THE SIRDAR CARBONIC GAS CO.LTD.(NOW KNOWN AS HINDOOSTAN MILLS LTD.), MUMBAI V. ASSTT. CIT- 2(3), MUMBAI

ITA 373/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3290 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2016
• Appeal Filed By: Assessee
• Bench Allotted: H
• Next Hearing Date: 03-08-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 15-01-2014
• Court: TRIBUNAL
• Keywords: Earning of tax free income
• Section: 143(3); 14A

Judgement Text

, , H, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES H, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO.373/MUM/2014 ASSESSMENT YEAR: 2010-11 THE SIRDAR CARBONIC GAS CO. LTD. (NOW KNOWN AS HINDOOSTAN MILLS LTD.) SIR, VITHALDAS CHAMBERS 16, MUMBAI SAMACHAR MARG, FORT MUMBAI -400001 / VS. A CIT 2(3) MUMBAI- ( REVENUE ) ( RESPONDENT ) P.A. NO. AAACT0173A ASSESSEE BY MS. NEHA PARANJPE ( A R) REVENUE BY SHRI ABHISHEK SHARMA (D R) ! ' # / DATE OF HEARING : 04/08/2016 ' # / DATE OF ORDER: 09/09/2016 / O R D E R PER ASHWANI TANEJA (ACCOUNTANT MEMBER): THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST ORDER OF LD. ORDER OF LD. COMMISSIONER OF INCOME TAX (APP EALS)-6 MUMBAI, {(IN SHORT CIT(A)}, DATED 28.11.2013 PAS SED AGAINST ASSESSMENT ORDER U/S 143(3) 07.03.2013 FOR A.Y. 201 0-11 ON THE FOLLOWING GROUNDS: SIRDAR CARBONIC GAS 2 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 8,19,151/- MADE U/S. 14A OF THE INCOME-TAX ACT 1961 BY THE ASSESSING OFFICER OUT OF EXPENSES AS EXPENDITURE ATTRIBUTABLE TO THE EARNING OF EXEMPT INCOME. YOUR APPELLANTS SUBMIT THAT THEY HAVE ALREADY DISALLOWED A SUM OF RS.1,11,814/- IN THEIR RETURN O F INCOME U/S.14A AS EXPENDITURE INCURRED TOWARDS EARNING INCOME NOT CHARGEABLE TO TAX. THE DISALLOWANCE OF RS.8,19,151/- IS AN ADDITIONAL DISALLOWANCE. YOUR APPELLANTS SUBMIT THAT NO FURTHE R DISALLOWANCE IS CALLED FOR. YOUR APPELLANTS SUBMITS THAT THE DISALLOWANCE OF RS. 8,19,151/- OUGHT TO BE DELE TED. WITHOUT PREJUDICE TO THE ABOVE YOUR APPELLANTS SUBM IT THAT THE DISALLOWANCE OF RS.8,19,151/- U/S. 14A REA D WITH RULE 8D IS EXCESSIVE AND OUGHT TO BE REDUCED SUBSTANTIALLY. 2. DURING THE COURSE OF HEARING, ARGUMENTS WERE MADE B Y MS. NEHA PARANJPE, AUTHORISED REPRESENTATIVE (AR) ON BE HALF OF THE ASSESSEE AND BY SHRI ABHISHEK SHARMA, DEPARTMEN TAL REPRESENTATIVE (DR) ON BEHALF OF THE REVENUE. 3 . THE SOLITARY GROUND RAISED IN THIS APPEAL IS WITH REGARD TO DISALLOWANCE U/S 14A. WE HAVE CONSIDERED THE SUBMIS SIONS MADE BY THE BOTH THE SIDES BEFORE DECIDING THE ISSU E. 3.1. IT IS NOTED BY US THAT THE ASSESSEE HAD MADE SUO MOTU DISALLOWANCE OF RS.1,11,814/- HOWEVER, THE AO MADE FURTHER DISALLOWANCE U/S 14A FOR RS.4,33,019/- ON ACCOUNT O F INDIRECT INTEREST AND RS.8,19,151/- ON ACCOUNT OF INDIRECT E XPENSES COMPUTED @ 0.5 % OF THE AVERAGE VALUE OF INVESTMENT . WITH THE ASSISTANCE OF THE PARTIES, IT NOTED BY US THAT OWN FUNDS OF THE ASSESSEE ARE IN EXCESS OF THE AMOUNT OF INVESTMENT IN TAX-FREE SIRDAR CARBONIC GAS 3 SECURITIES AND THEREFORE, NO DISALLOWANCE OF INTERE ST IS CALLED FOR AND THEREFORE, SAME IS DIRECTED TO DELETED. 3.1. WITH REGARD TO THE DISALLOWANCE ON ACCOUNT OF INDI RECT EXPENSES, LD. COUNSEL SUBMITTED BEFORE US DETAILS S HOWING THAT SUBSTANTIAL AMOUNT OF INVESTMENT WAS ON ACCOUN T OF STRATEGIC REASONS. THE INVESTMENTS WERE MADE IN VAR IOUS COMPANIES AS STRATEGIC INVESTMENT. IN ADDITION TO T HAT THERE ARE CERTAIN INVESTMENTS ON WHICH NO TAX-FREE INCOME IS EARNED. IT IS NOTED BY US ON THE BASIS OF DETAILED SUBMISSI ONS BY THE LD. COUNSEL THAT IF THESE KINDS OF INVESTMENT ARE E XCLUDED, THEN THE DISALLOWANCE COMES TO RS.351720/- ONLY ON ACCOUNT OF INDIRECT EXPENSES. 3.2. DURING THE COURSE OF HEARING LD. DR DID NOT POINT ANYTHING INCORRECT OR WRONG IN THE DETAILS SUBMITTE D BY THE LD. COUNSEL AND HE FAIRLY AGREED THAT DISALLOWANCE ON A CCOUNT OF INDIRECT EXPENSES CAN BE RESTRICTED TO A SUM OF RS. 351720/-. 3.3. WE HAVE GONE THROUGH THE FACTS OF THE CASE AND SET TLED LEGAL POSITION IN THIS REGARD. IN OUR VIEW, ARGUMEN TS OF THE ASSESSEE HAVE SUBSTANCE AND THUS TOTAL DISALLOWANCE SHOULD BE RESTRICTED TO RS.351720/- (INCLUDING THE SUO MOTU DISALLOWANCE MADE BY THE ASSESSEE OF RS.111814/-). THEREFORE, WE SUSTAIN DISALLOWANCE U/S 14A TO THE EXTENT OF RS .351720 AND BALANCE DISALLOWANCE IS DIRECTED TO BE DELETED. THE ASSESSEE GETS PART RELIEF ACCORDINGLY. SIRDAR CARBONIC GAS 4 4. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH SEPTEMBER, 2016. SD/- (JOGINDER SINGH) SD/- (ASHWANI TANEJA) ! / JUDICIAL MEMBER ' ! / ACCOUNTANT MEMBER ! MUMBAI; % DATED: 09 /09/2016 CTX? P.S/. . . #$%&'(')% / COPY OF THE ORDER FORWARDED TO : 1. '() / THE APPELLANT 2. *+() / THE RESPONDENT. 3. , , - ( ' ) / THE CIT, MUMBAI. 4. , , - / CIT(A)- , MUMBAI 5. 01 *2 , , '# 23 , ! / DR, ITAT, MUMBAI 6. 45 6! / GUARD FILE. / BY ORDER, +0' * //TRUE COPY// / (DY./ASSTT. REGISTRAR) , ! / ITAT, MUMBAI