JMP INESMENTS P. LTD( NOW KNOWN AS JMP TRADING & PROPERTIES P. LTD), MUMBAI V. ITO 2(2)(1), MUMBAI

ITA 5219/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92433 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-04-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Assessment Year: 2009-2010
• Appeal Filed On: 24-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKHILDENDRA YADA
• Section: 14A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F MUMBAI . . , , BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI N.K.BILLAIYA, ACCOUNTANT MEMBER . / ITA NO. 5219/MUM/2013 / ASSESSMENT YEAR 2009-10 M/S. JMP INVESTMENTS PVT. LTD. (NOW KNOWN AS JMP TRADING & PROPERTIES PVT. LTD. ROHIT CHAMBERS, JANMABHOOMI MARG, FORT, MUMBAI 400001 / VS. INCOME TAX OFFICER 2(2)(1), ROOM NO.549, 5 TH FLOOR, AAYKAR BHAVAN, MK ROAD, MUMBAI 400020 ! ./ ./ PAN/GIR NO. : AAACJ 3002E ( !$ / APPELLANT ) .. ( %&!$ / RESPONDENT ) ASSESSEE BY MS. AARTI VISSANJI RESPONDENT BY : SHRI AKHILDENDRA YADA ( ) * / DATE OF HEARING : 21/04/2015 ( ) * / DATE OF PRONOUNCEMENT : 21/04/2015 / O R D E R PER I.P.BANSAL, JM: THIS IS AN APPEAL FILED BY THE ASSESSEE AND IT IS DIRECTED AGAINST ORDER PASSED BY LD. CIT(A)-5, MUMBAI DATED 29/4/2013 FOR ASSESSMENT YEAR 2009- 10. GROUNDS OF APPEAL READ AS UNDER: 1) THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS ) ERRED IN CONFIRMING THE DISALLOWANCE OF RS 12,83,127/- U/S 14A AS AGAINST R S 83,583/- DISALLOWED BY YOUR APPELLANTS IN THE RETURN OF INCOME. YOUR APPEL LANTS SUBMIT THAT THE DISALLOWANCE OUGHT TO HAVE BEEN RESTRICTED TO RS 83 ,583/- AND THE ADDITION OF RS 11,99,5441- (RS. 12,83,127- RS 83,583) OUGHT TO BE DELETED. . / ITA NO. 5219/MUM/2013 / ASSESSMENT YEAR 2009-10 2 2) THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFIRMING THE ADDITION MADE BY ASSESSING OFFICER ON ACCOUNT OF IN COME FROM HOUSE PROPERTY - ANITA FLAT. YOUR APPELLANTS SUBMIT THAT THE PROPERT Y INCOME OUGHT TO HAVE BEEN COMPUTED BY TAKING THE RENT OF RS 60,000/- ACTUALLY RECEIVED BY YOUR APPELLANTS AND NOT BY ADOPTING A NOTIONAL RENT OF RS 3,60,000/ - AS DONE BY THE ASSESSING OFFICER AND CONFIRMED BY THE COMMISSIONER OF INCOME -TAX (APPEALS). YOUR APPELLANT SUBMIT THAT THE ADDITION OF RS 3,00,000/- MADE ON ACCOUNT OF HOUSE PROPERTY BE DELETED. 