Thakarshi Devshi Aim Associates, Kolhapur V. Income-tax Officer, Ward - 2(2), Kolhapur

ITA 2953/PUN/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4140 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 10 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 26-10-2020
• Assessment Year: 2013-2014
• Appeal Filed On: 11-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ARISES OUT OF PASSED
• Keywords: Earning of tax free income; Rule 8D
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE VIRTUAL COURT BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER ITA NO.2953/PUN/2017 / ASSESSMENT YEAR : 2013-14 THAKARSHI DEVSHI AIM ASSOCIATES, 585, E-WARD, VYAPARI PETH, SHAHUPURI, KOLHAPUR PAN : AAAFT8063E VS. ITO, WARD-2(2), KOLHAPUR APPELLANT RESPONDENT / ORDER PER R.S.SYAL, VP : THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDER PASS ED BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-2, KOLHAPUR ON 0 3-10- 2017 IN RELATION TO THE ASSESSMENT YEAR 2013-14. 2. THE ONLY ISSUE RAISED IN THIS APPEAL IS AGAINST THE DISALLOWANCE U/S.14A OF THE INCOME-TAX ACT, 1961 (HEREINA FTER ALSO CALLED `THE ACT) AMOUNTING TO RS.18,66,538/-. 3. SUCCINCTLY, THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF DEALING IN COMMODITIES AND INVESTM ENT IN SHARES ETC. DIVIDEND ON SHARES AMOUNTING TO RS.2,33,43 6/- WAS EARNED BY THE ASSESSEE WHICH WAS CLAIMED AS NOT CHARGEA BLE TO TAX. ASSESSEE BY SHRI M.K. KULKARNI REVENUE BY SHRI MAHADEVAN A.M. KRISHANAN DATE OF HEARING 26-10-2020 DATE OF PRONOUNCEMENT 27-10-2020 ITA NO.2953/PUN/2017 THAKARSHI DEVSHI AIM ASSOCIATES 2 THE ASSESSEE MADE SUO MOTO DISALLOWANCE OF RS.9,24,023/- UNDER SECTION 14A READ WITH RULE 8D. THE ASSESSING OFFICER (AO) WORKED OUT THE DISALLOWANCE UNDER RULE 8D AT A TOTAL OF RS.35,86,551/-. THE DIFFERENTIAL AMOUNT OF RS.26,62,528/ - WAS ADDED BY THE AO. THE LD. CIT(A) RESTRICTED THE DISALLOWANCE TO RS.18,66,538/-. 4. HAVING HEARD BOTH THE SIDES THROUGH VIRTUAL COURT AND GO NE THROUGH THE RELEVANT MATERIAL ON RECORD, IT IS FOUND AS AN A DMITTED POSITION THAT THE ASSESSEE EARNED EXEMPT DIVIDEND INCOME OF RS.2,33,436/-. AS AGAINST THAT, SUO MOTO DISALLOWANCE U/S.14A WAS OFFERED BY THE ASSESSEE AT RS.9,24,023/-. T HE HON'BLE DELHI HIGH COURT IN CHEMINVEST LTD. VS. CIT (2015) 378 ITR 33 (DEL) HAS HELD THAT IF THERE IS NO EXEMPT INCOME, THERE CAN BE NO QUESTION O F MAKING ANY DISALLOWANCE U/S 14A OF THE ACT. SIMILAR VIEW HAS BEEN TAKEN BY THE HON'BLE DELHI HIGH COURT IN CIT VS. HOLCIM INDIA P. LTD. (2014) 90CCH 081-DEL-HC . TAKING THIS PROPOSITION FURTHER, THE HONBLE JURISDICTIONAL HIGH COURT IN PR. CIT VS. HSBC INVEST DIRECT (INDIA) LTD. (2020) 421 ITR 125 (BOM) HAS HELD THAT DISALLOWANCE U/S 14A CANNOT EXCEED THE AMOUNT OF EXEMPT INC OME. ITA NO.2953/PUN/2017 THAKARSHI DEVSHI AIM ASSOCIATES 3 5. ADVERTING TO THE FACTS OF THE INSTANT CASE, IT IS SEEN THAT THE AMOUNT OF SUO MOTU DISALLOWANCE OFFERED BY THE ASSESSEE AT RS.9,24,023/- IS GREATER THAN THE AMOUNT OF EXEMPT INCOME RS.2,33,436/-. THAT BEING THE POSITION, THERE CAN BE NO QUESTION OF ANY FURTHER DISALLOWANCE U/S 14A OF THE ACT. WE, THEREFOR E, OVERTURN THE IMPUGNED ORDER ON THIS COUNT AND DELETE THE FU RTHER DISALLOWANCE SUSTAINED IN THE FIRST APPEAL. 6. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH OCTOBER, 2020. SD/- SD/- (S.S. VISWANETHRA RAVI) (R.S.SY AL) JUDICIAL MEMBER VIC E PRESIDENT PUNE; DATED : 27 TH OCTOBER, 2020 SATISH / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. THE CIT(A)-2, KOLHAPUR 4. 5. THE PR.CIT-2, KOLHAPUR , , / DR B, ITAT, PUNE 6. / GUARD FILE / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE ITA NO.2953/PUN/2017 THAKARSHI DEVSHI AIM ASSOCIATES 4 DATE 1. DRAFT DICTATED ON 26-10-2020 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 27-10-2020 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *