DCIT 10(2), MUMBAI V. GOYAM STOCK BROKING P.LTD, MUMBAI

ITA 5081/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88268 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-02-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 06-01-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 05-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY KUMAR BORA
• Assessee Lawyers: RA JEEV WAGLAY
• Section: 14A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE HONBLE S/SHRI VIJAY PAL RAO (JM) , AND B.R.BASKARAN (AM) , . . , ./I.T.A. NO.5081/MUM/2013 ( / ASSESSMENT YEAR : 2009-10) DY.COMMISSIONER OF INCOME TAX 10(2), ROOM NO.432, 4TH FLOOR, AAYAKAR BHAVAN,M.K.ROAD, MUMBAI-400020 / VS. M/S GOYAM STOCK BROKING PVT.LTD, 1-41, GURUPRASAD, GADORIA NAGAR, GHATKOPAR EAST, MUMBAI-400077 ( / APPELLANT) .. ( / RESPONDENT) ./ ./PAN/GIR NO. :AAACF4291M / REVENUE BY: SHRI VIJAY KUMAR BORA ! /ASSESSEE BY : SHRI RAJEEV WAGLAY ' # ! $% / DATE OF HEARING : 6.1.2015 &' ! $% /DATE OF PRONOUNCEMENT : 13.2.2015 / O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE REVENUE HAS FILED THIS APPEAL CHALLENGING THE O RDER DATED 22.4.2013 PASSED BY LD CIT(A)-21, MUMBAI CANCELLING THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT FOR THE ASSESSMENT YEAR 20 09-10. 2. THE LD D.R SUBMITTED THAT THE ASSESSEE HAD RECEI VED DIVIDEND INCOME AND CLAIMED THE SAME AS EXEMPT. HOWEVER THE ASSESSEE HAD DISALLOWED A SUM OF RS.81,600/- ONLY U/S 14A OF THE ACT, BUT THE SAME WAS NOT IN ACCORDANCE WITH SECTION 14A READ WITH RULE 8 D. HENCE THE ASSESSING OFFICER COMPUTED THE DISALLOWANCE AS PER RULE 8D AT RS.39,27,054/- AND ITA NO.5081/M/2013 2 ACCORDINGLY COMPLETED THE ASSESSMENT. THE ASSESSEE ALSO ACCEPTED THE SAME. LATER THE ASSESSING OFFICER LEVIED A PENALTY OF RS.12,13,459/- U/S 271(1)(C) OF THE ACT FOR FURNISHING INACCURATE PART ICULARS OF INCOME. THE LD D.R SUBMITTED THAT THE ASSESSEE IS WELL AWARE THAT THE PROVISIONS OF RULE 8D ARE APPLICABLE TO THE YEAR UNDER CONSIDERATION A ND HENCE NON- COMPLIANCE OF THE SAME WOULD LEAD TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. ACCORDINGLY HE CONTENDED THAT THE LD CIT (A) WAS NOT JUSTIFIED IN CANCELLING THE PENALTY. 3. ON THE CONTRARY, THE LD A.R SUBMITTED THAT THE ASSESSEE IS A TRADER IN STOCKS AND SHARES AND HENCE THE QUESTION AS TO W HETHER THE PROVISIONS OF RULE 8D R.W.S. 14A SHALL APPLY TO A TRADER OR NO T REMAINED A DEBATABLE ISSUE ON THE DATE WHEN THE ASSESSEE FILED ITS RETUR N OF INCOME. FURTHER THE CONSTITUTIONAL VALIDITY OF THE ABOVE SAID PROVI SIONS WERE ALSO CHALLENGED AT THAT POINT OF TIME BEFORE THE HONBLE BOMBAY HIG H COURT IN THE CASE OF GODREJ & BOYCE MANUFACTURING COMPANY LTD. HOWEVER, BY THE TIME THE ASSESSMENT WAS COMPLETED, THE HONBLE BOMBAY HIGH C OURT HAD CONFIRMED THE CONSTITUTIONAL VALIDITY AND HENCE THE ASSESSEE ACCEPTED THE ADDITION MADE BY THE AO. HE FURTHER SUBMITTED THAT THE AO HA S COMPUTED DISALLOWANCE ONLY UNDER RULE 8D(2)(II) AND RULE 8D( 2)(III), I.E., RELATING TO INDIRECT EXPENSES ONLY. ACCORDINGLY HE SUBMITTED T HAT THE LD CIT(A) WAS JUSTIFIED IN DELETING THE PENALTY BY PLACING RELIAN CE ON THE DECISION OF HONBLE SUPREME COURT RENDERED IN THE CASE OF RELIA NCE PETRO PRODUCTS ITA NO.5081/M/2013 3 (322 ITR 158). FURTHER HE SUBMITTED THAT THE PENAL TY SHALL ALSO NOT LIE, SINCE THE APPLICABILITY OF PROVISIONS OF SEC. 14A T O A SHARE TRADER REMAINS A DEBATABLE ISSUE. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RECORD. WE NOTICE THAT THE ASSESSEE HAS FURNISHED AN EXPLANATI ON FOR NOT COMPUTING THE DISALLOWANCE IN TERMS OF RULE 8D R.W.S.14A OF T HE ACT AND THE SAID EXPLANATION HAS NOT BEEN FOUND TO BE FALSE. FURTHER , THE CLAIM OF EXPENDITURE BECAME UNSUSTAINABLE DUE TO THE LEGAL P ROVISIONS AND HENCE THE LD CIT(A) WAS JUSTIFIED IN PLACING RELIANCE ON THE DECISION OF HONBLE SUPREME COURT RENDERED IN THE CASE OF RELIANCE PETR O PRODUCTS (SUPRA), WHEREIN IT HAS BEEN HELD THAT THE CLAIM, WHICH IS N OT SUSTAINABLE IN LAW, WOULD NOT LEAD TO A CASE OF FURNISHING OF INACCURAT E PARTICULARS OF INCOME. ACCORDINGLY, WE UPHOLD THE ORDER OF LD CIT(A). 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED . THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 13TH FEB, 2015 . &' ' () * + 13TH FEB, 2015 ' ! ,# - SD SD ( / VIJAY PAL RAO ) ( . . ,/ B.R. BASKARAN ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER ( ' # MUMBAI: 13TH FEB,2015. . . ./ SRL , SR. PS ITA NO.5081/M/2013 4 !'#$ %$&' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ' 0$ ( ) / THE CIT(A)- CONCERNED 4. ' 0$ / CIT CONCERNED 5. 6. 1, $ 2 , % 2 , ( ' # / DR, ITAT, MUMBAI CONCERNED ,3 4# / GUARD FILE. 5 ' / BY ORDER, TRUE COPY 6 (ASSTT. REGISTRAR) % 2 , ( ' # /ITAT, MUMBAI