JSW CEMENT LTD, MUMBAI V. DCIT 5 (3)(1), MUMBAI

ITA 5387/MUM/2018

• Counselvise Citation: [2019] 111 COUNSELVISE.COM (IT) 9993 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2013-2014
• Appeal Filed On: 18-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MOHAMMED RIZWAN ADD
• Keywords: Rule of consistency; Earning of tax free income; Rule 8D
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F, MUMBAI BEFORE SHRI PAWAN SINGH (JM) & SHRI S RIFAUR RAHMAN (AM) ITA NO. 5387/MUM/2018(ASSESSMENT YEAR : 2013-14 ITA NO. 5388/MUM/2018(ASSESSMENT YEAR : 2014-15 JSW CEMENT LTD 5 TH FLOOR, JSW CENTRE BANDRA KURLA COMPLEX MUMBAI-400 051 PAN : AABCJ6731B VS DY.CIT-5(3)(1), MUMBAI APPELLANT RESPONDEDNT APPELLANT BY SHRI RITESH JAIN RESPONDENT BY SHRI MOHAMMED RIZWAN ADD.CIT/DR DATE OF HEARING 12-12-2019 DATE OF PRONOUNCEMENT 12-12-2019 O R D E R PER PAWAN SINGH, JM : 1. THESE TWO APPEAL FILED BY ASSESSEE ARE DIRECTED AGA INST THE SEPARATE ORDERS OF CIT(A)-10, MUMBAI BOTH DATED 14-06-2018 FOR ASSE SSMENT YEARS 2013-14 & 2014-15. IN BOTH THE APPEALS, THE ASSESS EE HAS RAISED IDENTICAL GROUNDS OF APPEAL. FACTS IN BOTH THE APPEALS ARE I DENTICAL EXCEPT THE VARIATION OF CERTAIN FIGURES. ACCORDINGLY, BOTH T HE APPEALS WERE CLUBBED, HEARD AND ARE DECIDED BY THIS CONSOLIDATED ORDER. IN APPEAL FOR AY 2013- 14, THE ASSESSEE HAS RAISED THE FOLLOWING GROUND OF APPEAL:- THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACT ION OF LEARNED ASSESSING OFFICER IN DISALLOWING A SUM OF RS. 12,70,0897- U/S . 14A OF INCOME TAX ACT, 1961 BY INVOKING THE RULE 8D OF INCOME TAX RULES, 1 962, WITHOUT CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE. 2 ITA 5387 & 5388/MUM/2018 JSW CEMENT 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS A CORPORATE ENTITY ENGAGED IN THE BUSINESS OF MANUFACTURING OF GROUND GRANULAT ED BLAST FURNACE SLAG (CGBS), PORTLAND SLAG CEMENT (PSC) & ORDINARY PORTL AND CEMENT (OPC), FILED ITS RETURN OF INCOME DECLARING LOSS OF RS.425 CRORES. THE CASE WAS SELECTED FOR SCRUTINY AND ASSESSMENT WAS COMPLETED U/S 143(3) ON 31-03- 2016. DURING THE ASSESSMENT, THE ASSESSEE HAS SHOW N EXEMPT INCOME IN THE FORM OF DIVIDEND OF RS.7.79 LAKHS. THE ASSESSE E HAS SHOWN SUO MOTO DISALLOWANCE OF RS.1.23 LAKHS BEING EXPENDITURE INC URRED IN RELATION TO EXEMPT INCOME. THE AO NOTED THAT ASSESSEE HAS NOT DEBITED THE INTEREST EXPENDITURE WHILE COMPUTING THE DISALLOWANCE U/S 14 A R.W.S. 8D(2)(II). ON SHOW CAUSE NOTICE, THE ASSESSEE FILED ITS SUBMIS SION, WHICH HAS BEEN RECORDED BY AO AT PARA 4.1 OF THE ASSESSMENT ORDER. THE ASSESSEE, IN HIS REPLY STATED THAT THE ASSESSEE OWNED INTEREST FREE FUNDS FOR MAKING INVESTMENTS, THOUGH THE ASSESSEE HAS BORROWED FUNDS , A PRESUMPTION CAN BE MADE THAT ADVANCE FOR NON-BUSINESS PURPOSE, HAVE BEEN MADE OUT OF OWN FUNDS AND THAT BORROWED FUNDS HAVE NOT BEEN USE D FOR THE PURPOSE OF INVESTMENT. THE ASSESSEE RELIED UPON THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN CIT VS RELIANCE UTILIT IES & POWER PVT LTD 313 ITR 340 (BOM) AND CIT VS HDFC BANK LTD 366 ITR 505 (BOM). 