VEENA INVESTMENT P.LTD, MUMBAI V. DCIT CIR 7(3), MUMBAI

ITA 3402/MUM/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0838 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 18-07-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 09-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: POOJA SWAROOP
• Assessee Lawyers: B S SHARMA
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'F' BENCH, MUMBAI BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.3402/MUM/2017 (ASSESSMENT YEAR: 2011-12) M/S. VEENA INVESTMENT P. LTD. VS. DCIT, CIRCLE 7(3) 18TH FLOR, MARATHON FUTUREX A WING, N.M. JOSHI MARG LOWER PARE, MUMBAI 400013 AAYAKAR BHAVAN, M.K. ROAD MUMBAI 400020 PAN AAACV6436A APPELLANT RESPONDENT APPELLANT BY: SHRI B.S. SHARMA RESPONDENT BY: MS. POOJA SWAROOP DATE OF HEARING: 19.12.2017 DATE OF PRONOUNCEMENT: 24.01.2018 O R D E R PER RAJESH KUMAR, AM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A)-14, MUMBAI DATED 27.03.2017 FOR A.Y. 2011-12 . 2. THE ONLY ISSUE RAISED BY THE ASSESSEE IN THIS APPEA L IS AGAINST THE CONFIRMATION OF DISALLOWANCE TO THE TUNE OF ` 3,49,95,420/- BY CIT(A) UNDER SECTION 14A OF THE ACT R.W. RULE 8D AS AGAINST THE DISALLOWANCE MADE BY THE AO OF ` 23,18,53,471/-. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE WAS CARRYING ON TRADING BUSINESS IN EQUITY SHARES AND HOLDING THE UNSOLD EQUITY SHARES AS STOCK IN TRADE AND ALSO AS INVESTMENT. DURING TH E YEAR THE ASSESSEE RECEIVED DIVIDEND INCOME OF RS. 3,49,95,420/- WHICH WAS CLAIMED AS EXEMPT. THE ASSESSEE HAS ALSO INCURRED HUGE AMOUNT OF INTEREST EXPENDITURE RS. ` 25,65,22,810/- AS COMPARED TO RS. 1,74,65,541/- IN THE IMMEDIATELY PRECEDING PREVIOUS YEAR. THE ASSESSEE S UO MOTO DISALLOWED A SUM OF RS. 43,32,240/- IN THE COMPUTATION OF INCOME WHILE FILING THE ITA NO. 3402/MUM/2017 M/S. VEENA INVESTMENT P. LTD. 2 RETURN OF INCOME. BEFORE THE AO, THE ASSESSEE SUBMI TTED THAT SUBSTANTIAL INVESTMENTS WERE MADE IN THE GROUP COMPANIES FROM S TRATEGIC POINT OF VIEW. VIDE WRITTEN SUBMISSION DATED 21.01.2014 THE ASSESSEE SUBMITTED BEFORE THE AO THAT NO DISALLOWANCE OF INTEREST IS C ALLED FOR AS THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING IN SECURITIES AND SHARES AND THEREFORE ALL THESE INVESTMENTS WERE MADE IN THE NO RMAL COURSE OF BUSINESS FROM STRATEGIC POINT OF VIEW. HOWEVER, THE AO WAS NOT CONVINCED WITH THE CONTENTIONS OF THE ASSESSEE AND ACCORDINGL Y CALCULATED THE DISALLOWANCE AT RS. 25,22,18,697/- COMPRISING RS. 2 3,18,53,471/- UNDER RULE 8D(2)(II) AND ` 2,03,65,226/- UNDER RULE 8D(2)(III) AND AFTER ALLOW ING CREDIT OF SUO MOTTO DISALLOWANCE OF RS. 43,32,240/- THE NET DISALLOWANCE WAS WORKED OUT AT ` 24,78,86,457/-. IN THE APPELLATE PROCEEDINGS THE CIT(A) PARTIALLY ALLOWED THE VIEW OF THE ASSESSEE A ND RESTRICTED THE DISALLOWANCE TO ` 3,49,95,420/- EQUAL TO THE AMOUNT OF DIVIDEND INCOM E RECEIVED DURING THE YEAR. THE ASSESSEE, STILL AGGRI EVED BY THE ORDER OF THE CIT(A), PREFERRED AN APPEAL BEFORE THE TRIBUNAL. 4. THE LEARNED A.R. AT THE OUTSET SUBMITTED BEFORE THE BENCH THAT THE CASE OF THE ASSESSEE IS FULLY COVERED BY THE ORDER OF THE COORDINATE BENCH IN ASSESSEES OWN CASE IN ITA NO. 1252/MUM/2013 FOR A.Y. 2009-10 DATED 17.12.2015 WHEREIN SIMILAR ISSUE HAS BEEN ALLOWED F OR STATISTICAL PURPOSES BY ISSUING DIRECTIONS TO DECIDE THE SAME ON THE LIN ES OF THE DECISIONS OF THE COORDINATE BENCHES IN THE CASE OF J.M. FINANCIAL LT D. VS. ACIT IN ITA NO. 4521/MUM/2012, GARWARE WALL ROPES LTD. VS. DCIT 65 SOT 86 AND KOTAK MAHINDRA CAPITAL CO. LTD. VS. DCIT IN ITA NO. 5748/ MUM/2012. THE LEARNED A.R. PRAYED BEFORE THE BENCH THAT SINCE THE ENTIRE INVESTMENTS WERE MADE FROM STRATEGIC POINT OF VIEW, NO DISALLOW ANCE CAN BE MADE ON THE SAID INVESTMENTS IN THE GROUP COMPANIES. MOREOV ER NO DISALLOWANCE UNDER SECTION 14A CAN BE MADE IF SHARES ARE HELD AS STOCK IN TRADE AND THEREFORE PRAYED TO DECIDE THE CURRENT APPEAL ON TH E SAME LINES AS IN A.Y. 2009-10. 5. THE LEARNED D.R., ON THE OTHER HAND, RELIED ON THE DECISION OF THE LEARNED CIT(A) AND REQUESTED THE BENCH TO CONFIRM T HE SAME. ITA NO. 3402/MUM/2017 M/S. VEENA INVESTMENT P. LTD. 3 6. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATE RIAL ON RECORD. ON PERUSAL OF THE FACTS OF THE PRESENT APPEAL VIS-A -VIS THE DECISION OF THE COORDINATE BENCH IN ITA NO. 1252/MUM/2013 FOR A.Y. 2009-10 WE OBSERVE THAT THE ISSUE IN THE CURRENT YEAR STANDS A S RESOLVED BY THE DECISION OF THE COORDINATE BENCH IN THE ABOVE MENTI ONED CASE AND THEREFORE THE SAME SHOULD BE FOLLOWED IN THE CURREN T YEAR ALSO TO MAINTAIN CONSISTENCY WITH THE SAID DECISION. ACCORDINGLY WE RESTORE THE ISSUE BACK TO THE FILE OF THE AO WITH THE DIRECTION TO DECIDE THE SAME BY FOLLOWING THE DECISION OF THE COORDINATE BENCH IN ITA NO. 1252/MU M/2013. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH JANUARY, 2018. SD/ - SD/ - (MAHAVIR SINGH) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 24 TH JANUARY, 2018 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -14, MUMBAI 4. THE CIT - 8, MUMBAI 5. THE DR, F BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.