BARODA INDUSTRIES P. LTD, MUMBAI V. ITO 3(1)(2), MUMBAI

ITA 4213/MUM/2012

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9095 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 08-01-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 15-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PREMANAND J
• Assessee Lawyers: M A GOHEL
• Section: 14A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE S/SHRI I.P. BANSAL, (JM) AND B.R.BASKARAN (AM) . . , . . , ./I.T.A. NO.4213/MUM/2012 ( / ASSESSMENT YEAR : 2008-09) BARODA INDUSTRIES PRIVATE LIMITED, 2 ND FLOOR, BAJAJ BHAVAN. 226, JAMNALAL BAJAJ MARG, NARIMAN POINT, MUMBAI-400021 / VS. INCOME TAX OFFICER 3(1)(2), AAYAKAR BHAVAN, M K ROAD, MUMBAI-400020. ( / APPELLANT) .. ( ! / RESPONDENT) ./ '# ./PAN/GIR NO. :AAACB2428A $ / ASSESSEE BY: SHRI M A GOHEL ! % $ / REVENUE BY:: SHRI PREMANAND J & ' % () / DATE OF HEARING : 8.1.2015 *+ % () /DATE OF PRONOUNCEMENT : 8.1.2015 / O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER DATED 20.12.2011 PASSED BY THE LD. CIT(A)-5, MUMBAI AND I T RELATES TO THE ASSESSMENT YEAR 2008-09. 2. THE APPEAL FILED BY THE ASSESSEE IS BARRED BY L IMITATION BY 81 DAYS. THE ASSESSEE HAS MOVED A PETITION REQUESTING THE BENCH TO CONDONE THE DELAY. WE HAVE ALSO HEARD THE LD. DR ON THIS PRELIMINARY ISSU E. HAVING REGARD TO THE SUBMISSIONS MADE IN THE AFFIDAVIT, WE CONDONE THE D ELAY AND ADMIT THE APPEAL FOR HEARING. 3. THE ONLY ISSUE CONSISTED IN THE APPEAL RELATES TO DISALLOWANCE MADE U/S 14A OF THE ACT. ITA NO.4213/M/2012 2 4. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD . THE IMPUGNED DISALLOWANCE MADE BY THE AO RELATES TO DISALLOWANCE OF 0.05% OF THE ADMINISTRATIVE EXPENSES AS PER THE PROVISIONS OF RU LE 8D R.W. SECTION 14A OF THE ACT. WHILE FILING THE RETURN OF INCOME, THE ASSESS EE DID NOT MAKE ANY DISALLOWANCE U/S 14A OF THE ACT EVEN THOUGH IT HAD RECEIVED RS.8.32 CRORES AD DIVIDEND INCOME FROM SHARES AND MUTUAL FUNDS. DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WORKED OUT THE DISALLOWAN CE OUT OF GENERAL AND ADMINISTRATIVE EXPENSES AT RS.3,15,118/- AND REQUE STED THE AO TO MAKE DISALLOWANCE ON THE ABOVE SAID AMOUNT U/S 14A. HOW EVER, COMPUTATION MADE BY THE ASSESSEE WAS NOT IN ACCORDANCE WITH RULE 8D OF THE INCOME TAX RULES, 1962. ACCORDINGLY, THE AO COMPUTED THE DISALLOWANC E AS PER PROVISIONS OF RULE 8D AT RS.8,53,822/-. THE LD. CIT(A) ALSO CONFIRMED THE SAID DISALLOWANCE. AGGRIEVED, THE ASSESSEE FILED THE APPEAL BEFORE US. . 5. AT THE TIME OF HEARING, THE LD. COUNSEL INVITED OUR ATTENTION TO THE SCHEDULE-IV OF THE ANNUAL REPORT AND SUBMITTED THAT THE ASSESSEE HAS INVESTED MOSTLY IN THE SHARES OF SUBSIDIARY AND GROUP COMPAN IES AND THEY ARE ALL PASSIVE INVESTMENTS MADE WITH THE STRATEGIC BUSINESS PURPOS E OF HOLDING CONTROLLING INTEREST. ACCORDINGLY HE SUBMITTED THAT THE IMPUGN ED INVESTMENTS HAVE NOT BEEN MADE FOR THE PURPOSES OF EARNING DIVIDEND INCOME. THE LD. COUNSEL SUBMITTED THAT OUT OF THE INVESTMENT OF RS.20.01 CRORES, THE INVESTMENT IN MUTUAL FUNDS UNITS WAS ONLY RS.58 LAKHS AND REMAINING INVESTMEN T HAVE BEEN MADE IN THE SHARES/DEBENTURES OF SUBSIDIARY AND GROUP COMPANIES . THE LD. COUNSEL SUBMITTED THAT THE ASSESSEE BELONG TO A WELL KNOWN GROUP OF BAJAJ GROUP. THE LD. COUNSEL PLACED RELIANCE ON THE FOLLOWING CA SE LAWS TO SUBMIT THAT THE DISALLOWANCE U/S 14A WAS NOT REQUIRED TO BE MADE IF THE PRELIMINARY OBJECTIVE OF INVESTMENT WAS HOLDING CONTROLLING STAKE IN GROUP C ONCERN AND NOT FOR EARNING DIVIDEND FROM INVESTMENT. A) M/S JM FINANCIAL LIMITED V/S ADCIT IN ITA NO.452 1/MUM/2012 (AY-2009-10) ORDER DATED 26.3.2014; B) GARWARE WALL ROPES LTD V/S ADDL. CIT (2014) 65 SOT 86 6. THE LD. DR, ON THE CONTRARY, PLACED RELIANCE ON THE DECISION OF LD. CIT(A). 7. WE NOTICE THAT THE ASSESSEE HAS RAISED THE ISSUE OF STRATEGIC INVESTMENT IN SUBSIDIARY AND GROUP COMPANIES FOR THE FIRST TIM E BEFORE US. WE ALSO NOTICE ITA NO.4213/M/2012 3 THAT THE CONTENTION OF THE ASSESSEE IS SUPPORTED BY THE TWO TRIBUNAL DECISIONS REFERRED (SUPRA). THE CLAIM OF THE ASSESSEE IS THAT THE COMPANIES IN WHICH THE INVESTMENT HAVE BEEN MADE ARE SUBSIDIARY AND GROUP COMPANIES. HOWEVER, WE ARE OF THE VIEW THAT THE SAID CLAIM REQUIRES VERIFI CATION AT THE END OF THE AO. FURTHER, WE ARE OF THE VIEW THAT THE FRESH CONTENTI ON PUT FORTH BY THE LD A.R ALSO NEEDS TO BE EXAMINED AT THE END OF THE ASSESSING OF FICER. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD. CIT(A) ON THIS ISSUE AND RES TORE THE MATTER TO THE FILE OF THE AO WITH A DIRECTION TO EXAMINE THE CLAIM OF THE ASS ESSEE AFRESH AND TAKE APPROPRIATE DECISION IN ACCORDANCE WITH LAW. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 8TH JAN, 2015 . *+ & , - . 8TH JAN, 2015 + % /' 0 SD SD ( . . /I.P. BANSAL ) ( . . ,/ B.R. BASKARAN ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER & ' MUMBAI: 8TH JAN,2015. . . ./ SRL , SR. PS ! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. ! / THE RESPONDENT. 3. & 3( ( ) / THE CIT(A)- CONCERNED 4. & 3( / CIT CONCERNED 5. 6. 45/ (6 , ) 6 , & ' / DR, ITAT, MUMBAI CONCERNED /7 8' / GUARD FILE. 9 & / BY ORDER, TRUE COPY : ' (ASSTT. REGISTRAR) ) 6 , & ' /ITAT, MUMBAI