TEJASKIRAN PHARMACHEM INDUSTRIES P.LTD, MUMBAI V. DCIT CIR 8(3), MUMBAI

ITA 4045/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2861 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2011-2012
• Appeal Filed On: 03-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANUJ KISHNADWALLA
• Assessee Lawyers: MANJUNATHA SWAMY
• Section: 143(3); 142(1); 14A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI SHAILENDRA KUMAR YADAV , JM AND SHRI RAJESH KUMAR, AM ./ I.T.A. NO. 4045 /MUM/ 201 4 ( / ASSESSMENT YEAR : 20 11 - 12 ) TEJASKIRAN PHARMACHEM INDUSTRIES PVT LTD. FP 145, RAM MANDIR ROAD, VILE PARLE (E), MUMBAI - 400057 / VS. DY.COMMISSIONER OF INCOME TAX, CIRCLE 8(3), MUMBAI . ./ PAN : AAACT1461B / ASSESSEE BY SHRI ANUJ KISHNADWALLA / ASSESSEE BY SHRI MANJUNATHA SWAMY / DATE OF HEARING : 16 . 6. 2016 / DATE OF PRONOUNCEMENT : 22. 6. 2016 / O R D E R PER RAJESH KUMAR, A. M: THIS IS AN APPEAL FILED BY THE ASSESSEE AND IT IS DIRECTED AGAINST THE ORDER DATED 28.4.2014 PASSED BY LD.CIT(A) - 18 , MUMBAI , AND IT RELATES TO THE ASSESSMENT YEAR 20 11 - 12 . 2. THE COMMON ISSUE IN ALL THE GROUNDS OF APPEAL IS AGAINST THE PART CONFIRMATION OF ORDER OF THE AO BY THE LD.CIT(A) ON DISALLOWANCE U/S 14A BY IGNORING THE FACT THAT T HE AS S E SS EE HAS TOTALLY DISALLOWED IN ITS ENTIRETY THE EXPENSES CLAIMED IN THE PROFIT AND LOSS ACCOUNT SUO - MOT T O AND THERE WERE NO 2 5222 /MUM/ 201 3 ELEMENT FOR EXPENSES DIRECT OR INDIRE CT ON TO WHICH THE PROVISIONS OF SECTION 14A R.W.RULE 8D OF T HE INCOME TAX RULE, 1962 COULD BE APPLIED. 3 . THE FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE FILED RETURN OF INCOME ON 28.9.2011 DECLARING TOTAL INCOME AT RS.1,51,24,342/ - . THE RET URN OF INCOME WAS PROCESSED UNDER SECTION 143(1) AND THEREAFTER THE CASE OF ASSESSEE WAS SELECTED FOR SCRUTINY AND STATUTORY NOTICES UNDER SECTION 143(2) DATED 10.9.2012 AND 142(1) DATED 16.9.2013 WERE DULY ISSUED AND SERVED ON THE ASSESSEE . DURING THE C OURSE OF ASSESSMENT PROCEEDING, THE AO FOUND THAT THE ASSESSEE EARNED TAX FREE DIVIDEND INCOME AMOUNTING TO RS.28,73,98,458/ - FROM THE INVESTMENT S AMOUNTING RS.1,27,00,11,256/ - (INVESTMENT IN SHARES AND BONDS) AT THE YEAR END. HOWEVER , THE ASSESSEE DISA LLOWED ONLY RS.3,29,580 / - U/S 14A OF THE ACT. FINALLY, THE ASSESSMENT UNDER SECTION 143(3) WAS FRAMED BY THE AO VIDE ORDER DATED 31.10.2013 BY ASSESSING THE TOTAL INCOME AT RS.2,07,67,330/ - BY MAKING DISALLOWANCE U/S 14A TO THE TUNE OF RS.56,41,322/ - . AGGRIEVED BY THE ORDER OF AO , THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) , WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE PARTLY ALLOWED THE APPEAL OF THE ASSESSEE BY DIRECTING THE AO TO EXCLUDE WHILE COMPUTING THE DISALLOWANCE U/S 1 4A R.W.R 8D INVESTMENTS IN RURAL ELECTRIFICATION CORPORATION LIMITED BONDS RS.71,00,000/ - AND IN BIRLA SUN LIFE EMP RS.28,22,24,658/ - . THE ASSESSEE 3 5222 /MUM/ 201 3 CHALLENGED THE OR D E R OF T HE LD . CIT(A) BEFORE THE T RIBUNAL AN D HENCE THIS APPEAL IS BEFORE US. 4 . THE LD.COUNSEL VEHEMENTLY SUBMITTED BEFORE US THAT THE ASSESSEE SUO MOT T O DISALLOWED A SUM OF RS.3,29,580/ - WHILE FILING THE RETURN OF INCOME WHICH WERE ONLY EXPENSES CHARGED TO PROFIT AND LOSS ACCOUNT. THE LD. AR DREW OUR ATTENTION TO THE PAGES 3 AND 6 OF THE ASSESSEES PAPER BOOK WHICH COMPRISED OF PROFIT AND LOSS ACCOUNT AND SCHEDULE - L QUA DETAILS OF OTHER EXPENSES. THE LD. COUNSEL WHILE DRAWING OUR ATTENTION TO THE PAGE 3 OF THE PAPER BOOK POINTED OUT THAT THE ASSESSEE HAS NOT CHARGED ANY EXPENSES TO T HE PROFIT AND LOSS ACCOUNT OTHER THAN RS.3,29,580/ - UNDER SCHEDULE - L WHICH WERE DISALLOWED SUO - MO T T O WHILE COMPUTING THE TAXABLE INCOME OF THE ASSESSEE. 5 . THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE DISALLOWANCE U/S 14A COULD NOT BE EXCEED THE AC TUAL AMOUNT OF EXPENS ES CHARGED TO THE PROFIT AND LOSS ACCOUNT AND THEREFORE THE APPLICATION OF PROVISIONS OF SECTION 14A IS WITHOUT APPLICATION OF MIND AND WITHOUT REFERRING TO BOOKS OF ACCOUNTS OF THE ASSESSEE IS BAD IN LAW AND BE DELETED. 6 . THE LD.D R, ON THE OTHER HAND, SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 4 5222 /MUM/ 201 3 7 . WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS PLACED ON RECORD. WE FIND FROM THE COPY OF COMPUTATION OF TOTAL INCOME AT PAGE 1 OF THE PAPER BOOK FILED BY THE ASSESS EE THAT THE ASSESSEE HAS SUO MOT T O DISALLOWED A SUM OF RS.3,29,580/ - WHICH IS THE TOTAL AMOUNT OF EXPENSES CHARGED TO THE PROFIT AND LOSS ACCOUNT UNDER THE HEAD OTHER EXPENSES . THE DETAILS WHEREOF IS FILED AT PAGE 6 OF THE PAPER BOOK. WE FIND MERIT IN THE SUBMISSIONS OF THE ASSESSEE THAT THE DISALLOWANCE U/S 14A CANNOT EXCEED THE ACTUAL AMOUNT OF EXPENSES CHARGED TO THE PROFIT AND LOSS ACCOUNT. FROM THE PERUSAL OF THE PAGE 3 OF THE PAPER BOOK , WHICH IS A COPY OF PROFIT AND LOSS ACCOUNT FOR THE YEAR END ED ON 31.3.2011 , WE FIND TH A T THE ONLY EXPENSE S DE BITED BY THE ASSESSEE IN THE PROFIT AND LOSS ACCOUNT UNDER HEAD OTHER EXPENSES AS DETAILED IN SCHEDULE - L , IS RS.3,29,580/ - WHICH WAS DISALLOWED BY THE ASSESSEE SUO MOT TO THEREFORE THERE IS NO SCOPE FOR A NY FURTHER DISALLOWANCE U/S 14A OF T HE ACT. THE DISALLOWANCE U/S 14A H A S TO BE WORKED OUT BY THE AO REFERRING TO THE B OOKS OF ACCOUNT OF THE ASSESSEE AND NOT TO INVOKE THE SAID PROVISION BLINDLY WITHOUT EXAMINING THE BOOKS OF ACCOUNT OF THE ASSESSEE . WE , THEREFORE, SET ASIDE THE ORDER OF LD. CIT(A) BY DIRECTING THE AO TO DELETE THE ADDITION AS MADE UNDER SECTION 14A OF THE ACT. 5 5222 /MUM/ 201 3 8 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 .6. 2016. S D SD ( SHAILENDRA KUMAR YADAV ) (RAJESH KUMAR) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 22 .6.2016 SR.PS:SRL: / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, T RUE COPY / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI