ITO 7(1)(2), MUMBAI V. ONWARD NETWORK TECHNOLOGIES P.LTD, MUMBAI

ITA 5350/MUM/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70914 (ITAT-MUMBAI)
• Duration Of Justice: 1 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 02-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROOPAK KUMAR
• Section: 14A

Judgement Text

. , IN THE INCOME TAX APPELLATE TRIBUNAL SMC , BENCH MUMBAI , BEFORE SHRI R. K. GUPTA , JM ITA NO. 5350 / MUM/ 20 1 3 ( ASSESSMENT YEAR : 200 9 - 10 ) ITO 7(1 )(2) , MUMBAI - 20 VS. ONWARD NETWORK TECHNOLOGIES PVT. LTD., 2 ND FLOOR, STERLING CENTRE, DR. A.B.ROAD, WORLI, MUMBAI - 18 PAN/GIR NO. : A AACO 0641 A ( APPELLANT ) .. ( RESPONDENT ) /REVENUE BY : MR. ROOPAK KUMAR /ASSESSEE BY : NONE DATE OF HEARING : 21 ST AUGUST , 201 3 DATE OF PRONOUNCEMENT : 4 TH SEPT , 2013 O R D E R T HE DEPARTMENT HAS PREFERRED THIS APPEAL AGAINST THE ORDER OF LEANED CIT(A) RELATING TO THE ASSESSMENT YEAR 200 9 - 10 . 2 . THE DEPARTMENT IS OBJECTING IN RESTRICTING THE DISALLOWANCE FROM RS. 11,18,462/ - TO RS.25,401/ - DISALLOWED BY THE AO UNDER SECTION 14A RE AD WITH RULE 8D OF THE IT RULES. 3 . DURING THE ASSESSMENT PROCEEDING, THE AO NOTICED THAT THE ASSESSEE HAS RECEIVED DIVIDEND OF RS. 1,12,732/ - ON INVESTMENT S OF RS. 22,70,57,901/ - . THE DIVIDEND WAS CLAIMED AS EXEMPT. THE AO NOTED THAT THE ASSESSEE OFFERED D ISALLOWANCE UNDER SECTION 14A OF THE ITA NO. 5350 / 20 1 3 2 ACT AT RS. 87,331/ - . THE AO NOTED THAT THE ASSESSEE HAS DEBITED TOTAL EXPENSES TO PROFIT AND LOSS ACCOUNT AT RS. 1,69,05,986/ - . THE ASSESSEE WAS REQUIRED AS TO WHY THE DISALLOWANCE UNDER SECTION 14A READ WITH RULE 8D BE N OT MADE. AFTER CONSIDERING THE SUBMISSION, THE AO FOUND THAT AS PER RULE 8D, THE DISALLOWANCE WAS TO BE MADE. ACCORDINGLY, HE WORKED OUT THE TOTAL DISALLOWANCE MADE AN ADDITION OF RS. 11,48,462/ - AT THE RATE OF 0.5% OF AVERAGE VALUE OF INVESTMENTS. 4 . DUR ING THE APPELLATE PROCEEDINGS, IT WAS SUBMITTED THAT THE DIVIDEND INCOME IS ONLY 0.5% AND THE ASSESSEE HAS DISALLOWED VARIOUS EXPENSES IN ITS RETURN ITSELF. THE DETAIL OF EXPENSES WAS FILED AND IT WAS STATED THAT THE REMAINING EXPENSES REMAINED AT RS .21,18 ,735/ - AS OUT OF TOTAL EX P E N S ES OF RS. 1,69,05,986/ - , THE ASSESSEE HIMSELF HAS DISALLOWED AT RS .1,47,87,451/ - . AFTER CONSIDERING THE SUBMISSION, LEARNED CIT(A) FOUND THAT THE AO WAS WRONG IN DISALLOWING THE EXPENSES BY APPLYING RULE 8D ON GROSS EXPENDITURE AS HE HAS NOT TAKEN VARIOUS EXPENSES DISALLOWED BY THE ASSESSEE ITSELF. THE LD. CIT(A) FOUND THAT THE RULE 8D CAN BE APPLIED ONLY IN RESPECT OF REMAINING EXPENSES OF RS. 21,18,735/ - , WHICH WORKED OUT AT RS. 1,12,732/ - . THE CIT(A) FURTHER NOTED THAT THE ASSESSEE HIMS ELF HAS DISALLOWED RS. 87,331/ - . ACCORDINGLY, HE DISALLOWED THE REMAINING AMOUNT OF RS. 25,401/ - . NOW, THE DEPARTMENT IS IN APPEAL HERE BEFORE THE TRIBUNAL. ITA NO. 5350 / 20 1 3 3 5 . LEARNED DR PLACED RELIANCE ON THE ORDER OF AO. ON THE OTHER HAND, LEARNED COUNSEL OF THE ASSESSEE PLACED RELIANCE ON THE ORDER OF CIT(A) . 6 . AFTER CONSIDERING THE SUBMISSION, I FIND NO INFIRMITY IN THE ORDER OF LEARNED CIT(A) . I NOTED THAT OUT OF TOTAL EXPENSES AT RS. 1,69,05,986/ - , THE ASSESSEE ITSELF HAS DISALLOWED A SUM OF RS. 1,47,87,251/ - IN THE RETURN OF INCOME. THEREFORE, THERE WAS NO QUESTION OF MAKING ANY DISALLOWANCE IN RESPECT OF EXPENSES, WHICH WERE ALREADY DISALLOWED BY THE ASSESSEE. THE REMAINING EXPENSES REMAIN AT RS. 21,18,735/ - ON WHICH AS PER RULE 8D , THE TOTAL DISALLOWANCE COMES TO RS . 1,12,732/ - . THE ASSESSEE ITSELF HAS DISALLOWED A SUM OF RS. 87,331/ - AND REMAINING EXPENSES HAS BEEN DISALLOWED BY THE LD. CIT(A) , WHICH ARE AT RS. 25,401/ - . THEREFORE, THE CIT(A) HAS PASSED A VERY CORRECT ORDER, WHICH DOES NOT REQUIRE ANY INTER FERENCE. ACCORDINGLY, I CONFIRM THE ORDER OF THE LEARNED CIT(A) . 7 . IN THE RESULT, APPEAL OF THE DEPARTMENT IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 4TH DAY OF SEPT .2013 SD/ - ( ) ( R.K.GU PTA ) / JUDICIAL MEMBER MUMBAI ; DATED : 04/09/2013 /PKM , PS ITA NO. 5350 / 20 1 3 4 COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) , MUMBAI. 4. / CIT 5. / DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// / BY ORDER, ( ASSTT. REGISTRAR) / ITAT, MUMBAI