DCIT 8(2), MUMBAI V. NIRPAN SECURITIES P.LTD, MUMBAI

ITA 3406/MUM/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2623 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2015
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 13-08-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 02-05-2013
• Court: TRIBUNAL
• Department Lawyers: M RAJAN
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI , , BEFORE SHRI RAJENDRA , ACCOUNTAN T MEMBER AND SHRI SAKTIJIT DEY , JUDICIAL MEMBER . / ITA NO . 3406 / MUM./ 2013 ( / ASSESSMENT YEAR : 20 0 9 10 ) DY. COMMISSIONER OF INCOME TAX CIRCLE 8 (2), AAYAKAR BHAWAN 101, M.K. ROAD, MUMBAI 400 020 .. / APPELLANT V/S M/S. NIRPAN SECURITIES PVT. LT D. 301 308, BHAGWATI HOUSE PLOT NO.A/19, VEERA DESAI RAOD ANDHERI (W), MUMBAI 400 058 PAN AAACN1329A .... / RESPONDENT / REVENUE BY : SHRI M. RAJAN / ASSESSEE BY : SHRI NEE LKANTH KHANDELWAL / DATE OF HEARING 01 . 10 .2015 / DATE OF ORDER 16.10.2015 / ORDER , / PER SAKTIJIT DEY, J.M. THIS IS AN APPEAL BY THE REVENUE AGAINST THE ORDER DAT ED 18 TH DECEMBER 2013, PASSED BY THE LEARNED COMMISSIONER (APPEALS) 17, MUMBAI, FOR THE ASSESSMENT YEAR 2009 10. M/S. NIRPAN SECURITIES PVT. LTD. 2 2. THE DEPARTMENT IS AGGRIEVED WITH THE DECISION OF THE LEARNED COMMISSIONER (APPEALS) IN DIRECTING THE ASSESSING OFFICER TO RESTRICT THE DISALLOW ANCE UNDER SECTION 14A TO 5% OF THE EXEMPT INCOME. 3. BRIEFLY THE FACTS ARE, THE ASSESSEE, A COMPANY, FILED ITS RETURN OF INCOME ON 26 TH SEPTEMBER 2009, DECLARING TOTAL INCOME OF ` 6,25,75,170, FOR THE IMPUGNED ASSESSMENT YEAR. DURING THE ASSESSMENT PROCEEDI NGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS EARNED TAX FREE DIVIDEND OF ` 89,32,661, BUT HAS NOT DISALLOWED ANY EXPENDITURE TOWARDS SUCH EXEMPT INCOME. WHEN THE ASSESSEE WAS CALLED UPON TO EXPLAIN WHY NO DISALLOWANCE UNDER SECTION 14A R/W RULE 8D, HAS BEEN MADE, THE ASSESSEE STATED THAT IT HAS NOT INCURRED ANY EXPENDITURE FOR EARNING EXEMPT INCOME. THE ASSESSING OFFICER NOT BEING SATISFIED WITH THE SUBMISSIONS OF THE ASSESSEE, WORKED OUT DISALLOWANCE AT ` 20,08,657. BEING AGGRIEVED OF SUCH DISA LLOWANCE, THE ASSESSEE PREFERRED APPEAL BEFORE THE LEARNED COMMISSIONER (APPEALS). 4. BEFORE THE FIRST APPELLATE AUTHORITY, THOUGH THE ASSESSEE TOOK A PLEA THAT NO DISALLOWANCE UNDER SECTION 14A R/W RULE 8D, IS CALLED FOR BUT ALTERNATIVELY HE ALSO CONTENDED THAT, AT BEST, 5% OF THE EXEMPT INCOME CAN BE DISALLOWED UNDER SECTION 14A OF THE ACT. IN THIS CONTEXT, THE ASSESSEE RELIED UPON SOME DECISIONS OF THE TRIBUNAL. THE LEARNED COMMISSIONER (APPEALS) REFERRING TO THE DECISION OF THE TRIBUNAL, MUMBAI BENCH, IN M/S. ARNAB GRIHA LTD. V/S DCIT, ITA NO.5349/MUM. / M/S. NIRPAN SECURITIES PVT. LTD. 3 2011 DATED 26 TH SEPTEMBER 2012, ULTIMATELY DIRECTED THE ASSESSING OFFICER TO RESTRICT THE DISALLOWANCE UNDER SECTION 14A TO 5% OF THE EXEMPT INCOME. BEING AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 5. W E HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. AS COULD BE SEEN, THE TRIBUNAL IN ARNAB GRIHA LTD. (SUPRA) BEING CONSCIOUS OF THE FACT THAT RULE 8D HAS BEEN MADE APPLICABLE FROM THE ASSESSMENT YEAR 2008 09 HEL D THAT ONLY BECAUSE THE ASSESSEE HAS EARNED SOME EXEMPT INCOME PROVISIONS OF SECTION 14A R/W RULE 8D CANNOT BE APPLIED BLINDLY. HOLDING AS ABOVE, THE TRIBUNAL DIRECTED FOR DISALLOWANCE OF 5% OF THE EXEMPT INCOME UNDER SECTION 14A OF THE ACT. THE LEARNED CO MMISSIONER (APPEALS) HAVING FOLLOWED THE DECISION OF THE TRIBUNAL AS AFORESAID, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED COMMISSIONER (APPEALS). ACCORDINGLY, UPHOLDING THE SAME, WE DISMISS THE GROUND RAISED BY THE REVENUE. 6. IN THE RESULT, R EVENUES APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT O N 16.10.2015 SD/ - RAJENDRA ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED : 16.10.2015 M/S. NIRPAN SECURITIES PVT. LTD. 4 / COPY OF THE ORDER FORWARDED TO : (1) / THE ASSESSEE; (2) / THE REVENUE; (3) ( ) / THE CIT(A); (4) / THE CIT, MUMBAI CITY CONCERNED; (5) , , / THE DR, ITAT, MUMB AI; (6) / GUARD FILE . / TRUE COPY / BY ORDER . / PRADEEP J. CHOWDHURY / SR. PRIVATE SECRETARY / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI