ENAM FIANANCIAL CONSULTANTS P.LTD, MUMBAI V. DCIT 2(1), MUMBAI

ITA 5406/MUM/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0195 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 20-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN
• Assessee Lawyers: M ANISH DESAI
• Keywords: Earning of tax free income
• Section: 143(3); 14A; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH E, MU MBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.5406/MUM/2015 (ASSESSMENT YEAR- 2011-12) M/S ENAM FINANCIAL CONSULTANTS PVT. LTD. 809-812, DALAMAL TOWER, FREE PRESS JOURNAL MARG, NARIMAN POINT, MUMBAI-400021 PAN: AAACE1052H VS. D.C.I.T. RANGE (2)(1) , MUMBAI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI MANISH DESAI (AR) REVENUE BY : SHRI V.JUSTIN (DR) DATE OF HEARING : 24.08.2017 DATE OF PRONOUNCEMENT : 24.08.2017 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER: 1. THIS APPEAL BY ASSESSEE U/S 253 OF THE INCOME-TAX A CT (THE ACT) IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)-4, MUMBAI DATED 09.06.2015 FOR THE AY 2011-12. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : (I) REGARDING DISALLOWANCE OF RS 30,36,105/- U/S 14 A OF THE INCOME TAX ACT AND ALSO WRONGLY ENHANCING THE BOOK PROFIT U/S 115J B BY RS. 30,36,105/- I.E. 14A DISALLOWANCE (A) THE LEARNED CIT(A)-4 HAS ERRED IN LAW AND ON FA CTS IN CONFIRMING THE ASSESSMENT OF THE APPELLANT ON THE BOOK PROFIT U/S 115 JB OF RS. 7,81,90,888/- (B) THE LEARNED CIT(A)-4 HAS ERRED IN CONFIRMING TH E DISALLOWANCE U/S 14A MADE BY THE A.O. WITHOUT BRINGING ANYTHING ON RECOR D TO PROVE THAT THE EXPENDITURE WERE INCURRED TO EARN EXEMPT INCOME OR WITHOUT BRINGING ON RECORD ANYTHING TO SHOW DIRECT NEXUS BETWEEN THE EXPENDITU RE INCURRED & THE EXEMPT INCOME. (C) THE LEARNED CIT(A) FURTHER ERRED IN CONFIRMING THE ENHANCEMENT OF BOOK PROFIT U/S 115 JB BY ADDING DISALLOWANCE U/S. 14A O F RS. 30,36,105/- TO THE BOOK PROFIT FOR THE PURPOSE OF SECTION 115 JB. (D) THE LEARNED CIT(A) ERRED IN NOT CONSIDERING THE FACTS THAT FOR THE PURPOSE OF BOOK PROFIT U/S, 115 JB LONG TERM CAPITAL GAIN IS N OT REDUCED FROM THE BOOK PROFIT ITA NO.5406/M/2015 M/S ENAM FINA NCIAL CONSULTANTS PVT. LTD. 2 BUT ONLY DIVIDEND INCOME IS REDUCED HENCE IF AT ALL DISALLOWANCE U/S 14A IS TO BE ADDED TO THE BOOK PROFIT IT SHOULD BE DIVIDED BETWE EN DIVIDEND INCOME AND LONG TERM CAPITAL GAIN AND RESTRICT THE ADDITION TO THE AMOUNT RELATING TO DIVIDEND INCOME ONLY BECAUSE LONG TERM CAPITAL GAIN IS NOT R EDUCED FROM BOOK PROFIT U/S 115JB. (E) YOUR APPELLANT CRAVES LEAVE TO ADD TO AMEND, AL TER, DELETE AND / OR MODIFY THE ABOVE GROUNDS OF APPEAL ON OR BEFORE THE FINAL DATE OF HEARING. (F) THE LEARNED CIT CA) ERRED IN NOT APPRECIATING T HE FACT THAT OUT OF TOTAL EXPENDITURE OF RS 4,00,01,581/- DEBITED TO PROFIT A ND LOSS ACCOUNT, EXPENDITURE OF RS.3,89,99,862/- IS NOT AT ALL RELATED TO EXEMPT INCOME AND IT IS MAINLY IN RESPECT OF PROPERTY UNDER CONSTRUCTION AND PROPERTY GIVEN ON RENT AND INCOME TAX EXPENSES WRITTEN OFF. GROUNDS 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE-COMPA NY IS ENGAGED IN THE BUSINESS OF INVESTMENT IN SHARES, FILED RETURN OF INCOME FOR RE LEVANT AY ON 30.09.2011 DECLARING TOTAL INCOME OF RS. 4,32,17,800/-. THE AS SESSMENT WAS COMPLETED ON 18.02.2014 UNDER SECTION 143(3) OF THE ACT. THE AS SESSING OFFICER (AO) WHILE PASSING THE ASSESSMENT ORDER MADE THE DISALLOWANCE OF RS. 30,36,105/- UNDER SECTION 14A OF THE ACT. AND THEREBY ENHANCED THE BOOK PROFIT U/S 115JB OF THE ACT BY ADDING DISALLOWANCE U/S 14A OF RS. 30,36,105 /-. ON APPEAL BEFORE THE LD. CIT(A), THE ACTION OF AO WAS CONFIRMED. THUS, FURTH ER AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFOR E US. 3. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVE (AR ) OF THE ASSESSEE AND LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR THE REVENUE AN D PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. AR OF THE ASSESSEE ARG UED THAT RECENTLY THE SPECIAL BENCH OF DELHI TRIBUNAL IN ACIT VS. VIREET INVESTME NT PVT. LTD.[2017] 82TAXMAN.COM 415(DELHI- TRIB)(SB) HELD THAT COMPUTA TION UNDER CLAUSE-(F) OF EXPLANATION-1 TO SECTION 115JB(2) OF THE ACT IS TO BE MADE WITHOUT RESORTING TO COMPUTATION AS CONTEMPLATED U/S 14A R.W. RULE 8D OF THE ACT. IT WAS FURTHER ITA NO.5406/M/2015 M/S ENAM FINA NCIAL CONSULTANTS PVT. LTD. 3 ARGUED THAT THE LOWER AUTHORITY WAS NOT HAVING THE BENEFIT OF DECISION OF SPECIAL BENCH WHILE PASSING THE ORDER IMPUGNED IN THE PRESE NT APPEAL. THE LD. AR OF THE ASSESSEE SUBMITS THAT THE MATTER MAY BE RESTORED TO THE LOWER AUTHORITY TO DECIDE THE ISSUE IN ACCORDANCE WITH THE DECISION IN M/S VI REET INVESTMENT (P) LTD (SUPRA). THE LD. DR FOR THE REVENUE HAS NO OBJECTION, IF THE MATTER IS RESTORED TO THE LOWER AUTHORITIES FOR DECIDING THE ISSUE AFRESH IN ACCORD ANCE WITH THE DECISION OF SPECIAL BENCH. 4. WE HAVE CONSIDERED THE RIVAL CONTENTION OF THE PART IES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE HAVE SEEN THAT THE AO MADE THE ADDITION U/S 14A R.W. RULE 8D OF THE ACT AND MADE THE DISALLOWANCE O F RS. 30,36,105/- AND THEREBY ENHANCED THE BOOK PROFIT ACCORDINGLY. THE ORDER OF AO WAS CONFIRMED BY LD. CIT(A) IN THE ORDER IMPUGNED BEFORE US. CONSIDERING THE FACT THAT THE LOWER AUTHORITIES WERE NOT HAVING BENEFIT OF DECISION OF SPECIAL BENCH IN ACIT VS. VIREET INVESTMENT PVT. LTD.(SUPRA). IN VIEW OF THE SUBMISSIONS OF BOTH THE PARTIES AND THE NATURE OF DISALLOWANCE, THE MATTER IS RESTO RED TO THE FILE OF AO TO PASS THE ORDER IN ACCORDANCE WITH LAW AFTER CONSIDERING THE DECISION OF ACIT VS. VIREET INVESTMENT PVT. LTD. (SUPRA). 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FO R STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH DAY OF AUGUST 2017. SD/- SD/- (G.S. PANNU) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 24/08/2017 S.K.PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT ITA NO.5406/M/2015 M/S ENAM FINA NCIAL CONSULTANTS PVT. LTD. 4 BY ORDER, (ASSTT.REGISTRAR) ITAT, MUMBAI 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY/