SICOM INVESTMENTS & FINANCE LTD, MUMBAI V. DCIT 3(3), MUMBAI

ITA 3835/MUM/2014

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9245 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2015
• Appeal Filed By: Assessee
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 28-05-2014
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIP
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL E , BENCH MUMBAI . . , , BEFORE SHRI R.C.SHARMA , A M & SHRI SANJAY GARG , J M ./ ITA NO. 3 835 / MUM/20 1 4 ( / ASSESSMENT YEAR : 20 10 - 1 1 ) M/S SICOM INVESTMENTS & FINANCE LTD., 402, GROUND FLOOR, SOLITAIRE PARK - IV, ANDHERI GHATKOPAR LIND ROAD, CHAKALA, ANDHERI (E), MUMBAI - 400093 VS. DCIT - 3(3), MUMBAI ./ ./ PAN /GIR NO. : A A B CS 1131 L ( / APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI JAYANT R. BHATT /REVENUE BY : SHRI NEIL PHILIP / DATE OF HEARING : 1 9 /03/2015 / DA TE OF PRONOUNCEMENT 27 / 03/2015 / O R D E R PER R.C.SHARMA (A.M) : TH IS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A), DATED 24 - 3 - 2014 FOR THE ASSESSMENT YEAR 20 10 - 201 1 . 2. THE ASSESSEE IS AGGRIEVED FOR THE DISALLOWANCE MADE UNDER SECTION 14A AMOUNTING TO RS.82,92,060/ - . 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF FINANCE. DURING THE COURSE OF SCRUTINY ASSESSMENT, THE AO COMPUTE D DISALLOWANCE UNDER SECTION 14A READ WITH RULE 8D AT RS.82,92,060/ - . THE AO HAS RELIED ON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & ITA NO . 3835 /1 4 2 BOYCE MFG. CO. LTD. 328 ITR 81. BY THE IMPUGNED ORDER, THE CIT(A) CONFIRMED THE ACTION OF THE A O. 4. IT WAS CONTENDED BY THE LD. AR THAT ASSESSEE WAS HAVING SUFFICIENT INTEREST FREE FUNDS, THEREFORE, NO DISALLOWANCE HAS TO BE MADE AS PER DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF HDFC BANK LTD. , 366 ITR 505. OUR ATTENTION WAS INVITED TO TH E AUDITED BALANCE SHEET FOR THE YEAR ENDING ON 31 - 3 - 2009 AS WELL AS 31 - 3 - 2010 TO INDICATE THAT ASSESSEE WAS HAVING SUFFICIENT INTEREST FREE FUNDS. LD. AR ALSO DREW OUR ATTENTION TO THE ORDER OF CIT(A) FOR THE ASSESSMENT YEAR 2010 - 2011 DATED 31 - 10 - 2014, WHE REIN UNDER SIMILAR FACTS AND CIRCUMSTANCES THE CIT(A) HAS DELETED DISALLOWANCE BY OBSERVING THAT ASSESSEE WAS HAVING SUFFICIENT INTEREST FREE FUNDS. LD. AR FURTHER CONTENDED THAT THE SAME CIT(A) HAS CONFIRMED THE DISALLOWANCE DURING THE YEAR UNDER CONSIDER ATION, WHICH IS NOT CORRECT. 5. ON THE OTHER HAND, LD. DR RELIED ON THE ORDER OF THE AUTHORITIES BELOW AND CONTENDED THAT SINCE THE ASSESSMENT YEAR INVOLVED IS A.Y.2010 - 2011, ACCORDINGLY, THE AO WAS JUSTIFIED IN APPLYING RULE 8D FOR WORKING OUT THE DISAL LOWANCE TO BE MADE U/S.14A. 6. WE HAVE CONSIDERED RIVAL CONTENTIONS, CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THERE IS NO DISPUTE TO THE FACT THAT RULE 8D IS APPLICABLE TO THE INSTANT CASE INSOFAR AS RELEVANT ASSESSMENT YEAR IS 2010 - 2011 AS PER VERDICT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG. LTD. HOWEVER, IN APPLYING RULE 8D, THE AO IS REQUIRED TO RECORD A SATISFACTION THAT EXPENSES WERE ACTUALLY INCURRED IN EARNING THE EXEMPT INCOME. IN THE INSTANT CA SE, ASSESSEE HAS GIVEN FULL DISCLOSURE OF THE TOTAL EXPENSES INCURRED AS WELL AS EXPENSES ATTRIBUTABLE ITA NO . 3835 /1 4 3 TO THE EXEMPT INCOME. HOWEVER, NO SATISFACTION HAS BEEN RECORDED BY THE AO. HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF HDF C BANK LTD. HELD THAT IN CASE THE ASSESSEE IS HAVING INTEREST FREE FUNDS, IT IS PRESUMED THAT INVESTMENT HAS BEEN MADE OUT OF THE INTEREST FREE FUNDS AVAILABLE WITH THE ASSESSEE. FOR THIS PURPOSE, RELIANCE CAN BE PLACED ON THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF RELIANCE UTILITIES AND POWER LTD., 313 ITR 340 . KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE CASE, WE RESTORE THE MATTER BACK TO THE FILE OF AO FOR DECIDING AFRESH AFTER VERIFYING THE INTEREST FREE FUNDS AVAILABLE WITH THE ASSESSEE FOR UTILIZATIO N IN THE INVESTMENT. THE AO IS TO DECIDE THE ISSUE AS PER THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF RELIANCE UTILITIES AND POWER LTD. (SUPRA) AND HDFC BANK LIMITED (SUPRA). WE DIRECT ACCORDINGLY. 7 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 27 /03/ 201 5 . SD/ - SD/ - ( ) ( SANJAY GARG ) ( . . ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 27/03 /201 5 . . /PKM , . / PS / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6 . / GUARD FILE. //TRUE COPY//