SALENE POWER INFRASTRUCTURE LTD, AHEMEDABAD V. ITO WD 3(3)(2), MUMBAI

ITA 2024/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1205 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2017
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Next Hearing Date: 09-07-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 25-03-2014
• Court: TRIBUNAL
• Department Lawyers: DR A K NAYAK
• Assessee Lawyers: SANJAY KAPADIA
• Section: 14A; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) & RAMLAL NEGI (JM) I.T.A. NO. 2024 /MUM/20 14 (ASSESSMENT YEAR 20 10 - 11 ) SALENE POWER INFRASTRUCTURE LIMITED 1207, 12 TH FLOOR RAJEJA CENTRE FREE PRESS JOURNAL MARG, NARIM AN POINT MUMBAI - 400 021. VS. ITO WARD 3(3)(2) MUMBAI. ( APPELLANT ) ( RESPONDENT ) PAN NO . AAFCS6940P ASSESSEE BY SHRI SANJAY KAPADIA DEPARTMENT BY DR. A.K. NAYAK DATE OF HEARING 1 2 .4 . 201 7 DATE OF PRONOUNCEMENT 12 . 4 . 201 7 O R D E R PER B.R. BASKARAN (AM) : - THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 13.1.2014 PASSED BY THE LEARNED CIT(A) - 7, MUMBAI AND IT RELATES TO A.Y. 2010 - 11. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF THE LEARNED CIT(A) IN CONFIRMING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER U/S. 14A OF THE ACT WHILE COMPUTING INCOME UNDER THE NORMAL PROVISIONS OF THE ACT AS WELL AS WHEN COMPUTING BOOK PROFIT UNDER SECTION 115JB OF THE ACT. 2. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD. THE ASS ESSEE DID NOT EARN ANY DIVIDEND INCOME AND ALSO DID NOT MAKE ANY DISALLOWANCE U/S. 14A OF THE ACT. THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HELD INVESTMENT OF ` 38.20 CRORES AS ON BEGINNING OF THE YEAR AS WELL AS AT THE END OF THE YEAR UNDER CONSIDE RATION IN SHARES OF M/S. SUZLON GREEN POWER LIMITED. ACCORDINGLY THE ASSESSING OFFICER, BY APPLYING PROVISIONS OF RULE 8D(2)(III) OF THE I.T. RULES, COMPUTED THE DISALLOWANCE AT 0.5% OF INVESTMENT VALUE OF ` 38.20 CRORES, SALENE POWER INFRASTRUCTURE LTD. 2 WHICH WORKED OUT TO ` 19,10,000/. THE ASSESSING OFFICER ADDED THE SAME TO THE TOTAL INCOME AS WELL AS TO THE BOOK PROFIT U/S. 115JB OF THE ACT. THE LEARNED CIT(A) CONFIRMED THE SAME AND HENCE THE ASSESSEE HAS FILED THIS APPEAL BEFORE US. 3. LEARNED COUNSEL APPEARING FOR THE ASSESSEE SUBM ITTED THAT M/S. SUZLON GREEN POWER LTD. IS A GROUP COMPANY AND HENCE INVESTMENT MADE THEREIN QUALIFIES AS STRATEGIC INVESTMENT. HE SUBMITTED THAT THE STRATEGIC INVESTMENTS HAVE TO BE EXCLUDED FROM THE VALUE OF INVESTMENTS WHILE COMPUTING THE DISALLOWANCE UNDER RULE 8D AS PER THE DECISION RENDERED BY THE CO - ORDINATE BENCH IN THE CASE OF GARWARE WALL ROPES LTD. VS. ADD. CIT (46 TAXAMNN.COM 18). EVEN OTHERWISE, THE ADMINISTRATIVE EXPENSES HAVE BEEN INCURRED TOWARDS ITS MAIN ACTIVI TY OF RUNNING WINDMILL BUSI NESS AND HENCE NO PART THEREOF CAN BE ATTRIBUTED TO THE INVESTMENT ACTIVITY, SINCE T HE ASSESSEE HAS NOT MADE ANY OTHER INVESTMENT DURING THE YEAR UNDER CONSIDERATION. ACCORDINGLY, HE SUBMITTED THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN COMPUTING THE D ISALLOWANCE UNDER RULE 8D(2) OF THE ACT. HE SUBMITTED THAT THE COORDINATE BENCH OF THE TRIBUNAL, ON IDENTICAL SET OF FACTS, HAS DELETED THE DISALLOWANCE MADE U/S. 14A OF THE A CT IN THE CASE OF RED CHILLIES ENTERTAINMENT PVT. LTD. (ITA NO. 5271/MUM/2013 & 1577/MUM/2013 DATED 31.5.2016. 4. ON THE CONTRARY, LEARNED DEPARTMENTAL REPRESENTATIVE PLACED RELIANCE ON THE DECISION RENDERED BY THE LEARNED CIT(A). 5. HAVING HEARD THE RIVAL SUBMISSIONS, WE ARE OF THE VIEW THAT THERE IS MERIT IN THE SUBMISSIONS MADE BY THE ASSESSEE. FIRST OF ALL, WE NOTICED THAT THE ASSESSEE HAS NOT MADE ANY FRESH INVESTMENT DURING THE YEAR UNDER CONSIDERATION. SECONDLY THE EXISTING INVESTMENTS HAVE BEEN MADE IN A GROUP COMPANY WHICH QUALIFIES AS STRATEGIC INVESTMENT. THE ASSESSEE HAS NOT EARNED ANY DIVIDEND INCOME AND ADMINISTRATIVE EXPENSES HAVE BEEN INCURRED MAINLY IN CONNECTION WITH THE WINDMILL BUSINESS. IT IS WELL SETTLED PROPOSITION THAT THE ASSESSING OFFICER CAN HAVE REG A RD TO PROVISIONS OF RULE 8D OF THE I.T. RULES SALENE POWER INFRASTRUCTURE LTD. 3 ONLY IF HE IS NOT SATISFIED WITH THE CLAIM PUT FORTH BY THE ASSESSEE WITH REGARD TO THE DISALLOWANCE TO BE MADE U/S. 14A OF THE ACT, THAT TOO BY HAVING RE GA RD TO THE ACCOUNTS OF THE ASSESSEE. FROM THE DISCUSSIONS MADE BY US ON THE FACTUAL ASPECTS OF THE INVESTMENT AN D OTHER DETAILS, I.E. BY HAVING REGARD TO THE ACCOUNTS OF THE ASSESSEE, WE ARE OF THE VIEW THAT THERE IS MERIT IN THE CLAIM OF THE ASSESSEE THAT THERE IS NO REQUIREMENT TO MAKE ANY DISALLOWANCE U/S. 14A OF THE ACT. ACCORDINGLY, WE SET ASIDE THE ORDER PASSE D BY THE LEARNED CIT(A) AND DIRECT THE ASSESSING OFFICER TO DELETE THE DISALLOWANCE MADE U/S. 14A OF THE ACT DURING THE YEAR UNDER CONSIDERATION. 6. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 12 .4 .201 7. SD/ - SD/ - (RAMLAL NEGI ) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 1 2 / 4 / 20 1 7 COPY OF THE ORDER FORWARDED TO : 1. TH E APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( DY./ASSTT. REGISTRAR) PS ITAT, MUMBAI