M/S ABIL INFRAPROJECTS P. LTD., MUMBAI V. DY CIT CENTRAL CIR.- 2(3), MUMBAI

ITA 1895/MUM/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 4500 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-10-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 03-11-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BRAJENDRA KUMAR LD
• Assessee Lawyers: ANUJ KISNADWALALD
• Keywords: Earning of tax free income; Rule 8D
• Section: 143(3); 153A; 14A; 48

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI , , BEFORE HONBLE SHRI VIKAS AWASTHY, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM (HEARING THROUGH VIDEO CONFERENCING MODE) ./ I.T.A. NO. 1895 /MUM/20 20 ( / ASSESSMENT YEAR : 2013 - 14 ) M/S ABIL INFRAPROJECTS PVT. LTD. ST. REGIS, 33 RD FLOOR, SENAPATI BAPAT MARG PHOENIX MILL COMPOUND, LOWER PAREL, MUMBAI - 400 013 / VS. D CIT CEN . CIR 2 (3 ) R. NO. 803 , 8 TH FLOOR OLD CGO BUILDING, PRATIS HTHA B HAVAN M. K. ROAD, MUMBAI - 2 0 ./ ./ PAN/GIR NO . A A ACR - 7823 - H ( / APPELLANT ) : ( / RESPONDENT ) ASSESSEE BY : SHRI ANUJ K ISNADWALA LD. AR REVENUE BY : SHRI BRAJENDRA KUMAR LD. SR. DR / DATE OF HEARING : 29 /09 /2021 / DATE OF PRONOUNCEMENT : 01/10/2021 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY ASSESSEE F OR ASSESSMENT YEAR (AY) 2013 - 14 ARISES OUT OF ORDER OF LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) - 48 , MUMBAI [CIT(A)], DATED 07/07/2020 IN THE MATTER OF ASSESSMENT FRAMED BY LD. ASSESSING OFFICER (AO) U/S 153A R.W.S. 143(3) ON 25/05/2019 . THE ONLY GRIEVA NCE OF THE ASSESSEE IS DISALLOWANCE U/S 14A. 2 2. HAVING HEARD RIVAL SUBMISSIONS AND AFTER CAREFUL CONSIDERATION OF MATERIAL ON RECORD, OUR ADJUDICATION TO THE SUBJECT MATTER OF APPEAL WOULD BE AS GIVEN IN SUCCEEDING PARAGRAPHS. 3. THE MATERIAL FACTS ARE THA T THE ASSESSEE BEING RESIDENT CORPORATE ASSESSEE IS STATE TO BE ENGAGED AS REAL ESTATE DEVELOPER. IT EARNED EXEMPT INCOME OF RS.13.74 LACS INCLUDING EXEMPT INCOME FROM PARTNERSHIP FIRMS. THE ASSESSEE OFFERED SUO - MOTO DISALLOWANCE U/S 14A FOR RS.3.35 LACS I N THE COMPUTATION OF INCOME. THE SAID DISALLOWANCE WAS COMPUTED @0.5% ON INVESTMENT MADE IN EQUITY SHARES AND PREFERENCE SHARES. DURING ASSESSMENT PROCEEDINGS, THE ASSESSEE SUBMITTED THAT NO EXPENDITURE WAS INCURRED TO EARN THE EXEMPT INCOME. HOWEVER, NOT SATISFIED, LD. AO, APPLYING RULE 8D, COMPUTE INDIRECT EXPENDITURE DISALLOWANCE U/R 8D(2)(III) @0.5% OF AVERAGE IN VESTMENTS HELD BY THE ASSESSEE WHILE COMPUTING THE AVERAGE INVESTMENTS, LD. AO INCLUDED THE INVESTMENT MADE IN PARTNERSHIP FIRMS ALSO. THE DISA LLOWANCE CAME TO RS.13.07 LACS AND AFTER REDUCING SUO - MOTO DISALLOWANCE OF RS.3.35 LACS, LD. AO COMPUTED ADDITIONAL DISALLOWANCE OF RS.9.72 LACS AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. 4. DURING APPELLATE PROCEEDINGS, THE ASSESSEE SUBMITTED THAT EXEMPT INCOME WAS RECEIVED ON CERTAIN MUTUAL FUNDS WHICH WERE REDEEMED DURING THE YEAR. HOWEVER, FROM PARTNERSHIP FIRM, THE ASSESSEES HAD RECEIVED SHARE OF LOSS OF RS.4,109/ - AND THEREFORE, THESE INVESTMENTS WERE TO BE EXCLUDED. HOWEVER, NOT CONVINCED, LD . CIT(A) CONFIRMED THE DISALLOWANCE. AGGRIEVED, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 5. WE FIND THAT IT IS UNDISPUTED FACT THAT THE ASSESSEE HAS RECEIVED LOSS OF RS.4,109/ - FROM PARTNERSHIP FIRM AND HAS NOT RECEIVED ANY EXEMPT INCOME FROM THE FIRM. IT IS SETTLED LEGAL POSITION THAT TO COMPUTE 3 DISALLOWANCE U/S 14A, ONLY THOSE INVESTMENTS ARE TO BE CONSIDERED WHICH HAVE YIELDED ANY EXEMPT INCOME DURING THE YEAR. SINCE THE ASSESSEE HAS NOT EARNED ANY EXEMPT INCOME FROM PARTNERSHIP FIRM, THE SAME HAS RI GHTLY BEEN EXCLUDED WHILE COMPUTING THE DISALLOWANCE. THEREFORE, THE ADDITIONAL DISALLOWANCE AS COMPUTED BY LD. AO IS NOT SUSTAINABLE IN LAW. WE ORDER SO, 6. THE APPEAL STAND ALLOWED. ORDER PRONOUNCED ON 1 ST OCTOBER, 2021. SD/ - SD/ - ( VIKAS AWASTHY ) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 01/10/2021 SR.PS, DHANANJAY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.