M\u005cS A.B.G. PORTS LIMITED, MUMBAI V. DCIT5(1)(1), MUMBAI

ITA 3085/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8259 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 02-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITTAL
• Keywords: Earning of tax free income
• Section: 143(3); 142(1); 14A; 115JB

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE HONBLE S/SHRI JOGINDER SINGH (JM), AND RAJESH KUMAR, ( AM ) I.T.A. NO. 3085 /MUM/201 6 ( / ASSESSMENT YEA R :20 12 - 13 ) M/S ABG PORTS LI MITED, 5 TH FLOOR, BHUPATI CHAMBERS, 13, MATHEW ROAD, OPERA HOUSE, MUMBAI - 400004 / VS. DY.COMMISSONER OF INCOME TAX - 5(1)(1), MUMBAI. / ASSESSE E BY : NONE / REVENUE BY : SHRI RAJAT MITTAL PAN : AAHCA1523A / DATE OF HEARING : 2 6 . 10 .2017 / DATE OF PRONOUNCEMENT : 24. 11 .2017 / O R D E R PER RAJESH KUMAR, A. M: THIS IS AN APPEAL FILED BY THE ASSESSEE CHALLENGING THE ORDER OF THE LD.CIT(A), MUMBAI, DATED 20.11.2016 F OR THE ASSESSMENT YEAR 20 12 - 13 WHEREIN THE ASSESSEE CHALLENGED THE CONFIRMATION OF DISALLOWANCE OF RS.31,04,835/ - U/S 14A OF THE INCOME TAX ACT, 1961 R.W.RULE 8D OF THE INCOME TAX RULES, 1962 WITHOUT APPRECIATING THE FACTS THAT 99.999% INVESTMENTS MAD E BY THE ASSESSEE ARE IN ITS SUBSIDIARY COMPANIES MADE FOR STRATEGIC PURPOSES. 2 I.T.A. NO. 3085 /MUM/201 6 2. AT THE OUTSET, WE WOULD LIKE TO MENTION HERE THAT NEITHER THE ASSESSEE NOR HIS AUTHORIZED REPRESENTATIVE APPEARED BEFORE THIS TRIBUNAL WHEN THE APPEAL WAS CALLED FOR HEARI NG NOR THERE WAS ANY APPLICATION SEEKING ADJOURNMENT OF THE HEARING RECEIVED IN THE OFFICE OF THE TRIBUNAL DESPITE SERVICE OF NOTICE THROUGH RPAD. THEREFORE, WE PROCEED TO DISPOSE OF THE APPEAL OF THE ASSESSEE EX - PARTE AFTER HEARING THE LD. DR. 3. T HE FACTS IN BRIEF ARE THAT THE ASSESSEE HAS FILED RETURN OF INCOME ON 29.9.2012 DECLARING A TOTAL INCOME OF RS.3,24,66,900/ - WHICH WAS PROCESSED UNDER SECTION 143(1) OF THE ACT. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND ACCORDINGLY STATUTO RY NOTICES U/S 143(2) AND 142(1) WERE ISSUED AND SERVED UPON THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO OBSERVED THAT THE ASSESSEE HAS MADE INVESTMENT S IN SHARES WHICH ARE CAPABLE OF YIELDING DIVIDEND INCOME NEVERTHELESS NO DIVID END INCOME WAS RECEIVED DURING T HE YEAR. THE TOTAL INVESTMENT S OF THE ASSESSEE IN SHARES AND SECURITIES WERE RS.62,09,54,000/ - AND ACCORDING TO THE AO, THE ASSESSEE SHOULD HAVE MADE DISALLOWANCE OF EXPENDITURE IN RELATION TO THE INCOME WHICH WAS NOT FORM ING PART OF THE TOTAL INCOME OF THE ASSESSEE UNDER SECTION 14A READ WITH RULE 8D OF THE ACT/RULES. A SHOW CAUSE NOTICE WAS ISSU ED CALLING UPON THE ASSESSEE AS TO WHY THE PROVISIONS OF SECTION 14A READ WITH RULE 8D SHOULD NOT BE APPLIED TO WORK OUT THE D ISALLOWANCE . IT WAS SUBMITTED BEFORE THE AO THAT THE ASSESSEE HAS NOT INCURRED ANY EXPENDITURE ON EARNING OF 3 I.T.A. NO. 3085 /MUM/201 6 EXEMPT INCOME IN THE LIGHT OF FACTS THAT DURING THE YEAR NO DIVIDEND INCOME HAS BEEN RECEIVED BY THE ASSESSEE AND NO SUCH EXPENSES WERE INCURRE D. HOWEVER, THE REPLY OF THE ASSESSEE DID NOT FIND FAVOUR WITH THE AO AND HE ,BY INVOKING THE PROVISIONS OF SECTION 14A R.W.S.8D , DISALLOWED AN AMOUNT OF RS.31,04,835/ - U/R 8D(2)(III) BY FRAMING THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT ORDER DATE D 7.1.2015 ASSESSING THE TOTAL INCOME AT RS.3,55,71,730/ - UNDER THE NORMAL PROVISIONS OF ACT AND RS.3,63,51,954/ - UNDER SECTION 115JB OF THE ACT. AGGRIEVED BY THE ORDER OF THE LD.AO, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD.FAA, WHO ALSO DISMISS ED THE APPEAL OF THE ASSESSEE. NOW THE ASSESSEE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD THE LD. DR AND PERUSED THE MATERIAL PLACED BEFORE US. THE UNDISPUTED FACTS OF THE CASE ARE THAT THE ASSESSEE MADE INVESTMENT S IN THE TAX FREE SECURITIES AMOUNTING TO RS.62,09,54,000/ - OUT OF WHICH 99.999% WERE MADE IN THE SUBSIDIARY COMPANIES TO GAIN CONTROL OVER THE SAID SUBSIDIARY FOR STRATEGIC PURPOSES. MOREOVER, THE ASSESSEE HAS NOT RECEIVED ANY DIVIDEND INCOME DURING THE YEAR AND THE FINDINGS TO THAT EFFECT HAS ALREADY BEEN RECORDED BY THE LOWER AUTHORITIES IN THEIR RESPECTIVE ORDERS. HAVING CONSIDERED THE FACTS OF THE CASE, WE ARE OF THE VIEW THAT THERE IS NO EXEMPT INCOME DURING YEAR AND HENCE NO DISALLOWANCE COULD BE MADE WITH REGARDS TO EXPENSES ATTRIBUTABLE TO EARNING OF EXEMPT INCOME . THE CASE OF THE ASSESSEE ALSO SUPPORTED BY THE DECISION OF THE CO - ORDINATE BENCH OF THE 4 I.T.A. NO. 3085 /MUM/201 6 TRIBUNAL IN THE CASE OF M/S DAGA GLOBAL CHEMICALS PVT LTD V/S ACIT IN ITA NO.5592/MUM/2012. FOLLOWING THE SAID ORDER, WE ALLOW THE A PPEAL OF THE ASSESSEE AND DIRECT THE AO TO GIVE EFFECT OF THIS ORDER. 5 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 24TH NOV , 2017 . S D SD (JOGINDER SINGH ) ( RAJESH KUMAR ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 24. 1 1 . 2017 SR.PS:SRL: / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, T RUE COPY / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI