DCIT CC 44, MUMBAI V. J.K. INVESTORS (BOMBAY ) LTD, MUMBAI

ITA 2698/MUM/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1932 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2015
• Appeal Filed By: Department
• Bench Allotted: J
• Assessment Year: 2010-2011
• Appeal Filed On: 21-04-2014
• Court: TRIBUNAL
• Keywords: Earning of tax free income
• Section: 143(3); 14A

Judgement Text

, , J , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES J, MUMBAI , , , BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER, AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO.2698/MUM/2014 ASSESSMENT YEAR: 2010-11 DCIT CC 44 R.NO.656, 6 TH FLOOR, AAYAKAR BHAVAN, M.K. RD. MUMBAI -400020 / VS. J.K. INVESTORS (BOMBAY) LTD. NEW HIND HOUSE, NARROTAM MORARJEE MARG, BALLARD ESTATE MUMBAI-400 038 (REVENUE) (RESPONDENT) P.A. NO. AAACJ2089D REVENUE BY SHRI VINOD KUMAR (DR) RESPONDENT BY SHRI NITESH JOSHI (AR) / DATE OF HEARING : 02/12/2015 / DATE OF ORDER: 18/12/2015 / O R D E R PER ASHWANI TANEJA (ACCOUNTANT MEMBER): THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE A GAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEAL S)-5, MUMBAI {(IN SHORT CIT(A)}, DATED 30.01.2014 FOR T HE J.K. INVESTORS 2 ASSESSMENT YEAR 2010-11, PASSED AGAINST THE ASSESSM ENT ORDER PASSED BY THE ASSESSING OFFICER (IN SHORT AO ) U/S 143(3) OF THE ACT, ON THE FOLLOWING GROUNDS: 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN RESTRICTING THE DISALLOWANCE U/S 14A READ WITH RULE 8D TO RS. 5,31,27,929/- AS AGAINST THE DISALLOWANCE MADE BY T HE AO AT RS.5.80,51,785/WITHOUT APPRECIATING THE FACT THAT THE INTEREST EXPENSES OF RS.46,63,856/- DISALLOWED UNDER RULE 8D(2)(II) AND RS.2,60,000/- DISALLOWED UNDER RULE 8D(2)(11) WERE JUSTIFY DISALLOWED AS THE SAME WERE EXPENSES WHICH HAD BEEN INCURRED FOR EARN ING EXEMPT INCOME.' 2. DURING THE COURSE OF HEARING, ARGUMENTS WERE MADE BY SHRI NITESH JOSHI, AUTHORISED REPRESENTATIVE (AR) ON BEH ALF OF THE ASSESSEE AND BY SHRI VINOD KUMAR, DEPARTMENTAL REPRESENTATIVE (DR) ON BEHALF OF THE REVENUE. 3. THE SOLITARY GROUND RAISED BY THE REVENUE IN THIS APPEAL IS WITH REGARD TO THE RELIEF GIVEN BY LD.CIT(A) IN RES TRICTING THE DISALLOWANCE U/S 14A READ WITH RULE 8D. 3.1. THE BRIEF FACTS IN THIS CASE ARE THAT DURING THE Y EAR THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF TRADING IN TEXTILE FABRICS AND HOSIERY, AGENCY BUSINESS AND LEASING AN D INVESTMENT IN SHARES. J.K. INVESTORS 3 3.2. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WA S NOTED BY THE LD. AO THAT THE ASSESSEE HAS RECEIVED INCOME BY WAY OF DIVIDEND INCOME FROM MUTUAL FUNDS AND CLAIME D IT AS EXEMPT. THEREFORE, HE GAVE SHOW CAUSE FOR DISALLOWA NCE U/S 14A READ WITH RULE 8D. IN RESPONSE, THE ASSESSEE SU BMITTED THAT VOLUNTARY DISALLOWANCE HAS ALREADY BEEN MADE I N THE RETURNS FILED BY THE ASSESSEE ON ACCOUNT OF INTERES T, AND THEREFORE NO FURTHER DISALLOWANCE WAS REQUIRED TO B E MADE. BUT, THE AO DID NOT AGREE WITH THE SUBMISSIONS OF T HE ASSESSEE AND HE WAS NOT SATISFIED WITH THE DISALLOW ANCE VOLUNTARY MADE BY THE ASSESSEE, AND THEREFORE, HE M ADE FURTHER DISALLOWANCE AGGREGATING TO RS.1,30,84,992/ -. 3.3. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER I N APPEAL BEFORE LD. CIT(A), DETAILED SUBMISSIONS WERE FILED AND DEMONSTRATED BEFORE THE LD. CIT(A) THAT DISALLOWANC E WAS CORRECTLY MADE BY THE ASSESSEE VOLUNTARILY IN ITS R ETURN AND NO MORE DISALLOWANCE WAS CALLED FOR, AND THEREFORE, TH E ACTION OF AO WAS NOT JUSTIFIED. THE RELIANCE WAS ALSO PLACED ON THE ORDER OF LD. CIT(A) FOR IMMEDIATELY PROCEEDINGS YEAR IN A SSESSEES OWN CASE I.E. A.Y.2009-10. THE LD. CIT(A) WAS PARTL Y SATISFIED WITH THE SUBMISSIONS OF THE ASSESSEE, HE THEREFORE, REDUCED THE DISALLOWANCE TO RS.81,61,136/- AS AGAINST THE DISALLOWANCE MADE BY THE AO FOR RS.1,30,84,992/-. A S PER INFORMATION PROVIDED TO US, THE ASSESSEE HAS ACCEPT ED THE ORDER OF LD. CIT(A). BUT THE REVENUE IS AGGRIEVED W ITH THE RELIEF GIVEN BY LD. CIT(A). J.K. INVESTORS 4 3.4. DURING THE COURSE OF HEARING BEFORE US, IT HAS BEE N SUBMITTED THAT LD. CIT(A) HAS CAREFULLY EXAMINED AL L THE FIGURES AND WHILE MAKING DISALLOWANCE OUT OF INTERE ST, LD. CIT(A) HAS RIGHTLY EXCLUDED INTEREST PAID ON THOSE AMOUNTS WHICH WERE GIVEN BY THE ASSESSEE FOR THE PURPOSE OF ITS BUSINESS. IT WAS THEREFORE, REQUESTED THAT THE ORDE R OF LD. CIT(A) SHOULD BE CONFIRMED. 3.5. ON THE OTHER HAND, LD. DR HAS RELIED UPON ASSESSME NT ORDER. 3.6. WE HAVE GONE THROUGH THE FACTS AND FIGURES OF THIS CASE AND ORDERS PASSED BY LOWER AUTHORITIES. IT IS NOTED THAT THE TOTAL AMOUNT OF INTEREST EXPENDITURE DEBITED BY THE ASSESSEE WAS TO THE TUNE OF RS.4,93,13,048/-. THE ASSESSEE C LAIMED THAT OUT OF THIS AMOUNT, A SUM OF RS.57,82,501/- PE RTAINS TO THE AMOUNT OF LOAN GIVEN TO ITS DEALERS OR OTHER PE RSONS EXCLUSIVELY FOR THE PURPOSE OF ITS BUSINESS, AND OT HER SUM OF RS.2,60,000/- WAS ALSO GIVEN TO M/S. TIGER TRAVEL A ND TOURS LTD. DURING THE COURSE OF ITS BUSINESS. THUS, AGGRE GATE AMOUNT OF RS.57,82,501/- WAS PLAINLY FOR THE PURPOSE OF ITS BUSINESS. LD. CIT(A) EXAMINED THESE FACTS AND FOUND THE CLAIM OF THE ASSESSEE FACTUALLY CORRECT. NOTHING HAS BEEN BROUGH T BEFORE US TO CONTROVERT OR NEGATE THE FACTUALLY FINDING OF LD . CIT(A). 3.7. WE HAVE GONE THROUGH THE DETAILED FINDINGS OF LD. CIT(A), AND WE FIND NOTHING WRONG THEREIN. IT IS FURTHER NO TED BY US THAT, AS PER FACTS BROUGHT BEFORE US, SIMILAR ISSUE HAD ARISEN J.K. INVESTORS 5 IN A.Y. 2009-10 WHICH WAS DECIDED IN FAVOUR OF THE ASSESSEE BY LD. CIT(A), AND AS PER OUR INFORMATION, THE SAME WAS ACCEPTED BY THE DEPARTMENT AND NO APPEAL WAS FILED BEFORE THE TRIBUNAL. IN SUPPORT OF THIS CLAIM, LD. COUNSEL SUB MITTED THE ORDER OF LD. CIT(A) FOR A.Y. 2009-10 AS WELL AS ORD ER OF HONBLE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2009-10 IN ITA NO.7472/MUM/2012 DATED 29.05.2014 SHOWING THAT NO APPEAL WAS FILED BY THE REVENUE ON THIS ISSUE. IT I S FURTHER NOTED BY US THAT LD. CIT(A) HAS DELETED SIMILAR DI SALLOWANCE FOR A.Y. 2009-10. THUS, IN VIEW OF THESE FACTS AND CIRCUMSTANCES, WE HAVE NO OTHER OPTION BUT TO UPHOL D THE ORDER OF LD. CIT(A). THUS, GROUND RAISED BY THE REV ENUE IS DISMISSED. 4. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH DECEMBER, 2015. SD/- (SANJAY GARG ) SD/- (ASHWANI TANEJA) ! / JUDICIAL MEMBER ' ! / ACCOUNTANT MEMBER MUMBAI; ' DATED :18/12/2015 CTX? P.S/. .. #$%&'(')% / COPY OF THE ORDER FORWARDED TO : 1. $ %& / THE APPELLANT 2. '(%& / THE RESPONDENT. 3. ) ) * ( $ ) / THE CIT, MUMBAI. 4. ) ) * / CIT(A)- , MUMBAI 5. -. ' /0 , ) $ /01 , / DR, ITAT, MUMBAI 6. 2 3 / GUARD FILE. J.K. INVESTORS 6 / BY ORDER, ( -$ ' //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI