SHIVALIK VENTURES P. LTD, MUMBAI V. DCIT (OSD 1) CEN RG 7, MUMBAI

ITA 5136/MUM/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 3696 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Assessment Year: 2010-2011
• Appeal Filed On: 29-10-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIDISHA KALRA
• Assessee Lawyers: ANUJ KISHANADWALA
• Keywords: Opportunity of being heard; Earning of tax free income
• Section: 14A; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G , MUMBAI BEFORE SHRI R.C. SHARMA, HON'BLE ACCOUNTANT MEMBER AND SHRI C.N. PRASAD, HON'BLE JUDICIAL MEMBER ITA NO . 5136 /MUM/201 5 (A.Y: 2010 - 11 ) M/ S. SHIVALIK VENTURES PVT. LTD., PLOT NO. 756, STANEY FERNANDES WADI, D.S. BABREKAR MARG, DADAR (W), MUMBAI 400 028 PAN: AALCS 7683 R V . DCIT (OSD 1), CENTRAL RANGE 7, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400 020 (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI ANUJ KISHANADWALA DEPARTMENT BY : SHRI V IDISHA KALRA DATE OF HEARING : 30 .05.2018 DATE OF PRONOUNCEMENT : 08 .08 .2018 O R D E R PER C. N. PRASAD (JM) 1. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 52, MUMBAI DATED 17.08.2015 FOR THE ASSESSMENT YEAR 2010 - 11 . 2. ASSESSEE HAS RAISED THE FOLLOWING GROUNDS IN ITS APPEAL: - 1. THE LEARNED CIT(A) HAS ERRED IN LAW AND IN FACT IN CONFIRMING THE ADDITION OF .1,10,81,680/ - UNDER SECTION 14A OF THE INCOME TAX ACT. R.W.R 8D OF THE INCOME TAX RULES. 2 ITA NO.5136/MUM/2015 (A.Y: 2010 - 11) M/S. SHIVALIK VENTURES PVT. LTD ., 2. THE LEARNED CIT(A) HAS ERRED IN LAW AND IN FACT IN CONFIRMING THE ADDITION OF .53,39,377/ - ON ACCOUNT OF INCOME AS PER 26AS NOT ACCOUNTED IN THE BOOKS OF ACCOUNTS. 3. REGARDING DISALLOWANCE MADE U/S. 14A, BRIEFLY STATED FACTS ARE THAT, THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT DISALLOWED .11,44,161/ - UNDER RULE 8D ( 2 ) (II) AND .99,37,519/ - UNDER RULE 8D ( 2 ) (III) R.W.S. 14A OF THE ACT. ON APPEAL LD.CIT (A) SUSTAINED THE DISALLOWANCE. 4. BEFORE US , LD. COUNSEL FOR THE ASSESSEE IN SO FA R AS THE INTEREST DISALLOWANCE IS CONCERNED SUBMITTED THAT THE ASSESSEE HAS OWN FUNDS MORE THAN THE INVESTMENTS AND ONE TO ONE NEXUS WAS ALSO SHOWN TO THE LD.CIT(A). THEREFORE, PLACING RELIANCE ON THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. HDFC [366 ITR 505] SUBMITTED THAT NO INTEREST DISALLOWANCE IS REQUIRED TO BE MADE. HE ALSO FURTHER SUBMITTED THAT NET I NTEREST INCOME IS POSITIVE AN D T HEREFORE IN VIEW OF THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. JUBILIANT ENTERPRISES PVT. LTD . IN ITA.NO. 1512 OF 2014 DATED 28.02.2017 NO PART OF THE INTEREST IS LIABLE TO BE DISALLOWED U NDER RULE 8D(2) (II). 5. COMI NG TO THE DISALLOWANCE UNDER RULE 8D(2) (III) THE ONLY SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE IS THAT ONLY THOSE INVESTMENTS WHICH YIELD ED DIVIDEND INCOME SHOULD BE CONSIDERED FOR COMPUTING THE DISALLOWANCE. HE PLACED RELIANCE ON THE DECISION OF TH E 3 ITA NO.5136/MUM/2015 (A.Y: 2010 - 11) M/S. SHIVALIK VENTURES PVT. LTD ., SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF ACIT V. VIREET INVESTMENT PVT LTD [165 ITD 27]. 6. LD. DR VEHEMENTLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF THE AUTHORITIES BELOW. ON PERUSAL OF THE BALANCE SHEET , WE NOTICE THAT THE ASSESSEE EARNED INTE REST INCOME OF .2,01,80,733/ - AND INCURRED INTEREST EXPENDITURE OF .1,02,39,665/ - AND THE NET INTEREST INCOME IS POSITIVE. THUS , FOLLOWING THE DECISION OF THE HON'BLE JURISDICTIONAL H IGH COURT IN THE CASE OF CIT V. JUBILIANT ENTERPRISES PVT. LTD. (SUPRA) WE DIRECT THE ASSESSING OFFICER TO DELETE THE DISALLOWANCE MADE UNDER RULE 8D(2) (II). IN SO FAR AS THE DISALLOWANCE MADE UNDER RULE 8D(2) (III) IS CONCERNED , IN VIEW OF THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL , ONLY THOSE INVESTMENTS WHICH YIELDED EXEMPT INCOME SHOULD BE CONSIDERED FOR THE PURPOSE OF DISALLOWANCES. FOLLOWING THE SPECIAL BENCH DECISION, WE DIRECT THE ASSESSING OFFICER TO RECOMPUTE THE DISALLOWANCE ACCORDINGLY. THE GROUND RAISED BY THE ASSESSEE IS PARTLY ALLO WED. 8. COMING TO GROUND NO.2 I.E. ADDITION ON ACCOUNT OF INCOME AS PER 26AS NOT ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS, L D. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS NOT RECEIVED ANY INCOME FROM M/S. VIVEK ENTERPRISES AMOUNTING TO .48,52,603/ - , T HEREFORE , THERE IS NO 4 ITA NO.5136/MUM/2015 (A.Y: 2010 - 11) M/S. SHIVALIK VENTURES PVT. LTD ., QUESTION OF TREATING THE SAID AMOUNT AS INCOME OF THE ASSESSEE. LEARNED COUNSEL FOR THE ASSESS EE SUBMITTED THAT THIS ISSUE MAY BE SENT BACK TO THE FILE OF THE ASSESSING OFFICER FOR VERIFICATION. LD. DR HAS NO SER I OUS OBJECTION IN RESTORING THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER. 9. CONSIDERING THE SUBMISSIONS OF BOTH THE PARTIES , WE ARE OF THE VIEW THAT THIS MATTER SHOULD GO BACK FOR RE - EXAMINATION TO THE FILE OF THE ASSESSING OFFICER. THUS, WE RESTORE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR DENOVO ADJUDICATION . ASSESSEE IS AT LIBERTY TO FILE SUFFICIENT EVIDENCES IN SUPPORT OF THEIR CONTENTIONS. ASSESSING OFFICER SHALL PROVIDE ALL THE NECESSARY DETAILS TO THE ASSESSEE TO RECONCILE THE MIS - MATCH. NEEDLESS TO SAY THAT THE ASSESSING OFFICER SHALL PROVIDE ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THIS GROUND IS AL LOWED FOR STATISTICAL PURPOSES. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE 08 TH AUGUST , 2018 SD/ - SD/ - ( R.C. SHARMA ) (C.N. PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI / DATED 08/ 0 8 / 2018 GIRIDHAR , S R. PS 5 ITA NO.5136/MUM/2015 (A.Y: 2010 - 11) M/S. SHIVALIK VENTURES PVT. LTD ., 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 (ASSTT. REGISTRAR) ITAT, MUM