TARAPUR SYNTHETICS PVT. LTD., MUMBAI V. ITO 3 (3)(3), MUMBAI

ITA 5417/MUM/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 9920 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 21-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAURABH KUMAR RAI LD DRS; AKHTAR HANSARI
• Assessee Lawyers: J P BAIRAGRA LD
• Keywords: Earning of tax free income; Rule 8D
• Section: 14A; 115JB; 250

Judgement Text

1 ITA 5417/MUM/2018 A.Y.2014-15 TARAPUR SYNTHETICS PRIVATE LIMITED - IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI , , BEFORE HONBLE SHRI MAHAVIR SINGH, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.5417/MUM/2018 ( / ASSESSMENT YEAR:2014-15 ) TARAPUR SYNTH E TICS P RIVATE LIMITED 701, TULSIANI CHAMBERS FREE PRESS JOURNAL MARG NARIMAN POINT, MUMBAI-400 021. / VS. INCOME TAX OFFIC ER - 3(3)(3) AAYKAR BHAVAN MUMBAI-400 020. '# ./ ./PAN/GIR NO. AABCT-2020-R ( #% /APPELLANT ) : ( &'#% / RESPONDENT ) REVENUE BY : SHRI AKHTAR H. ANSARI & SAURABH KUMAR RAI -LD.DR. S ASSESSEE BY : SHRI J.P. BAIRAGRA-LD. AR / DATE OF HEARING : 16/09/2019 / DATE OF PRONOUNCEMENT : 30/09/2019 / O R D E R PER BENCH: - 1. AFORESAID APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2014-15 CONTEST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-8, MUMBAI, [IN SHORT REFERRED TO AS CIT(A)], APPEAL NO. C IT-8/IT-287/16-17 DATED 18/06/2018 ON FOLLOWING GROUNDS OF APPEAL: - 2 ITA 5417/MUM/2018 A.Y.2014-15 TARAPUR SYNTHETICS PRIVATE LIMITED 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, AND IN LAW, THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)- HAS ERRED IN CONFIRMING THE DISALLOWANCE OF RS.4,79,854/- MADE UNDER SECTION 14A OF THE INCOME TAX ACT, 1961. 2. FURTHER THE SAME WAS ADDED TO THE TOTAL INCOME W HILE CALCULATING MINIMUM ALTERNATE TAX UNDER SECTION 115JB OF THE INCOME TAX ACT, 1961. 3. THE APPELLANT PRAYS THAT THE DISALLOWANCE OF RS. 4,79,854/- TO BE DELETED. AS EVIDENT FROM GROUNDS OF APPEAL, THE SOLE SUBJECT MATTER OF PRESENT APPEAL IS DISALLOWANCE U/S 14A. 2.1 FACTS ON RECORD WOULD REVEAL THAT THE ASSESSEE BEING RESIDENT CORPORATE ASSESSEE STATED TO BE ENGAGED IN THE BUSI NESS OF LETTING OUT OF PROPERTY WAS SADDLED WITH DISALLOWANCE U/S 14A FOR RS.4,79,854/- WHILE COMPUTING INCOME UNDER NORMAL PROVISIONS. 2.2 DURING ASSESSMENT PROCEEDINGS, IT TRANSPIRED TH AT THE ASSESSEE HAD MADE INVESTMENT OF RS.77.08 LACS, WHICH CALLED FOR DISALLOWANCE U/S 14A. THE ASSESSEE HAD NOT EARNED ANY EXEMPT DIVIDEND DUR ING THE YEAR UNDER CONSIDERATION. THE ASSESSEE HAD OFFERED SUO-MOTO DI SALLOWANCE OF RS.3.78 LACS IN THE RETURN OF INCOME. THE SAID DISALLOWANCE WAS ADDED BACK WHILE COMPUTING INCOME UNDER NORMAL PROVISIONS AS WELL AS WHILE COMPUTING BOOK PROFITS U/S 115JB. HOWEVER, REJECTING ASSESSEE S DISALLOWANCE, LD. AO, APPLYING RULE 8D, COMPUTED AGGREGATE DISALLOWAN CE OF RS.8.54 LACS, WHICH COMPRISED-OFF OF INTEREST DISALLOWANCE U/R 8D (2)(II) FOR RS.7.93 LACS AND ADMINISTRATIVE EXPENSE DISALLOWANCE U/R 8D(2)(I II) FOR RS.0.60 LACS. AFTER ADJUSTING SUO-MOTO DISALLOWANCE OF RS.3.78 LA CS ALREADY OFFERED BY THE ASSESSEE, NET DISALLOWANCE I.E. RS.4.79 LACS WA S ADDED TO THE INCOME OF THE ASSESSEE WHILE COMPUTING INCOME UNDER NORMAL PROVISIONS. THE SAID DISALLOWANCE, WHILE COMPUTING BOOK PROFIT U/S 115JB , WAS MADE FOR 3 ITA 5417/MUM/2018 A.Y.2014-15 TARAPUR SYNTHETICS PRIVATE LIMITED RS.8.54 LACS OVERLOOKING THE FACT THAT SUO-MOTO DIS ALLOWANCE OFFERED BY THE ASSESSEE WAS ALREADY ADDED BACK IN ASSESSEES COMPU TATIONS. THE ADJUDICATION OF LD. AO, UPON CONFIRMATION BY FIRST APPELLATE AUTHORITY, IS UNDER CHALLENGE BEFORE US. 3. WE HAVE CAREFULLY HEARD AND CONSIDERED THE SUBMI SSIONS MADE BY BOTH THE REPRESENTATIVES. 4. THE UNDISPUTED POSITION THAT EMERGES IS THE FACT THAT THE ASSESSEE HAS NOT EARNED ANY EXEMPT INCOME DURING THE YEAR UN DER CONSIDERATION AND THEREFORE, THE ADDITIONAL DISALLOWANCE AS MADE BY L EARNED AO WOULD NOT BE SUSTAINABLE IN THE EYES OF LAW. THE SAID PROPOSITIO N IS WELL SUPPORTED BY THE FOLLOWING BINDING JUDICIAL PRECEDENTS: - (I) HONBLE SUPREME COURT IN CIT V/S CHETTINAD LOGI STICS [95 TAXMANN.COM 250 SLP DISMISSED ON 02/07/2018] (II) HONBLE SUPREME COURT IN PR.CIT V/S GVK PROJEC T & TECHNICAL SERVICES LTD. [264 TAXMAN 76 SLP DISMISSED ON 03/05/2019] (III) HONBLE SUPREME COURT IN PR.CIT V/S OIL INDUS TRY DEVELOPMENT BOARD [103 TAXMANN.COM 326 SLP DISMISSED ON 08/02/2019] (IV) HONBLE SUPREME COURT IN CIT V/S ESSAR TELEHOL DINGS LTD. [401 ITR 445] RESPECTFULLY FOLLOWING THE SAME, WE HOLD THAT THE A DDITIONAL DISALLOWANCE OF RS.4.79 LACS MADE BY LD. AO WHILE COMPUTING INCOME UNDER NORMAL PROVISIONS, WOULD NOT BE SUSTAINABLE. ACCORDINGLY, WE DELETE THE SAME. GROUND NOS. 1 & 3 STAND ALLOWED. 5. SO FAR AS THE ADDITION OF DISALLOWANCE U/S 14A W HILE COMPUTING BOOK PROFITS U/S 115JB IS CONCERNED, WE FIND THAT THE SU O-MOTO DISALLOWANCE 4 ITA 5417/MUM/2018 A.Y.2014-15 TARAPUR SYNTHETICS PRIVATE LIMITED OFFERED BY THE ASSESSEE WAS ALREADY ADDED WHILE COM PUTING BOOK PROFITS U/S 115JB. SINCE WE HAVE ALREADY DELETED THE ADDITI ONAL DISALLOWANCE U/S 14A AS MADE BY LEARNED AO, NO FURTHER DISALLOWANCE WOULD BE REQUIRED U/S 115JB. GROUND NO. 2 STAND ALLOWED. 6. RESULTANTLY, THE APPEAL STANDS ALLOWED IN TERMS OF OUR ABOVE ORDER. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH SEPTEMBER, 2019. SD/- SD/- (MAHAVIR SINGH) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 30/09/2019 SR.PS:-JAISY VARGHESE #$ %$ / COPY OF THE ORDER FORWARDED TO : 1. #% / THE APPELLANT 2. &'#% / THE RESPONDENT 3. . ( ) / THE CIT(A) 4. . / CIT CONCERNED 5. /0 &)1 , 1 , / DR, ITAT, MUMBAI 6. 0234 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.