M/S. INDIABULLS INTEGRATED SERVICES(FORMERLY KNOW AS M/S. INDIABULLS WHOLESALE SERVICES LTD), HARYANA V. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 3(2)(1), MUMBAI

ITA 5286/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 0899 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-07-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 13-08-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: CHETAN KARIAAR
• Keywords: Earning of tax free income; Rule 8D; Set aside
• Section: 143(3); 14A; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUM BAI BEFORE HONBLE JUSTICE P.P.BHATT, PRESIDENT AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO.5653/MUM/2019 (ASSESSMENT YEAR: 2013-14) DCIT,CENTRAL CIRCLE-6(4) ROOM NO.1925, AIR INDIA BUILDING 19 TH FLOOR, NARIMAN POINT MUMBAI-400 021 VS. INDIABULLS INTEGRATED SERVICES LIMITED [FORMERLY KNOWN AS INDIABULLS WHOLESALE SERVICES LIMITED] M-62 & 63, 1 ST FLOOR, CONNAUGHT PLACE, NEW DELHI-110 001 PAN/GIR NO. AABCI7129N (REVENUE) : ( ASSESSEE ) & ITA NO.5286/MUM/2019 (ASSESSMENT YEAR: 2013-14) INDIABULLS INTEGRATED SERVICES LIMITED [FORMERLY KNOWN AS INDIABULLS WHOLESALE SERVICES LIMITED] M-62 & 63, 1 ST FLOOR, CONNAUGHT PLACE, NEW DELHI-110 001 VS. DCIT, CIRCLE-3(2)(1) ROOM NO.608, 6 TH FLOOR AAYKAR BHAWAN, M.K.ROAD MUMBAI-400 020 PAN/GIR NO. AABCI7129N ( ASSESSEE ) : ( RE VENUE ) ASSESSEE BY : SHRI CHETAN KARIA-AR RE VENUE BY : MS. SHREEKALA PARDESHI - DR DATE OF HEARING : 05.07.2021 DATE OF PRONOUNCEMENT : 13 .07.2021 O R D E R PER SHAMIM YAHYA, A. M.: THESE CROSS APPEALS BY THE REVENUE AND THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS)-9, MUMBAI (LD.CIT(A) FOR SHORT) DATED 13.06.2019 AND PERTAIN TO THE ASSE SSMENT YEAR (A.Y.) 2013-14. 2 ITA NOS. 5653 & 5286/MUM/2019 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE READ AS UNDER: I. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE CIT(A) HAS ERRED IN RESTRICTING THE ADDITION U/S.14 A TO THE EXTENT OF EXEMPT INCOME EARNED? THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GR OUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 3. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE COMPAN Y FILED RETURN OF INCOME ON 23.09.2013 DECLARING TOTAL LOSS OF RS.5,05,32,941/- . THEREAFTER, THE CASE WAS SELECTED FOR SCRUTINY AND ASSESSMENT ORDER U/S. 143(3) WAS PASSE D ON 29.01.2016 BY DETERMINING TOTAL LOSS AT RS.3,25,15,060/-. THE AO DISALLOWED AN AMOU NT OF RS.1,80,17,881/- U/S 14A R.W.RULE 8D OF THE INCOME TAX RULES. 4. UPON THE ASSESSEES APPEAL, THE LD. CIT(A) RESTR ICTED THE DISALLOWANCE TO EXEMPT INCOME EARNED AS UNDER:- 4.5.1 THE ISSUE OF RESTRICTION OF THE DISALLOWANCE UNDER SECTION 14A TO THE EXEMPT INCOME HAS BEEN CONCLUSIVELY DECIDED THE HON'BLE SU PREME COURT IN ITS RECENT JUDGEMENT IN THE CASE OF MAXOPP INVESTMENT LTD. V. CIT ( 91 TAXMANN.COM 154 ). THE HON'BLE SUPREME COURT IN PARA 40 OF THE JUDGEME NT HAS OBSERVED AS UNDER: 'WE NOTE FROM THE FACTS IN THE STATE BANK OF PATIAL A CASES THAT THE AO, WHILE PASSING THE ASSESSMENT ORDER, HAD ALREADY RESTRICTE D THE DISALLOWANCE TO THE AMOUNT WHICH WAS CLAIMED AS EXEMPT INCOME BY APPLYI NG THE FORMULA CONTAINED IN RULE 8D OF THE RULES AND HOLDING THAT SECTION 14A OF THE ACT WOULD BE APPLICABLE. IN SPITE OF THIS EXERCISE OF APPORTIONMENT OF EXPEN DITURE CARRIED OUT BY THE AO, CIT(A) DISALLOWED THE ENTIRE DEDUCTION OF EXPENDITU RE. THAT VIEW OF THE CIT(A) WAS CLEARLY UNTENABLE AND RIGHTLY SET ASIDE BY THE ITAT.' 4.5.2 IN VIEW OF THE JUDICIAL PRECEDENTS LISTED A BOVE, I UNDERSTAND THAT THE DISALLOWANCE COMPUTED UNDER RULE 8D NEEDS TO BE RES TRICTED TO TOTAL AMOUNT OF EXEMPT INCOME EARNED BY THE APPELLANT DURING THE YE AR. THE DISALLOWANCE U/S 14A OF THE ACT IS RESTRICTED TO THE EXEMPT INCOME OF RS.10 ,05,236/- FOLLOWING THE JUDICIAL VIEW WHICH HAS BEEN EVOLVED AS REFLECTED IN VARIOUS DECISIONS REFERRED IN EARLIER 3 ITA NOS. 5653 & 5286/MUM/2019 PARAGRAPHS. THEREFORE THE AO IS DIRECTED TO RESTRIC T THE DISALLOWANCE UNDER SECTION 14A R.W. RULE 8D TO RS.10,05,236/- AND THE BALANCE DISALLOWANCE OF RS.1,70,12,645/- IS TO BE DELETED 5. AGAINST THE ABOVE ORDER, THE ASSESSEE AND THE RE VENUE IS APPEAL BEFORE US. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED TH E RECORD. WE FIND THAT LD.CIT(A) HAS PASSED A CORRECT ORDER FOLLOWING HONBLE SUPRE ME COURT DECISION IN MAXOPP INVESTMENT LTD.(SUPRA). HENCE, WE UPHOLD THE ORDER OF LD.CIT(A). LD. DR FAIRLY AGREED TO THE ABOVE. 7. HENCE, REVENUE APPEAL IS DISMISSED. 8. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE R EAD AS UNDER:- 1. THE HONBLE CIT(A) ERRED ON FACTS AND CIRCUMSTANCES OF THE CASE IN CONFIRMING THE DISALLOWANCE U/S 14A READ WITH RULE 8D MADE BY THE AO TO THE EXTENT OF RS.10,05,236/-. 2. THE APPELLANT CRAVES FOR LIBERTY TO ADD, AMEND, ALT ER OR FOREGO ANY OF THE ABOVE GROUNDS OF APPEAL AS THE CIRCUMSTANCES MAY WARRANT. 9. SINCE, WE HAVE ALREADY UPHOLD LD.CIT(A)S O RDER IN REVENUES APPEAL ABOVE; THE APPEAL BY THE ASSESSEE IS LIABLE TO BE DISMISSED. L D. COUNSEL OF THE ASSESEE FAIRLY AGREED TO THE ABOVE. HENCE, ASSESSEES APPEAL IS DI SMISSED. 10. IN THE RESULT, BOTH APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 .07.2021 SD/- SD/- (JUSTICE P.P.BHATT) (SH AMIM YAHYA) PRESIDENT ACCOUNTANT ME MBER MUMBAI; DATED : 13.07.2021 THIRUMALESH , SR. PS 4 ITA NOS. 5653 & 5286/MUM/2019 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