DCIT 1(2), MUMBAI V. PNB INSURANCE BROKING P.LTD, MUMBAI

ITA 2517/MUM/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0608 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-05-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 31-03-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 02-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIP
• Assessee Lawyers: SANGHVI
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI N.K . BILLAIYA, A CCOUNTANT M EMBER / I .T.A. NO . 2517/MUM/2013 ( / ASSESSMENT YEAR : 2009 - 10 THE DCIT 1(2), AAYAKAR BHAVAN, MUMBAI - 400 020 / VS. M/S. PNB INSURANCE BROKING PVT. LTD., 11 TH FLOOR, DALALMAL HOUSE,J.B. MARG, NARIMAN POINT, MUMBAI - 400 021 ./ ./ PAN/GIR NO. : AAECA 3425A ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY: SHRI NEIL PHILIP / RESPONDENT BY : SHRI SANGHVI / DATE OF HEARING : 19 . 0 5 .2015 / DATE OF PRONOUNCEMENT : 19 .0 5 .2015 / O R D E R PER N.K. BILLAIYA, AM: THIS IS AN APPEAL BY THE REVENUE PREFERRED AGAINST THE ORDER OF THE LD. CIT(A) - 2 , MUMBAI DT. 2. 1 .201 3 PERTAINING TO ASSESSMENT YEAR 2009 - 10. 2. THE SOLE GRIEVANCE OF THE REVENUE IS THAT THE LD. CIT(A) ERRED IN DIRECTING THE AO TO DELETE THE ADDITION OF RS. 13,79,844/ - U/S. 14A OF THE I.T. ACT. ITA. NO. 2517/M/13 2 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS IN THE BUSINESS OF INSURANCE BROKING. THE RETURN FOR THE YEAR WAS ELECTRONICALLY FILED ON 29.9.2009 WHICH WAS TAKEN UP FOR SCRUTINY ASSESSMENT. WHILE GOING THROUGH THE RETURN OF INCOME, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS DECLARED DIVIDEND INCOME AT RS. NIL ON ITS INVESTMENT OF SHARES AND MUTUAL FUND. ON FURTHER PERUSAL OF THE BALANCE SHEET, THE AO FOUND THAT THE TOTAL INVESTMENT WAS AT RS. 13,90,15,862/ - . THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THE DISALLOWANCE U/S. 14A WAS NOT MADE. 3.1. THE ASSESSEE FILED A DETAILED REPLY CLAIMING THAT THERE IS NO DIVIDEND INCOME SINCE NONE OF THE INVESTMENTS ARE DIVIDEND GENERATING INVESTMENTS. THE AO DID NOT ACCEPT THIS SUBMISS ION OF THE ASSESSEE CLAIMING THAT SINCE THERE WAS NO DIVIDEND INCOME THERE CANNOT BE A QUESTION OF DISALLOWANCE OF EXPENSES U/S. 14A OF THE ACT. THE AO PROCEEDED BY COMPUTING THE DISALLOWANCE IN THE LIGHT OF THE PROVISIONS OF SEC. 14A OF THE ACT R.W. RULE 8D. THE DISALLOWANCE WAS COMPUTED AT RS. 13,79,844/ - 4. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A). IT WAS STRONGLY CONTENDED BEFORE THE LD. CIT(A) THAT THERE WAS NO EXEMPT INCOME EARNED NOR THERE WAS ANY INVESTMENT BEARING EXEMPT INCOME AND THEREFORE PROVISIONS OF SEC. 14A ARE NOT ATTRACTED. AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS, THE LD. CIT(A) HELD AS UNDER: I HAVE GONE THROUGH THE ISSUE. IT IS SEEN THAT IN THIS YEAR, ALL THE MUTUAL FUNDS IN WHICH THE APPELLANT HAS INVESTED GRO WTH ORIENTED FUNDS AND IN THESE FUNDS NO DIVIDEND WILL BE DECLARED. HOWEVER, WHEN THE UNITS ARE MATURED/SURRENDERED THE APPELLANT WILL GET A HIGHER FIGURE THAN THE AMOUNT OF INVESTMENT AND IT IS TAXABLE AS CAPITAL GAINS. IN VIEW OF THIS, IT CANNOT BE CON SIDERED THAT THESE INVESTMENTS ARE TAX EXEMPT ITA. NO. 2517/M/13 3 INVESTMENTS. IN VIEW OF THIS POSITION, NO DISALLOWANCE NEEDS TO BE MADE U/S. 14A OF THE INCOME - TAX ACT IN THIS A.YR 2009 - 10. THE AO IS DIRECTED TO DELETE THE ADDITION OF RS. 13,79,844/ - . 5. AGGRIEVED BY THI S, THE REVENUE IS BEFORE US. 6. THE LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ASSESSMENT ORDER. 7. PER CONTRA, THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE ORDER OF THE FIRST APPELLATE AUTHORITY. THE LD. COUNSEL FURTHER BROUGHT TO OUR NOTICE DECISION OF THE TRIBUNAL MUMBAI BENCHES WHICH ARE PLACED ON RECORD IN THE FORM OF PAPER BOOK. 8. WE HAVE C ONSIDERED THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND THE JUDICIAL DECISIONS BROUGHT TO OUR NOTICE. IN OUR CONSIDERED OPINION, THE INVESTMENTS MADE BY THE ASSESSEE ARE IN GROWTH ORIENTED FUNDS WHERE NO DIVIDEND IS D ECLARED. HOWEVER, WE FIND THAT WHENEVER THERE IS MATURITY OF THESE FUNDS, THE AMOUNT IS SUBJECT TO TAX UNDER THE HEAD CAPITAL GAIN. CONSIDERING ALL THESE FACTS IN TOTALITY AND DRAWING SUPPORT FROM THE DECISION OF THE TRIBUNAL, MUMBAI BENCH, WE DECLINE TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A). 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. OR DER PRONOUNCED IN THE OPEN COURT ON 19 TH MAY , 2015 SD/ - SD/ - ( JOGINDER SING ) (N.K. BILLAIYA) /JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 19 TH MAY , 2015 . . ./ RJ , SR. PS ITA. NO. 2517/M/13 4 / 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 . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI