ACIT CIRCLE -7 (3)(1), MUMBAI V. PANCARD CLUBS LTD., MUMBAI

ITA 2774/MUM/2018

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 3316 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 11 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2015-2016
• Appeal Filed On: 02-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Earning of tax free income; Set aside
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH “C”, MUMBAI BEFORE SHRI KULDIP SINGH, JUDICIAL MEMBER AND SHRI OM PRAKASH KANT, ACCOUNTANT MEMBER ITA Nos.2773 & 2774/M/2018 Assessment Years: 2010-11 & 2015-16 Asstt. Commissioner of Income Tax, Circle-7(3)(1), Room No.142G, First Floor, Aayakar Bhavan, M.K. Road, Mumbai - 400020 Vs. M/s. Pancard Clubs Ltd., 111-113, Kalyandas Udyog Bhavan, Near Century Bhavan, Prabhadevi, Mumbai – 400 025 PAN: AAACP9093R (Appellant) (Respondent) Present for: Assessee by : None Revenue by : Shri Jasdeep Singh, D.R. Date of Hearing : 04 . 04 . 2022 Date of Pronouncement : 29 . 04 . 2022 O R D E R Per : Kuldip Singh, Judicial Member: Aforesaid appeals earlier decided vide order dated 08.01.2020 by the Tribunal were recalled for limited purpose to decide ground No.3, which remained undecided vide earlier order (supra). 2. The appellant, Asstt. Commissioner of Income Tax, Mumbai (hereinafter referred to as ‘the Revenue’) by filing the present appeals, sought to set aside the impugned order dated 31.01.2018 ITA Nos.2773 & 2774/M/2018 M/s. Pancard Clubs Ltd. 2 passed by Commissioner of Income Tax (Appeals), Mumbai [hereinafter referred to as the CIT(A)] qua the assessment year 2011-11 on identically worded ground No.3 in both the appeals except the difference in amounts inter alia are that :- ITA No.2773/M/2018 A.Y. 2010-11 "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in holding that the disallowance u/s 14A of the Act shall be made only in respect of those investments from which exempt income has been earned during the year whereas CBDT vide circular No. 5/2014 dated 11.2.2014 had clarified that disallowance u/s 14A has to be made even if no exempt income was earned during the year from the investments." 3. Despite issuance of the notice to the assessee company none appeared on behalf of it, so the Bench decided to decide these appeals on the basis of material available on record with the assistance of the Ld. D.R. for the Revenue. 4. We have heard the Ld. Departmental Representative for the Revenue, perused the orders passed by the Ld. Lower Revenue Authorities and documents available on record in the light of the facts and circumstances of the case and case law relied upon. 5. Assessing Officer (AO) by invoking the provisions contained under section 14A of the Income Tax Act, 1961 (for short ‘the Act’) made disallowance of Rs.58,03,500/- and Rs.91,28,060/- in A.Y. 2010-11 and in A.Y. 2015-16 respectively, which were challenged before the Ld. CIT(A) on the ground that the AO while making disallowance under section 14A of the Act considered all ITA Nos.2773 & 2774/M/2018 M/s. Pancard Clubs Ltd. 3 the investments instead of restricting the calculation to the investment which has yielded exempt income. 6. At the same time, the Ld. CIT(A) while deciding this issue directed the AO to consider investments which have yielded exempt income only by returning following findings: “4.5 So far as eight and ninth grounds of appeal are concerned, in view of the decision of ITAT, New Delhi, Special Bench in the case of ACIT Vs Vireet Investment (P.) Ltd [2017] 82 taxmann.com 415 (Delhi - Trib.) (SB)/[2017] 58 ITR(T) 313 (Delhi- Trib.) (SB)/[2017] 165 ITD 27 (Delhi - Trib.) (SB)/[2017] 188 TTJ 1 (Delhi –Trib.) (SB), the AO is directed to make disallowance u/s 14A only in respect of those investments from which exempt income has been earned during the year.” 7. We have perused the findings returned by the Ld. CIT(A) on the ground in question which is decided in accordance with the settled principle of law that only “exempt income yielding investments are to be taken for the purpose of making disallowance under section 14A of the Act and not all the investments made by the assessee” during the year under assessment. This issue has already been decided by the Special Bench of the Tribunal in case of ACIT vs. Vireet Investments (supra) referred by the Ld. CIT(A). So in these circumstances, we find no illegality or perversity in the impugned findings returned by the Ld. CIT(A) on the issue in question. So ground No.3 of ITA No.2773/M/2018 & 2774/M/2018 for A.Y. 2010-11 & 2015-16 respectively is decided against the Revenue. ITA Nos.2773 & 2774/M/2018 M/s. Pancard Clubs Ltd. 4 8. Resultantly, both the appeals filed by the Revenue are dismissed. Order pronounced in the open court on 29.04.2022. Sd/- Sd/- (OM PRAKASH KANT) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated: 29.04.2022. * Kishore, Sr. P.S. Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The CIT (A) Concerned, Mumbai The DR Concerned Bench //True Copy// By Order Dy/Asstt. Registrar, ITAT, Mumbai.