Appeal details
Counselvise Citation
[2017] 126 COUNSELVISE.COM (IT) 9610 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
4 month(s) 11 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
13-09-2017
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
SMC
Assessment Year
2012-2013
Appeal Filed On
02-05-2017
Judgement Text
THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) I.T.A. NO. 3187 /MUM/ 2017 (ASSESSMENT YEAR 20 1 2 - 13 ) M/S. MIRCHANDANI PROJECTS PVT. LTD. 505/506, SHALIMAR MORYA PARK, NEW LINE ROAD ANDHERI WEST MUMBAI - 400 053 PAN : AAACE9128J VS. DCIT WARD - 10(2)(2) MUMBAI ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHRI KAPIL JAIN DEPARTMENT BY SHRI S.K. BEPARI DATE OF HEARING 1 3 .9. 201 7 DATE OF PRONOUNCEMENT 13 . 9 . 201 7 O R D E R THE APP E AL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 17.2.2017 PASSED BY THE LEARNED CIT(A) - 17, MUMBAI AND IT RELATES TO A.Y. 2012 - 13. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF THE LEARNED CIT(A) IN CONFIRMING THE ADDITION OF ` 2.87 LAKHS MADE BY THE ASSESSING OFFICER U/S. 14A OF THE ACT. 2. I HEARD THE PARTIES AND PERUSED THE RECORD. THE ASSESSEE RECEIVED DIVIDEND INCOME OF ` 20.57 LAKHS AND CLAIMED THE SAME AS EXEMPT U/S. 10(34) OF THE ACT. THE ASSESSEE DID NOT MAKE ANY DISALLOWANCE U/S. 14A OF THE ACT AND HENCE THE ASSE SSING OFFICER COMPUTED THE DISALLOWANCE AS PER RULE 8D OF THE I.T. RULES AS UNDER: - (A) DISALLOWANCE OUT OF INTEREST EXPENDITURE ` 7,515/ - (B) DISALLOWANCE OUT OF EXPENSES ` 2,79,508 / - TOTAL : ` 2,87,023/ - THE LEARNED CIT(A) ALSO CONFIRMED THE SAME. M/S. MIRCHANDANI PROJECTS PVT. LTD. 2 3. LEARNED AR SUBMITTED THAT THE INVESTMENT MADE BY THE ASSESSEE CONSISTS OF CAPITAL INTRODUCED IN VARIOUS PARTNERSHIP FIRMS, CAPITAL INTRODUCED IN GROUP COMPANIES AND INVESTMENT MADE IN MUTUAL FUNDS. LEARNED AR SUBMITTED THAT THE ASSE SSEE HAS RECEIVED ENTIRE DIVIDEND INCOME OF ` 20.57 LAKHS FROM MUTUAL FUND S ONLY . HE FURTHER SUBMITTED THAT THE INVESTMENT S IN MUTUAL FUNDS W E RE MADE IN IMMEDIATELY PRECEDING YEAR AND ENTIRE INVESTMENT HAVE BEEN REDEEMED DURING THE YEAR UNDER CONSIDERATION . ACCORDINGLY HE SUBMITTED THAT, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN APPLYING PROVISIONS OF RULE 8D OF THE I.T. RULES. 4. ON THE CONTRARY, LEARNED DEPARTMENTAL REPRESENTATIVE STRONGLY SUPPORTED THE ORDER PASSED BY THE LEARNED CIT(A). 5. HAVING HEARD THE RIVAL SUBMISSION, I AM OF THE VIEW THAT THERE IS MERIT IN THE CONTENTION OF THE ASSESSEE. THE ASSESSEE HAS HELD AGGREGATE INVESTMENT OF ` 111 . 3 0 LAKH S AS ON 31.3.2011 AND THE SAME HA S BEEN REDUCED TO ` 4.1 9 LAKHS AS ON 31.3.2012. OPENING BALANCE OF INVESTMENT INCLUDED INVESTMENT IN MUTUAL FUNDS AGGREGATING TO ` 11 1 LAKH S, MEANING THEREBY , THE ASSESSEE HAS VIRTUALLY INVESTED ITS FUNDS MAINLY IN MUTUAL FUNDS AND THE SAME HAS BEEN REDEEMED DURING THE YEAR UNDE R CONSIDERATION. UNDER THESE SET OF FACTS, I AGREE WITH THE CONTENTION OF THE ASSESSEE THAT THERE IS NO REQUIREMENT TO APPLY PROVISIONS OF RULE 8D FOR COMPUTING DISALLOWANCE REQUIRED TO BE MADE U/S. 14A OF THE ACT. I ALSO NOTICED THAT THE ASSESSEE HAS INV ESTED ONLY IN THREE SCHEMES OF MUTUAL FUND UNITS IN THE IMMEDIATELY PRECEDING YEAR, WHICH HAS BEEN REDEEMED DURING THE YEAR UNDER CONSIDERATION. UNDER THESE SET OF FACTS, I AM OF THE VIEW THAT A NOMINAL DISALLOWANCE OF ` 10,000/ - WOULD MEET THE REQUIREMENT OF SECTION 14A, WHICH IS IN ADDITION TO INTEREST DISALLOWANCE OF ` 7,515/ - MADE BY THE ASSESSING OFFICER. ACCORDINGLY, I SET ASIDE THE O R DER PASSED BY THE LEARNED CIT(A) ON THIS ISSUE AND DIRECT THE ASSESSING OFFICER TO RESTRICT THE DISALLOWANCE U/S. 14A OF THE ACT TO ` 17,515/ - . M/S. MIRCHANDANI PROJECTS PVT. LTD. 3 6. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 1 3 . 9 . 201 7. SD/ - (B.R.BASKARAN) ACCOUNTANT MEMBER MUMBAI ; DATED : 1 3 / 9 / 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. REGIS TRAR) PS ITAT, MUMBAI
Mehul