Appeal Details
Counselvise Citation
[2019] 115 COUNSELVISE.COM (IT) 8357 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 5 month(s) 1 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
04-10-2019
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
A
Assessment Year
2012-2013
Appeal Filed On
03-05-2018
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL A , BENCH MUMBAI BEFORE SHRI MAHAVIR SINGH , JM & SHRI M.BALAGANESH, AM ITA NO. 2766 /MUM/201 8 ( ASSESSMENT YEAR : 2012 - 13 ) DCIT, CC 5(1) R.NO.1928, 19 TH FLOOR AIR INDIA BUILDING NARIMAN POINT MUMBAI 400 021 V S. M/S. ANAND RATHI CAPITAL ADVISORS PVT. LTD., 47A, 3 RD FLOOR, PLOT NO.308, HANUMAN BUILDING, PERIN NARIMAN STREET, FORT, MUMBAI 400 001 PAN/GIR NO. AAACR2791N (APPELLANT ) .. (RESPONDENT ) CO NO.181/MUM/2019 (ARISING OUT OF ITA NO. 2766 /MUM/201 8) ( A SSESSMENT YEAR : 2012 - 13 ) M/S. ANAND RATHI CAPITAL ADVISORS PVT. LTD., 47A, 3 RD FLOOR, PLOT NO.308, HANUMAN BUILDING, PERIN NARIMAN STREET, FORT, MUMBAI 400 001 VS. DCIT, CC 5(1) R.NO.1928, 19 TH FLOOR AIR INDIA BUILDING NARIMAN POINT MUMBAI 400 021 P AN/GIR NO. AAACR2791N (APPELLANT ) .. (RESPONDENT ) REVENUE BY SHRI ANADI VARMA ASSESSEE BY SHRI A.K. GHOSH DATE OF HEARING 25 / 09 /2019 DATE OF PRONOUNCEMENT 04 / 10 /2019 ITA NO .2766/MUM/2018 & CONO.181/MUM/2019 M/S. ANAND RATHI ADVISORS P. LTD. 2 / O R D E R PER M. BALAGANESH (A.M) : THIS APPEAL IN ITA NO. 2766/MUM/2018 AND CROSS OBJECTION NO.181/MUM/2019 FOR A.Y. 2012 - 13 ARISE OUT OF THE ORDER BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 53, MUMBAI IN APPEAL NO. CIT(A) - 53/IT - 157/DCCC - 5(1)/2 015 - 16 DATED 28/04/2016 (LD. CIT(A) IN SHORT) AGAINST THE ORDER OF ASSESSMENT PASSED U/S.143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS ACT) DATED 28/03/2016 BY THE LD. DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 5(1), MUMBAI (HEREINAF TER REFERRED TO AS LD. AO). 2. THE ONLY ISSUE INVOLVED IN THE APPEAL OF THE REVENUE AS WELL AS THE CROSS OBJECTION OF THE ASSESSEE IS AS TO WHETHER THE LD CITA WAS JUSTIFIED IN RESTRICTING THE DISALLOWANCE MADE U/S 14A OF THE ACT BY CONSIDERING ONLY THOSE INVESTMENTS THAT HAD YIELDED EXEMPT INCOME , BOTH UNDER NORMAL PROVISIONS OF THE ACT AS WELL AS IN THE COMPUTATION OF BOOK PROFITS U/S 115JB OF THE ACT. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND THAT THE ASSESSEE COMPANY IS ENGAGED IN INVESTMENT A ND TRADING IN SHARES, SECURITIES AND COMMODITIES. WE FIND THAT THE ASSESSEE HAD EARNED DIVIDEND INCOME OF RS 3,70,700/ - AND CLAIMED THE SAME AS EXEMPT IN THE RETURN OF INCOME. WE FIND THAT THE LD AO HAD MADE DISALLOWANCE U/S 14A OF THE ACT IN THE SUM OF RS 1,98,93,431/ - BY APPLYING SECOND AND THIRD LIMB OF RULE 8D(2) OF THE RULES, BOTH UNDER NORMAL PROVISIONS OF THE ACT AS WELL AS IN THE COMPUTATION OF BOOK PROFITS U/S 115JB OF THE ACT. WE FIND THAT THE LD CITA HAD DIRECTED