ITO WD 11(2)(3), MUMBAI V. SPRINT ADVISORY SERVICES P. LTD, MUMBAI

ITA 2285/MUM/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 3794 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Assessment Year: 2013-2014
• Appeal Filed On: 12-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHAUDHARY ARUN KUMAR SINGH
• Keywords: Earning of tax free income; Rule 8D
• Section: 14A; 201

Judgement Text

N THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI N.K. PRADHAN , ACCOUNTANT MEMBER ITA NO. 2285 / MUM . /201 8 ( ASSESSMENT YEAR : 20 1 3 1 4 ) INCOME TAX OFFICER WARD 11(2)(3), MUMBAI . APPELLANT V/S SPRINT ADVISORY SERVICES PVT. LTD. SHYAM NAGAR, OFF JOGESHWARI VIKHROLI LINK ROAD, JOGESHWARI (E) MUMBAI 400 060 PAN AAJCS0579E . RESPONDENT REVENUE BY : SHRI CHAUDHARY ARUNKUMAR SINGH ASSESSEE BY : MS. DINKLE HARIYA DATE OF HEARING 31.07.2019 DATE OF ORDER 09.08.2019 O R D E R PER SAKTIJIT DEY. J.M. CAPTIONED APPEAL BY THE REVENUE IS AGAINST THE ORDER DATED 12 TH JANUARY 201 8 , PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 18 , MUMBAI , FOR THE ASSESSMENT YEAR 20 1 3 1 4 . 2 . THE DISPUTE IN THE PRESENT APPEAL IS CONFINED TO DELETION OF DISALLOWANCE MADE UNDER SECTION 14A R/W RULE 8D. 2 SPRINT ADVISORY SERVICES PVT. LTD. 3 . BRIEF FACTS ARE, FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE COMPANY FILED ITS RETURN OF INCOME ON 26 TH SEPTEMBER 20 13, DECLARING NIL INCOME AFTER SET OFF OF BROUGHT FORWARD BUSINESS LOSS. IN COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICING THAT THE ASSESSEE HAS MADE INVESTMENT IN EQUITY SHARES OF FUTURE GENERAL INDIA LIFE INSURANCE CO. LTD., WORTH ` 711 .48 CRORE, WHICH WOULD YIELD EXEMPT INCOME CALLED UPON THE ASSESSEE TO EXPLAIN WHY DISALLOWANCE SHOULD NOT BE MADE. THOUGH , THE ASSESSEE OBJECTED TO THE PROPOSED DISALLOWANCE REJECTING THE SUBMISSIONS OF THE ASSESSEE, THE ASSESSING OFFICER DISALLOWED AN AM OUNT OF ` 3,40,38,875, BY APPLYING RULE 8D. THE ASSESSEE CHALLENGED THE AFORESAID DISALLOWANCE BEFORE THE FIRST APPELLATE AUTHORITY. 4 . THE LEARNED COMMISSIONER (APPEALS) HAVING FOUND THAT DURING THE YEAR THE ASSESSEE HAD NOT EARNED ANY EXEMPT INCOME AND ALS O TAKING NOTE THAT IN SIMILAR FACTS AND CIRCUMSTANCES HIS PREDECESSOR IN OFFICE DELETED THE DISALLOWANCE MADE UNDER SECTION 14A R/W RULE 8D IN ASSESSMENT YEAR 2012 13 AS WELL AS THE RATIO LAID DOWN IN THE JUDICIAL PRECEDENTS CITED BEFORE HIM DELETED THE DI SALLOWANCE MADE BY THE ASSESSING OFFICER. 5 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. FROM THE FACTS EMERGING FROM RECORD, IT IS EVIDENT, BOTH THE 3 SPRINT ADVISORY SERVICES PVT. LTD. ASSESSING OFFICER AND LEARNED COMMISSIONER (APPEALS) HAVE STATED THAT DU RING THE RELEVANT PREVIOUS YEAR THE ASSESSEE HAS NOT EARNED ANY EXEMPT INCOME. THE AFORESAID FINDING OF FACT BY THE DEPARTMENTAL AUT HORITIES REMAINS UNCONTROVERTED. T HEREFORE, THE ISSUE WHICH NEEDS TO BE DECIDED IS , WHETHER IN ABSENCE OF ANY EXEMPT INCOME EARNE D DURING THE YEAR , DISALLOWANCE UNDER SECT ION 14A R/W RULE 8D CAN BE MADE? IN OUR VIEW, THE ANSWER TO THE AFORESAID QUESTION IS NO . THE HONBLE DELHI HIGH COURT IN CHEMINVEST LTD. V/S ITO, [2009] 378 ITR 33 (DEL.), HAS HELD THAT IN ABSENCE OF ANY EXEMPT INCOME EARNED IN A PARTICULAR ASSESSMENT YEAR, NO DISALLOWANCE UNDER SECTION 14A R/W RULE 8D CAN BE MADE. THE SAME VIEW HAS BEEN EXPRESSED BY THE HON'BLE JURISDICTIONAL HIGH COURT IN PCIT V/S BALLARPUR INDUSTRIES LTD., ITA NO.51/2016 , JUDGMENT DATED 13 TH O CTOBER 2016. O THER HIGH COURTS AS WELL AS DIFFERENT BENCHES OF THE TRIBUNAL HAVE ALSO EXPRESSED IDENTICAL VIEW. THUS, AS PER THE RATIO LAID DOWN IN THE JUDICIAL PRECEDENTS REFERRED TO ABOVE, IN ABSENCE OF ANY EXEMPT INCOME EARNED DURING THE YEAR, NO DISALL OWANCE UNDER SECTION 14A R/W RULE 8D CAN BE MADE. IN VIEW OF THE AFORESAID, WE DO NOT FIND ANY INFIRMITY IN THE DECISION OF LEARNED COMMISSIONER (APPEALS) ON THE ISSUE. GROUNDS RAISED ARE DISMISSED. 4 SPRINT ADVISORY SERVICES PVT. LTD. 6 . IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN C OURT ON 09.08.2019 SD/ - N.K. PRADHAN ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 09.08.2019 COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY ASSISTANT REGISTRAR ITAT, MUMBAI