MANEKCHAND PANCHAND TRADING INVESTMENT COMPANY PVT LTD., Mumbai V. DCIT 5 (2)(2), Mumbai

ITA 4645/MUM/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 6310 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-01-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 09-07-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SANJAY J SETHI
• Assessee Lawyers: SHEFALI GARG
• Keywords: Earning of tax free income; Rule 8D
• Section: 14A; 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (VIRTUAL COURT) SMC BENCH, MUMBAI BEFORE SHRI C.N. PRAS AD, HON'BLE JUDICIAL MEMBER AND IT A. NO. 4645 /MUM/201 9 (A.Y: 201 4 - 15) MANEKCHAND PANACHAND TRADING INVESTMENT COMPANY PVT. LTD., HIRA BAUG, KASTURBA CHOWK C.P. TANK ROAD , CHARNI ROAD (E) MUMBAI 400004 PA N: AAACM4147P V. DY . COMMISSIONER OF INCOME TAX RANGE 5 (2) (2) ROOM NO. 571, AAYAKAR BHAVAN, M.K. ROAD MUMBAI 400 020 (APPELLANT) (RESPONDENT) ASSESSEE BY : MS. SHEFALI GARG DEPARTMENT BY : SHRI SANJAY J. SETHI DATE OF HEARING : 19.01.2021 DATE OF PRONOUNCEMENT : 19.01.2021 O R D E R PER C.N. PRASAD (JM) 1. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. COMMISSI ONER OF INCOME - TAX (APPEALS) - 10 , MUMBAI [HEREINAFTER FOR SHORT 'LD. CIT(A)] DATED 10.05.2019 FOR THE A.Y. 201 4 - 15 IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN DISALLOWING .4,34,417/ - U/S. 14A OF THE ACT. 2 ITA.NO. 4645/MUM/2019 (A.Y: 2014 - 15) MANEKCHAND PANACHAND TRADING INVESTMENT COMPANY PVT. LTD., 2. BRIEFLY STATED THE FACTS ARE, THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT COMPUTED THE DISALLOWANCE U/S. 14A R.W. RULE 8D OF I.T. RULES AND MADE DISALLOWANCE OF INTEREST UNDER RULE 8D(2)(II) AND EXPENSES BEING 0.5% OF AVERAGE INVESTMENTS UNDER RU LE 8D(2)(III) OF I.T. RULES. LD.CIT(A) SUSTAINED THE ACTION OF THE ASSESSING OFFICER. AGAINST THIS ORDER ASSESSEE IS IN APPEAL BEFORE US IN CONFIRM ING THE DISALLOWANCE MADE U/S. 14A OF THE ACT. 3. LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT DURING THE ASSESSM ENT YEAR UNDER CONSIDERATION ASSESSEE RECEIVED EXEMPT INCOME OF .59,573/ - AND THE ASSESSING OFFICER HAS MADE DISALLOWANCE OF .4,34,417/ - U/S. 14A R.W. RULE 8D OF I.T. RULES. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE DISALLOWANCE U/S. 14A R.W. R ULE 8D CANNOT EXCEED EXEMPT INCOME AND THEREFORE DIRECTION BE GIVEN TO ASSESSING OFFICER ACCORDINGLY. LD. COUNSEL FOR THE ASSESSEE RELIED ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF PCIT V. STATE BANK OF PATIALA (99 TAXMANN.COM 286) WHEREI N IT WAS HELD THAT DISALLOWANCE U/S. 14A OF THE ACT CANNOT EXCEED EXEMPT INCOME. 4. LD.DR VEHEMENTLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 3 ITA.NO. 4645/MUM/2019 (A.Y: 2014 - 15) MANEKCHAND PANACHAND TRADING INVESTMENT COMPANY PVT. LTD., 5. HEARD BOTH SIDES , PERUSED THE ORDERS OF THE AUTHORITIES BELOW . I N VIEW OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF PCIT V. STATE BANK OF PATIALA (SUPRA), I HOLD THAT THE DISALLOWANCE U/S. 14A SHALL NOT EXCEED THE EXEMPT INCOME , ACCORDINGLY THE ASSESSING OFFICER IS DIRECTED TO RESTRICT THE DISALLOWANCE U/S. 14A TO THE EXEMPT INCOME RECEIVED BY THE ASSESSEE DURING THE YEAR UNDER APPEAL . 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE VIRTUAL COURT ON 19.01.2021. SD/ - (C.N. PRASAD) JUDICIAL MEMBER MUMBAI / DATED 19/01/2021 GIRIDHAR , S R. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// BY ORDER (ASSTT. REGISTRAR) ITAT, MUM