SVS SECURITIES P.LTD, MUMBAI V. DEPUTY COMMISSIONER OF INCOME TAX RANGE-4(2)(2), MUMBAI

ITA 4522/MUM/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5497 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2011-2012
• Appeal Filed On: 20-06-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: CH ARUN KUMAR SINGH LD
• Keywords: Earning of tax free income
• Section: 143(3); 14A

Judgement Text

ITA NOS.4522-23/MUM/2017 M/S. SVS SECURITIES PRIVATE LIMITED ASSESSMENT YEARS- 2011-11 & 2012-13 1 IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI , , BEFORE HONBLE SHRI PAWAN SINGH, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.4522/MUM/2017 ( / ASSESSMENT YEAR: 2011-12) M/S. SVS SECURITIES PVT LTD. 32, KHATAU BUILDING ALKESH DINESH MODI MARG FORT, MUMBAI 400 023 / VS. ASSISTANT COMMISSIONER OF INCOME-CIRCLE 4(2) R. NO. 642, AAYKAR BHAWAN M.K.ROAD, MUMBAI 400 020 ./ ./PAN/GIR NO. AABCS-5982-K ( /APPELLANT ) : ( / RESPONDENT ) & ./ I.T.A. NO.4523/MUM/2017 ( / ASSESSMENT YEAR: 2012-13) M/S. SVS SECURITIES PVT LTD. 32, KHATAU BUILDING ALKESH DINESH MODI MARG FORT, MUMBAI 400 023 / VS. ASSISTANT COMMISSIONER OF INCOME-CIRCLE 4(2) R. NO. 642, AAYKAR BHAWAN M.K.ROAD, MUMBAI 400 020 ./ ./PAN/GIR NO. AABCS-5982-K ( /APPELLANT ) : ( / RESPONDENT ) ASSESSEE BY : NONE REVENUE BY : CH. ARUN KUMAR SINGH- LD.DR !' / DATE OF HEARING : 28/01/2019 !' / DATE OF PRONOUNCEMENT : 05/02/2019 ITA NOS.4522-23/MUM/2017 M/S. SVS SECURITIES PRIVATE LIMITED ASSESSMENT YEARS- 2011-11 & 2012-13 2 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEALS BY ASSESSEE FOR ASSESSMENT YEA RS [AY] 2011- 12 & 2012-13 CONTEST SEPARATE ORDERS OF FIRST APPEL LATE AUTHORITY. SINCE, COMMON ISSUES ARE INVOLVED, BOTH THE APPEALS ARE BE ING DISPOSED-OFF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENC E AND BREVITY. NONE HAS APPEARED FOR ASSESSEE DESPITE NOTICE AND NO VAL ID ADJOURNMENT APPLICATION IS ON RECORD. LEFT WITH NO OPTION, WE P ROCEED TO ADJUDICATE THE SAME ON THE BASIS OF MATERIAL ON RECORD AND AFTER H EARING LD. DEPARTMENTAL REPRESENTATIVE [DR], CH. ARUN KUMAR SINGH, WHO SUPPORTED THE ORDERS OF LOWER AUTHORITIES. FIRST, W E TAKE UP ITA NO. 4522/MUM/2017 FOR AY 2011-12, WHEREIN THE ASSESSEE IS AGGRIEVED BY DISALLOWANCE U/S 14A. 2.1 THE ASSESSEE BEING RESIDENT CORPORATE ASSESSEE STATED TO BE ENGAGED AS SHARES & STOCK BROKER DURING IMPUGNED AY WAS ASSESSED IN SCRUTINY ASSESSMENT U/S 143(3) ON 20/01/2014 BY LD. ASSISTANT COMMISSIONER OF INCOME TAX-CIRCLE 4(2), MUMBAI [AO] WHEREIN THE INCOME OF THE ASSESSEE WAS DETERMINED AS RS.173.12 LACS AFTER SOLE DISALLOWANCE U/S 14A FOR RS.4.02 LACS AS AGAINST RE TURNED INCOME OF RS.169.10 LACS E-FILED BY THE ASSESSEE ON 29/09/201 1. 2.2 DURING ASSESSMENT PROCEEDINGS, IT TRANSPIRED TH AT THE ASSESSEE EARNED EXEMPT INCOME OF RS.7,04,418/- AND OFFERED SUO-MOTO DISALLOWANCE AGAINST THE SAME U/S 14A FOR RS.64,029 /-. HOWEVER, NOT CONVINCED, LD. AO APPLYING THE METHODOLOGY OF RULE 8D(2)(III), COMPUTED EXPENSE DISALLOWANCE @0.5% OF AVERAGE INVE STMENTS OF ITA NOS.4522-23/MUM/2017 M/S. SVS SECURITIES PRIVATE LIMITED ASSESSMENT YEARS- 2011-11 & 2012-13 3 RS.932.13 LACS WHICH WORKED OUT TO RS.4.66 LACS. AF TER ADJUSTING THE SUO-MOTO DISALLOWANCE OF RS.0.64 LACS AS OFFERED BY THE ASS ESSEE, THE NET DISALLOWANCE SO MADE WORKED OUT TO RS.4.02 LACS , WHICH WAS ADDED TO THE INCOME OF THE ASSESSEE. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITHO UT ANY SUCCESS BEFORE LD. COMMISSIONER OF INCOME TAX (APPEALS)-9, MUMBAI [CIT(A)], APPEAL NO. CIT(A)-9/CIR.4/314/2013-14 DATED 28/04/2 017 WHEREIN THE STAND OF LD. AO GOT CONFIRMED, AGAINST WHICH THE AS SESSEE IS IN FURTHER APPEAL BEFORE US. BEFORE FIRST APPELLATE AUTHORITY, THE MAIN ARGUMENT OF THE ASSESSEE REVOLVED AROUND THE FACT THAT LD. AO D ID NOT RECORD THE REQUISITE SATISFACTION AS ENVISAGED BY LAW BEFORE P ROCEEDING TO APPLY RULE 8D AND SECONDLY, THE INVESTMENTS IN THE SHAPE OF STOCK-IN-TRADE WERE REQUIRED TO BE EXCLUDED WHILE WORKING OUT THE DISALLOWANCE. 4.1 WE HAVE DELIBERATED UPON THE MATERIAL ON RECOR D AND THE ORDERS OF LOWER AUTHORITIES. THE UNDISPUTED POSITION THAT EME RGES IS THAT THE ASSESSEE HAS EARNED EXEMPT INCOME OF RS.7.04 LACS A ND OFFERED A SUO- MOTO DISALLOWANCE OF RS.0.64 LACS AGAINST THE SAME. THE LD. AO, DISREGARDING THE SAME, HAS COMPUTED THE SAME IN TER MS OF METHODOLOGY PRESCRIBED IN RULE 8D(2)(III), WHICH HAS RESULTED I NTO ADDITIONAL IMPUGNED DISALLOWANCE OF RS.4.02 LACS. 4.2 SO FAR AS THE APPLICABILITY OF PROVISIONS OF SE CTION 14A AND RULE 8D TO THE INVESTMENTS HELD AS STOCK-IN-TRADE IS CONCERNED, WE FIND THAT THE ISSUE IS NO LONGER RES INTEGRA IN VIEW OF THE RECENT JUDGMENT OF HONBLE APEX COURT RENDERED IN MAXOPP INVESTMENT LTD. VS CIT [12/02/2018 91 TAXMANN.COM 154] WHEREIN HONBLE COURT HAS APPROVED THE APPLICABILI TY OF DISALLOWANCE TO STOCK-IN-TRADE AS WELL. THEREFORE, THE ARGUMENTS ITA NOS.4522-23/MUM/2017 M/S. SVS SECURITIES PRIVATE LIMITED ASSESSMENT YEARS- 2011-11 & 2012-13 4 RAISED IN THIS REGARD HAVE RIGHTLY BEEN REJECTED BY THE LOWER AUTHORITIES AND THEREFORE, NO INTERFERENCE IS CALLED FOR IN THA T RESPECT. 4.3 SO FAR AS THE SATISFACTION OF LD. AO IS CONCERN ED, WE FIND THAT ALTHOUGH THE ASSESSEE HAS MADE SUO-MOTO DISALLOWANCE AGAINST THE EXEMPT INCOME, HOWEVER, THE JUSTIFICATION OF THE SA ME DO NOT EMANATE ANYWHERE FROM THE MATERIAL ON RECORD. IN OUR OPINIO N, THE FIRST ONUS WAS ON THE ASSESSEE TO DEMONSTRATE THAT SUO-MOTO DISALLOWANCE WAS REASONABLE AND FAIR UNDER THE CIRCUMSTANCES AND THE REAFTER, THE ONUS WAS ON LD. AO TO RECORD HIS SATISFACTION AS TO HOW THE DISALLOWANCE OFFERED WAS NOT FAIR HAVING REGARDS TO THE ACCOUNTS OF THE ASSESSEE. IN THE ABSENCE OF ANY JUSTIFICATION BY ASSESSEE, THIS PLEA ALSO COULD NOT BE ACCEPTED. 5. CONSIDERING THE OVERALL FACTUAL MATRIX, WE DO NO T FIND ANY REASON TO INTERFERE WITH THE IMPUGNED ORDER. THE APPEAL STAND S DISMISSED. ITA NO. 4523/MUM/2017, AY 2012-13 6. IN THIS AY, THE ASSESSEE HAS EARNED EXEMPT INCOM E OF RS.7.24 LACS AND OFFERED SUO-MOTO DISALLOWANCE OF RS.0.51 LACS AGAINST THE SAME. THE LD. AO, APPLYING RULE 8D, WORKED OUR AGGR EGATE DISALLOWANCE OF RS.6.61 LACS WHICH COMPRISED-OFF OF INTEREST DISALLOWANCE OF RS.1.75 LACS U/R 8D(2)(II) AND EXPE NSES DISALLOWANCE U/R 8D(2)(III) FOR RS.4.85 LACS. THE NET DISALLOWANCE T HUS WORKED OUT TO BE RS.6.09 LACS. THE ARGUMENTS AS WELL AS REASONING OF FIRST APPELLATE AUTHORITY IS MORE OR LESS ON THE SAME LINES. THEREF ORE, FACTS AND CIRCUMSTANCES BEING PARI-MATERIA THE SAME, WE DECLINE TO INTERFERE IN THE IMPUGNED ORDER. ACCORDINGLY, THE APPEAL STANDS DISM ISSED. ITA NOS.4522-23/MUM/2017 M/S. SVS SECURITIES PRIVATE LIMITED ASSESSMENT YEARS- 2011-11 & 2012-13 5 CONCLUSION 7. BOTH THE APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 05 TH FEBRUARY, 2019. SD/- SD/ - (PAWAN SINGH) (MAN OJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 05.02.2019 PS / K. RAVI KUMAR / 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, MUMBAI.