SHANTILAL JAYAVANTRAJ METHA, NAVI MUMBAI V. ITO 10(3)(3)(3), MUMBAI

ITA 2914/MUM/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2602 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 14-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR SANTOSH MANKOSKAR
• Assessee Lawyers: J B SHAH
• Keywords: Earning of tax free income
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER ITA NO. 2914 /MUM/2015 (ASSESSMENT YEAR : 2010-11) ITA NO. 2915 /MUM/2015 (ASSESSMENT YEAR : 2011-12) SHANTILALJAYAVANTRAJ MEHTA, 205-206, J.K.CHAMBERS, SECTOR 17, VASHI , NAVI MUMBAI 400 703 PAN: ACUPM 2302F ... APPE LLANT VS. THE INCOME TAX OFFICER 10(3)(3), MUMBAI. .... RESPONDENT APPELLANT BY : SHRI J.B. SHAH RESPONDENT BY : DR. SANTOSH MANKOSKAR DATE OF HEARING : 01/07/2016 DATE OF PRONOUNCEMENT : 13/07/2016 ORDER THE CAPTIONED APPEALS FILED BY THE ASSESSEE PERTAIN ING TO ASSESSMENT YEARS 2010-11 & 2011-12 ARE DIRECTED AGA INST ORDERS PASSED BY CIT(A)-24, MUMBAI DATED 30/03/2015 AND 2 3/03/2015 RESPECTIVELY, WHICH IN TURN HAVE ARISEN OUT OF O RDERS PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) OF THE I NCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 19/03/2013 AND 20/02/2014. SINCE THE ISSUE INVOLVED IN THESE APPEALS IS IDENTICAL, THEY ARE DI SPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2 ITA NO. 2914 & 2915/MUM/2015 (ASSESSMENT YEAR : 2010-11& 2011-12) 2. IN BOTH THE APPEALS, THE GRIEVANCE OF THE ASSESS EE IS AGAINST THE DISALLOWANCE MADE BY THE INCOME TAX AUTHORITIES BY INVOKING THE PROVISIONS OF SECTION 14A OF THE ACT. IN ASSESSMEN T YEAR 2010-11, DISALLOWANCE HAS BEEN MADE OF RS.16,50,000/-, WHERE AS IN ASSESSMENT YEAR 2011-12, THE DISALLOWANCE IS OF RS.17,65,000/- . 3. BEFORE ME, A PERTINENT POINT WHICH HAS BEEN RAIS ED IS TO THE EFFECT THAT IN BOTH THE ASSESSMENT YEARS ASSESSEE HAS NOT EARNED/DECLARED ANY EXEMPT INCOME AND, THEREFORE, F OLLOWING THE RATIO OF THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CHEMIVEST LTD. VS. CIT, 378 ITR 33(DEL) NO DISALLOW ANCE UNDER SECTION 14A OF THE ACT IS MERITED. APART THEREFROM, THE LD . REPRESENTATIVE FOR THE ASSESSEE ALSO REFERRED TO THE DECISION OF THE M UMBAI TRIBUNAL IN THE CASE OF DIT VS. APEX REALTY PVT. LTD., IN ITA NO.2 855/MUM/2013 DATED 31/8/2015, WHEREIN UNDER A SIMILAR SITUATION, DIS ALLOWANCE UNDER SECTION 14A OF THE ACT HAS BEEN DELETED FOLLOWING T HE JUDGMENT OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. D ELITE ENTERPRISES (ITA NO.110 OF 2009) DATED 26/2/2009. 4. THE LD. DEPARTMENTAL REPRESENTATIVE, ON THE OTHE R HAND, DID NOT DISPUTE THE FACTUAL MATRIX BROUGHT OUT BY THE LD. R EPRESENTATIVE FOR THE ASSESSEE BUT DEFENDED THE DISALLOWANCE UNDER SECTIO N 14A OF THE ACT EVEN IN THE ABSENCE OF ANY EXEMPT INCOME BEING RECE IVED BY THE ASSESSEE DURING THE YEAR. 5. I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSION S. IN THE PRESENT CASE, THE ASSESSING OFFICER NOTICED THAT ASSESSEE H AD MADE CERTAIN INVESTMENTS IN SHARES AND, THEREFORE, HE PROCEEDED TO WORK OUT THE DISALLOWANCE UNDER SECTION 14A OF THE ACT BY APPLY ING THE FORMULA 3 ITA NO. 2914 & 2915/MUM/2015 (ASSESSMENT YEAR : 2010-11& 2011-12) CONTAINED IN RULE 8D OF THE INCOME TAX RULES, 1962( IN SHORT THE RULES). SO, HOWEVER, IT IS QUITE CLEAR THAT DURI NG THE TWO ASSESSMENT YEARS UNDER CONSIDERATION, ASSESSEE HAS NOT RECEIVE D ANY EXEMPT INCOME AND, THEREFORE, INVOKING OF SECTION 14A OF T HE ACT IN SUCH A SITUATION IS SUSPECT. QUITE CLEARLY, WHERE NO EXE MPTION HAS BEEN CLAIMED BY THE ASSESSEE IN THE INSTANT YEARS, IN TH E ABSENCE OF ANY TAX FREE INCOMES, PROVISIONS OF SECTION 14A OF THE ACT CANNOT BE INVOKED AS HELD BY THE HONBLE DELHI HIGH COURT IN THE CASE OF CHEMIVEST LTD. (SUPRA). THE JUDGMENT OF HONBLE GUJARAT HIGH COU RT IN THE CASE OF CIT VS. CORRTECH ENERGY (P) LTD. , 272 CTR 262(GUJ) IS ALSO ON THE SAME LINE. UNDER THESE CIRCUMSTANCES, IN MY CONSIDERED OPINIO N, THE DISALLOWANCE OF RS.16,50,000 & RS.17,65,000/-MADE BY THE ASSESSI NG OFFICER FOR THE TWO ASSESSMENT YEARS UNDER CONSIDERATION BY INVOKIN G THE PROVISIONS OF SECTION 14A OF THE ACT IS UNWARRANTED AND UNFOUND ED. ACCORDINGLY, THE ASSESSING OFFICER IS DIRECTED TO DELETE THE AD DITION IN TWO CAPTIONED ASSESSMENT YEARS. 6. IN THE RESULT, APPEALS OF THE ASSESSEE ARE ALLO WED, AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 13/07/2016 SD/- (G.S. PANNU) ACCOU NTANT MEMBER MUMBAI, DATED 13/07/2016 VM , SR. PS 4 ITA NO. 2914 & 2915/MUM/2015 (ASSESSMENT YEAR : 2010-11& 2011-12) 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