2. APROPOS GROUND NO.1; DISALLOWANCE AS PER RULE -8 D WAS CALCULATED BY THE AO AT A SUM OF RS.14,73,126/- AS UNDER: DIRECT EXPENSES - NIL INDIRECT EXPENSES - NIL VALUE OF INVESTMENT AS ON 31.3.2008 300060291 VALUE OF INVESTMENT AS ON 31.3.2009 289190420 TOTAL 589250711/2 = AVERAGE VALUE OF INVESTMENTS 2946253 55 THE DISALLOWANCE @ 0.5% OF AVERAGE VALUE OF INVESTM ENT OF RS.29,46,25,355/- WHICH COMES TO RS.14,73,126/- 3. BEFORE LD. CIT(A) IT WAS PLEADED THAT THE DETAIL S OF INVESTMENT MADE BY THE ASSESSEE IS AS PER SCHEDULE V, WHICH READ AS UNDER: S.NO. PARTICULARS 31.03.2009 31.03.2008 1. QUOTED SHARES 0 7202,383 2. UNQUOTED SHARES 90,500,000 90,500,000 3. REDEEMABLE NON CUMULATIVE PREFERENCE SHARES 143,500,000 143,500,000 4. PREFERENCE SHARES 0 4,610,000 5. EQUITY SHARES OF VITHAL COOP BANK 2500 2500 6. *IMMOVABLE PROPERTY * 38,00 0,000 *38,000,000 7. OTHER INVESTMENT (I) DWS MONEY PLUS ADVANTAGE FUND 7,480,942 7,085,128 (II) HDFC CASH MANAGEMENT FUND 8,385,978 3,839,280 (III) HDFC EQUITY FUND 750,000 750,000 (IV) RELIANCE DIVERSIFIED POWER SECTOR FUND 571,000 571,000 T OTAL 289,190,420 300,060,291 . / ITA NO. 5219/MUM/2013 / ASSESSMENT YEAR 2009-10 3 3.1 CONSIDERING THE AFOREMENTIONED SUBMISSIONS LD. CIT(A) EXCLUDED THE INVESTMENT IN IMMOVABLE PROPERTY AND ARRIVED DISAL LOWANCE OF RS.12,83,127/- IN PLACE OF A SUM OF RS.14,73,126/-. THUS, A PART RELIEF WAS GIVEN BY LD. CIT(A) AGAINST WHICH THE ASSESSEE IS AGGRIEVED, HEN CE, HAS FILED AFOREMENTIONED GROUNDS OF APPEAL. 4. IT WAS THE CASE OF LD. AR THAT ASSESSEE SUO-MOTU HAS DISALLOWED A SUM OF RS.83,583/-. IGNORING THE SAME, THE AO HAS CALCUL ATED THE DISALLOWANCE AS PER RULE 8D. IT WAS SUBMITTED THAT ITEM NO.1 TO 4 IN THE AFOREMENTIONED CHART REPRESENTED STRATEGIC INVESTMENT BY THE ASSESSEE WH ICH COULD NOT BE INCLUDED FOR THE PURPOSE OF DISALLOWANCE AND REFERENCE IN T HIS REGARD WAS MADE TO THE DECISION MUMBAI TRIBUNAL IN THE CASE OF GARWARE WA LL ROPES LTD. VS. ADDL. CIT, 65 SOT 86 (MUM), COPY OF THE SAID DECISION WA S PLACED ON OUR RECORD AND WAS ALSO GIVEN TO LD. DR. IN THE SAID CASE IT WAS HELD THAT PRIMARY OBJECT OF INVESTMENT WAS HOLDING CONTROLLING STAKE IN GROUP CONCERN AND NOT EARNING INCOME OUT OF INVESTMENT AND INVESTMENT WAS ALSO MA DE LONG BACK AND NOT IN THE YEAR UNDER CONSIDERATION, THEREFORE, IT WAS HEL D THAT ASSESSEE DID NOT INCUR ANY EXPENDITURE FOR EARNING INCOME WHICH DID NOT FO RM PART OF THE TOTAL INCOME. 5. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDER PASSED BY LD. CIT(A). 6. WE HAVE HEARD BOTH THE PARTIES AND THEIR CONTE NTIONS HAVE CAREFULLY BEEN CONSIDERED. TO VERIFY THE AFOREMENTIONED CON TENTION OF THE ASSESSEE, WE RESTORE THIS ISSUE TO THE FILE OF LD. CIT(A) WITH A DIRECTION TO RE-ADJUDICATE THIS ISSUE BY TAKING INTO CONSIDERATION THE AFOREMENTIO NED DECISION OF TRIBUNAL AS WELL AS OTHER JUDICIAL PRONOUNCEMENTS AVAILABLE ON THE ISSUE AND AFTER GIVING THE ASSESSEE A REASONABLE OPPORTUNITY OF HEARING. WE DIRECT ACCORDINGLY. FOR STATISTICAL PURPOSE THIS GROUND IS TREATED AS ALLOW ED. . / ITA NO. 5219/MUM/2013 / ASSESSMENT YEAR 2009-10 4 7. APROPOS GROUND NO.1; IT WAS SUBMITTED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBU NAL IN ASSESSEES OWN CASE FOR A.Y 2007-08 VIDE ORDER DATED 30/1/2013 PASSED I N ITA NO.3127/MUM/2011, WHEREIN TRIBUNAL HAS SET ASIDE TH E ORDER PASSED BY LD. CIT(A) AND AO WAS DIRECTED TO DELETE THE ADDITION O F RS.3.00 LACS. 7.1 ACCORDING TO THE FACTS OF THE CASE, A FLAT ADME ASURING 625 SQ.FT. AT ANITA BUILDING MALABAR HILL WAS GIVEN ON RENT TO MS. SONL I PATEL, BEING ONE OF THE DIRECTORS OF THE ASSESSEE COMPANY AT A MONTHLY RENT OF RS.5000/- AS PER AGREEMENT ENTERED INTO BETWEEN ASSESSEE AND TENANT. THE AO TOOK THE ALV OF THE SAID PROPERTY AT RS.3,60,000/- AND SUCH ADDITIO N WAS DELETED BY THE TRIBUNAL IN A.Y 2007-08 VIDE AFOREMENTIONED ORDER. LD. CIT(A) DID NOT FOLLOW THE SAID ORDER OF THE TRIBUNAL, AS ACCORDING TO HIM AS PER LOCAL ENQUIRIES, IT WAS REVEALED THAT RENTAL VALUE OF THE ALIKE FLAT IN FI NANCIAL YEAR 2008-09 WOULD BE RS.30,000/- TO 35,000/- PER MONTH. 7.2 AFTER HEARING BOTH THE PARTIES, WE ARE OF THE OPINION THAT ACCORDING TO JUDICIAL DISCIPLE, LD. CIT(A) SHOULD HAVE FOLLOWED THE ORDER OF ITAT WHICH WAS RELIED UPON BY THE ASSESSEE BEFORE HIM AS THERE WAS NO CHANGE IN THE FACTS & CIRCUMSTANCES OF THE CASE. THEREFORE, RESPECTFULLY FOLLOWING THE AFOREMENTIONED DECISION, WE DECIDE THE ISSUE IN FAVOUR OF THE ASS ESSEE AND IMPUGNED ADDITION IS DELETED. FOR THE SAKE OF COMPLETENESS THE CONCL UDING PORTION OF THE ORDER OF THE TRIBUNAL IS REPRODUCED. 5. SINCE THE ISSUE IN THE INSTANT CASE IS IDENTICA L AS IT WAS IN THE CASE OF GAGAN TRADING(SUPRA), WE ARE INCLINED TO FOLLOW THE DECIS ION [AS ALSO, BECAUSE ONE US WAS A PARTY IN THAT CASE]. RESPECTFULLY, THEREFORE , FOLLOWING THE DECISION IN GAGAN TRADING (SUPRA) WE DELETE THE ADDITION. 6. IN THE RESULT, THE ORDER OF THE LD. CIT(A) ON TH IS ISSUE IS SET ASIDE AND WE DIRECT THE AO TO DELETE THE ADDITION MADE AT RS.3,00,000 ( RS.3,60,000-RS.60,000). ACCORDINGLY, GROUND NO.2 IS ALLOWED . . / ITA NO. 5219/MUM/2013 / ASSESSMENT YEAR 2009-10 5 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED IN THE MANNER AFORESAID. ORDER PRONOUNCED IN THE OPEN COURT ON 21/04/2015 ( 0 1 2 21/04/2015 ( SD/- SD/- ( / N.K.BILLAIYA ) ( . . / I.P. BANSAL ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; 1 DATED 21/04/2015 / COPY OF THE ORDER FORWARDED TO : 1. !$ / THE APPELLANT 2. %&!$ / THE RESPONDENT. 3. 4) ( ) / THE CIT(A)- 4. 4) / CIT 5. 56 %)78 , * 78 , / DR, ITAT, MUMBAI 6. 9 / GUARD FILE. / BY ORDER, & 5) %) //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI . . ./ VM , SR. PS