STAR CHEMICALS (BOMBAY) PVT LTD., MUMBAI V. DCIT-3(3), MUMBAI

ITA 4448/MUM/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 7112 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-08-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2014-2015
• Appeal Filed On: 28-06-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: T S KHALSA L D
• Assessee Lawyers: ANIL THANAWAD LD
• Keywords: Earning of tax free income; Rule 8D
• Section: 143(3); 14A

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI , , BEFORE HONBLE SHRI VIKAS AWASTHY, JM AND HONBLE SHRI MANO J KUMAR AGGARWAL, AM (HEARING THROUGH VIDEO CONFERENCING MODE) ./ I.T.A. NO. 4448 /MUM/2019 ( / ASSESSMENT YEAR : 20 14 - 15 ) STAR CHEMICAL S (BOMBAY) PVT. LTD. 55/58, JOLLY MAKER CHAMBERS NO. 2, NARIMAN POINT, MUMBAI - 400 021 / VS. DC IT - 3(3 ) 6 TH FLOOR, AAY KAR BHAVAN, MUMBAI - 400 020 ./ ./ PAN/GIR NO . A AACS - 7485 - E ( / APPELLANT ) : ( / RESPONDENT ) ASSESSEE BY : SHRI ANIL THANAWAD LD. AR REVENUE BY : SHRI T. S. KHALSA LD. SR. DR / DATE OF HEARING : 16/08 /2021 / DATE OF PRONOUNCEMENT : 25/08/2021 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE SOLE GRIEVANCE OF THE ASSESSEE IN CAPTIONED APPEAL FOR ASSESSMENT YEAR (AY) 2014 - 15 IS DISALLOWANCE U/S 14A. THE AS SESSMENT WAS FRAMED BY LD. ASSESSING OFFICER (AO) U/S 143(3) ON 30/06/2016 WHEREAS IMPUGNED ORDER WAS PASSED BY LEARNED COMMI SSIONER OF INCOME - TAX (APPEALS) - 9 , MUMBAI [CIT (A) ] ON 18/06 /20 19 AGAINST WHICH THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 2 2. THE DISALLOWANCE U/S 14A STEM FROM THE FACT THAT THE ASSESSEE EARNED EXEMPT INCOME OF RS.77.09 LACS WHICH WAS IN THE SHAPE OF INTEREST AND DIVIDEND. THE ASSESSEE ALSO RECEIVED SHARE OF PROFIT OF RS.391.80 LACS FROM A PARTNERSHIP CONCERN WHICH WAS ALSO CLAIMED EXEMPT. IN THE COMPUTATION OF INCOME, THE ASSESSEE OFFERED SUO - MOTO DISALLOWANCE OF RS.11.02 LACS AS CERTIFIED BY TAX AUDITORS. THOUGH THE ASSESSEE JUSTIFIED THE DISALLOWANCE, HOWEVER, NOT CONVINCED, LD. AO APPLIED RULE 8D AND COMPUTED AGGREGATE DISALLOWAN CE OF RS.30.31 LACS WHICH WAS NOTHING BUT INDIRECT EXPENSE DISALLOWANCE U/R 8D(2)(III), BEING 0.5% OF AVERAGE INVESTMENTS. ACCORDINGLY, THE DIFFERENTIAL OF RS.19.28 LACS WAS FURTHER ADDED TO THE INCOME OF THE ASSESSEE WHILE COMPUTING INCOME UNDER NORMAL PR OVISIONS AS WELL AS WHILE COMPUTING BOOK - PROFITS U/S 115JB. 3. UPON FURTHER APPEAL, LD. CIT(A), INTER - ALIA, RELYING UPON THE DECISION OF SPECIAL BENCH OF DELHI TRIBUNAL IN ACIT V/S VIREET INVESTMEN T (P) LTD. (1 65 ITD 27 ), DIRECTED LD. AO TO EXAMINE THE WOR KING OF THE ASSESSEE AND COMPUTE THE DISALLOWANCE BY CONSIDERING ONLY THOSE INVESTMENTS WHICH HAVE YIELDED EXEMPT INCOME DURING THE YEAR. THE LD. CIT(A) ALSO DIRECTED LD. AO TO EXCLUDE THE DISALLOWANCE FROM BOOK - PROFITS U/S 115JB. STILL AGGRIEVED, THE ASSE SSEE IS IN FURTHER APPEAL BEFORE US. 4. UPON DUE CONSIDERATION OF MATERIAL FACTS, WE FIND THAT THE FINDINGS RENDERED IN THE IMPUGNED ORDER ARE IN ACCORDANCE WITH SETTLED LEGAL POSITION. THE LD. CIT(A) HAS ALREADY DIRECTED FOR EXCLUSION OF THOSE INVESTMENTS WHICH HAVE NOT YIELDED ANY EXEMPT INCOME DURING THE YEAR. THE LD. AO HAS ALSO BEEN DIRECTED TO EXAMINE THE WORKING OF THE ASSESSEE AFTER PROVIDING OPPORTUNITY OF HEARING. I T IS ALSO EVIDENT THAT LD. 3 CIT(A) HAS ALREADY DIRECTED LD. AO TO EXCLUDE THE ADDITI ONAL DISALLOWANCE WHILE COMPUTING BOOK - PROFITS U/S 115JB. THEREFORE, THE ORDER IS IN ACCORDANCE WITH LAW WHICH DO ES NOT REQUIRE ANY INTERFERENCE ON OUR PART. N O FURTHER DIRECTIONS ARE REQUIRED IN THE MATTER. 5. THE APPEAL STANDS DISMISSED. ORDER PRONOUNCE D ON 25 TH AUGUST, 2021. SD/ - SD/ - ( VIKAS AWASTHY ) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 25/08/2021 SR.PS, DHANANJAY / 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 FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMB AI.