JSW POWER TRADING COMPANY LTD, MUMBAI V. ADDL CIT RG 5(2), MUMBAI

ITA 468/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8087 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-12-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 01-02-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AARJU GARODIA
• Keywords: Opportunity of being heard; Earning of tax free income
• Section: 5(2); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI N.K.PRADHAN, ACCOUNTANT MEMBER AND ITA N O. 468/MUM/2016 ( ASSESSMENT YEAR : 2011 12 ) M/S. JSW POWER TRADING COMPANY LTD., JSW CENTER, BKC BANDRA (E), MUMBAI 400 051 PAN: AABCJ5740L . APPELLANT V/S ADDL CIT RG 5(2) MUMBAI . RESPONDENT APPELLANT BY : SHR I GAURAV KABRA RESPONDENT BY : MS. AARJU GARODIA DATE OF HEARING 13/12/2017 DATE OF ORDER 15.12.2017 O R D E R PER SAKTIJIT DEY, J.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST ORDER DATED 30/10/2015 OF LD. COMMISSIONER OF INCOME TAX (APPEALS) 10, MUMBAI FOR THE A SSESSMENT Y EAR 2011 12. 2. IN GROUND NO.1 TO 4, ASSESSEE HAS CHALLENGED THE DISALLOWANCE MADE UNDER SECTION.14A R.W.R. 8D. 2 ITA NO.468/MUM/2016 M/S. JSW POWER TRADING COMPANY LTD., 3. BRIEFLY THE FACTS ARE , THE ASSESSEE A COMPANY IS ENGAGED IN THE BUSINESS OF TRADING IN POWER . F OR THE ASSESSMENT YEAR UNDER DIS PUTE A SSESSEE FILED ITS RETURN OF INCOME ON 28/09/ 2011 DECLARING TOTAL INCOME OF . 5,82,67,968/ . DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT IN THE RELEVANT PREVIOUS YEAR, ASSESSEE HAS RECEIVED EXEMPT INCOME BY WAY OF DIVIDEND OF . 6,65,36,433/ WHEREAS , THE ASSESSEE HAS DISA LLOWED .1,59,120/ UNDER SECTION.14A COMPRISING OF DMAT CHARGES OF . 5, 515/ AND AN AMOUNT OF .1,53,605/ BEING 1% OF VARIOUS OTHER EXPENDITURE S . THE ASSESSING OFFICER BEING OF THE VIEW THAT THE DISALLOWANCE MADE BY THE ASSESSEE IS ON ADHOC BASIS AND NOT IN TERMS OF RULE 8D PROCEEDED TO COMPUTE DISALLOWANCE IN TERMS OF RULE 8D WHICH WAS ULTIMATELY QUANTIFIED AT . 85,75,954/ . THE ASSESSEE HAVING ALREADY DISALLOWED . 1,59,120/ , THE ASSESSING OFFICER ADDED BACK AN AMOUNT OF . 84,13,834/ . THOUGH , THE ASSESSEE CHALLENGED THE DISALLOWANCE BEFORE THE FIRST APPELLATE AUTHORITY, HOWEVER, LD. FIRST APPELLATE AUTHORITY SUSTAINED THE DISALLOWANCE ON THE REASONING THAT THE ASSESSING OFFICER HAS MADE THE DISALLOWANCE CORRECTLY APPLYING THE PROVISIONS OF RULE 8D . 4. THE LD. AUTHORISED REPRESENTATIVE SUBMITTED BEFORE US THAT THE ASSESSEE HAS SUFFICIENT INTEREST FREE FUND AVAILABLE WITH IT TO MAKE THE INVESTMENT, THEREFORE, NO DISALLOWANCE OF INTEREST EXPENDITURE CAN BE 3 ITA NO.468/MUM/2016 M/S. JSW POWER TRADING COMPANY LTD., MADE. AS FAR AS DISALLOWANCE OF ADMINISTRATI VE EXPENDITURE IS CONCERNED , HE SUBMITTED THAT UNDER IDENTICAL FACTS AND CIRCUMSTANCES, THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y.2009 10 AND 2010 11 HAS RESTRICTED THE DISALLOWANCE TO 5% OF THE DIVIDEND INCOME. HE SUBMITTED , THOUGH , THE DECISIONS OF THE TRIBUNAL IN ASSESSEES OWN CASE WERE BROUGHT TO THE NOTICE OF THE FIRST APPELLATE AUTHORITY , HE HAS COMPLETELY IGNORED THEM AND SUSTAINED THE D ISALLOWANCE MADE BY THE ASSESSING OFFICER . 