DCIT - 9(3)(1), MUMBAI V. FIDUCIARY EUROMAX GLOBAL MARKETS LTD., MUMBAI

ITA 5176/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8153 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 16-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: V C SHAH
• 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. 5176/MUM/2016 ASSESSMENT YEAR: 2012 - 13 DCIT - 9(3)(1) ROOM NO. 260A, 2 ND FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 . VS. M/S FIDUCIARY EUROMAX GLOBAL MARKETS LTD., UNIT NO. T - 7B, 5 TH FLOOR, PHOENIX MILL COMPOUND, 462, SENAPATI BAPAT MARG, LOWER PAREL, MUMBAI - 400013. PAN NO. AAA CF1326P APPELLANT RESPONDENT REVENUE BY : MR. SAURABH KUMAR RAI, DR ASSESSEE BY : MR. V. C. SHAH , AR DATE OF HEARING : 31 /10/2017 DATE OF PRONOUNCEMENT : 21/12/2017 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) - 1 6 , MUMBAI AND ARISES OUT OF THE ASSESSMENT ORDER U/S 143(3) OF THE INCOME TAX ACT 1961, ( THE ACT). 2. THE SOLE GROUND RAISED BY THE REVENUE IN THIS APPEAL IS AGAINST THE ORDER OF LD. CIT(A) DELETING THE DISALLOWANCE OF RS.73,97,461/ - MADE BY THE ASSESSING OFFICER (AO) U/S 14A R.W. RULE 8D. M/S FIDUCIARY EUROMAX ITA NO. 5176/MUM/2016 2 3 . BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE HAS NOT EARNED ANY EXEMPT INCOME FROM INVESTMENTS DURING THE YEAR UN DER CONSIDERATION. THE AO MADE A DISALLOWANCE OF RS.73,97,461/ - U/S 14A R.W. RULE 8D OF THE INCOME TAX RULES 1962. THE AO PLACED RELIANCE ON THE ORDER OF THE TRIBUNAL IN THE CASE OF CHEMINVEST LTD. VS. ITO [317 ITR 86 (AT)] AND SANCHAYITA MERCANTILE (P) LTD. VS. ACIT (2008) (25 SOT 57) (MUM), WHEREIN IT HAS BEEN HELD THAT THE DISALLOWANCE U/S 14A CAN BE MADE EVEN IF NO EXEMPT INCOME IS ACTUALLY EARNED OR RECEIVED DURING THE YEAR, FROM THE INVESTMENT. 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 RELIED ON THE JUDGMENT OF THE HONBLE DELHI HIGH C OURT IN M/S CHEMVINVEST LTD. VS. CIT (ITA NO. 749/2014 DATED 02.09.2015) AND DELETED THE DISALLOWANCE OF RS.73,97,461/ - MADE BY THE AO. 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 CB DT WHICH READS AS UNDER: THE USAGE OF TERM INCLUDIBLE IN THE HEADING TO SECTION 14A OF THE ACT AND ALSO THE HEADING 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 PARTIC ULAR YEARS INCOME, FOR DISALLOWANCE TO BE TRIGGERED. ALSO SECTION 14A OF THE ACT DOES NOT USE THE WORD INCOME OF THE YEAR BUT INCOME UNDER THE ACT . THIS ALSO INDICATES THAT FOR INVOKING DISALLOWANCE U/S 14A, IT IS NOT 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 FACT REMAINS THAT IN THE INSTANT CASE THE M/S FIDUCIARY EUROMAX ITA NO. 5176/MUM/2016 3 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 INCO ME EARNED BY THE ASSESSEE, DISALLOWANCE U/S 14A COULD NOT BE MADE. IN A SIMILAR VEIN, IT HAS BEEN HELD IN CHEMINVEST LTD. (SUPRA) THAT SECTION 14A WILL NOT APPLY IF NO EXEMPT INCOME IS RECEIVED OR RECEIVABLE DURING THE RELEVANT PREVIOUS YEAR. AS THE SUBJ ECT - MATTER HAS BEEN CLARIFIED BY THE ABOVE JUDGMENT S OF THE HONBLE HIGH COURT, WE FOLLOW THEM IN PLACE OF THE CBDT CIRCULAR REFERRED HERE AT PARA 5 AND CONFIRM THE ORDER OF THE ORDER OF THE LD. CIT(A) DELETING THE DISALLOWANCE OF RS. 73,97,461/ - MADE BY TH E AO U/S 14A R.W. RULE 8D. 7 . IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21/12/2017. SD/ - SD/ - (C.N. PRASAD) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 21/12/2017 RAHUL SHARMA, SR. P.S. 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