PUDUMJEE INDUSTRIES LTD, MUMBAI V. ASST CIT CIR 2(2)(OSD), MUMBAI

ITA 3603/MUM/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87963 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 31-12-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 21-05-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIP
• Assessee Lawyers: VIJAY MEHTA
• Section: 14A; 115JB

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE HONBLE S/SHRI H.L. KARWA, PRESIDENT AND B. R.BASKARAN (AM) . . , . . , ./ I.T.A. NO.3603/MUM/2012 ( / ASSESSMENT YEAR :2009-10) PUDUMJEE INDUSTRIES LTD, 60, DR.A.V.B.GANDHI MARG, MUMBAI. / VS. ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 2(2) (OSD), MUMBAI. ( / APPELLANT) .. ( ! / RESPONDENT) ./ #$ ./ PAN/GIRNO.:AAACPO487B % / APPELLANT BY : SHRI VIJAY MEHTA ! & % / RESPONDENT BY SHRI NEIL PHILIP ' ( & ) * / DATE OF HEARING :31.12.2014 +, & ) * /DATE OF PRONOUNCEMENT : 16.01.2015 / O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 09- 03-2012 PASSED BY LD CIT(A)-5, MUMBAI AND IT RELATE S TO THE ASSESSMENT YEAR 2009-10. THE ASSESSEE IS AGGRIEVED BY THE DEC ISION OF LD CIT(A) IN CONFIRMING THE ADDITION MADE BY THE AO U/S 14A OF THE ACT. AT THE TIME OF HEARING, THE LD A.R DID NOT PRESS GROUND NO.3 RELAT ING TO ADVANCE TAX PAYMENT. ACCORDINGLY THE SAID GROUND IS DISMISSED AS NOT PRESSED. 2. WE HEARD THE PARTIES AND PERUSED THE RECORD. WE NOTICE THAT THE ASSESSEE HAS EARNED DIVIDEND INCOME OF RS.8,19,084/ - ON LONG TERM INVESTMENT MADE IN THE SHARES OF M/S PUDUMJEE PULP & PAPER MILLS LTD TO THE TUNE OF RS.2.67 CRORES. THE ASSESSEE DID NOT M AKE ANY DISALLOWANCE U/S 14A OF THE ACT, SINCE IT CLAIMED THAT THE ABOVE SAID INVESTMENT WAS 3603MUM/2012 2 MADE FROM TIME TO TIME OUT OF OWN FUNDS. THE SAID CLAIM DID NOT FIND FAVOUR BOTH WITH THE AO AND LD CIT(A). 3. AT THE TIME OF HEARING, THE LD A.R INVITED OUR ATTENTION TO PAGES 2 & 3 OF THE ASSESSMENT ORDER, WHEREIN THE ASSESSING OF FICER HAS EXTRACTED THE SUBMISSIONS OF THE ASSESSEE. THE LD A.R SUBMITTED THAT THE ASSESSEE HAD SUBMITTED THE DETAILS OF YEAR-WISE INVESTMENT MADE IN THE ABOVE SAID COMPANY. HE FURTHER INVITED OUR ATTENTION TO THE B ALANCE SHEET PLACED IN THE PAPER BOOK FILED BY IT AND SUBMITTED THAT THE O WN FUNDS AVAILABLE WITH THE ASSESSEE ARE IN EXCESS OF OF THE LOAN FUNDS. A CCORDINGLY, BY PLACING RELIANCE ON THE DECISION OF HONBLE JURISDICTIONAL BOMBAY HIGH COURT IN THE CASE OF CIT VS. HDFC BANK (2014)(366 ITR 505), THE LD A.R SUBMITTED THAT THE DISALLOWANCE U/S 14A IS NOT CALLED FOR. 4. ON THE CONTRARY, THE LD D.R PLACED RELIANCE ON THE ORDERS OF LD CIT(A). 5. FROM THE BALANCE SHEET FILED BY THE ASSESSEE, WE NOTICE THAT THE ASSESSEE WAS HAVING OWN FUNDS OF 3888.89 LAKHS AS O N 31.3.2008 AND LOAN FUNDS OF RS.2968.09 LAKHS. THE LOAN FUNDS CONSISTE D OF SECURED LOANS OF 1270.40 LAKHS AND UNSECURED LOANS OF RS.1697.69 LAK HS. THE SECURED LOANS SHOULD HAVE BEEN USED FOR SPECIFIC PURPOSES. THE INVESTMENT MADE BY THE ASSESSEE IS 1268.16 LAKHS (NET OF PROVISION FOR DIMINUTION IN VALUE). THE BALANCE SHEET IS ALSO SHOWING POSITIVE BALANCE OF NET CURRENT ASSETS. THUS, WE NOTICE THAT THE OWN FUNDS ARE MORE THAN TH E LOAN FUNDS AND HENCE THE DECISION RENDERED BY THE JURISDICTIONAL H IGH COURT IN THE CASE OF HDFC BANK APPLIES TO THE FACT OF THE ASSESSEE. 6. ACCORDINGLY, WE AGREE WITH THE CONTENTIONS OF THE ASSESSEE THAT THE DISALLOWANCE U/S 14A IN RESPECT OF INTEREST EXPENDI TURE IS NOT CALLED FOR. WITH REGARD TO THE DISALLOWANCE OF ADMINISTRATIVE E XPENSES UNDER RULE 8D(2)(III), THE LD A.R DID NOT PRESS THE SAME IN VI EW OF THE SMALLNESS OF 3603MUM/2012 3 THE AMOUNT INVOLVED. ACCORDINGLY, WE SUSTAIN THE D ISALLOWANCE MADE TOWARDS ADMINISTRATIVE EXPENSES. ACCORDINGLY WE MO DIFY THE ORDER OF LD CIT(A) IN THE LINES DISCUSSED ABOVE AND DIRECT THE ASSESSING OFFICER TO SUSTAIN THE ADDITION RELATING TO ADMINISTRATIVE EXP ENSES ONLY. 7. THE ASSESSEE HAS ALSO RAISED AN ADDITIONAL GROU ND RELATING TO THE COMPUTATION OF BOOK PROFIT U/S 115JB OF THE ACT. T HE LD A.R SUBMITTED THAT THE SAID GROUND IS CONSEQUENTIAL IN NATURE. A CCORDINGLY THE SAME DOES NOT REQUIRE ANY ADJUDICATION. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 16TH JAN,2015. +, ' - ./ 0 1 16TH JAN 2015 , & 2( 3 SD SD ( . . / H.L. KARWA) ( . . , / B.R. BASKARAN ) / PRESIDENT / ACCOUNTANT MEMBER . ' ( MUMBAI: 16TH JAN, 2015. . . ./ SRL , SR. PS ! ' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. ! / THE RESPONDENT. 3. ' 7) ( ) / THE CIT(A)- CONCERNED 4. ' 7) / CIT CONCERNED 5. 6. 89 2 ): , * : , . ' ( / DR, ITAT, MUMBAI CONCERNED 2 ; < ( / GUARD FILE. = ' / BY ORDER, TRUE COPY > # (ASSTT. REGISTRAR) * : , . ' ( /ITAT, MUMBAI