DIATRENDS JEWELLERY PVT. LTD., MUMBAI V. DCIT CENT. CIR. 9(3)(1), MUMBAI

ITA 5202/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8801 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-11-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 17-08-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: T A KHAN LD
• Assessee Lawyers: MAHESH G TRIVEDI LD
• Keywords: Earning of tax free income
• Section: 143(3); 14A

Judgement Text

ITA.NO.5202/MUM/2016 DIATRENDS JEWELLERY PRIVATE LIMITED ASSESSMENT YEARS-2012-13 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI . . , , BEFORE SHRI D.T. GARASIA, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.5202/MUM/2016 ( / ASSESSMENT YEAR: 2012-13) DIATRENDS JEWELLERY PRIVATE LIMITED PLOT NO.B/3, ROAD NO.6 OFF. MIDC CENTRAL ROAD, ANDHERI(E) MUMBAI - 400 093 / VS. DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 9(3)(1) AAYKAR BHAVAN M.K.ROAD MUMBAI - 40 0 020 !' ./ ./PAN/GIR NO. AABCD-2163-P ( '$ /APPELLANT ) : ( %&'$ / RESPONDENT ) A SSESSEE BY : MAHESH G TRIVEDI, LD. AR RE VENUE BY : T.A.KHAN, LD. DR / DATE OF HEARING : 10/08/2017 / DATE OF PRONOUNCEMENT : 01/11 /2017 ITA.NO.5202/MUM/2016 DIATRENDS JEWELLERY PRIVATE LIMITED ASSESSMENT YEARS-2012-13 2 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2012-13 ASSAILS THE ORDER OF THE LD. COMMISSIONER O F INCOME-TAX (APPEALS)-16 [CIT(A)], MUMBAI, APPEAL NO.CIT(A)-16/IT-11/DCIT 9(3)(1)/2015-16 DATED 15/06/2016. THE ASSESSMENT FOR IMPUGNED AY WAS FRAMED BY LD. DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCL E 9(3)(1) U/S 143(3) OF THE INCOME TAX ACT, 1961 ON 11/03/2015. THE SOLITARY ISSUE INVOLVED IN THE APPEAL IS DISALLOWAN CE U/S 14A. 2.1 BRIEFLY STATED THE ASSESSEE BEING RESIDENT CORPORATE ASSESSEE ENGAGED IN THE BUSINESS OF MANUFACTURING OF JEWELLERY AND DEALING IN DIAMONDS, GOLD & OTHERS WAS ASSESSED FOR IMPUGNED AY U/S 143(3) ON 11/03/2015 AT RS.2,25,69,340/- AS AGAINST RETURNED INCOME OF RS.2,00,57,928/- E-FILED BY THE ASSESSEE ON 24/09/2012. THE ASSESSEE HAS SUFFERED DISALLOWANCE U/S 14A FOR RS.10,81,461/ - AND THE SAME IS THE SUBJECT MATTER OF THIS APPEAL. 2.2 DURING ASSESSMENT PROCEEDINGS, IT WAS NOTED THA T THE ASSESSEE EARNED EXEMPT DIVIDEND INCOME OF RS.1,57,500/- WHER EAS IT DID NOT MAKE ANY SUO-MOTO DISALLOWANCE U/S 14A AGAINST THE SAME. THE LD. AO, APPLYING RULE 8D , COMPUTED THE SAME AT RS.10,81,461/- WHICH COMPRISED OF INTEREST DISALLOWANCE AS PER RULE 8D(2)(II) FOR RS.7,84,161/- AND EXPENSES DISALLOWANCE U/R 8D(2)(III) @0.5% OF A VERAGE INVESTMENT, WHICH CAME TO RS.2,97,300/-. ITA.NO.5202/MUM/2016 DIATRENDS JEWELLERY PRIVATE LIMITED ASSESSMENT YEARS-2012-13 3 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH PARTIAL SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 15/06/2 016 WHERE INTEREST DISALLOWANCE WAS DELETED UPON NOTICING THAT THE INV ESTMENTS WERE MADE BY THE ASSESSEE OUT OF OWN INTEREST FREE FUNDS HELD IN THE SHAPE OF SHARE CAPITAL & RESERVES & SURPLUS. THE EXPENSE DISALLOWANCE WAS RESTRICTED TO RS.1,57,500/-, BEING EXEMPT INCOME EA RNED BY THE ASSESSEE, BY PLACING RELIANCE ON THE JUDGMENT OF HO NBLE DELHI HIGH COURT RENDERED IN THE CASE OF CHEMINVEST LTD. VS. CIT [2015 94 CCH 2] . AGGRIEVED, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. THE LD. COUNSEL FOR ASSESSEE PLEADED FOR FURTHER RELIEF ON THE GROUND THAT THE ASSESSEE DID NOT INCUR ANY EXPENSES TO EARN THE DIVIDEND INCOME. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE CONTENDED THAT THE STAND OF LD. CIT WAS QUITE FAIR AND REASON ABLE AND THEREFORE, NO FURTHER RELIEF COULD BE GRANTED TO THE ASSESSEE. 5. WE HAVE CAREFULLY HEARD THE RIVAL CONTENTIONS AN D PERUSED RELEVANT MATERIAL ON RECORD. WE FIND THAT DISALLOWANCE U/R 8 D(2)(III) WAS COMPUTED BY LD. AO BY APPLYING THE PRESCRIBED FORMULA. THE D ISALLOWANCE, THUS WORKED OUT, CAME TO RS.2,97,300/-. THE LD. CIT(A) R ESTRICTED THE SAME TO EXEMPT INCOME EARNED BY ASSESSEE I.E. RS.1,57,50 0/-. WE FIND THE STAND OF LD. CIT(A) QUITE FAIR AND REASONABLE SINCE THE DISALLOWANCE HAD TO BE WORKED OUT ONLY AS PER THE PRESCRIBED FORMULA ONLY. THEREFORE, NO FURTHER RELIEF COULD BE GRANTED TO THE ASSESSEE ON THE GIVEN FACTS. 6. RESULTANTLY, THE ASSESSEES APPEAL STANDS DISMIS SED. ITA.NO.5202/MUM/2016 DIATRENDS JEWELLERY PRIVATE LIMITED ASSESSMENT YEARS-2012-13 4 ORDER PRONOUNCED IN THE OPEN COURT ON 01 ST NOVEMBER, 2017. SD/- SD/- (D.T. GARASIA) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 01.11 .2017 SR.PS:- THIRUMALESH ! / COPY OF THE ORDER FORWARDED TO : 1. '$ / THE APPELLANT 2. %&'$ / THE RESPONDENT 3. , ( ) / THE CIT(A) 4. , / CIT CONCERNED 5. %(. , . , / DR, ITAT, MUMBAI 6. / / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI