YARDLEY INVESTMENT & TRADING CO. LTD, MUMBAI V. CIT(A) -3, MUMBAI

ITA 5419/MUM/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3523 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 03-02-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 24-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI . . , , ! '# $%, & , ' BEFORE SHRI R.C.SHARMA, AM AND SHRI AMARJIT SINGH, JM / I.T.A. NO.5419/M/15 ( &( !) / ASSESSMENT YEAR: 2012-13) M/S. YARDLEY INVESTMENT & TRADING CO. PVT. LTD. 01, PEARL MANSION, (N)(91), M. K. ROAD, MUMBAI - 400013 ( / VS. INCOME TAX OFFICER 1(3)(2) AAYAKAR BHAVAN, M.K.ROAD, MUMBAI - 400020 ./ ./ PAN/GIR NO. : AAACY0327M ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING: 03.02.2016 !' /DATE OF PRONOUNCEMENT: 29.02.2016 #$ / O R D E R PER AMARJIT SINGH, JM: THIS IS AN APPEAL AGAINST THE ORDER DATED 30.09.201 5 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-3, MUMBAI [HEREINAFTER REFERRED TO AS THE LEARNED CIT(A)] R ELEVANT TO THE ASSESSMENT YEAR 2012-13. ASSESSEE BY: NONE DEPARTMENT BY: SHRI. V. S. JADHAV ITA NO.5419/MUM/15 A.Y. 2012-13 2 2. THE APPELLANT HAS TAKEN FOLLOWING GROUNDS OF APP EAL:- 1. THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF AN AMOUNT OF RS.1,79,263/- U/S. 14A OF THE INCOME TAX ACT 1961 AND HAS FURTHER ERRED IN APPLYING RULE 8D OF INCOME TAX RULES, 1961 WITHOUT APPRECIATING THE FACTS OF THE CASE IN THE RIGHT PERSPECTIVE. 3. THE BRIEF FACTS THE CASE ARE THAT THE MAIN BUSIN ESS OF THE ASSESSEE IS OF DEALING IN SHARES AND SECURITIES. T HE ASSESSEE EARNED THE DIVIDEND INCOME TO THE TUNE OF RS.2,97,393/- HO WEVER, NO EXPENDITURE TO EARN THE EXEMPT INCOME WAS MENTIONED . AT THE TIME OF ASSESSMENT THE ASSESSING OFFICER APPLIED THE SECTIO N 14 A READ WITH RULE 8D OF THE INCOME TAX ACT, 1961 ( IN SHORT TH E ACT) AND DISALLOWED THE EXPENDITURE TO THE TUNE OF RS.1,79,2 63/-. ASSESSEE WAS NOT SATISFIED THEREFORE, THE APPEAL WAS FILED B EFORE THE LEARNED CIT(A) WHO ALSO DISMISSED THE APPEAL OF THE ASSESSE E THEREFORE, THE ASSESSEE IS BEFORE US. 4. WE HAVE HEARD THE ARGUMENTS ADVANCED BY THE LEAR NED REPRESENTATIVE OF DEPARTMENT AND PERUSED THE RECORD S CAREFULLY. THE SOLE POINT WHICH HAS BEEN RAISED BY THE ASSESSEE IS THAT THE ASSESSEE RECEIVED THE DIVIDEND INCOME TO THE TUNE OF RS.2,97 ,393/- WHICH WAS BEING CLAIMED AS EXEMPTED FROM INCOME TAX. AS THE ASSESSEE INVESTED THE SAID INVESTMENT FROM HIS OWN FUND AND THE ASSESSEE NEVER CLAIMED ANY INTEREST EXPENDITURE OR ANY OTHER EXPEN DITURE THEREFORE, IN ITA NO.5419/MUM/15 A.Y. 2012-13 3 VIEW OF THE LAW SETTLED IN RELIANCE UTILITIES AND P OWER LTD. (313 ITR 340), BOMBAY HIGH COURT, IT IS REQUIRED TO BE PRESU MED THAT THE ASSESSEE HAS INVESTED INTO THE SHARES AND DERIVED D IVIDEND FROM ITS OWN FUND BUT THE LEARNED ASSESSING OFFICER HAS WRON GLY APPLIED THE PROVISION OF SECTION 14A READ WITH RULE 8D, HENCE T HE APPEAL OF THE ASSESSEE IS LIABLE TO BE ALLOWED IN THE INTEREST OF JUSTICE. THE LEARNED REPRESENTATIVE OF THE ASSESSEE ALSO PLACE RELIANCE ON LAW SETTLED IN ITO VS. PIONEER RADIO TRAINING SERVICES PVT. LTD. (ITA NO. 4448/DEL/2013)(ORDER DATED 19.01.2015), DELHI INCOM E TAX APPELLATE TRIBUNAL, RELIANCE UTILITIES AND POWER LTD. (313 IT R 340), BOMBAY HIGH COURT, INCOME TAX APPELLATE TRIBUNAL, CHENNAI IN CASE OF EIH ASSOCIATED HOTELS LTD. VS. DCIT, MAXOPP INVESTMENT LTD. VS. CIT (JURISDICTIONAL HIGH COURT)(347 ITR 272), WIMCO SEE DLINGS LTD. VS. DCIT (INCOME TAX APPELLATE TRIBUNAL, DELHI THIRD ME MBER)(107 ITD 267), CIT VS. HERO CYCLES (PANJAB & HARYANA HIG H COURT) (323 ITR 518), ACIT VS. EICHER LTD. (ITAT DELHI) (101 TT J 369), MARUTI UDYOG VS. DCIT (INCOME TAX APPELLATE TRIBUNAL, DELH I) 92 ITD 119 AND HINDUSTAN PAPER CORPORATIONS LTD. V. DCIT (INCO ME TAX APPELLATE TRIBUNAL KOLKATA BENCH JUDGEMENT DATED 2 2.08.2012) ITA NO. 47/KOL/2012. 4.1 ON THE OTHER HAND LEARNED REPRESENTATIVE OF THE DEPARTMENT HAS REFUTED THE SAID CONTENTION. ITA NO.5419/MUM/15 A.Y. 2012-13 4 4.2 KEEPING IN VIEW OF THE ARGUMENTS ADVANCED BY TH E REPRESENTATIVE OF DEPARTMENT AND PERUSING THE RECOR D, IT IS OBSERVED THAT IT IS NECESSARY TO MENTIONED THE DETAILS OF SH ARE CAPITAL, RESERVE & SURPLUS, INVESTMENTS, DIVIDENDS AND INTEREST FOR LAST THREE YEARS OF THE ASSESSEE ON RECORD:- A.Y. 2010-11 2011-12 2012-13 SHARE CAPITAL 70,30,200 70,30,200 70,30,200 RESERVE & SURPLUS 2,41,83,371 2,47,26,720 2,52,05,047 QUASI EQUITY 3,51,00,000 3,51,00,000 3,51,00,000 TOTAL 6,63,13,571 6,68,56,920 6,73,35,247 INVESTMENTS 3,62,41,475 3,62,66,475 3,62,66,475 DIVIDEND INCOME 4,585 3,51,455 2,97,393 INTEREST EXPENSE NIL NIL NIL THE ABOVE SAID CHART SPEAKS THAT THE INVESTMENTS AR E LESS THAN THE AVAILABLE TOTAL FUNDS IN THE NATURE OF CAPITAL, RES ERVES AND SURPLUS AND QUASI EQUITY. IN THE YEAR UNDER CONSIDERATION , THE TOTAL SHARE CAPITAL AVAILABLE TO THE APPELLANT WAS TO THE TUNE OF RS.6.73 CRORES WHEREAS THE ASSESSEE MADE INVESTMENTS IN SHARES ONL Y TO THE TUNE OF RS.3.63 CRORES. IN VIEW OF THE LAW SETTLED IN RELI ANCE UTILITIES AND POWER LTD. (313 ITR 340), BOMBAY HIGH COURT, IT IS REQUIRED TO BE PRESUMED THAT THE ASSESSEE HAS INVESTED INTO THE SH ARES AND DERIVED DIVIDEND FROM ITS OWN FUND. MOREOVER NOTHING CAME INTO THE NOTICE ITA NO.5419/MUM/15 A.Y. 2012-13 5 THAT THE ASSESSING OFFICER PROVE THE NEXUS BETWEEN THE EXPENDITURE CLAIMED AND INVESTED AMOUNT IN THE SHARES. IN VIEW OF THE SAID CIRCUMSTANCES WE ARE OF THE VIEW THAT THE MATTER IS LIABLE TO BE CONSIDERED AGAIN BY THE ASSESSING OFFICER IN THE LI GHT OF OBSERVATIONS MADE ABOVE AND TO REASSESS THE DISALLOWANCE U/S. 14 A IN VIEW OF THE LAW SETTLED IN RELIANCE UTILITIES AND POWER LTD. (3 13 ITR 340), BOMBAY HIGH COURT. 6. ACCORDINGLY THE APPEAL FILED BY THE ASSESSEE IS HEREBY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH FEBRUARY , 2016. SD/- SD/- (R.C.SHARMA) (AMARJIT SINGH) # / ACCOUNTANT MEMBER %& # /JUDICIAL MEMBER ' ( MUMBAI; )# DATED : 29 TH FEBRUARY, 2016 MP MP MP MP ITA NO.5419/MUM/15 A.Y. 2012-13 6 + ,&#$- .-)# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. * ( ) / THE CIT(A)- 4. * / CIT 5. -./ &&01 , 01' , ' ( / DR, ITAT, MUMBAI 6. /34 5 / GUARD FILE. ( / BY ORDER, - & //TRUE COPY// //% ' /(DY./ASSTT. REGISTRAR) , ' ( / ITAT, MUMBAI