OASIS SECURITIES LIMITED, MUMBAI V. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 3(2), MUMBAI

ITA 385/MUM/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 9184 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 17-01-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ABI RAMA KARTIKEYAN
• Assessee Lawyers: PRAKASH JOTHWANI
• Keywords: Earning of tax free income; Rule 8D
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C, MUMBAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH, JUDICIAL MEMBER ITA NO.385/M/2018 ASSESSMENT YEAR: 2014-15 M/S. OASIS SECURITIES LTD., 2 ND FLOOR, BUILDING NO.5, RAJA BAHADUR COMPOUND, 43, TAMARIND LANE, FORT, MUMBAI-400 001 PAN: AAACO 0091J VS. DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 3(2), AAYAKAR BHAVAN, 4 TH FLOOR, MUMBAI - 400020 (APPELLANT) (R ESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI PRAKASH JOTHWANI, A.R. REVENUE BY : SHRI ABI RAMA KARTIKEYAN, D.R. DATE OF HEARING : 05.03.2019 DATE OF PRONOUNCEMENT : 26.03.2019 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 15.12.2017 OF THE COMMISSIO NER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2014-15. 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW. 1. A) THE LEARNED CIT ERRED IN RESTRICTING DISALLOWANC E U/S 14AR.W. RULE 8D(III) OF A SUM OF RS.1,84,880/- IN PLACE OF RS.1,125/-. B) THE LEARNED CIT(A) ERRED IN NOT CONSIDERING THAT INVESTMENT MADE IN SHARES OF AZURE CAPITAL ADVISORS WAS NOT TOWARDS EARNING OF T AX EXEMPT INCOME. 2. WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED CIT( A) ERRED IN NOT RESTRICTING DISALLOWANCE U/S 14A R.W. RULE 8D TO THE EXTENT OF DIVIDEND INCOME BEING RS.1,10,679/-. ITA NO.385/M/2018 M/S. OASIS SECURITIES LTD. 2 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEN D THE GROUNDS OF APPEAL AT OR BEFORE THE HEARING OF THE APPELLANT. 3. THE ISSUE RAISED BY THE ASSESSEE IN GROUND NO.1 IS COVERED AGAINST THE ASSESSEE BY THE APEX COURT ORDER IN THE CASE OF MAXOPP INVESTMENT PVT. LTD. VS. CIT (2018) 91 TAXMA NN.COM 154 (SC) AND IS ACCORDINGLY DISMISSED. 4. THE ISSUE RAISED IN THE SECOND GROUND OF APPEAL IS AGAINST THE ORDER OF CIT(A) NOT RESTRICTING THE DISALLOWANC E U/S 14A TO THE AMOUNT OF EXEMPT INCOME OF RS.1,10,679/-. THIS IS UNDISPUTED THAT DURING THE YEAR THE ASSESSEE HAS EX EMPT INCOME OF RS. 1,10,679/- FROM SHARES AND MUTUAL FUN DS. THE AO APPLIED THE PROVISIONS OF SECTION 14A R.W.S. RUL E 8D AND CALCULATED THE DISALLOWANCE AT RS.11,05,830/- COMPR ISING RS.9,19,820/- UNDER RULE 8D(2)(II) AND RS.1,86,010/ - UNDER RULE 8D(2)(III). THE LD CIT(A) DELETED THE DISALLOWANCE UNDER RULE 8D(2)(II) BUT SUSTAINED THE DISALLOWANCE TO THE EXT ENT OF RS.1,84,880/- UNDER RULE 8D(2)(III). 5. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIALS AS PLACED BEFORE US, WE ARE OF THE VIEW THAT DISALL OWANCE U/S 14A OF THE ACT CAN NOT EXCEED THE AMOUNT OF EXEMPT INCOME OF RS. 1,10,679/-.THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE DECISION OF THE JURISDICTIONAL HIGH COURT IN TH E CASE OF PR. CIT VS BALLARPUR INDUSTRIES LTD. ITA NO.15 OF 2016 DATED 13.10.2016 NAGPUR BENCH WHEREIN IT HAS BEEN HELD T HAT DISALLOWANCE U/S 14A CAN NOT EXCEED THE EXEMPT INCO ME. THEREFORE RESPECTFULLY FOLLOWING THE HONBLE BOMBAY HIGH COURT WE DIRECT THE AO TO RESTRICT THE DISALLOWANCE TO RS . 1,10,679/-. THE GROUND NO.2 IS ALLOWED. ITA NO.385/M/2018 M/S. OASIS SECURITIES LTD. 3 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 26.03.2019. SD/- SD/- ( AMARJIT SINGH) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 26.03.2019. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASS TT. REGISTRAR, ITAT, MUMBAI.