GAURAV OMPRAKASH GOENKA, MUMBAI V. ACIT CEN CIR 14, MUMBAI

ITA 4946/MUM/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9953 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 28-09-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIDYADHARDR
• Keywords: Earning of tax free income
• Section: 143(3); 14A

Judgement Text

, INCOME-TAX APPELLATE TRIBUNAL -GBENCH MUMBAI , . . , BEFORE S/SH.RAJENDRA,ACCOUNTANT MEMBER AND C. N. PRASAD,JUDICIAL MEMBER ./I.T.A./4946/MUM/2015, /ASSESSMENT YEAR: 2011-12 MR. GAURAV OMPRAKASH GOENKA 317/318, PARVATI INDL. ESTATE, SUNMILL COMPOUND,LOWER PAREL (W) MUMBAI-400 013. PAN:ABIPG 3139 P VS. ACIT, CC-14 (RESTRUCTURED DESIGNATION CENTRAL CIRCLE-2(4) PRATISHTHA BHAVAN, 8TH FLOOR MUMBAI. ( /APPELLANT) ( / RESPONDENT) / REVENUE BY: SHRI VIDYADHAR-DR /ASSESSEE BY: SHRI HIRO RAI -ADVOCATE / DATE OF HEARING: 13/07/2017 / DATE OF PRONOUNCEMENT: 13/07/2017 , / PER RAJENDRA A.M. - CHALLENGING THE ORDER DATED 6/8/2015 OF CIT(A)-48, MUMBAI THE ASSESSEE HAS FILED THE PRESENT APPEAL.ASSESSEE AN INDIVIDUAL ,A COMMISSION AGENT,FILED HIS RETURN OF INCOME ON 30/ 09/2011DECLARING TOTAL INCOME OF RS.66.14 LAKHS.THE ASSESSING OFFICER (AO)COMPLETED THE ASSESSMENT U/S. 143(3) OF THE ACT,ON 30/09/2013,DET ERMINING THE INCOME AT RS.66.14 LAKHS. 2. EFFECTIVE GROUND OF APPEAL IS ABOUT DISALLOWANCE MA DE U/S.14A R.W. RULE 8D OF THE INCOME TAX RULES,1962(RULES).AMOUNTING TO RS.22.81 LAKHS.D URING THE ASSESSMENT PROCEEDINGS THE AO FOUND THAT THE ASSESSEE HAD EARNED DIVIDEND INCO ME OF RS.4.36 LAKHS AND HAD CLAIMED EXEMPTION U/S.10(34) OF THE ACT FOR THE SAME.THE AO DISALLOWED RS.22.81 LAKHS (RS.21,00, 532/- UNDER THE HEAD EXPENDITURE DIRECTLY RELATED T O INCOME NOT FORMING PART OF TOTAL INCOME + RS.1.81 LAKHS @ 0.05% OF THE AVERAGE VALUE OF THE INVESTMENT.) 3. AGGRIEVED BY THE ORDER OF THE AO THE ASSESSEE PREF ERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA) AND MADE SUBMISSIONS BEFO RE HIM. HE RELIED UPON THE CASE OF TWINKLE ENVIRO TECH LTD. ONE OF THE GROUP CONCERN C ASES. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE AN D THE ASSESSMENT ORDER THE FAA HELD THAT DURING THE YEAR UNDER APPEAL THERE WAS AN INCREASE IN LOAN TO RS.11.55 CORES AS AGAINST RS. 6.35 CRORES OF EARLIER YEAR,THAT THERE WAS INCREASE D INVESTMENT IN SHARES ALSO TO RS.4.57 CRORES, THAT HE HAD PAID INTEREST OF RS.73.31 LAKHS , THAT THE INTEREST BEARING FUNDS WERE UTILISED FOR MAKING INVESTMENT IN SHARES, THAT HE HAD MADE I NVESTMENT FOR ACQUIRING THE STRATEGIC INTEREST IN SISTER CONCERN AND INVESTMENT IN LISTED COMPANIES OR IN MUTUAL FUNDS, THAT THE VALUE OF INVESTMENT MADE FOR ACQUIRING STRATEGIC ADVANCE HAD TO BE EXCLUDED WHILE COMPLETING DISALLOWANCE U/S.14A, THAT THE ASSESSEE HAD NOT BRO UGHT ON RECORD TO SHOW INVESTMENT WAS FOR GROWTH OF BUSINESS, THAT THERE WAS NO NEED TO INTER FERE WITH THE ORDER OF THE AO . 4946/M/15(11-12) GAURA V OMPRAKASH GOENKA 2 4. BEFORE US,THE AUTHORISED REPRESENTATIVE (AR) ARGUED THAT THE DISALLOWANCE U/S.14A CANNOT EXCEED THE EXEMPT INCOME,THAT THE AO HAD MADE DISAL LOWANCE OF 22.81 LAKHS WHEREAS THE ASSESSEE HAD CLAIMED EXEMPT INCOME OF 4.36 LAKHS ON LY.HE RELIED UPON THE CASE OF EMPIRE PACKAGE (P.) LTD. (286 CTR 457); TACPRO SYSTEMS LIM ITED (96CCH0087CHE.HC) AND DAGA GLOBAL CHEMICALS P.LTD.(46ITR(TRIB)70) . THE DEPART MENTAL REPRESENTATIVE (DR) SUPPORTED THE ORDER OF THE AO. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE ASSESSING OFFICER HAD MADE THE ADDITION FOLLOWING T HE DECISION OF SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF DAGA CAPITAL MANAGEMENT P. LTD., THAT THE FAA HAD UPHELD THE ORDER OF THE AO,THAT THE ORDER OF THE TRIBUNAL WAS REVERS ED BY THE HONBLE BOMBAY HIGH COURT, THAT THE ASSESSEE HAD CLAIMED EXEMPTION OF RS.4.36 LAKHS. IN OUR OPINION THE DISALLOWANCE E SHOULD NOT EXCEED THE CLAIM OF EXEMPT INCOME.THE P ROVISIONS OF SEC.14A R.W.R8D OF THE RULES WERE INTRODUCED TO DISCOURAGE THE ASSESSEES W HO USED TO CLAIM DOUBLE DEDUCTIONS I.E. CLAIMING EXEMPTION U/S.10 AND SIMULTANEOUSLY CLAIMI NG EXPENDITURE AGAINST SUCH EXEMPT INCOME.AS PER ESTABLISHED TAXATION PRINCIPLES DOUBL E DEDUCTIONS/DOUBLE TAXATION ARE NOT ALLOWABLE.WE FIND THAT,IN THE CASES RELIED UPON BY THE ASSESS,IT HAS BEEN HELD THAT DISALLOWANCE U/S. 14A SHOULD BE RESTRICTED TO THE I NCOME NOT FORMING PART OF TOTAL INCOME. THEREFORE, WE DIERECT THE AO TO RESTRICT THE DISALL OWANCE TO THE EXTENT OF 4.36 LAKHS ONLY FOR WHICH THE ASSESSEE HAD NOT OBJECTED TO DURING THE C OURSE OF HEARING BEFORE US. ACCORDINGLY, EFFECTIVE GOA IS DECIDED IN FAVOUR OF THE ASSESSEE, IN PART AS A RESULT AP PEAL FILED BY ASSESSEE STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH , JULY, 2017. 13 , , 2017 SD/- SD/- ( . . / C.N.PRASAD ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; /DATED : 13.07.2017. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR A BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.