SHANTIVIJAY JEWELS LTD, MUMBAI V. DCIT RG 8(3), MUMBAI

ITA 5215/MUM/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8749 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 5 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2017
• Appeal Filed By: Assessee
• Bench Allotted: E
• Next Hearing Date: 18-01-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 23-07-2013
• Court: TRIBUNAL
• Department Lawyers: B S BIST
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) & SHRI PAWAN SINGH (JM) I.T.A. NO. 5215 /MUM/20 13 (ASSESSMENT YEAR 20 10 - 11 ) M/S. SHANTIVIJAY JEWELS LTD. G - 37, GEMS & JEWELLERY COMPLEX - III, SEEPZ ANDHERI EAST MUMBAI - 4 00 096. VS. DCIT RANGE - 8(3) ROOM NO. 204 AAYAKAR BHAVAN M.K. ROAD MUMBAI - 400020. ( APPELLANT ) ( RESPONDENT ) PAN NO . AAFCS8914F ASSESSEE BY SHRI APURVA SHAH DEPARTMENT BY S HRI B.S. BIST DATE OF HEARING 1 8 .1 . 201 7 DATE OF PRONOUNCEMENT 1 8 . 1 . 201 7 O R D E R PER B.R. BASKARAN (AM) : - THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 6.5.2013 PASSED BY THE LEARNED CIT(A) - 18, MUMBAI AND IT RELATES TO A.Y. 2010 - 11. 2. AT THE TIME OF HEARING, LEARNED AR DID NOT PRESS GROUND NO. 4 AND HENCE THE SAME IS DISMISSED AS NOT PRESSED. REMAINING GROUNDS RELATE TO THE DISALLOWANCE MADE BY THE ASSESSING OFFICER U/S. 14A OF THE ACT. 3. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE RECEIVE D DIVIDEND INCOME OF ` 1,93,800/ - AND HE DID NOT MAKE ANY DISALLOWANCE U/S. 14A OF THE ACT. THE ASSESSING OFFICER COMPUTED DISALLOWANCE BY APPLYING RULE 8D OF THE I.T. RULES AND MADE DISALLOWANCE OF ` 5,54,017/ - U/S. 14A OF THE ACT. THE LEARNED CIT(A) ALSO CONFIRMED THE SAME AND HENCE THE ASSESSEE HAS FILED THIS APPEAL BEFORE US. 4. LEARNED COUNSEL APPEARING FOR THE ASSESSEE SUBMITTED THAT INVESTMENT HELD BY THE ASSESSEE INCLUDES OVER SEAS INVESTMENTS , INCOME FROM WHICH IS M/S. SHANTIVIJAY JEWELS LTD. 2 TAXABLE . ACCORDINGLY HE SUBMITT ED THAT THE ASSESSING OFFICER WAS NOT RIGHT IN LAW IN INCLUDING OVERSEAS INVESTMENTS ALSO FOR WORKING OUT THE DISALLOWANCE U/S. 14A OF THE ACT. LEARNED AR FURTHER SUBMITTED THAT OWN FUNDS HELD BY THE ASSESSEE IS IN FAR EXCESS OF THE AMOUNT OF I NVESTMENT S A ND HENCE DISALLOWANCE OF INTEREST IS NOT REQUIRED TO BE MADE UNDER RULE 8D(2)(II) OF THE I.T. RULES IN VIEW OF THE DECISION RENDERED BY HON'BLE JURISDICTIONAL BOMBAY HIGH COURT IN THE CASE OF HDFC BANK LTD. (366 ITR 505). 5. ON THE CONTRARY, LEARNED DEPA RTMENTAL REPRESENTATIVE SUPPORTED THE ORDER PASSED BY THE LEARNED CIT(A). 6. HAVING HEARD THE RIVAL CONTENTIONS, WE FIND MERIT IN THE SUBMISSIONS MADE BY LEARNED AR. SINCE DIVIDEND EARNED FROM OVERSEAS INVESTMENTS IS TAXABLE IN INDIA, THE SAME SHOULD NOT HAVE BEEN CONSIDERED BY THE ASSESSING OFFICER FOR WORKING OUT THE AVERAGE VALUE OF INVESTMENT. 7. WE NOTICED FROM THE B ALANCE SHEET FILED BY THE ASSESSEE THAT THE ASSESSEE IS HOLDING INTEREST FREE FUNDS OF ABOUT ` 24 CRORES , WHILE AMOUNT OF I NVESTMENT S HELD BY THE ASSESSEE IS ONLY ` 2.97 CORES. HENCE, DECISION RENDERED BY HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF HDFC BANK LTD.(SUPRA), WOULD APPLY TO THE FACTS OF THE PRESENT CASE AND ACCORDINGLY THE RE IS NO REQUIREMENT TO MAKE DISALLOWANCE OUT OF INTEREST EXPENDITURE UNDER RULE 8D(2)(II) OF THE I.T. RULES. 8. IN VIEW OF THE ABOVE, WE SET ASIDE THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE AND RESTORE THE SAME TO THE FILE OF THE AO WITH THE DIRECTION TO REWORK THE DISALLOWANCE U/S 14A R .W.R 8D OF THE IT RULES IN ACCORDANCE WITH THE DISCUSSIONS MADE SUPRA. M/S. SHANTIVIJAY JEWELS LTD. 3 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 1 8 . 1 .201 7. SD/ - SD/ - (PAWAN SINGH ) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 1 8/ 1 / 20 1 7 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) PS ITAT, MUMBAI