ACIT - 9(3)(2), MUMBAI V. FUTURE HUMAN DEVELOPMENT LTD., MUMBAI

ITA 5163/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8525 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-11-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 12-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: NAMRATA KASALE
• Keywords: Earning of tax free income
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH I MUMBAI BEFORE SHRI C.N. PRASAD (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 5163/MUM/2016 ASSESSMENT YEAR: 2012 - 13 ACIT - 9(3)(2) 418, AAYAKAR BHAVAN, 4 TH FLOOR, M.K. MARG, MUMBAI - 400020. VS. M/S FUTURE HUMAN DEVELOPMENT LTD. KNOWLEDGE HOUSE, OFF JOGESHWARI VIKHROLI LINK RD, SHYAM NAGAR, MUMBAI - 400060. PAN NO. AAACF9652Q APPELLANT RESPONDENT REVENUE BY : MR. SAURABH KUMAR RAI, DR ASSESSEE BY : MS. NAMRATA KASALE , AR DATE OF HEARING : 02 /11/2017 DATE OF PRONOUNCEMENT : 15/11/2017 ORDER PER N.K. PRADHAN, A.M. THIS IS AN APPEAL FILED BY THE REVENUE . THE RELEVANT ASSESSMENT YEAR IS 2012 - 13 . THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS ) - 16 , MUMBAI AND ARISES OUT OF THE ASSESSMENT COMPLETED U/S 143(3) OF THE INCOME TAX ACT 1961, (THE ACT). 2. THE SOLE GROUND RAISED BY THE REVENUE IN THIS APPEAL IS THAT THE LD. CIT(A) HAS ERRED IN GRANTING RELIEF TO ASSESSEE U/S 14A WHEN THE M/S FUTURE HUMAN DEVELOPMENT LTD. ITA NO. 5163/MUM/2016 2 ASSESSEE HAS USED COMMON POOL OF FUNDS FOR MAKING INVESTMENTS AND RUNNING BUSINESS, WHEREIN, IT IS IMPOSSIBLE TO CONCLUDE THAT FUNDS WERE SPECIFICALLY USED FOR BUSINESS, AS CLAIMED BY THE ASSESSEE, EVEN THOUGH THE ASSESSEE HAS NOT BEEN ABLE TO PROVE BY FIL ING DOCUMENTARY EVIDENCE THAT ONLY OWN FUNDS WERE USED FOR MAKING INVESTMENTS IN SHARES FOR EARNING EXEMPT INCOME. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE - COMPANY HAD NOT EARNED ANY EXEMPT INCOME DURING THE IMPUGNED ASSESSMENT YEAR. HOWEVER, THE ASSESSING OFFICER (AO) MADE A DISALLOWANCE OF RS.47,48,343/ - U/S 14A R.W. RULE 8D OF THE INCOME TAX RULES, 1962. 4. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A). WE FIND THAT THE LD. CIT(A) HAS FOLLOWE D THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN CHEMINVEST LTD. VS. CIT IN ITA NO. 749/2014 (DEL) AND THE ORDER OF THE ITAT MUMBAI IN J.M. FINANCIAL VS. ACIT DATED 30.04.2014 AND GARWARE WALL ROPES LTD. VS. ACIT DATED 21.02.2014 AND DELETED THE ABOVE DIS ALLOWANCE OF RS.47,48,343/ - . 5. ON THE OTHER HAND, THE LD. DR SUPPORTS THE ORDER PASSED BY THE AO. HE RELIES ON THE CIRCULAR NO. 5/2014 ISSUED BY CBDT WHICH READS AS UNDER: THE USAGE OF TERM INCLUDIBLE IN THE HEADING TO SECTION 14A OF THE ACT AND ALSO THE H EADING TO RULE 8D OF I.T. RULES, 1962 WHICH INDICATES THAT IT IS NOT NECESSARY THAT EXEMPT INCOME SHOULD BE NECESSARILY BE INCLUDED IN A PARTICULAR YEARS INCOME, FOR DISALLOWANCE TO BE TRIGGERED. ALSO SECTION 14A OF THE ACT DOES NOT USE THE WORD INC OME OF THE YEAR BUT INCOME UNDER THE ACT. THIS ALSO INDICATES THAT FOR INVOKING DISALLOWANCE U/S 14A, IT IS NOT M/S FUTURE HUMAN DEVELOPMENT LTD. ITA NO. 5163/MUM/2016 3 MATERIAL THAT ASSESSEE SHOULD HAVE EARNED SUCH EXEMPT INCOME DURING THE FINANCIAL YEAR UNDER CONSIDERATION. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. THE FACTS REMAINS THAT IN THE INSTANT CASE THE ASSESSEE - COMPANY HAS NOT EARNED ANY EXEMPT INCOME DURING THE FINANCIAL YEAR 2011 - 12 RELEVANT TO THE ASSESSMENT YEAR 2012 - 13. IN THE CASE OF CIT V. SHIVAM MOTORS (P) LTD. (2015) 55 TAXMANN.COM 262 (ALL), IT HAS BEEN HELD THAT IN ABSENCE OF ANY TAX FREE INCOME EARNED BY THE ASSESSEE, DISALLOWANCE U/S 14A COULD NOT BE MADE. IN A SIMILAR VEIN, IT HAS BEEN HELD IN CHEMINVEST LTD. (SUPR A) THAT SECTION 14A WILL NOT APPLY IF NO EXEMPT INCOME IS RECEIVED OR RECEIVABLE DURING THE RELEVANT PREVIOUS YEAR. RESPECTFULLY FOLLOWING THE ABOVE JUDGMENTS , WE HOLD THAT THE LD. CIT(A) HAS RIGHTLY DELETED THE DISALLOWANCE OF RS.47,48,343/ - MADE BY THE AO U/S 14A R.W. RULE 8D. 7. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 15/11/2017. SD/ - SD/ - ( C.N. PRASAD ) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 15/11/2017 RAHUL SHARMA, SR. P.S. M/S FUTURE HUMAN DEVELOPMENT LTD. ITA NO. 5163/MUM/2016 4 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI