UNI DERITEND LTD., MUMBAI V. DCIT 1(3)(2), MUMBAI

ITA 2215/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8777 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2017
• Appeal Filed By: Assessee
• Bench Allotted: H
• Assessment Year: 2012-2013
• Appeal Filed On: 06-04-2016
• Court: TRIBUNAL
• Department Lawyers: M C OMI NINGSHEN
• Assessee Lawyers: SANJAY R PARIKH
• Keywords: Earning of tax free income
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH, JUDICIAL MEMBER ITA NO. 2215/M/2016 (AY 2012 - 2013 ) M/S. UNI DERITEND LIMITED, 3 RD FLOOR, LIBERT Y BUILDING, SIR VITHALDAS THACKERSEY MARG, NEW MARINE LINE, MUMBAI - 020. / VS. DCIT - 1(3)(2), AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 020. ./ PAN : AAACU0028K ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI SANJAY R. PARIKH / RESPONDENT BY : SHRI M.C. OMI NINGSHEN, DR / DATE OF HEARING : 02. 01.2017 / DATE OF PRONOUNCEMENT : 20 . 01.2017 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 06.4.2016 IS AGAINST THE ORDER OF THE CIT (A) - 3, MUMBAI DATED 29.1.2016 FOR THE ASSESSMENT YEAR 2012 - 2013. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: - DISALLOWANCE U/S 14A R.W.R 8D(2)(I I) OF RS. 7,90,685/ - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN NOT ADJUDICATING THE MAIN GROUND OF THE APPELLANT THAT NO DISALLOWANCE WAS CALLED FOR UNDER SECTION 14A R.W.R 8D(2)(II) ON ACCOUNT OF INDIRECT INTEREST EXPENSES AND HENCE THE DISALLOWANCE MADE BY THE AO TO THE EXTENT OF RS. 7,90,685/ - . 2. THE LD CIT (A) ERRED IN FACTS IN LAW THAT THE APPELLANT DID NOT BORROW ANY MONEY FOR THE PURPOSE OF MAKING INVESTMENTS YIELDING TAX FREE INCOME AND ALSO FAILED TO APPRECIATE THAT THE APPELLANT IS CASH RICH COMPANY AND HAS HUGE FREE RESERVES AND SURPLUS AND PAID UP CAPITAL TOTALLING TO RS. 70,46,86,451/ - AS AGAINST INVESTMENT IN CURRENT AND NON - CURRENT INVESTMENTS OF RS. 48,04,11,669/ - HENCE NO DISALLOWANCE WAS CALLE D FOR U/S 14A R.W.R 8D(2)(II) TO THE EXTENT OF RS. 7,90,685/ - . 2. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF FERROUS AND NON - FERROUS INVESTMENT CASTINGS AND GENERATION OF WIND ENERGY. ASSESSEE FILED THE RETURN OF INCOME DECLARING THE TOTAL INCOME OF RS. 10,24,88,251/ - . ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT AND 2 THE ASSESSED INCOME WAS DETERMINED AT RS. 10,45,58,263/ - . IN THE ASSESSMENT , AO MADE CERTAI N ADDITIONS / DISALLOWANCE S WHICH INCLUDE DISALLOWANCE U/S 14A R.W. RULE 8D(2)(II) OF THE IT RULES, 1962. AGGRIEVED, ASSESSEE RAISED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 3. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, CIT (A) PARTLY ALLOWED THE APPEAL. AGAIN AGGRIEVED WITH THE SAID DECISION OF THE CIT (A), ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 4. DURING THE PROCEEDINGS BEFORE US, AT THE OUTSE T, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE DISALLOWANCE MADE U/S 14A R.W. RULE 8D (2)(II) OF THE ACT IS THE SUBJECT MATTER OF DISALLOWANCE. BRINGING OUR ATTENTION TO THE ASSESSMENT ORDER, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AO MADE DISALLOWANCE UNDER CLAUSE (II) OF THE IT RULES, 1962 AN AMOUNT OF RS. 14,49,846/ - , WHICH IS THE SOLITARY ISSUE TO BE ADJUDICATED BEFORE THE TRIBUNAL IN THIS APPEAL. ON THIS ISSUE, LD COUNSEL FOR THE ASSESSEE RAISED THE ARGUMENT THAT THE AO AND THE CIT (A) FAILED TO GIVE FINDING OF THE FACT THAT THE ASSESSEE HAD SUFFICIENT INTEREST FREE FUNDS AND ALSO FAILED TO COMPLY WITH THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. HDFC BANK LTD (2014) 366 ITR 505 (BOM.) AND ALSO THE JUDGMENT IN THE CASE OF CIT VS. RELIANCE UTILITIES AND POWER LTD (2009) 313 ITR 340 (BOM.) DESPITE THE SAME WERE REFERRED BY THE ASSESSEE BEFORE THE FIRST APPELLATE AUTHORITY. 5. AFTER HEARING BOTH THE PARTIES AND ON PERUSAL OF THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE CITED P RECEDENTS (SUPRA), WE FIND THAT THE CIT (A) CONFIRMED THE ADDITION DESPITE THE SAID BINDING JUDGMENT WITHOUT GIVING ANY REASONS. THE CONTENTS OF PARA 6 OF THE ORDER OF THE CIT (A) ARE RELEVANT IN THIS REGARD. FOR DECIDING THIS ISSUE, IN OUR OPINION, THER E IS A REQUIREMENT OF FINDING OF FACTS RELATING TO IF THE ASSESSEE IS ENGAGED IN MUTUAL FUNDS AND GOT INTEREST FREE OWN FUNDS, WHICH CAN BE PRESUMED TO HAVE BEEN FOUND WAY INTO THE INVESTMENTS THAT YIELDED EXEMPT INCOME TO THE ASSESSEE IN THE YEAR UNDER CO NSIDERATION. FOR WANT OF FINDING OF THE FACT, WE ARE OF THE OPINION, AS DISCUSSED IN THE OPEN COURT, THE MATTER SHOULD BE REMANDED TO THE FILE OF THE AO FOR THE LIMITED PURPOSE. AO SHOULD RESIST MAKING ADDITIONS, IF ANY, IN CASE AO COMES TO THE CONCLUSIO N THAT THE AFORESAID JUDGMENTS ARE APPLICABLE TO THE FACTS OF THE PRESENT CASE ON THIS LIMITED ISSUE RELATING TO THE 3 APPLICABILITY OF CLAUSE (II) OF RULE 8D (2) OF THE IT RULES, 1962. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED FOR STATIST ICAL PURPOSES. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCE D IN THE OPEN COURT ON 20 TH JANUARY, 2017. SD/ - SD/ - ( AMARJIT SINGH ) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 20.01.2017 . . ./ OKK , 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. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI