SHIVKUMAR TEKRIWAL, BANGALORE V. DCIT CC 38, MUMBAI

ITA 1961/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84552 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 20-10-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 22-03-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: LOVE KUMAR
• Assessee Lawyers: REEPAL G TRAISHAWALA
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E , BENCH MUMBAI , BEFORE : SHRI I.P.BANSAL, JM & SHRI R.C.SHARMA , A M ITA NO. 1961 / MUM/20 1 2 ( ASSESSMENT YEAR : 200 8 - 200 9 ) SHIV KUMAR TEKRIWAL, 3006, 12B MAIN ROAD, 8 TH CROSS HALL, 2 ND STAGE, INDIRANAGAR, BANGALORE - 5600 038 VS. DCIT, CC . 38 , MUMBAI PAN/GIR NO. : A AOPW 9700 H ( APPELLANT ) .. ( RESPONDENT ) /ASSESSEE BY : SHRI REEPAL G. TRAISHAWALA /REVENUE BY : SHRI LOVE KUMAR DATE OF HEARING : 20 TH OCT . 201 4 DATE OF PR ONOUNCEMENT : 18 /12/ 201 4 O R D E R PER R.C.SHARMA ( A .M.) : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) , DATED 16 - 12 - 2011 FOR ASSESSMENT YEAR 200 8 - 0 9 , IN THE MATTER OF ORDER PASSED U/S.143(3) OF THE I.T. ACT . 2. TH E SOLITARY GRIEVANCE OF THE ASSESSEE RELATES TO DISALLOWANCE OF EXPENDITURE OF RS. 14,77,041/ - U/S.14A R.W.R.8D OF THE ACT. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THAT DURING THE COURSE OF SCRUTINY PROCEEDINGS, IT W A S N OTICED THAT ASSESSEE HAD INCURRED INTEREST EXPENDITURE OF RS. 28,23,224/ - ON LOANS BORROWED AND ASSESSEE HAD EARNED TAX FREE INCOME I.E. DIVIDEND AMOUNTING RS. 8,66,351/ - AND PPF INTEREST RS.32,793/ - . ASSESSEE WAS ASKED TO STATE WHY PROVISIONS OF SECTION 14A SHOULD NOT BE INVOKED FOR ITA NO. 1961 /1 2 2 DISALLOWING EXPENDITURE RELATED TO EARNING OF TAX EXEMPT INCOME. IN RESPONSE ASSESSEE HAS NOT FURNISHED ANY REPLY BUT HAS FURNISHED THE WORKING OF DISALLOWANCE U/S.14A WHICH AMOUNT TO RS. 14,77,041/ - THE WORKING IS AS UNDER : - 1) DIRECT EXPENDITURE INCURRED RELATION TO EXEMPT INCOME : NIL 2) INDIRECT EXPENSES I) INTEREST PAID RS.28,23,224/ - (A) II) TOTAL INVESTMENT AS ON 31.3.07 RS.1,30,79,702/ - III) TOTAL INVESTMENT AS ON 31.3.08 . RS.2,28,12,520/ - IV) AVG OF VALUE OF I NVESTMENTS INCOME FROM WHICH DOES NOT OR SHALL NOT FORM PART OF TOTAL INCOME RS.1,79,46,111/ - (B) TOTAL ASSETS AS PER BALANCE SHEET ON 31. 3.07 RS.3,36,53, 711/- TOTAL ASSETS AS PER BALANCE SHEET ON 31.3.08 RS.3,93,88,192/ - A VERAGE OF TOTAL ASSETS RS.3,65,20,952/ - (C) DISALLOWANCE AXB C 3) TOTAL DISALLOWANCE RS.13,87,310/ - 0.5% OF AVERAGE VALUE OF INVESTMENTS RS. 89, 731/ - TOTAL DISALLOWANCE RS.14,77,041/ - ( NON FURNISHING OF EXPLANATION WOULD AMOUNT TO T ACIT ADMISSION OF THE FACT THAT THE NEXUS BETWEEN NON - INTEREST BEARING FUNDS AND INVESTMENTS IN ASSETS YIELDING TAX FREE INCOME CANNOT BE ESTABLISHED ) ' 4. IN APPEAL BEFORE THE CIT(A) VIDE SUBMISSION DATED 4 - 10 - 2011, THE ASSESSEE SUBMITTED AS UNDER : - THESE FACTS IN THE CASE OF APPELLANT WE RE GROSSLY IGNORED BY THE LD. AO WHILE INVOKING THE PROVISIONS OF SECTION 14A WHICH SPECIFICALLY STATES THAT THE PROVISIONS SHOULD BE APPLIED 'HAVING REGARDS TO THE BOOKS OF ACCOUNTS' AND NATURE OF TRANSACTIONS. HOWEV ER, IN ORDER TO BUY PEACE AND AVOID FURTHER LEGAL TUSSLE THE APPELLANT HAD AGREED TO THE ADDITION ULS. 1 4A AND WORKED OUT THE SAME AS PER RULE 8D, ON PRE CONDITION THAT NO PENALTY SHALL BE LEVIED FOR SUCH ADDITION. SINCE ON THE ASSURANCE GIVEN BY THE L D. AO FOR NON LEVY OF PENALTY THE APPELLANT HAD AGREED TO THE ADDITION. AT THIS JUNCTURE THE APPELLANT WOULD NOT LIKE TO HARP UPON THE QUANTUM ADDITION. HOWEVER, IN THE ASSESSMENT ORDER THE LD. A O HAD INITIATED PENALTY ULS.271(1)(C) AND FILED TO HONOR HIS COMMI TMENT. IN THIS CIRCUMSTANCE, WE PRAY YOUR HONOR TO DIRECT THE LD. AO TO DROP THE PENALTY PROCEEDINGS. ITA NO. 1961 /1 2 3 5. AFTER CONSIDERING THE ASSESSEES CONTENTION, THE CIT(A) CONFIRMED THE ACTION OF THE AO FOR DISALLOWANCE MADE U/S.14A. 6. LEARNED AR RELIED ON THE DECISION OF HON BLE KARNATAKA HIGH COURT IN THE CASE OF M/S CCI LTD., PASSED IN ITA NO. 359/2011, DATED 28 - 2 - 2012 . 7. THE AFORESAID CASE PERTAINS TO THE ASSESSMENT YEAR 2007 - 08 WHEN THE RULE 8D WAS NOT APPLICABLE, WHEREAS IN THE INSTANT CASE, RELEVANT ASSE SSMENT YEAR IS 2008 - 09 WHEN THE RULE 8D IS APPLICABLE. SIMILARLY, THE DECISION OF THE COORDINATE BENCH RELIED BY THE LEARNED AR ARE DISTINGUISHABLE ON FACTS. IN THE INSTANT CASE, ASSESSEE HIMSELF HAS FURNISHED DISALLOWANCE U/S.14A OF THE ACT WHICH AMOUNTS TO RS. 14,77,041/ - AND EVEN BEFORE THE CIT(A), LEARNED AR HAS AGREED FOR THE DISALLOWANCE OFFERED BY HIM. THUS, IT IS NOT THE CASE OF THE ASSESSEE THAT WITHOUT FINDING ANY FAULT IN THE DISALLOWANCE WORKED OUT BY ASSESSEE U/S.14A OF THE ACT , T HE AO HAD MADE ANY HIGHER DISALLOWANCE. THE WORKING OF DISALLOWANCE U/S. 14A OF THE ACT AS SUBMITTED BY THE ASSESSEE WAS ACCEPTED BY BOTH AO AND CIT(A) . EVEN BEFORE US, ASSESSEE COULD NOT POINT OUT ANY FAULT IN THE WORKING SO FURNISHED WITH REGARD TO COMPUTATION OF DISALL OWANCE U/S. 14A OF THE ACT , WHICH AMOUNTS TO RS. 14,77,041/ - . ACCORDINGLY , WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LOWER AUTHORITIES FOR DISALLOWANCE MADE U/S.14A FOR THE RELEVANT ASSESSMENT YEAR 2008 - 09 UNDER CONSIDERA TION AS PER RULE 8D OF I.T. AC T, WHICH WAS SUBMITTED BY ASSESSEE HIMSELF DURING COURSE OF ASSESSMENT. 8 . IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED ITA NO. 1961 /1 2 4 ORDER PRONOUNCED IN THE OPEN COURT ON THIS 18 / 1 2 / 201 4 . / 1 2 / 2014 SD/ - SD/ - ( ) ( I.P.BANSAL ) ( ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 18 / 1 2 /2014 /PKM , PS COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( ASSTT. REGISTRAR) / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A), MUMBAI. 4. / CIT 5. / DR, ITA T, MUMBAI 6. GUARD FILE. //TRUE COPY//