3 ITA 5387 & 5388/MUM/2018 JSW CEMENT 3. THE REPLY OF THE ASSESSEE WAS NOT ACCEPTED BY AO. THE AO INVOKED THE PROVISIONS OF RULE 8D(2)(II) AND MADE DISALLOWANCE OF RS.12,70,089/- ON ACCOUNT OF INTEREST EXPENDITURE. THE AO, AFTER GIV ING SET OFF OF SUO MOTO DISALLOWANCE, MADE THE ADDITION ACCORDINGLY. ON AP PEAL BEFORE THE CIT(A), THE ACTION OF AO WAS UPHELD. FURTHER AGGRI EVED BY THE ORDER OF CIT(A), THE ASSESSEE HAS FILED PRESENT APPEAL BEFOR E TRIBUNAL. 4. WE HAVE HEARD THE LEARNED AUTHORISED REPRESENTATIVE (LD. AR) FOR THE ASSESSEE AND THE LEARNED DEPARTMENTAL REPRESENTATIV E (LD. DR) FOR THE REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECOR D. THE LD.AR OF THE ASSESSEE SUBMITS THAT THE ASSESSEE HAS RAISED VERY LIMITED GROUND OF APPEAL THAT THE DISALLOWANCE MADE BY AO AND CONFIRM ED BY LD.CIT(A) U/R 8D(2)(II) IS MADE BY NOT FOLLOWING THE DECISION OF JURISDICTIONAL HIGH COURT IN CIT VS HDFC BANK LTD (SUPRA) AND CIT VS RE LIANCE UTILITIES & POWER PVT LTD (SUPRA). THE LD.AR SUBMITS THAT DESP ITE BRINGING THE FACT IN THE NOTICE OF AO THAT THE ASSESSEES OWN FUNDS W ERE MORE THAN THE INVESTMENT MADE BY ASSESSEE FOR EARNING THE EXEMPT INCOME THE LOWER AUTHORITY MADE DISALLOWANCES UNDER RULE8D(2)(II), W HICH IS NOT WARRANTED IN THE PRESENT APPEAL. 4 ITA 5387 & 5388/MUM/2018 JSW CEMENT 5. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SUPPO RTED THE ORDER OF LOWER AUTHORITIES. THE LD. DR SUBMITS THAT LD. CIT (A) HAS DISTINGUISHED THE CASE LAWS RELIED UPON BY THE ASSESSEE. 6. WE HAVE CONSIDERED THE SUBMISSION OF BOTH THE PARTI ES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE NOTED THAT T HERE IS VERY SHORT POINT / ISSUE FOR OUR ADJUDICATION. WE HAVE NOTED THAT B EFORE THE LD.CIT(A), THE ASSESSEE BEFORE THE LOWER AUTHORITIES DEMONSTR ATED THAT THE RESERVES AND SURPLUS FUND OF THE ASSESSEE WAS MORE THAN THE INVESTMENT MADE IN THE SHARES OF JSW ENERGY ON WHICH ASSESSEE EARNED E XEMPT INCOME. DESPITE THE FACT THAT THE ASSESSEE RELIED UPON THE BINDING DECISION OF CIT VS HDFC BANK LTD (SUPRA) AND CIT VS RELIANCE UTILI TIES & POWER PVT LTD (SUPRA), THE AO MADE DISALLOWANCE U/ 8D(2)(II). CONSIDERING THE BINDING DECISION OF HONBLE JURISDICTIONAL HIGH COU RT, WE ARE IN AGREEMENT WITH THE SUBMISSION OF LD.AR OF THE ASSES SEE THAT NO DISALLOWANCE U/R 8D(2)(II) IS WARRANTED WHEN THE AS SESSEE HAS OWN INTEREST FREE FUNDS MORE THAN THE INVESTMENT. ACCO RDINGLY, WE DIRECT THE AO TO VERIFY THE FACT, AND IF THE RESERVES AND SURP LUS INTEREST FREE FUNDS OF THE ASSESSEE WERE MORE THAN THE INVESTMENT THEN, NO DISALLOWANCE U/R 8D(2)(II) BE MADE. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED. 5 ITA 5387 & 5388/MUM/2018 JSW CEMENT ITA NO.5388/MUM/2018 (AY 2014-15) 10. THE ASSESSEE HAS RAISED IDENTICAL GROUND OF APPEAL IN THIS APPEAL AS RAISED IN APPEAL FOR AY 2013-14. THE FACTS OF THE CASE FO R THE YEAR UNDER CONSIDERATION ARE ALSO IDENTICAL. THEREFORE, CONSI DERING THE PRINCIPLE OF CONSISTENCY, THE GROUND OF APPEAL OF THE ASSESSEE I S ALLOWED WITH SIMILAR DIRECTION. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS TREATE D AS ALLOWED. 12. AS A RESULT, BOTH THE APPEAL FILED BY THE ASSES SEE IS ALLOWED, FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 12-12-2019. SD/- SD/- (S RIFAUR RAHMAN) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DT : 12 TH DECEMBER, 2019 PK/- COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI