ACIT RG 11(1), MUMBAI V. CRATIVE EYE LTD, MUMBAI

ITA 4193/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49238 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: misc
• Appeal Filed On: 24-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V S SAMUEL
• Keywords: Earning of tax free income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C, MUMBAI BEFORE SHRI R.V. EASWAR (PRESIDENT) AND SHRI B. RAMAKOTAIAH (A.M.) ITA NO.4193/MUM/2010 ASSESSMENT YEAR : 2007-08 A.C.I.T. RANGE 11(1) RM. NO.439, AAYAKAR BHAVAN, M.K. MARG, MUMBAI 400 020. VS. M/S. CREATIVE EYE LTD. PLOT NO.12-A, KAILASH PLAZA, OFF. LAXMI INDUSTRIAL ESTATE, NEW LINK RD., ANDHERI (W), MUMBAI 400 053. PAN : AAACC2700Q (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI V.S. SAMUEL, SR. DR RESPONDENT BY : SHRI VIMAL PUNMIYA O R D E R PER B. RAMAKOTAIAH, A.M. THIS IS AN APPEAL BY THE REVENUE AGAINST THE ORDER OF THE CIT(A) III, MUMBAI DATED 25.03.2010 RELATING TO ASSESSMENT YEAR 2007-08. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUND, WHI CH IS MATERIAL FOR CONSIDERATION ON THE FACTS AND IN THE CIRCUMSTANCES IN THE CASE A ND IN LAW, THE LEARNED CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO ALLOW DEDUCTION U/S.14A IGNORI NG THE FACT THAT THE ASSESSEE EARNED EXEMPTED INCOME AND INCURRED DIRECT AND INDIRECT EXPENSES TO EARN T HE SAID EXEMPTED INCOME. 3. THE ASSESSEE COMPANY IS IN THE BUSINESS OF PRODUCTION AND MARKETING OF TV SERIALS, AD-FILMS, FEATURE FILMS, C OMMERCIAL TIMES ETC. BRIEFLY STATED, THE ASSESSING OFFICER INVOKED RULE 8D AND WORKED OUT THE DISALLOWANCE U/S.14A TO THE EXTENT OF ` 15,54,388/- VIDE PARA 4.4. OF THE ASST ORDER. THE ASSESSEE SUBMITTED THAT INVESTMENT S ARE MADE FROM ITS OWN FUNDS ARISING OUT OF IPO IN THE YEAR 2000-01 AN D THE MUTUAL FUND ITA NO.4193/MUM/2008 ASSESSMENT YEAR : 2007-08 2 INVESTMENTS. FURTHER, IT WAS SUBMITTED THAT THE I NTEREST AMOUNT PAID AND CLAIMED IN THE P & L A/C WAS ON ACCOUNT OF OVER DRAFT TAKEN FOR THE PROJECT AND CAR LOAN, WHICH CAN NOT BE CONSIDERED F OR DISALLOWANCE U/S.14A. IT WAS FURTHER CONTENDED THAT RULE 8D IS N OT APPLICABLE FOR THE IMPUGNED ASSESSMENT YEAR AND RELIED ON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. WOLFORT SHARE AND STOCKBROKERS PVT. LTD. (2009) 310 ITR 421 (BOM). IT WAS FURTHER SUBMITTED THAT THE ASSESSMENT IN EARLIER YEAR WAS C OMPLETED U/S.143(3) AND NO ADDITION WAS MADE IN THOSE YEARS. ON THE B ASIS OF FACTS ON RECORD THE CIT(A) HAS GIVEN THE FOLLOWING FINDING S: 4.1.1 FACTS AND MATERIAL ON RECORD ARE CONSIDERED . THERE IS NO DISCUSSION OF THE FACTS OF THE CASE IN THE ASSES SMENT ORDER. SUBMISSIONS MADE, IF ANY, BY THE APPELLANT DURING A SSESSMENT PROCEEDINGS HAVE ALSO NOT BEEN RECORDED NOR WHETHER THESE WERE CONSIDERED BY THE ASSESSING OFFICER. THE ASSESSMEN T ORDER DOES NOT INDICATE THE REASON WHY THE ASSESSING OFFICER CHOSE TO INVOKE THE PROVISIONS OF RULE 8D. THE ASSESSMENT ORDER ALSO DOES NOT INDICATE THE SATISFACTION OF THE ASSESSING OFFICER IN TERMS OF SECTION 14A(2) VIS A VIS THE CORRECTNESS OF THE CLAIM OF THE ASSES SEE HAVING REGARD TO THE ACCOUNTS OF THE ASSESSEE. THERE IS NO REASO N RECORDED IN THE ASSESSMENT ORDER FOR THE DISALLOWANCE MADE. THEREF ORE, THERE IS NO REASON TO SUSTAIN THE DISALLOWANCE MADE. MOREOVER, DURING APPELLATE PROCEEDINGS, APPELLANT HAS FILED DETAILS OF THE INVESTMENT HAVING BEEN MADE IN EARLIER YEARS AND THA INTEREST BEARING FUNDS WERE NOT UTILIZED FOR MAKING INVESTMENTS WHICH YIEL DED EXEMPT INCOME. ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE DISALLOWANCE MADE IS DELETED. 4. BEFORE US THE LEARNED DR COULD NOT CONTROVERT TH E FACTUAL FINDINGS GIVEN BY THE CIT(A) WHEREAS LEARNED COUNSEL SUBMITT ED THAT THE APPLICATION OF RULE 8D DOES NOT ARISE AND INTEREST CLAIMED AND DEBITED TO P & L A/C. WAS WHOLLY FOR THE PURPOSE OF BUSINESS A ND NOT FOR INVESTMENTS WHICH WERE MADE DURING THE 2000-01. C ONSIDERING THE FACTS ON RECORD, WE ARE OF THE OPINION THAT THERE I S NO INFIRMITY IN THE FINDING GIVEN BY THE CIT(A). THE ASSESSING OFFICER HAS NOT MADE OUT ANY ITA NO.4193/MUM/2008 ASSESSMENT YEAR : 2007-08 3 CASE FOR INVOKING SEC.14A AND ON THE GIVEN FACTS, W E AGREE WITH THE FINDINGS OF THE CIT(A). ACCORDINGLY, WE CONFIRM T HE ORDER OF THE CIT(A) AND DISMISS THE GROUNDS RAISED BY THE REVENUE. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED ON THIS 30 TH DAY OF JUNE, 2011. SD/ (R.V. EASWAR) PRESIDENT SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER MUMBAI, DATED 30 TH JUNE 2011. JANHAVI COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS)- , MUM BAI 4. COMMISSIONER OF INCOME TAX, CITY- , MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH , MUMBA I //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI