VAKKASH CAPITAL COMPANY LIMITED , MUMBAI V. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-14(3)(1), MUMBAI

ITA 4918/MUM/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 2632 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-03-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2011-2012
• Appeal Filed On: 14-07-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJIV GUBGOTRA LD
• Assessee Lawyers: DINKLE HARIA LD
• Keywords: Earning of tax free income
• Section: 143(3); 14A

Judgement Text

ITA NO.4918/MUM/2017 VAKKASH CAPITAL CO. LTD. ASSESSMENT YEAR :2011-12 1 IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI , ' ' ' ' , % % % % BEFORE HONBLE SHRI AMARJIT SINGH, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.4918/MUM/2017 ( & & & & '& '& '& '& / ASSESSMENT YEAR: 2011-12) VAKKASH CAPITAL CO. LTD. 141, MITTAL TOWER C-WING, NARIMAN POINT MUMBAI-400 021. / VS. DY. CIT, CIRCLE 14(3)(1) ROOM NO.307, 3 RD FLOOR AAYKAR BHAVAN, M.K. ROAD MUMBAI-400 009. ( ./ ./PAN/GIR NO. AACCV-0990-R ( (* /APPELLANT ) : ( +,(* / RESPONDENT ) (* - / APPELLANT BY : MS. DINKLE HARIA- LD. AR ( +,(* / RESPONDENT ) BY : RAJIV GUBGOTRA - LD.DR - / / DATE OF HEARING : 28/02/2019 ' - / / DATE OF PRONOUNCEMENT : 08/03/2019 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2011-12 CONTEST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-22, ITA NO.4918/MUM/2017 VAKKASH CAPITAL CO. LTD. ASSESSMENT YEAR :2011-12 2 MUMBAI, [CIT(A)], APPEAL NO. CIT(A)-22/IT/51/2014-15 DATED 04/04/2017 QUA CONFIRMATION OF CERTAIN DISALLOWANCE U/S 14A. 2.1 THE ASSESSMENT FOR IMPUGNED AY WAS FRAMED BY LD . DEPUTY COMMISSIONER OF INCOME TAX-10(1), MUMBAI [AO] U/S. 143(3) ON 07/03/2014 WHEREIN THE INCOME OF THE ASSESSEE WAS D ETERMINED AT RS.280.98 LACS AFTER DISALLOWANCE U/S 14A FOR RS.9. 29 LACS AS AGAINST RETURNED INCOME OF RS.271.68 LACS E-FILED BY THE AS SESSEE ON 10/09/2011. THE ASSESSEE BEING RESIDENT CORPORATE ENTITY IS STATED TO BE ENGAGED IN TRADING & CONSULTANCY. THE DISALLOWANCE MADE BY LD. AO U/R 8D(2)(III) ON ACCOUNT OF ADMINISTRATIVE EXPENSES IS THE SOLE SUBJECT MATTER OF PRESENT APPEAL BEFORE US. 2.2 DURING ASSESSMENT PROCEEDINGS, IT TRANSPIRED TH AT THE ASSESSEE EARNED EXEMPT DIVIDEND INCOME OF RS.3.87 LACS BUT D ID NOT OFFER ANY SUO-MOTO DISALLOWANCE AGAINST THE SAME. THE ASSESSEE SIMPLY SUBMITTED THAT NO EXPENDITURE WAS INCURRED TO EARN THE EXEMPT INCOME AND THEREFORE, NO DISALLOWANCE WAS TO BE MADE. HOWE VER, NOT CONVINCED, LD. AO WORKED OUT EXPENSE DISALLOWANCE U /R 8D(2)(III) FOR RS.1.05 LACS, BEING 0.5% OF AVERAGE INVESTMENTS. THE LD. FIRST APPELLATE AUTHORITY, WHILE CONFIRMING THE SAME, DIRECTED LD. AO TO EXCLUDE THE INVESTMENTS MADE IN ART & SCULPTORS WHICH REDUCED THE DISALLOWANCE TO RS1.02 LACS AS EVIDENT FROM ORDER GIVING EFFECT DAT ED 22/06/2017 . AGGRIEVED, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 3. THE LD. AR, MS. DINKLE HARIA, PLEADED FOR DELETION OF DISALLOWANCE ON THE GROUND THAT LD. AO FAILED TO RECORD ANY SATI SFACTION BEFORE PROCEEDING TO APPLY RULE 8D. THE ATTENTION HAS BEEN DRAWN TO THE ITA NO.4918/MUM/2017 VAKKASH CAPITAL CO. LTD. ASSESSMENT YEAR :2011-12 3 FINANCIAL STATEMENTS TO SUBMIT THAT THERE WAS ONLY ONE CHANGE IN THE INVESTMENTS DURING THE YEAR AND THE DIVIDEND WAS DI RECTLY RECEIVED IN THE BANK ACCOUNT AND THEREFORE, DISALLOWANCE WAS NOT JU STIFIED. ON THE OTHER HAND, LD. DR SUPPORTED THE STAND OF LD. AO. 4. AFTER DUE CONSIDERATION, WE FIND THAT THE ASSESS EE HAS NOT MADE ANY SUO-MOTO DISALLOWANCE AGAINST EXEMPT INCOME AND THEREFORE, T HE PLEA THAT THE LD. AO FAILED TO RECORD ANY SATISFACT ION AS TO ASSESSEES COMPUTATION HOLD NO WATER. THE ASSESSEE MERELY SUBM ITTED THAT NO EXPENDITURE WAS INCURRED TO EARN THE INCOME WHEREAS LD. AO OPINED THAT SOME MINIMUM EXPENDITURE WAS ALWAYS NECESSARY TO EARN ANY INCOME, WHICH IS GENERALLY TRUE TO SOME EXTENT. IT IS ALSO UNDISPUTED FACT THAT FRESH INVESTMENT HAS BEEN MADE BY THE ASSESSEE DURING IMPUGNED AY AND THEREFORE, TO SAY THAT NO EXPENDITURE WAS IN CURRED, IS NOT CONVINCING. AT THE SAME TIME, THE SAID FACT ALSO SU PPORTS THE SUBMISSIONS THAT ADDITION TO THE EXTENT OF RS.1.02 LACS WAS ALSO NOT JUSTIFIED. THEREFORE, KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES, WE RESTRICT THE IMPUGNED DISALLOWANCE TO RS.10,000/- A ND DELETE THE BALANCE DISALLOWANCE. THE APPEAL STANDS PARTLY ALLOWED. IT IS MADE CLEAR THAT THE DECISION HAS BEEN RENDERED ON THE FACTUAL MATRIX OF THE CASE BASED ON ASSESSEES FINANCIALS ONLY. 5. THE APPEAL STANDS PARTLY ALLOWED IN TERMS OF OUR ABOVE ORDER. ORDER PRONOUNCED IN THE OPEN COURT ON 08 TH MARCH, 2019. SD/- SD/- (AMARJIT SINGH) ( MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER ITA NO.4918/MUM/2017 VAKKASH CAPITAL CO. LTD. ASSESSMENT YEAR :2011-12 4 MUMBAI; DATED : 08/03/2019. SR.PS:- JAISY VARGHESE / 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, / 1 (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.