Master Handlers Private Limited, Pune V. Income-tax Officer, Ward - 14(4), Pune

ITA 2368/PUN/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4896 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-02-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 10-10-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M K VERMA
• Section: 14A

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC , PUNE , BEFORE MS. SUSHMA CHOWLA, JM . / ITA NO. 2368 /P U N/201 7 / ASSESS MENT YEAR : 20 1 2 - 1 3 MASTER HANDLERS PVT. LTD., PLOT NO.17 OF 17/1B, KOTHRUD INDUSTRIAL ESTATE, KOTHRUD, PUNE 4110 38 . / APPELLANT PAN: AA BCM1809K VS. THE INCOME TAX OFFICER , WARD 14 ( 4 ) , PUNE . / RESPONDENT / APPELLANT BY : SHRI KISHOR PHADKE / RESPONDENT BY : S HRI M.K. VERMA / DATE OF HEARING : 1 6 . 0 1 .201 9 / DATE OF PRONOUNCEMENT: 08 . 0 2 .201 9 / ORDER PER SUSHMA CHOWLA, J M : TH E APPEAL FILED BY ASSESSEE IS AGAINST THE ORDER OF CIT (A) - 7 , PUNE , DATED 30 . 0 6 .20 1 7 RELATING TO ASSESSMENT YEAR 20 1 2 - 1 3 AGAINST ORDER PASSED UNDER SECTION 14 3(3) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THE LEARNED CIT(A) - 7, PUNE ERRED IN LAW AND ON FACTS IN UPHOLDING THE DISALLOWANCE U/S 14A OF THE ITA, 1961 MADE BY THE LEARNED ITO WARD, 14(4) PUNE (HEREINAFTER REFERRED TO AS THE LEARNED AO) AMOUNTING TO RS.15,67,949/ - . ITA NO. 2368 /P U N/20 1 7 MASTER H ANDLERS PVT. LTD. 2 2. THE LEA RNED CIT(A) - 7, PUNE ERRED IN LAW AND ON FACTS IN AFFIRMING DISALLOWANCE U/S 14A OF THE ITA, 1961 MADE BY THE LEARNED AO, WITHOUT APPRECIATING THE FACT THAT NO SATISFACTION WAS RECORDED BY THE LEARNED AO W.R.T. CLAIM OF APPELLANT THAT NO EXPENDITURE IS INCU RRED FOR EARNING TAX FREE INCOME. 3. THE LEARNED CIT(A) - 7, PUNE AND THE LEARNED AO ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THE FACT THAT APPELLANT HAD SUFFICIENT OWN FUNDS OF RS.5.18 CRS. WHEREFROM, THE INVESTMENT IN SHARES AND MUTUAL FUND AMOUNTING TO RS.4.94 CRS. WAS MADE. 4. THE LEARNED CIT(A) - 7, PUNE AND LEARNED AO ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THE RATIO OF JURISDICTIONAL HONORABLE BOMBAY HIGH COURT EMANATING FROM THE DECISION GIVEN IN THE CASE OF CIT VS. HDFC BANK LIMITED 366 ITR 505. 3. THE ASSESSEE HAS RAISED FOUR GROUNDS OF APPEAL BUT ALL RELATING TO DIFFERENT FACETS OF DISALLOWANCE UNDER SECTION 14A OF THE ACT AT 15,67,949/ - . THE GROUND OF APPEAL NO.2 RAISED BY ASSESSEE IS AGAINST NON - RECORDING OF SATISFACTION BY THE ASSESSING OFFICER. THE ASSESSEE REFERRED TO THE ASSESSMENT ORDER AND POINTED OUT THAT THE ASSESSING OFFICER HAS FAILED TO RECORD SATISFACTION. IT MAY BE POINTED OUT HEREIN ITSELF THAT THIS IS THE CASE WHERE ASSESSEE HAD NOT MADE ANY SUO MOTU DISALLOWANCE UNDER SECTION 14A OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS AT PAGE 3 OF ASSESSMENT ORDER, IT IS VERY CLEARLY NOTED THAT THE ASSESS EE WAS ASKED AS TO WHY DISALLOWANCE SHOULD NOT BE MADE UNDER SECTION 14A OF THE ACT READ WITH RULE 8D OF THE INCOME TAX RULES, 1962 (IN SHORT THE RULES). THEREAFTER, THE ASSESSEE HAS GIVEN REPLY. IN SUCH CIRCUMSTANCES, THERE IS NO MERIT IN THE PLEA OF ASSESSEE THAT NO SATISFACTION WAS RECORDED FOR MAKING DISALLOWANCE UNDER SECTION 14A OF THE ACT. 4. THE NEXT ISSUE RAISED VIDE GROUNDS OF APPEAL NO.3 AND 4 IS AGAINST CLAIM OF ASSESSEE THAT IT HAD SUFFICIENT OWN FUNDS TO THE EXTENT OF 5.18 CRORES AS AGA INST INVESTMENT IN SHARES AND MUTUAL FUNDS TO THE EXTENT OF 4.94 CRORES. THE SAID DETAILS ARE CLEARLY AVAILABLE AT PAGE 3 OF ASSESSMENT ORDER ITSELF, WHEREIN INVESTMENT IN TAX FREE SECURITIES INCLUDING MUTUAL FUNDS TOTALED TO 4.94 CRORES. T HE OWN FUNDS OF THE COMPANY ARE TO THE EXTENT OF 5.18 CRORES. ITA NO. 2368 /P U N/20 1 7 MASTER H ANDLERS PVT. LTD. 3 5. THE HONBLE BOMBAY HIGH COURT IN CIT VS. HDFC BANK LTD. (2014) 366 ITR 505 (BOM) HAVE LAID DOWN THAT WHERE THE ASSESSEE HAS OWN FUNDS EXCEEDING THE INVESTMENT MADE IN SECURITIES, INCOME FRO M WHICH IS TAX FREE , THEN NO DISALLOWANCE IS TO BE MADE UNDER SECTION 14A OF THE ACT. 6. APPLYING THE SAID PRINCIPLE TO THE FACTS OF PRESENT CASE, I HOLD THAT NO DISALLOWANCE ON ACCOUNT OF INTEREST IS TO BE MADE UNDER SECTION 14A OF THE ACT READ WITH RULE 8D(2)(II) OF THE RULES. HOWEVER, DISALLOWANCE OF 2,44,261/ - MADE UNDER RULE 8D(2)(III) OF THE RULES STANDS UPHELD. THE GROUNDS OF APPEAL RAISED BY ASSESSEE ARE THUS, PARTLY ALLOWED. 7 . IN THE RESULT, APPEAL OF ASSESSEE IS PARTLY ALLOWED. ORDER PRONO UNCED ON THIS 8 TH DAY OF FEBR UARY , 201 9 . SD/ - (SUSHMA CHOWLA) / JUDICIAL MEMBER / PUNE ; DATED : 8 TH FEBR UARY , 201 9 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) - 7 , PUNE ; 4. THE PR. CIT - 6 , PUNE ; 5. 6. , , , - / DR SMC , ITAT, PUNE; / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE