DCIT- 3(2)(1), MUMBAI V. LOKMAT MEDIA PVT. LTD., MUMBAI

ITA 2999/MUM/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9957 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 25-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M C OMI NINGSHEN
• Assessee Lawyers: MILIN BAKHANI
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE S/ SHRI B.R. BASKARAN (AM) & SANDEEP GOSAIN (JM) I.T.A. NO. 2999 /MUM/20 16 (ASSESSMENT YEAR 20 11 - 12 ) DCIT 3(2)(1) ROOM NO. 674 6 TH FLOOR AAYAKAR BHAVAN M.K. ROAD MUMBAI - 400 020. VS. LOKMAT MEDIA PVT. LTD. 126 - B, MITTAL TOWER NARIMAN POINT MUMBAI - 400 021. ( APPELLANT ) ( RESPONDENT ) PAN NO .AAACL1888J ASSESSEE BY SHRI MILIN BAKHANI DEPARTMENT BY SHRI M.C. OMI NINGSHEN DATE OF HEARING 13 .7 . 201 7 DATE OF PRONOUNCEMENT 13 . 7 . 201 7 O R D E R PER B.R. BASKARAN (AM) : - THE REVENUE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 21 - 01 - 2016 PASSED BY LD CIT(A) - 8, MUMBAI AND IT RELATES TO THE ASSESSMENT YEAR 2011 - 12. THE REVENUE IS AGGRIEVED BY THE DECISION OF LD CIT(A) IN GR ANTING RELIEF TO THE ASSESSEE IN RESPECT OF ADDITION MADE U/S 14A OF THE ACT. 2. WE HEARD THE PARTIES AND PERUSED THE RECORD. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF PRINTING AND PUBLISHING OF NEWSPAPERS AND ALSO PRODUCTION AND DISTRIBUTION OF FILMS. THE AO NOTICED THAT THE ASSESSEE HAS MADE INVESTMENTS TO THE TUNE OF RS.56.23 CRORES AND EARNED DIVIDEND INCOME OF RS.49,340/ - . THE AO TOOK THE VIEW THAT THE PROVISIONS OF RULE 8D SHOULD BE APPLIED FOR COMPUTING DISALLOWANCE U/S 14A OF THE ACT AND ACCORDINGLY COMPUTED THE DISALLOWANCE OF RS.54,44,633/ - U/S RULE 8D(2)(II) OUT OF INTEREST EXPENDITURE AND RS.20,61,130/ - UNDER RULE 8D(2)(III) OUT OF ADMINISTRATIVE EXPENSES, BOTH AGGREGATING TO RS.75,05,763/ - . LOKMAT MEDIA PVT. LTD. 2 3. BEFORE LD CIT(A), THE ASSESSEE CONTENDED THAT THE INTEREST FREE OWN FUNDS AVAILABLE WITH THE ASSESSEE IS MORE THAN THE VALUE OF INVESTMENTS AND HENCE NO DISALLOWANCE IS CALLED FOR OUT OF INTEREST EXPENDITURE. THE ASSESSEE ALSO SUBMITTED THAT IT HAS SUO - MOTO DISALLOWED A SUM OF RS.34,01 ,388/ - . THE LD CIT(A) AGREED WITH THE CONTENTIONS OF THE ASSESSEE IN VIEW OF THE DECISION RENDERED BY HONBLE BOMBAY HIGH COURT IN THE CASE OF RELIANCE UTILITIES LTD (313 ITR 340). ACCORDINGLY HE DIRECTED THE AO TO RESTRICT THE DISALLOWANCE TO THE SUO - MO TO DISALLOWANCE OF RS.34,01,388/ - MADE BY THE ASSESSEE. THE REVENUE IS AGGRIEVED BY THE DECISION OF LD CIT(A). 4. THE LD A.R INVITED OUR ATTENTION TO THE BALANCE SHEET OF THE ASSESSEE AND SUBMITTED THAT THE OWN FUNDS AVAILABLE WITH THE ASSESSEE IS MORE THAN THE AMOUNT OF INVESTMENTS AND ACCORDINGLY THERE IS NO REQUIREMENT OF MAKING ANY DISALLOWANCE OUT OF INTEREST EXPENDITURE IN VIEW OF THE DECISION RENDERED BY HONBLE BOMBAY COURT IN THE CASE OF HDFC BANK LTD (2016)(67 TAXMANN.COM 42). 5. WE HEARD LD D.R AND PERUSED THE RECORD. THE BALANCE SHEET FILED BY THE ASSESSEE AT PAGE NO.2 OF THE PAPER BOOK WOULD SHOW THAT THE OWN FUNDS AVAILABLE WITH THE ASSESSEE RESPECTIVELY ON 31.3.2011 AND 31.3.2010 WAS RS.196.10 CRORES AND RS.170.41 CRORES. AS AGAINST THIS THE INVESTMENTS MADE BY THE ASSESSEE STAND AT RS.56.23 CRORES AND RS.26.21 CRORES RESPECTIVELY AS ON 31.3.2011 AND 31.3.2010. SINCE THE OWN FUNDS ARE MORE THAN THE AMOUNT OF INVESTMENTS, THE DECISION RENDERED BY HONBLE BOMBAY HIGH COURT IN THE CASE OF HDFC BANK LTD (SUPRA) SHALL APPLY TO THE FACTS OF THE PRESENT CASE. ACCORDINGLY WE ARE OF THE VIEW THAT THE LD CIT(A) WAS JUSTIFIED IN SUSTAINING DISALLOWANCE TO THE EXTENT OF RS.34,01,388/ - WORKED OUT BY THE ASSESSEE. 6. WE NOTICE THAT THE AO HAS NOT GIVEN SET OFF OF SUO - MOTO DISALLOWANCE MADE BY THE ASSESSEE. THE ASSESSEE HAS ALSO NOT FURNISHED COPY OF COMPUTATION OF INCOME FILED BY IT ALONG WITH THE RETURN OF INCOME. HENCE IT IS NOT CLEAR AS TO WHETHER THE ASSESSEE SUO - MOTO DISALLOWED A SUM OF RS.34,01,388/ - WHILE LOKMAT MEDIA PVT. LTD. 3 ARRIVING AT TOTAL INCOME. ACCORDINGLY WE RESTORE THIS ISSUE TO THE FILE OF THE AO FOR THE LIMITED PURPOSE OF VERIFYING AS TO WHETHER THE ASSESSEE HAS SUO - MOTO DISALLOWED A SUM OF RS.34,01,388/ - WHILE WORKING OUT THE TOTAL INCOME AS PE R THE RETURNED INCOME. IF IT IS FOUND TO BE SO, THEN THE ADDITION MADE BY THE AO IS LIABLE TO BE DELETED. IF IT IS NOT FOUND TO BE SO, THE AO IS REQUIRED TO MAKE ADDITION OF RS.34,01,388/ - TO THE TOTAL INCOME RETURNED BY THE ASSESSEE. 7. IN THE RESUL T THE APPEAL OF THE REVENUE IS TREATED AS DISMISSED. ORDER HAS BE E N PRONOUNCED IN THE COURT ON 13 .7 .201 7. SD/ - SD/ - (SANDEEP GOSAIN ) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MU MBAI ; DATED : 13 / 7 / 20 1 7 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) PS ITAT, MUMBAI