT COMPANY WHICH FILE D ITS RETURN OF INCOME ON 23.9.2010 DECLARING TOTAL INCOME OF RS . 4,12,50,771/-. THE RETURN WAS SELECTED FOR SCRUTINY ASSESSMENT AND ACCORDINGLY STATUTORY NOTICES WERE ISSUED AND SERVED UPON THE A SSESSEE. 2.1. WHILE SCRUTINIZING THE RETURN OF INCOME, THE A SSESSING OFFICER NOTICED THAT THE ASSESSEE HAS RECEIVED DIVIDEND INC OME OF RS. 7,40,63,855/- AND THE SAME WAS CLAIMED AS EXEMPT. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY DISALLOWANCE U/S. 14A R.W. RULE 8 D SHOULD NOT BE MADE IN RESPECT OF EXEMPT INCOME. IN ITS REPLY, TH E ASSESSEE CLAIMED THAT NO EXPENDITURE HAVE BEEN INCURRED TO EARN THE EXEMPT INCOME, THEREFORE DISALLOWANCE IS UNCALLED FOR. 2.3. THE AO WAS OF THE FIRM BELIEF THAT ADMINISTRAT IVE EXPENSES INCURRED BY THE ASSESSEE RELATED TO THE EARNING OF DIVIDEND INCOME THEREFORE A PROPORTION OF THE SAME HAS TO BE DISALL OWED. THE AO ACCORDINGLY COMPUTED THE DISALLOWANCE AS PER THE FO RMULA GIVEN IN RULE 8D AND COMPUTED THE DISALLOWANCE AT RS. 66,55, 580/- AND REDUCED THE SAME BY RS. 7,108/- WHICH WAS ALREADY D ISALLOWED BY THE ASSESSEE. THE TOTAL DISALLOWANCE WAS MADE AT RS. 6 6,48,472/-. 3. AGGRIEVED BY THIS, THE ASSESSEE CARRIED THE MATT ER BEFORE THE LD. CIT(A) AND BROUGHT TO THE NOTICE OF THE LD. CIT (A) THE ORDER OF HIS PREDECESSOR FOR A.YRS. 2008-09 AND 2009-10, WHEREIN THE DISALLOWANCE WAS RESTRICTED IN THE PROPORTION OF EX EMPT INCOME TO TOTAL INCOME. AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS AND THE ITA. NOS.1798 & 2243/M/14 3 ORDERS OF HIS PREDECESSOR, THE LD. CIT(A) AT PARA- 2.3 AND 2.4 OF HIS ORDER OBSERVED THAT THE METHODOLOGY OF PROPORTIONAT E EXPENDITURE, AS DIRECTED BY THE LEARNED PREDECESSOR IN RESPECT O F THE A.Y. 2009-10 IS ALSO APPLICABLE TO THIS APPEAL SINCE THERE ARE N O SIGNIFICANT VARIATIONS IN THE FACTS AND CIRCUMSTANCES BETWEEN THESE TWO APPEALS AND ACCORDINGLY DIRECTED THE AO TO RESTRICT THE DIS ALLOWANCE TO RS. 2,70,561/-. 4. AGGRIEVED BY THIS, THE REVENUE AND THE ASSESSEE ARE IN APPEAL BEFORE US. 5. HAVING HEARD THE RIVAL SUBMISSIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW, WE FIND THAT T HE ORDER OF THE FIRST APPELLATE AUTHORITY FOLLOWED BY THE LD. CIT(A) WENT UP TO THE TRIBUNAL AND THE TRIBUNAL IN ITA NOS. 84 & 85/M/201 2 AND 164 & 165/M/2013 AT PARA-6 HELD THAT THE INVESTMENT IN QU ESTION ARE IN THE SISTER CONCERN AND ARE IN THE NATURE OF STRATE GIC INVESTMENT. SINCE THE ASSESSEE ITSELF HAS MADE A DISALLOWANCE O F RS. 62.17 LAKHS, NO FURTHER DISALLOWANCE IS CALLED FOR. 5.1. WE HAVE GONE THROUGH THE CHART SHOWING THE EXP ENDITURE INCURRED FURNISHED BY THE LD. COUNSEL, WHEREIN THE TOTAL EXPENDITURE DEBITED ARE AT RS. 10,27,409/-, OUT OF WHICH THE AS SESSEE HAS SUO MOTO DISALLOWED RS. 5,95,293/- AND OUT OF THE BALAN CE OF RS. 4,32,116/- , THE LD. CIT(A) HAS DIRECTED TO RESTRIC T THE DISALLOWANCE TO RS. 2,70,561/-. WE DO NOT FIND ANY ERROR OR OMISSI ON IN THIS FINDINGS OF THE LD. CIT(A) CALLING FOR ANY INTERFERENCE. AC CORDINGLY, WE UPHOLD THE FINDINGS OF THE LD. CIT(A) AND DISMISS THE APPE ALS FILED BY THE ASSESSEE AS WELL AS THE REVENUE. ITA. NOS.1798 & 2243/M/14 4 6. IN THE RESULT, THE APPEALS FILED BY THE ASSESSEE AS WELL AS THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH OCTOBER, 2015 SD/- SD/- (SANJAY GARG ) (N.K. BILLAIYA) $% /JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; ( DATED : 7 TH OCTOBER, 2015 . % . ./ RJ , SR. PS !' #' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ) ( ) / THE CIT(A)- 4. ) / CIT 5. *+, %%-. , -.! , / DR, ITAT, MUMBAI 6. ,/0 / GUARD FILE. / BY ORDER, * % //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI