ACIT 14(2)(2), MUMBAI V. PROFICIENT REAL ESTATE DEVELOPERS LTD, MUMBAI

ITA 3514/MUM/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3457 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 10-03-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 08-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SALMAN KHAN
• Assessee Lawyers: AJAY R SINGH
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C, MUMBAI BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.3514/M/2015 ASSESSMENT YEAR: 2010-11 ACIT 14(2)(2), 432, 4 TH FLOOR, AAYAKAR BHAVAN, MUMBAI 400020 VS. M/S. PROFICIENT REAL ESTATE DEVELOPERS PVT. LTD., 1 ST FLOOR, CAPRI BUILDING, ANANT KANEKAR MARG, BANDRA EAST, MUMBAI 400 051 PAN: AAECP 1184D (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI AJAY R. SINGH, A.R. REVENUE BY : SHRI SALMAN KHAN, D.R. DATE OF HEARING : 10.03.2016 DATE OF PRONOUNCEMENT : 18.03.2016 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVEN UE AGAINST THE ORDER DATED 11.03.2015 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT Y EAR 2010-11. 2. THE REVENUE HAS AGITATED THE ACTION OF THE LD. C IT(A) IN DELETING THE DISALLOWANCE OF RS.1,82,31,213/- MADE BY THE ASSESS ING OFFICER (HEREINAFTER REFERRED TO AS THE AO) UNDER SECTION 14A RULE 8D OF THE INCOME TAX ACT IN RELATION TO THE EXPENDITURE INCURRED FOR INVESTMENT S MADE FOR EARNING OF EXEMPT INCOME. 3. AT THE OUTSET, THE LD. A.R. OF THE ASSESSEE HAS STATED THAT THE LD. CIT(A) HAS DELETED THE DISALLOWANCE MADE BY THE AO AFTER R EFERRING TO VARIOUS CASE LAWS AND HOLDING THAT IN CASE OF PASSIVE INVESTMENT S IN GROUP COMPANIES, NO DISALLOWANCE IS WARRANTED UNDER SECTION 14A. THE L D. CIT(A) HAS FURTHER OBSERVED THAT IN THE CASE IN HAND, THE ASSESSEE DID NOT EARN ANY EXEMPT INCOME DURING THE YEAR AND EVEN THE INVESTMENTS WERE NOT M ADE BY THE ASSESSEE FOR THE ITA NO.3514/M/2015 M/S. PROFICIENT REAL ESTATE DEVELOPERS PVT. LTD. 2 PURPOSE OF EARNING THE EXEMPT INCOME RATHER THESE W ERE STRATEGIC INVESTMENTS IN GROUP COMPANIES. THE LD. A.R. HAS STATED THAT T HE CASE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY VARIOUS DECISIONS. HE , IN THIS RESPECT, HAS RELIED UPON THE DECISION OF THE CO-ORDINATE BENCH OF THE T RIBUNAL IN THE CASE OF GARWARE WALL ROPES LTD. VS. ACIT ITA NO.5408/M/20 12 DECIDED VIDE ORDER DATED 15.01.14 WHEREIN THE TRIBUNAL HAS HELD THAT WHERE THE ASSESSEE HAS NOT INCURRED ANY EXPENDITURE FOR EARNING OF EXEMPT INCOME AND WHERE THE INVESTMENTS HAVE BEEN MADE BY THE ASSESSEE IN THE G ROUP CONCERN AND THE PRIMARY OBJECTION OF THE INVESTMENT IS TO HOLD CONT ROLLING STAKE IN THE GROUP CONCERN AND NOT EARNING OF ANY EXEMPT INCOME OUT OF THE INVESTMENT, IN SUCH TYPE OF STRATEGIC INVESTMENTS, DISALLOWANCE UNDER S ECTION 14A IS NOT WARRANTED. SIMILAR PROPOSITION OF LAW HAS BEEN LAID DOWN BY TH E TRIBUNAL IN THE CASE OF J.M. FINANCIAL LTD. VS. ACIT IN ITA NO.4521/M/201 2 VIDE ORDER DATED 26.03.14. THE ASSESSEE HAS ALSO RELIED UPON THE DE CISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CHEM INVESTMENT LTD. VS. CIT WHEREIN THE HONBLE DELHI HIGH COURT HAS HELD THAT THE DISALLOW ANCE UNDER SECTION 14A WILL NOT BE ATTRACTED WHERE NO EXEMPT INCOME IS REC EIVED OR RECEIVABLE DURING THE RELEVANT YEAR UNDER CONSIDERATION. 4. THE LD. D.R. COULD NOT POINT OUT ANY DIFFERENTIA TING FACT OR CASE LAW ON THIS ISSUE. HENCE, THE CASE OF THE ASSESSEE IS SQU ARELY COVERED BY THE ABOVE CITED DECISIONS. 5. IN VIEW OF THIS, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) AND THE SAME IS UPHELD. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS HERE BY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18.03.2016. SD/- SD/- (RAJESH KUMAR) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 18.03.2016. * KISHORE, SR. P.S. ITA NO.3514/M/2015 M/S. PROFICIENT REAL ESTATE DEVELOPERS PVT. LTD. 3 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.