4 . THE LD. D EPARTMENTAL R EPRESENTATIVE RELIED U PON THE OBSERVATIONS OF THE FIRST APPELLATE AUTHORITY 5 . WE HAVE CONSIDERED RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. IT IS EVIDENT , THE ASSESSEE HAS COMPUTED DISALLOWANCE OF ADMINISTRATIVE EXPENSES AT 1% OF THE TOTAL EXPENDITURE INCURRED UNDER VARIOUS HEADS. THE ASSESSING OFFICER HAS REJECTED THE COMPUTATION OF THE ASSESSEE AND PROCEEDED TO COMPUTE DISALLOWANCE UNDER RULE 8D. HOWEVER, IT IS RELEVANT TO NOTE , IN ASSESSEES OWN CASE FOR A.Y.2009 10 AND 2010 11 IN ITA NO.964/MUM/2013 DATED 15/01/2 015 AND ITA NO.5506/MUM/2014 DATED 29/03/2016 RESPECTIVELY , THE TRIBUNAL HAS RESTRICTED THE DISALLOWANCE OF ADMINISTRATIVE EXPENSES TO 5% OF THE DIVIDEND INCOME EARNED. W HILE DOING SO, THE TRIBUNAL HAS OBSERVED THAT THE ASSESSEE HAD SUFFICIENT INTEREST FRE E FUND TO MAKE THE 4 ITA NO.468/MUM/2016 M/S. JSW POWER TRADING COMPANY LTD., INVESTMENT. FACTS ARE MORE OR LESS IDENTICAL IN THE IMPUGNED ASSESSMENT YEAR. THE BALANCE SHEET OF THE ASSESSEE REVEALS THAT IT HAS SUFFICIENT INTEREST FREE FUNDS AVAILABLE TO TAKE CARE OF THE INVESTMENT. IT IS ALSO A FACT THAT THOUGH TH E ORDERS OF THE TRIBUNAL IN ASSESSEES OWN CASE WERE SUBMITTED BEFORE THE FIRST APPELLATE AUTHORITY, HE HAS COMPLETELY IGNORED THEM WHICH CANNOT BE APPRECIATED. THEREFORE, IN ABSENCE OF ANY CONTRARY FACTS BROUGHT TO OUR NOTICE BY THE DEPARTMENT , FOLLOWING THE CONSISTENT VIEW OF THE TRIBUNAL IN ASSESSEES OWN CASE AS REFERRED TO ABOVE, WE DIRECT THE ASSESSING OFFICER TO COMPUTE THE DISALLOWANCE UNDER SECTION. 14A AT 5% OF THE DIVIDEND INCOME EARNED DURING THE YEAR AND MAKE ADDITION ACCORDINGLY AFTER ADJUSTIN G THE DISALLOWANCE ALREADY MADE BY THE ASSESSEE. GROUNDS RAISED ARE PARTLY ALLOWED. 6 . IN GROUND NO.5, THE ASSESSEE H AS CHALLENGED SHORT CREDIT OF TDS TO THE TUNE OF .5,50,124/ . THE LEARNED A UTHORIZED R EPRESENTATIVE SUBMITTED , WHILE COMPLETING THE ASSES SMENT, THE ASSESSING OFFICER HAS NOT CORRECTLY GIVEN CREDIT OF TDS AS PER 26AS. AS A RESULT, THE ASSESSEE WAS DENIED BENEFIT OF TDS AMOUNTING TO .5,50,124/ . HE SUBMITTED , THOUGH , A SPECIFIC GROUND ON THE ISSUE WAS RAISED BEFORE THE FIRST APPELLATE AUTHO RITY , BEING GROUND NO.3, HOWEVER, HE FAILED TO DECIDE IT. 5 ITA NO.468/MUM/2016 M/S. JSW POWER TRADING COMPANY LTD., 7 . THE LEARNED D EPARTMENTAL R EPRESENTATIVE SUBMITTED , THE FACTS CAN BE VERIFIED BY THE ASSESSING OFFICER. 8. HAVING CONSIDERED THE SUBMISSIONS OF T HE PARTIES, WE FIND THAT LD. COMMISSIONER (A PPEAL S ) HAS FAILED TO DECIDE THE GROUND RAISED BY THE ASSESSEE ON THIS ISSUE. HOWEVER, CONSIDERING THE FACT THAT THE ASSESSEES CLAIM REQUIRES FACTUAL VERIFICATION VIS A VIS THE TDS REFLECTED IN FORM 26AS, WE ARE INCLINED TO RESTORE THE ISSUE TO THE ASSESSING O FFICER FOR VERIFICATION AND GRANT OF TDS CREDIT TO THE ASSESSEE AFTER DUE OPPORTUNITY OF BEING HEARD. THIS GROUND IS ALLOWED FOR STATI STI CAL PURPOSES . 8 . IN THE RESULT ASSESSEES APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON SD/ - N.K. PRADHAN ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE . TRUE COPY BY ORDER 6 ITA NO.468/MUM/2016 M/S. JSW POWER TRADING COMPANY LTD., KARUNA SR. PRIVATE SECRETARY (DY./ASSTT. REGISTRAR) ITAT, MUMBAI