J. KUMAR SOFTWARE SYSTEMS (I) PVT. LTD., MUMBAI V. J.C.I.T.(OSD) CENTRAL CIRCLE 39, MUMBAI

ITA 5101/MUM/2012

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9104 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 24-07-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 09-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRITAM SINGH
• Assessee Lawyers: MAYUR SONANI
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

. , IN THE INCOME TAX APPELLATE TRIBUNAL SMC , BENCH MUMBAI , BEFORE SHRI R. K. GUPTA , JM ITA NO. 5101 / MUM/ 20 1 2 ( ASSESSMENT YEAR : 200 9 - 20 10 ) M/S J.KUMA R SOFTWARE SY S TEMS (I) PVT. LTD. , 16 - A, ANDHERI INDUSTRIAL ESTATE, VEERA DESAI ROAD, ANDHERI (W) , MUMBAI - 400 058. VS. JCIT (OSD) , CC - 39 , MUMBAI PAN/GIR NO. : A A BCJ 8239 J ( APPELLANT ) .. ( RESPONDENT ) /ASSESSEE BY : MR. MAYUR SONANI /REVENUE BY : MR. PRITAM SINGH DATE OF HEARING : 1 0 TH DEC . , 2012 DATE OF PRONOUNCEMENT : 1 4 TH DE C. , 2012 O R D E R THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 24 - 5 - 2012 OF LEANED CIT(A) - 41 , MUMBAI RELA TING TO THE ASSESSMENT YEAR 200 9 - 10 . 2 . THE ASSESSEE IS OBJECTING IN REGARD TO THE ACTION OF THE CIT(A) IN CONFIRMING THE ADDIT ION OF RS. 1,22,764/ - , DISALLOWED BY THE AO UNDER SECTION 14A R.W.RULE 8D . 3 . DURING THE ASSESSMENT PROCEEDING, THE AO NOTICED THAT THE ASSESSEE HAS SHOWN TOTAL EXPEN SES OF RS. 1,22,764/ - AND DIVIDEND INCOME OF RS. 33,00,000/ - HAS BEEN SHOWN BESIDES MISCELL ANEOUS ITA NO. 5101 /20 1 2 2 INCOME OF RS. 1, 0 9,000/ - OR ODD. THEREFORE, IN HIS VIEW PROVISION OF SECTION 14A ARE CLEARLY ATTRACTED. ACCORDINGLY, HE DISALLOWED THE ENTIRE EXPENDITURE OF RS. 1,22,764/ - AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. 4 . LEARNED CIT(A) ALSO CONF IRMED THE ACTION OF THE ASSESSING OFFICER. NOW, THE ASSESSEE IS IN APPEAL HERE BEFORE THE TRIBUNAL. 5 . AFTER CONSIDERING THE SUBMISSION S AND PERUSING THE OTHER MATERIAL ON RECORD, I FIND THAT THE ASSESSEE DESERVES TO SUCCEED IN ITS APPEAL . I NOTED THAT TH E NATURE OF EXPENDITURE ARE SUCH WHICH CANNOT BE SAID THAT THEY ARE ENTIRELY ATTRIBUTED TO EXEMPT INCOME. AUDITED FEES IS PAID OF RS. 25,000/ - , PROFESSIONAL CHARGES ARE OF RS. 2010/ - , PRELIMINARY EXPENSES ARE OF RS. 9,34,756/ - AND MAINTENANCE CHARGES IS OF RS . 998/ - TOTAL TO RS.1,22,764/ - . THE ASSESSEE IS A COMPANY, WHICH IS INCORPORATED ON 1 - 3 - 2007 AND VARIOUS EXPENSES ARE MANDATORY TO MAINTAIN THE COMPANY, THEREFORE, IT CANNOT BE SAID THAT THOSE EXPENSES ARE RELATED TO EARNING OF INCOME WHICH IS EXEMPT. AUDIT FEES, PROFESSIONAL FEES, AND PRELIMINARY EXPENSES, CANNOT BE TREATED FOR THE PURPOSE OF DISALLOWANCE UNDER SECTION 14A AS THEY HAVE NO CONNECTION WITH THE EARNING OF EXEMPT INCOME . SIMILARLY, MAINTENANCE CHARGES OF RS. 998/ - ARE ALSO OF SUCH NATURE WHICH C ANNOT BE SAID THAT THEY ARE INCURRED FOR EARNING OF DIVIDEND INCOME OR EXEMPT INCOME. THE DIVIDEND INCOME IS EARNED ONLY FROM SISTER CONCERN AND NO INVESTMENT HAS BEEN MADE IN SHARES OF THE SISTER CONCERN DURING THE ITA NO. 5101 /20 1 2 3 YEAR UNDER CONSIDERATION, THEREFORE, IT CANNOT BE SAID THAT ANY EXPENDITURE IS ATTRIBUTED TO EARNING OF DIVIDEND. ACCORDINGLY, I DELETE THE ENTIRE ADDITION. 6 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 1 4 TH DAY OF DEC. 2012. 2012 SD/ - ( ) ( R.K.GUPTA ) / JUDICIAL MEMBER MUMBAI ; DATED : 1 4 / 1 2 / 2012 . /PKM , PS COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) , MUMBAI. 4. / CIT 5. / DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// / BY ORDER, ( DY./ASSTT. REGISTRAR) / ITAT, MUMBAI