FILMKRAFT PRODUCTIONS ( INDIA) P.LTD, MUMBAI V. ASST CIT 11(1), MUMBAI

ITA 4703/MUM/2012

• Counselvise Citation: 470319914 RSA 2012
• Duration Of Justice: 1 year(s) 1 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2008-2009
• Appeal Filed On: 13-07-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: C P PATHAK
• Assessee Lawyers: R PRASAD RAO
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

, , , , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F, MUMBAI .. , ! ' # $$, % ', & BEFORE SHRI R.S.SYAL, AM AND SHRI SANJAY GARG, JM ITA NO.4703/MUM/2012 : ASST.YEAR 2008-2009 M/S.FILMKRAFT PRODUCTIONS (INDIA) PVT.LTD B-27 COMMERCE CENTRE, 1 ST FLOOR OFF NEW LINK ROAD, ANDHERI (WEST) MUMBAI 400 053 PAN : AAACF3549E. THE ASSTT.COMMISSIONER OF INCOME-TAX CIRCLE 11(1) MUMBAI. ( '( / // / APPELLANT) * * * * / VS. ( +,'(/ RESPONDENT) '( - -- - . . . . / APPELLANT BY : SHRI R.PRASAD RAO +,'( - . - . - . - . / RESPONDENT BY : SHRI C.P.PATHAK * - /! / / / / DATE OF HEARING : 21.08.2013 012 - /! / DATE OF PRONOUNCEMENT : 23.08.2013 ' 3 ' 3 ' 3 ' 3 / / / / O R D E R PER R.S.SYAL (AM) : THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ON 14.06.2012 IN RELATION TO THE ASSESSMENT YEAR 2008-2009. 2. THE ONLY ISSUE IS AGAINST THE CONFIRMATION OF DI SALLOWANCE U/S 14A OF THE ACT. BRIEFLY STATED THE FACTS OF THE CAS E ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PRODUCTION A ND DISTRIBUTION OF MOTION PICTURES. CERTAIN EXEMPT DIVIDEND INCOME WAS EARNED BY THE ASSESSEE DURING THE YEAR IN QUESTION. ON BEING CALL ED UPON TO EXPLAIN AS TO WHY NO DISALLOWANCE WAS OFFERED, THE ASSESSEE STATED THAT NO EXPENDITURE WAS INCURRED TO EARN THE EXEMPT INCOME. THE ASSESSING ITA NO.4703/MUM/2012. M/S.FILMKRAFT PRODUCTIONS (INDIA) PVT.LTD. 2 OFFICER REJECTED THIS CONTENTION BY RELYING ON THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF GODREJ & BOYCE LTD. MFG. CO. V. DCIT [(2010) 328 ITR 81 (BOM.)] . HE, THEREFORE, COMPUTED THE DISALLOWANCE UNDER RULE 8D AT % OF TH E AVERAGE INVESTMENTS. SUCH DISALLOWANCES WORKED OUT AT ` 1.92 LAKH. NO RELIEF WAS ALLOWED IN THE FIRST APPEAL. 3. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD, IT IS FOUND AS AN ADMI TTED FACT THAT THE ASSESSEE EARNED EXEMPT DIVIDEND / INTEREST INCOME O F ` 1.18 LAKH. OUT OF THE DETAILS OF CERTAIN EXPENSES NOTED BY THE LEA RNED CIT(A), IT IS OBSERVED THAT THERE IS AN EXPENDITURE OF DEMAT CHAR GES OF ` 18,584. APART FROM THAT THERE ARE OTHER EXPENSES ALSO INCUR RED AND CLAIMED BY THE ASSESSEE. THERE CAN BE NO DISPUTE THAT THE DEMA T CHARGES ARE DIRECTLY AND WHOLLY IN RELATION TO THE SHARES FETCH ING EXEMPT DIVIDEND INCOME. THE LEARNED AR WAS FAIR ENOUGH TO ACCEPT TH AT DEMAT CHARGES OF ` 18,584 WERE NOT DISALLOWED BY THE ASSESSEE DUE TO INADVERTENCE. IT IS SEEN FROM THE DISALLOWANCES MA DE UNDER RULE 8D THAT THE ASSESSING OFFICER HAS RESTRICTED IT ONLY T O % OF AVERAGE INVESTMENT WHICH IS THE THIRD LIMB OR CLAUSE (III) OF RULE 8D(2). WHEREAS THE CLAUSE (I) DEALS WITH THE AMOUNT OF EXPE NDITURE DIRECTLY RELATING TO INCOME WHICH IS FORMING PART OF TOTAL I NCOME, THE CLAUSE (II) OF RULE 8D(2) PROVIDES FOR DISALLOWANCE OF INT EREST EXPENDITURE AND CLAUSE (III) DEALS WITH DISALLOWANCE AT % OF AVERAGE OF THE VALUE OF INVESTMENT TOWARDS OTHER EXPENSES. IN OUR CONSIDERED OPINION, THE ASSESSING OFFICER WAS MORE THAN JUSTIF IED IN RESTRICTING ITA NO.4703/MUM/2012. M/S.FILMKRAFT PRODUCTIONS (INDIA) PVT.LTD. 3 THE DISALLOWANCE TO ONLY CLAUSE (III) OF RULE 8D WH EN IT IS AMPLY CLEAR THAT THAT DEMAT CHARGES OF ` 18,584 DIRECTLY FALL IN CLAUSE (I) OF RULE 8D(2), WHICH SHOULD HAVE BEEN IN ADDITION TO DISALL OWANCE UNDER CLAUSE (III) OF RULE 8D(2). IN VIEW OF THESE FACTS, WE ARE OF THE CONSIDERED OPINION THAT NO FURTHER RELIEF IS CALLED FOR IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. WE, THEREFORE, U PHOLD THE IMPUGNED ORDER ON THIS ISSUE. 4. 4 /5 6 !4# - #/ 78 IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED ON THIS 23 RD DAY OF AUGUST, 2013. ' 3 - 012 9'*5 1 - $ SD/- SD/- (SANJAY GARG) (R.S.SYAL) % ' % ' % ' % ' / JUDICIAL MEMBER ! ' ! ' ! ' ! ' / ACCOUNTANT MEMBER MUMBAI ; 9'* DATED : 23 RD AUGUST, 2013. DEVDAS* ' 3 - +%/:; < ;2/ ' 3 - +%/:; < ;2/ ' 3 - +%/:; < ;2/ ' 3 - +%/:; < ;2// COPY OF THE ORDER FORWARDED TO : 1. '( / THE APPELLANT 2. +,'( / THE RESPONDENT. 3. = () / THE CIT, MUMBAI. 4. = / CIT(A) 3, MUMBAI. 5. ;@$ +%/%* , , / DR, ITAT, MUMBAI 6. $A / GUARD FILE. ' 3* ' 3* ' 3* ' 3* / BY ORDER, ,;/ +%/ //TRUE COPY// B B B B/ // /7 # 7 # 7 # 7 # ( DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI