UNI DERITEND LTD., MUMBAI V. DCIT 1(3)(2), MUMBAI

ITA 4851/MUM/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1827 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-11-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2013-2014
• Appeal Filed On: 12-07-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: SANJAY R PARIKH
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI RAM LAL NEGI , JM ITA NO. 4851 / MUM/20 1 7 ( ASSESSMENT YEAR : 2013 - 14 ) M/S. UNI DERITEND LTD., 3 RD FLOOR, LIBERTY BUILDING SIR VITHALDAS THACKERSEY MARG, NEW MAR INE LINES MUMBAI 400 020 VS. DCIT 1(3)(2) ROOM NO.540, 5 TH FLOOR AAYAKAR BHAVAN M.K.ROAD, MUMBAI PAN/GIR NO. AAACU0028K ( APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY SHRI SANJAY R. PARIKH REVENUE BY SHRI SAURABH KUMAR RAI DATE OF HEARING 08 / 11 / 201 8 DATE OF PRONOUNCEMENT 09 / 11 /201 8 / O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - 3, MUMBAI DATED 22/04/2017 FOR A.Y.2013 - 14 IN THE MATTER OF ORDER PASSED U/S.143(3) OF THE I T ACT. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. 3. ONLY GRIEVANCE OF ASSESSEE RELATES TO ADDITION OF RS.4,1 3,2 1 5/ - MADE U/S 14A OF THE I.T, ACT, 1961 R.W.R 8D(2)(III) OF THE I T RULES 1962. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A.O. HAS OBSERVED THAT THE ASSESSEE HAS MADE INVESTMENTS IN EQUITY SHARES AND MUTUAL FUNDS. ITA NO. 4851/MUM/2017 M/S. UNI DERITEND LIMITED 2 THE ASSESSEE HAS EARNED RS. 53,32,981 / - TOWARDS DIVIDEND INCOME AND SUO - MOTO DISALLOWED AN AMOUNT OF RS.5,76,787/ - U/S 14A OF THE I T ACT. AO HAS FURTHER OBSERVED TH AT THE ASSESSEE HAS COMPUTED THE DISALLOWANCE ONLY WITH REFERENCE TO THOSE INVESTMENTS FROM WHICH IT HAS EARNED EXEMPT INCOME. THE A.O. HAS RELIED ON THE CBDT CIRCULAR NO.5/2O 1 4 DATED 11.02.2014 CLARIFYING THAT SECTION 14A CAN BE INVOKED EVEN IN THOSE CASE S WHERE NO EXEMPT INCOME HAS BEEN EARNED BY THE ASSESSEE . ACCORDINGLY, THE ASSESSING OFFICER HAS RECOMPUTED THE DISALLOWANCE U/S 14A OF THE I. T. ACT, 1961 R.W.R 8D(2)(III) OF THE I T RULES 1962 TO THE EXTENT OF RS.9,90,O36/ - . THEREFORE, HE MADE DISALLOWAN CE OF RS . 4,13,215/ - AFTER GIVING CREDIT FOR THE DISALLOWANCE OF RS.5,76,787/ - U/S 14A OF THE I. T. ACT, 1961 R.W.R. 8D(2)(III) OF THE I.T. RULES 1962 , AS OFFERED BY THE ASSESSEE . 4. BY THE IMPUGNED ORDER CIT(A) CONFIRMED THE ACTION OF THE AO AGAINST WHICH ASSESSEE IS IN FURTHER APPEAL BEFORE US. 5. IT WAS ARGUED BY LEARNED AR THAT IN TERMS OF ITAT SPECIAL BENCH ORDER IN THE CASE OF VIREET INVESTMENT (P) LTD., 165 ITD 27 (DEL) (SB) , ONLY INVESTMENT YIELDING EXEMPT INCOME IS TO BE TAKEN INTO ACCOUNT WHILE COM PUTING DISALLOWANCE UNDER RULE 8D. AS PER LEARNED AR, AO HAS NOT EXCLUDED THE INVESTMENT WHICH DID NOT YIELD ANY EXEMPT INCOME. 6. WE HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. ITAT SPECIAL BENCH IN CA SE OF VIREET INVESTMENT 165 ITD 127 HAS HELD THAT WHILE COMPUTING DISALLOWANCE ITA NO. 4851/MUM/2017 M/S. UNI DERITEND LIMITED 3 U/S.14A R.W. RULE 8D, ONLY INVESTMENT WHICH YIELDED EXEMPT INCOME DURING THE YEAR HAS TO BE CONSIDERED AND THE INVESTMENT WHICH DID NOT YIELD EXEMPT INCOME SHOULD BE EXCLUDED. R ESPECTFULLY, FOLLOWING THE ORDER OF THE SPECIAL BENCH, WE RESTORE THE MATTER BACK TO THE FILE OF THE AO FOR RECOMPUTIG DISALLOWANCE AFTER EXCLUDING INVESTMENT YIELDING ANY EXEMPT INCOME. WE DIRECT ACCORDINGLY. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS AL LOWED IN PART FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 09 / 11 /201 8 SD/ - ( RAM LAL NEGI ) SD/ - (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DAT ED 09 / 11 /201 8 KARUNA SR. PS COPY OF THE ORDER FORWARDED TO : BY O RDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//