ACIT CIR 3(3), MUMBAI V. REMI FINANCE *& INVESTMENT P.LTD, MUMBAI

ITA 5364/MUM/2012

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2851 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 04-06-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 24-08-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K RAVI RAM CHANDRAN
• Assessee Lawyers: TAHER YUSUF
• Keywords: Proportionate interest
• Section: 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BE NCH, MUMBAI BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH, JUDICIAL MEMBER / I .TA NO. 5364/MUM/2012 ( / ASSESSMENT YEAR: 2009-10 THE ACIT, IRCLE-3(3) MUMBAI / VS. M/S. REMI FINANCE & INVESTMENTS PVT. LTD., PLOT NO. 11, CAMA INDUSTRIAL ESTATE, GOREGAON (E), MUMBAI-400 063 ./ ./ PAN/GIR NO. : AAACR 0400Q ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY: SHRI K. RAVI RAMCHANDRAN / RESPONDENT BY: SHRI TAHER YUSUF / DATE OF HEARING :28.10.2015 !' / DATE OF PRONOUNCEMENT :28.10.2015 #$ / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE REVENUE IS PREFERRED AGAINST THE ORDER OF THE LD. CIT(A)-7, MUMBAI DATED 30.4.2012 PERTAININ G TO ASSESSMENT YEAR 2009-10. 2. THE SOLE GRIEVANCE OF THE REVENUE IS THAT THE LD . CIT(A) ERRED IN DELETING THE DISALLOWANCE MADE U/S. 14A TO THE E XTENT OF RS.22,52,123/- UNDER RULE 8D(2)(II) OF THE ACT. ITA. NO. 5364/M/2012 2 3. THE ASSESSEE IS IN THE BUSINESS OF FINANCE AND A LSO TRADING IN SHARES AND SECURITIES. WHILE SCRUTINIZING THE RETU RN OF INCOME, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS CLA IMED DIVIDEND INCOME OF RS. 3,535/- AS EXEMPT FROM TAX. THE AO F URTHER NOTICED THAT THE ASSESSEE SUO MOTO DISALLOWED RS. 61,093/- U/S. 14A OF THE ACT. THE AO WAS OF THE OPINION THAT THE DISALLOWAN CE IS NOT AS PER RULE 8D OF THE ACT. ACCORDINGLY, THE AO PROCEEDED BY COMPUTING THE DISALLOWANCE AS PER RULE 8D AND COMPUTED THE SAME A T RS. 23,65,091/- AND AFTER DEDUCTING THE SUO MOTO DISALL OWANCE OF RS. 61,093/- THE AO MADE AN ADDITION OF RS. 23,03,998/- . 4. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT(A) AND STRONGLY SUBMITTED THAT IT HAS PAID UP CAPITAL AND RESERVES FAR IN EXCESS OF THE INVESTMENTS MADE IN THE SHARES AND TH EREFORE THE RATIO LAID DOWN BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS RELIANCE UTILITIES AND POWER LTD. 313 ITR 340 ( BOM) SQUARELY APPLY. THE LD. CIT(A) FOUND FORCE IN THE CONTENTIO N OF THE ASSESSEE AND DRAWING SUPPORT FROM THE DECISION OF THE HONBL E HIGH COURT OF BOMBAY (SUPRA), THE LD. CIT(A) DIRECTED THE AO TO R ESTRICT THE DISALLOWANCE TO THE EXTENT OF 0.5% OF AVERAGE VALUE OF INVESTMENT DELETING THE PROPORTIONATE INTEREST OF RS. 22,52,1 23/-. 5. AGGRIEVED BY THIS, THE REVENUE IS BEFORE US. 6. THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY STA TED THAT IT IS FOR THE ASSESSEE TO DEMONSTRATE THAT ON THE DATE OF INVESTMENT, IT HAS SURPLUS INVESTIBLE FUND. BLANKET RELIANCE ON THE D ECISION OF THE HONBLE HIGH COURT OF BOMBAY IS UNCALLED FOR. THE REPRESENTATIVE OF ITA. NO. 5364/M/2012 3 THE ASSESSEE FILED A WRITTEN SUBMISSION STATING THE SAME THING WHICH WAS STATED BEFORE THE LD. CIT(A). 7. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORDERS OF THE AUTHORITIES BELOW. UNDOUBTEDLY, THE LD. CIT(A) DEL ETED THE ADDITION ON ACCOUNT OF PROPORTIONATE INTEREST, DRAWING SUPPO RT FROM THE DECISION OF THE HONBLE HIGH COURT IN THE CASE OF RELIANCE UTILITIES AND POWER LTD (SUPRA). HOWEVER, WE FIND FORCE IN T HE CONTENTION OF THE LD. DR. THE ASSESSEE MUST DEMONSTRATE THE AVAI LABILITY OF SURPLUS INVESTIBLE FUND ON THE DATE OF INVESTMENT. WE, ACC ORDINGLY RESTORE THIS ISSUE TO THE FILE OF THE AO. THE ASSESSEE IS DIRECTED TO DEMONSTRATE THE AVAILABILITY OF SURPLUS FUNDS ON TH E DATE OF INVESTMENT AND THE AO IS DIRECTED TO DECIDE THE ISS UE AFRESH AFTER CONSIDERING THE DETAILS IN THE LIGHT OF THE DECISIO N OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF RELIANCE UTILITIES A ND POWER LTD (SUPRA). 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON 28 TH OCTOBER, 2015. SD/- SD/- (AMARJIT SINGH ) (N.K. BILLAIYA) %& # /JUDICIAL MEMBER # / ACCOUNTANT MEMBER ' ( MUMBAI; )# DATED : 28 TH OCTOBER, 2015 . & . ./ RJ , SR. PS ITA. NO. 5364/M/2012 4 !'# $#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. * ( ) / THE CIT(A)- 4. * / CIT 5. +,- &&./ , ./' , ' ( / DR, ITAT, MUMBAI 6. -01 2 / GUARD FILE. % / BY ORDER, + & //TRUE COPY// & / %' ( (DY./ASSTT. REGISTRAR) , ' ( / ITAT, MUMBAI