PRIYA LTD, MUMBAI V. DCIT CIR 2(3), MUMBAI

ITA 5092/MUM/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0127 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 20-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Earning of tax free income
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH C, MU MBAI BEFORE SH. P.K. BANSAL VICE PRESIDENT AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO. 5092/MUM/2015 (ASSESSMENT YEAR- 2011-1 2) M/S PRIYA LTD. 4 TH FLOOR, KIMATRAI BUILDING, 77/79, K. K. ROAD, MARINE LINES, MUMBAI-400002 PAN: AAACP2210Q VS. DCIT-CIRCLE (2)(3), MUMBAI-400020 (APPELLANT) (RESPONDENT) ITA NO. 5283/MUM/2015 (ASSESSMENT YEAR- 2011-12) DCIT-CIRCLE (2)(3), MUMBAI-400020 VS. M/S PRIYA LTD. 4 TH FLOOR, KIMATRAI BUILDING, 77/79, K. K. ROAD, MARINE LINES, MUMBAI-400002 PAN: AAACP2210Q (APPELLANT) (RESPONDENT) ASSESSEE REPRESENTED BY : MS. SHRADDHA GOR (AR) REVENUE REPRESENTED BY : SHRI RAJAT MITTAL (AR) DATE OF HEARING : 09.08.2017 DATE OF ORDER : 29.08.2017 ORDER UNDER SECTION 254(1) OF INCOME-TAX ACT PER PAWAN SINGH JUDICIAL MEMBER ; 1. THESE CROSS APPEAL ARE DIRECTED AGAINST THE ORDER O F LD. COMMISSIONER OF INCOME-TAX (APPEALS)-5, (THE LD. CIT(A), MUMBAI DAT ED 21.08.2015 FOR ASSESSMENT YEAR (AY) 2011-12. 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE-COMPANY I S IN THE BUSINESS OF TRADING IN CHEMICALS AND DYES, INTERMEDIATES, DRUGS , ELECTRONICS AND ITA NO.5092 & 5283/M/2015- M/S PRIYA LTD . 2 COMPUTER PARTS, FILED ITS RETURN OF INCOME FOR REL EVANT AY ON 14.09.2011 DECLARING TOTAL INCOME OF RS. 3,18,71,810/-. THE AS SESSING OFFICER (AO) COMPLETED THE ASSESSMENT U/S 143(3) OF THE ACT ON 0 6.02.2014. THE AO WHILE PASSING THE ASSESSMENT ORDER BESIDES THE OTHE R ADDITIONS/DISALLOWANCE MADE THE DISALLOWANCE OF RS. 17,12,432/- U/S 14A OF THE ACT. ON APPEAL BEFORE THE LD. CIT(A), THE LD. CIT(A) DIRECTED THE AO TO RE-COMPUTE THE DISALLOWANCE U/S 14A IN ACCORDANCE WITH RULE 8D (2) (III) AFTER EXCLUDING THE LONG TERM INVESTMENT IN SUBSIDIARY/GROUP COMPAN IES. THUS, FURTHER AGGRIEVED BY THE ORDER OF LD. CIT(A), BOTH THE PART IES HAVE FILED APPEAL BEFORE THE TRIBUNAL. THE ASSESSEE HAS RAISED THE GR OUND OF APPEAL THAT THE ASSESSEE HAS NOT EARNED ANY EXEMPT INCOME DURING TH E YEAR AND THE PROVISIONS OF SECTION 14A ARE NOT APPLICABLE AND TH AT THE RESERVE AND CAPITAL FUNDS OF THE ASSESSEE ARE MORE THAN THE INVESTMENT MADE IN SUBSIDIARY COMPANY. HOWEVER, THE REVENUE HAS CHALLENGED THE OR DER OF LD. CIT(A) FOR DIRECTING TO RESTRICT THE DISALLOWANCE U/S 14A R.W. RULE 8D(2)(III) BY EXCLUDING THE LONG TERM INVESTMENT. 3. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVE (AR ) OF THE ASSESSEE AND LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR THE REVENU E AND PERUSED THE MATERIAL AVAILABLE ON RECORD. AT THE OUTSET OF THE PROCEEDING, THE LD. AR OF THE ASSESSEE ARGUED THAT THE GROUNDS OF APPEAL RAIS ED IN BOTH THE APPEALS ARE COVERED BY THE DECISION OF TRIBUNAL IN ASSESSEES O WN CASE FOR AY 2010-11. ITA NO.5092 & 5283/M/2015- M/S PRIYA LTD . 3 4. WE HAVE SEEN THAT THE SIMILAR GROUND OF APPEAL WAS RAISED BY ASSESSEE AS WELL AS REVENUE IN THE APPEAL FOR AY 2010-11. THE C O-ORDINATE BENCH O THE TRIBUNAL HELD THAT THE PROVISIONS OF SECTION 14 A CANNOT BE REVOKED. THE ASSESSEE HAS NO ANY DIVIDEND INCOME DURING THE RELE VANT AY. THE TRIBUNAL ALSO CONSIDERED THE SIMILAR DIRECTION FOR RESTRICTI NG THE DISALLOWANCE UNDER RULE 8D(2)(III) AFTER EXCLUDING THE LONG TERM CAPIT AL INVESTMENT AND DECIDED THE IDENTICAL GROUND OF APPEAL AGAINST THE REVENUE. 5. CONSIDERING THE DECISION OF CO-ORDINATE BENCH IN AS SESSEES OWN CASE, THE APPEAL OF THE ASSESSEE IS ALLOWED AND THE APPEAL FI LED BY REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH DAY OF AUGUST 2017. SD/- SD/- (P.K. BANSAL) (PAWAN SINGH) VICE-PRESIDENT JUDICIAL MEMBER MUMBAI; DATED 29/8/2017 S.K.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (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/