THE LD AO TO RECOMPUTED THE DI SALLOWANCE UNDER SECOND AND THIRD LIMB OF RULE 8D(2) OF THE RULES BY CONSIDERING ONLY THOSE ITA NO .2766/MUM/2018 & CONO.181/MUM/2019 M/S. ANAND RATHI ADVISORS P. LTD. 3 INVESTMENTS WHICH HAD YIELDED EXEMPT INCOME TO THE ASSESSEE. AGGRIEVED, BY THIS DIRECTION, THE REVENUE IS IN APPEAL BEFORE US. WE FIND THA T THE ASSESSEE HAD PREFER RED CROSS OBJECTION BEFORE US BY RAISING A GROUND THAT THE TOTAL DISALLOWANCE U/S 14A OF THE ACT READ WITH RULE 8D OF THE RULES CANNOT EXCEED THE EXEMPT INCOME OF RS 3,70,700/ - . WE FIND THAT THIS ISSUE IS WELL SETTLED THAT THE DISALLOWANCE U/S 14A OF THE ACT CANNOT EXCEED EXEMPT INCOME AS PER THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF JOINT INVESTMENTS (P) LTD VS CIT REPORTED IN 372 ITR 694 (DEL) WHEREIN IT WAS HELD THAT : - 9. IN THE PRESENT CASE, THE AO HAS NOT FIRSTLY DISCLOSED WHY THE APPELLANT/ASSESSEE'S CLAIM FOR ATTRIBUTING RS. 2,97,440 AS A DISALLOWANCE UNDER S. 14A HAD TO BE REJECTED. TAIKISHA ENGG. INDIA LTD. ( SUPRA ) SAYS THAT THE JURISDICTION TO PROCEED FURTHER AND DETERMINE AMOUNTS IS DERIVED AFTER EXAMINATION OF THE ACCOUNTS A ND REJECTION IF ANY OF THE ASSESSEE'S CLAIM OR EXPLANATION. THE SECOND ASPECT IS THERE APPEARS TO HAVE BEEN NO SCRUTINY OF THE ACCOUNTS BY THE AO - AN ASPECT WHICH IS COMPLETELY UNNOTICED BY THE CIT(A) AND THE TRIBUNAL. THE THIRD, AND IN THE OPINION OF THIS COURT, IMPORTANT ANOMALY WHICH WE CANNOT BE UNMINDFUL IS THAT WHEREAS THE ENTIRE TAX EXEMPT INCOME IS RS. 48,90,000, THE DISALLOWANCE ULTIMATELY DIRECTED WORKS OUT TO NEARLY 110 PER CENT OF THAT SUM, I.E., RS. 52,56,197. BY NO STRETCH OF IMAGINATION CAN S. 14A OR R. 8D BE INTERPRETED SO AS TO MEAN THAT THE ENTIRE TAX EXEMPT INCOME IS TO BE DISALLOWED. THE WINDOW FOR DISALLOWANCE IS INDICATED IN S. 14A, AND IS ONLY TO THE EXTENT OF DISALLOWING EXPENDITURE 'INCURRED BY THE ASSESSEE IN RELATION TO THE TAX EXEM PT INCOME'. THIS PROPORTION OR PORTION OF THE TAX EXEMPT INCOME SURELY CANNOT SWALLOW THE ENTIRE AMOUNT AS HAS HAPPENED IN THIS CASE. 3.1. WE FIND THAT THE ASSESSEE HAD RAISED A GROUND IN HIS CROSS OBJECTION THAT THE DISALLOWANCE U/S.14A OF THE ACT SHOUL D BE RESTRICTED TO THE EXEMPT INCOME. RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF HONBLE DELHI HIGH COURT, WE DIRECT THE LD. AO TO RESTRICT THE DISALLOWANCE U/S.14A OF THE ACT TO RS.3,70,700/ - BOTH UNDER NORMAL PROVISIONS OF THE ACT AS WELL AS IN THE COMPUTATION OF BOOK PROFITS U/S.115JB OF THE ACT. ITA NO .2766/MUM/2018 & CONO.181/MUM/2019 M/S. ANAND RATHI ADVISORS P. LTD. 4 4. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED AND CROSS OBJECTION OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 04 / 10 /201 9 SD/ - ( MAHAVIR SINGH ) SD/ - (M.BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 04 / 10 / 2019 KARUNA , SR.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//
