NRC LTD, MUMBAI V. DCIT (OSD) CIR 2(2), MUMBAI

ITA 2734/MUM/2012

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2045 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 20-04-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 23-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMIT KUMAR
• Assessee Lawyers: M C NANIWADEKAR
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUM BAI BEFORE SHRI D. KARUNAKARA RAO, A.M. AND SHRI AMARJIT SINGH, J.M. ./ I.T.A. NO.2734/MUM/2012 ( / ASSESSMENT YEAR: 2008-09) NRC LTD. EWART HOUSE, 2 ND FLOOR, H.M. STREET, FORT, MUMBAI- 020. / VS. DY. COMMISSIONER OF INCOME TAX CIRCLE 2(2), AYAKAR BHAVAN, M.K. ROAD, MUMBAI- 400 020. ./ ./PAN/GIR NO. AAACN 1616J ( /APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI M.C. NANIWADEKAR / RESPONDENT BY : SHRI SUMIT KUMAR / DATE OF HEARING : 22/11/2015 !'# / DATE OF PRONOUNCEMENT : 11/12/2015 $% / O R D E R PER D. K. RAO, A. M: THIS IS AN APPEAL BY THE ASSESSEE FOR ASSESSMENT OR DER 2008-09 AND IS DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF I NCOME TAX (APPEALS)-5, MUMBAI DATED 20.01.2012. 2 I.T.A. NO 2734/MUM/2012 (A.Y:2008-09 ) NRC LTD. VS. DY. COMMISSIONER OF INCOME TAX GROUNDS OF APPEAL 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN UPHOLDING THE DISALLOWANCE OF EXPENSE U/S 14-A R.W. RULE 8-D OF R S. 2,06,49,075/- 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S IGNORED THE FACT THAT EXPENDITURE IS INCURRED IN CONNECTION WIT H THE EXEMPTED DIVIDEND INCOME. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FA ILED TO APPRECIATE THE FACT THAT INVESTMENTS IN SHARES MADE BY THE APPELLANT COMPANY WERE MADE OUT OF OWNED FUNDS AND NOT OUT OF BORROWED FUNDS. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FA ILED TO APPRECIATE THE FACT THAT INTEREST EXPENDITURE ON TH E BORROWED FUNDS, UTILIZED OTHERWISE THAT FOR THE INVESTMENT IN SHARE S, CANNOT BE DISALLOWED U/S 14A B. THE REASONS ASSIGNED FOR SUSTAINING THE ADDITION S/DISALLOWANCE ARE WRONG, INSUFFICIENT, AND CONTRARY TO LAW AND FACTS. 2. THE ONLY ISSUE RAISED IN THIS APPEAL RELATES TO APPLICABILITY U/S 14-A OF THE ACT R.W. RULE 8-D, WHEN THE ASSESSEE HAS NOT INCLUD ED ANY EXEMPTION INCOME IN THE TOTAL INCOME RETURNED BY THE ASSESSEE. 3 I.T.A. NO 2734/MUM/2012 (A.Y:2008-09 ) NRC LTD. VS. DY. COMMISSIONER OF INCOME TAX 3. AT THE OUTSET THE LD COUNSEL FOR THE ASSESSEE RE QUESTED THAT THIS ISSUE MAY BE REMANDED TO THE FILE OF THE AO FOR CONSIDERING T HE NUMBER OF DECISIONS SUBSEQUENTLY PRONOUNCED BY THE TRIBUNALS ON SIMILAR ISSUE. THE LD. COUNSEL FILED A COPY OF THE ORDER OF THE TRIBUNAL IN THE CA SE OF MR. M. BASKARAN, (ITA NO.1717/MDS/13 DATED 31-07-14) IN SUPPORT OF THE AB OVE CONTENTION. IT IS THE COUNSELS ARGUMENT THAT NO DISALLOWANCE UNDER THE S AID SECTIONS IS WARRANTED WHEN THE EXEMPT INCOME IS NOT INCLUDED IN THE TOTAL INCOME OF THE ASSESSEE. ON HEARING BOTH THE PARTIES, WE FIND THIS PARTICULAR R ATIO OF THE DECISIONS WERE NOT EXISTING AT THE RELEVANT POINT OF TIME, WHEN THE OR DERS BY THE AO AND CIT(A) WERE PASSED. WE ACCORDINGLY, DIRECT THE TO EXAMINE THE FACTS ON THE INCLUSION OF THE EXEMPT INCOME IF ANY AND APPLY THE ABOVE CITED ORDERS OF TRIBUNAL AND OTHER JUDGEMENTS IF ANY ON THE SUBJECT. THUS, WE REMIND A LL THE GROUNDS RAISED BY THE ASSESSEE IN THE APPEAL TO THE FILE OF THE AO FOR AF RESH ADJUDICATION OF THE ISSUE AFTER GRANTING REASONABLE OPPORTUNITY BEING HEARD T O THE ASSESSEE. 4. ACCORDINGLY, GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PUPOSES. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FO R STATISTICAL PURPOSES. 4 I.T.A. NO 2734/MUM/2012 (A.Y:2008-09 ) NRC LTD. VS. DY. COMMISSIONER OF INCOME TAX ORDER PRONOUNCED IN THE OPEN COURT ON DECEMBER 11 TH , 2015 SD/- SD/- (AMARJIT SINGH ) (D. KARUNAKARA RAO) &' $ / JUDICIAL MEMBER $ / ACCOUNTANT MEMBER ( ) MUMBAI; *$ DATED : 11.12.2015 PS. ASHWINI GAJAKOSH / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. + ( ) / THE CIT(A) 4. + / CIT - CONCERNED 5. ./0 ''12 , 12# , ( ) / DR, ITAT, MUMBAI 6. 045 6 / GUARD FILE / BY ORDER, / !'# (DY./ASSTT. REGISTRAR) #$ %, ( ) / ITAT, MUMBAI