FERESHTE SETHNA, MUMBAI V. ACIOT CIR 11(2), MUMBAI

ITA 1905/MUM/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3250 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-04-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2008-2009
• Appeal Filed On: 20-03-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: O P MEENA
• Section: 14A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F MUMBAI . . , / BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER /AND , SHRI RAJENDRA, ACCOUNTANT MEMBER . / ITA NO.1905 MUM/2012 ! ! ! ! ' ' ' ' / ASSESSMENT YEAR 2008-09 MS.FERESHTE SETHNA, 127, MAKER CHAMBERS -III, NARIMAN POINT, MUMBAI - 21 ! ! ! ! / VS. THE ACIT,CIR.11(2). MUMBAI - 20. # ./ $ ./ PAN/GIR NO. : PAN:AQWPS 3879H ( #% / APPELLANT ) .. ( &'#% / RESPONDENT ) #% ( / APPELLANT BY: NONE &'#% ) ( / RESPONDENT BY : SHRI O.P.MEENA ! ) * / DATE OF HEARING : 01/04/2013 +,' ) * / DATE OF PRONOUNCEMENT : 01/04/2013 - / O R D E R PER I.P.BANSAL, J.M THIS IS AN APPEAL FILED BY THE ASSESSEE. IT IS DI RECTED AGAINST THE ORDER PASSED BY LD. CIT(A)-3, MUMBAI DATED 16/02/2012 FOR ASSESSMENT YEAR 2008- 09. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE R EAD AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN UPHOLDING THE DISALLO WANCE OF A SUM OF RS.2,88,290/- UNDER THE PROVISIONS OF SECTION 14A O F THE INCOME TAX ACT,1961 WITHOUT CONSIDERING THE FACTS OF THE CASE AND VARIOUS JUDGMENTS QUOTED BY THE APPELLANTS. . / ITA NO.1905 MUM/2012 2 2. HENCE, THE TOTAL INCOME BE REDUCED BY RS.2,88,2 90/- BY DELETING THE ADDITION MADE UNDER THE PROVISIONS OF SECTION 14A O F THE INCOME TAX ACT,1961 READ WITH RULE 8D(III) THERETO. 2. THIS APPEAL WAS FIXED FOR HEARING ON 1/4/2013 AN D THE DATE WAS DULY NOTED BY THE REPRESENTATIVE OF THE ASSESSEE. HOWE VER, ON THE FIXED DATE OF HEARING NONE WAS PRESENT ON BEHALF OF ASSESSEE. THEREFORE, WE PROCEED TO DECIDE THE PRESENT APPEAL EX-PARTE, QUA THE ASSESSE E ON MERITS. 3. THE AO HAS COMPUTED THE DISALLOWANCE OF RS.3,70 ,065/- UNDER SECTION 14A OF THE INCOME TAX ACT, 1961 (THE ACT) R.W. RUL E 8D OF INCOME TAX RULES 1962(THE RULES). THE AO NOTED THAT ASSESSEE HAD EA RNED DIVIDEND INCOME OF RS.50,37,160/- AND ASSESSEE DID NOT MAKE ANY DISALL OWANCE UNDER SECTION 14A OF THE ACT. IT WAS SUBMITTED THAT THE ASSESSEE DID NOT INCUR ANY EXPENDITURE TO EARN THE DIVIDEND INCOME. THE AO HAS REJECTED SUCH SUBMISSION OF THE ASSESSEE ON THE GROUND THAT WITH THE INTRODUCTION O F RULE 8D, SUCH CONTENTION COULD NOT BE ACCEPTED. THE AO ALSO NOTICED THAT TH E INVESTMENT OF THE ASSESSEE IN THE SHARES AND MUTUAL FUNDS IS TO THE TUNE OF RS .7,40,13,052/-, TAKING 0.5% THEREOF LD.AO HAS COMPUTED THE DISALLOWANCE A T RS.3,70,065/-. THE DISALLOWANCE WAS AGITATED IN THE APPEAL FILED BEF ORE LD. CIT(A). LD. CIT(A) HAS REFERRED TO THE DECISION OF HONBLE BOMBAY HIGH COU RT IN THE CASE OF M/S. GODREJ & BOYCE MANUFACTURING CO. LTD. VS. DCIT, 32 8 ITR 81 AND FOLLOWING THE SAME HE HAS COME TO THE CONCLUSION THAT SINCE THE A MOUNT OF EXPENDITURE BY WAY OF INTEREST OTHER THAN THE DIRECT INTEREST IS N IL, HENCE THE SAME WILL BE CONSIDERED AS NIL. THE AVERAGE VALUE OF INVESTMENT S, INCOME FROM WHICH DOES NOT OR SHALL NOT FORM PART OF THE TOTAL INCOME AS A PPEARING IN THE BALANCE SHEET OF THE ASSESSEE ON THE 1 ST DAY AND LAST DAY OF THE PREVIOUS YEAR WOULD BE CONSIDERED AT 0.5% OF THE AVERAGE INVESTMENT FOR DI SALLOWANCE UNDER RULE 8D . NOTING THE FACT THAT AO HAD ONLY CONSIDERED THE CLO SING BALANCE AS AVERAGE INVESTMENT, LD. CIT(A) HAS OBSERVED THAT IT WILL NO T BE CORRECT AS OPENING BALANCE AND CLOSING BALANCE BOTH HAS TO BE CONSIDER ED. HE FOUND THAT OPENING BALANCE AS ON 01/04/2007 WAS A SUM OF RS.4,13,02,77 8/- AND CLOSING . / ITA NO.1905 MUM/2012 3 BALANCE WAS RS.7,40,13,052/- AS ON 31/3/2008. THER EFORE, THE AVERAGE INVESTMENT WAS A SUM OF RS.5,76,57,915/- AND 0.5% OF THE SAME COMES TO RS.2,88,290/-. THEREFORE, LD. CIT(A) HAS COME TO T HE CONCLUSION THAT DISALLOWANCE AS COMPUTED AS PER RULE 8D SHOULD BE A SUM OF RS.2,88,290/- IN PLACE OF RS.3,70,065/- ADDED BY THE AO. IN THIS MA NNER, LD. CIT(A) HAS PARTLY ALLOWED THE CLAIM OF THE ASSESSEE. 4. LD. DR SUBMITTED THAT DISALLOWANCE HAS RIGHTLY BEEN SUSTAINED BY LD. CIT(A) TO THE EXTENT OF RS.2,88,290/-. HE SUBMITTE D THAT THE DISALLOWANCE UPHELD BY LD. CIT(A) IS IN ACCORDANCE WITH THE AFOREMENTIONED DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MA NUFACTURING CO. LTD. VS. DCIT(SUPRA). THEREFORE, LD. DR PLEADED THAT THE A PPEAL FILED BY THE ASSESSEE SHOULD BE DISMISSED. 5. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF LD. DR. WE HAVE ALSO CAREFULLY GONE THROUGH THE ASSESSMENT ORDER AS WELL AS ORDER PASSED BY LD. CIT(A). ACCORDING TO AFOREMENTIONED DECISION OF HO NBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MANUFACTURING CO. LTD.(S UPRA) RULE 8D IS APPLICABLE IN THE YEAR UNDER CONSIDERATION. IN THE GROUNDS OF APPEAL IT HAS NOT BEEN SHOWN THAT HOW COMPUTATION ARRIVED AT BY LD. CIT(A ) IS NOT AS PER RULE 8D. THEREFORE, WE DECLINE TO INTERFERE IN THE DISALLOWA NCE SUSTAINED BY LD. CIT(A). ACCORDINGLY, THE APPEAL FILED BY THE ASSESSEE IS DI SMISSED. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. . */ ! .* ) 0 . ) * 12 ORDER PRONOUNCED IN THE OPEN COURT ON 01/04/2013 - ) ,' 0 3!/ 01/04/2013 , ) 4 5 SD/- SD/- ( / RAJENDRA ) ( . . / I.P. BANSAL ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; 3! DATED 01 / 04/2013 . / ITA NO.1905 MUM/2012 4 - - - - ) )) ) &*78 &*78 &*78 &*78 98'* 98'* 98'* 98'* / COPY OF THE ORDER FORWARDED TO : 1. #% / THE APPELLANT 2. &'#% / THE RESPONDENT. 3. : ( ) / THE CIT(A)- 4. : / CIT 5. 8;4 &*! , , / DR, ITAT, MUMBAI 6. 4< = / GUARD FILE. -! -! -! -! / BY ORDER, '8* &* //TRUE COPY// > >> > / 1 1 1 1 (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI . ! . ./ VM , SR. PS