JSW POWER TRADING CO. LTD, MUMBAI V. DCIT RG 5(2), MUMBAI

ITA 5506/MUM/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3272 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: J
• Assessment Year: 2010-2011
• Appeal Filed On: 01-09-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ASHISH HELIWALDR
• Assessee Lawyers: RISHABH S HAH
• Section: 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES J, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI RAJENDRA, ACCOUNTANT MEMBER ITA NO.5506/MUM/2014 ASSESSMENT YEAR-2010-11 M/S JSW POWER TRADING COMPANY LTD. JSW CENTER, BANDRA KURLA COMPLEX, BANDRA (EAST), MUMBAI-400051 / VS. DCIT, RANGE-5(2), MUMBAI PAN NO.AABCJ5740L ( / ASSESSEE) ( / REVENUE) / ASSESSEE BY SHRI RISHABH SHAH / REVENUE BY SHRI ASHISH HELIWAL-DR / DATE OF HEARING : 29/03/2016 / DATE OF ORDER: 29/03/2016 ITA NO.5506/MUM/2014 M/S JSW POWER TRADING COMPANY LTD. 2 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DATED 21/07/2014 OF THE LD. FIRST APPELLATE AUTHORI TY, MUMBAI. THE ONLY GROUND RAISED IN THIS APPEAL PERT AINS TO DISALLOWING A SUM OF RS.1,38,29,156/- U/S 14A OF TH E INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) READ WIT H RULE 8D OF THE INCOME TAX RULES 1962, AGAINST THE DIVIDE ND INCOME OF RS.70,03,835/-. 2. DURING HEARING, AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE, SHRI RISHABH SHAH, CLAIMED THAT THE IMPUGNED ISSUE IS COVERED IN THE CASE OF THE ASSESS EE, FOR A.Y. 2009-10 (ITA NO.964/MUM/2013) ORDER DATED 15/01/2015. THIS FACTUAL MATRIX WAS NOT CONROVERTED BY LD. DR, SHRI ASHISH HELIWAL. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN VIEW O F THE ABOVE, WE ARE REPRODUCING HEREUNDER, THE RELEVANT P ORTION FROM THE AFORESAID ORDER OF THE TRIBUNAL, DATED 15/ 01/2015 FOR READY REFERENCE AND ANALYSIS:- THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE LD. CIT(A)-9, MUMBAI, DT.15.10.2012 PERTAINING TO A .Y. 2009-10. 2. THE SOLE GRIEVANCE OF THE ASSESSEE IS THAT THE LD. CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF RS.60,24,063/- MA DE U/S 14A OF THE ACT BY THE ASSESSING OFFICER INVOKING RULE 8 D. ITA NO.5506/MUM/2014 M/S JSW POWER TRADING COMPANY LTD. 3 3. THE ASSESSEE IS A NON-BANKING FINANCE COMPANY. T HE RETURN FOR THE YEAR WAS SELECTED FOR SCRUTINY ASSESSMENT. DURING THE COURSE OF THE SCRUTINY ASSESSMENT, THE ASSESSING OF FICER NOTICED THAT THE ASSESSEE HAS RECEIVED EXEMPT DIVIDEND INCO ME OF RS. 1,19,29,077/-. THE AO FURTHER FOUND THAT THE ASSESS EE. HAS DISALLOWED RS. 1,81,532/- BEING 1% OF EXPENSES AND ALSO DEMAT CHARGES AT RS. 5,618/-. THE AO WAS NOT CONVINCED WI TH THE DISALLOWANCE MADE BY THE ASSESSEE AND THEREFORE PRO CEEDED BY COMPUTING THE DISALLOWANCE AS PER RULE 8D. THE DISA LLOWANCE WAS COMPUTED AT RS. 62,05,595/-. SINCE THE ASSESSEE HAS SUO- MOTU DISALLOWED RS.1,81,532/-, THE AO DISALLOWED RS . 60,24,063/-. 4. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C ITCA) BUT WITHOUT ANY SUCCESS. 5. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE STAT ED THAT THE LOWER AUTHORITIES HAVE NOT APPRECIATED THE FACT PRO PERLY. IT IS THE SAY OF THE LD. COUNSEL THAT THE ENTIRE INVESTM ENTS HAVE BEEN MADE OUT OF OWN FUNDS AND BORROWED FUNDS HAVE NOT B EEN UTILIZED FOR MAKING THE INVESTMENTS. THE LD. COUNSE L REFERRED TO THE DOCUMENTARY EVIDENCES BROUGHT ON RECORD. 6. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDERS OF THE REVENUE AUTHORITIES. 7. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTH ORITIES BELOW AND THE RELEVANT DOCUMENTARY EVIDENCES BROUGHT ON R ECORD BEFORE US. THE ASSESSEE HAS MADE INVESTMENTS IN FIN ANCIAL YEAR 2005-06 TO THE TUNE OF RS. 19.67 CRORES WHICH WAS O UT OF SHARE CAPITAL RECEIVED FROM HOLDING COMPANY M/S. JSW ENER GY LTD. AMOUNTING TO RS. 20 CRORES. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS MADE INVESTMENT OF RS. 125 CRORES, THE SAME HAS BEEN MADE OUT OF THE SHARE CAP ITAL RECEIVED FROM THE HOLDING COMPANY M/S. JSW ENERGY LTD. EVIDE NCE ON RECORD CLEARLY SHOWS THAT THE ENTIRE INVESTMENTS HA VE BEEN MADE OUT OF OWN FUNDS AND SIMPLY BECAUSE THE ASSESS EE HAS BORROWED FUNDS IN ITS BALANCE SHEET, THAT DOES NOT MEAN THAT ITA NO.5506/MUM/2014 M/S JSW POWER TRADING COMPANY LTD. 4 THE ASSESSEE HAS MADE INVESTMENTS OUT OF BORROWED C APITAL. HOWEVER, AT THE SAME TIME, WE FIND THAT THE ASSESSE E HAS MADE DISALLOWANCE @ 1 %. IN OUR CONSIDERED VIEW, THIS IS ON THE LOWER SIDE. WE, THEREFORE, DIRECT THE AO TO RESTRICT THE DISALLOWANCE ON ACCOUNT OF INDIRECT EXPENSES @ 5% OF THE DIVIDEND I NCOME WHICH COMES TO RS. 5,96,453/-. SINCE THE ASSESSEE HAS SUO -MOTU DISALLOWED RS.1,81,532/-, THE AO IS DIRECTED TO RES TRICT THE DISALLOWANCE AT RS.4,14,921/-. IN RESULT, THE APPEAL FILED BY THE ASSESSEE IS PART LY ALLOWED. 2.2. DURING HEARING BEFORE US, THE LD. COUNSEL FO R THE ASSESSEE, CONTENDED THAT THE AFORESAID REASONING CO NTAINED THE ORDER MAY BE FOLLOWED IN THE PRESENT ASSESSMENT YEAR ALSO. IT IS NOTED THAT FOR A.Y. 2009-10 ALSO, THER E IS OBSERVATION THAT THE ENTIRE INVESTMENT WAS MADE OUT OF OWN FUNDS AND SIMPLY BECAUSE THE ASSESSEE HAD BORRO WED FUNDS IN THE BALANCE SHEET DOES NOT MEAN THAT THE A SSESSEE MADE INVESTMENT OUT OF BORROWED CAPITAL. IT WAS FU RTHER OBSERVED THAT THE ASSESSEE MADE DISALLOWANCE AT THE RATE OF 1%, WHICH WAS CONSIDERED TO BE TOWARDS LOWER SIDE, THEREFORE, THE ASSESSING OFFICER WAS DIRECTED TO RE STRICT THE DISALLOWANCE ON ACCOUNT OF INDIRECT EXPENSES AT THE RATE OF 5% OF THE DIVIDEND INCOME AND SINCE THE ASSESSEE HA D SUO- MOTU DISALLOWED RS.1,81,532/-, THE ASSESSING OFFICE R WAS DIRECTED TO RESTRICT THE DISALLOWANCE AT RS.4,14,92 1/-. THE LD. DR HAD ALSO NO OBJECTION TO THE AFORESAID REASO NING, IF FOLLOWED. CONSIDERING THE TOTALITY OF FACTS, THE LD . ASSESSING OFFICER IS DIRECTED TO CONSIDER THE AFORESAID REASO NING AND ITA NO.5506/MUM/2014 M/S JSW POWER TRADING COMPANY LTD. 5 TO RESTRICT THE DISALLOWANCE ACCORDINGLY. APPEAL OF THE ASSESSEE, IS, THEREFORE, PARTLY ALLOWED. FINALLY, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOW ED. THIS ORDER WAS PRONOUNCED IN THE OPEN IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 29/03/2016. SD/- SD/- (RAJENDRA) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER MUMBAI; # DATED : 29/03/2016 F{X~{T? P.S/. . . %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. %& '( / THE APPELLANT (RESPECTIVE ASSESSEE) 2. )*'( / THE RESPONDENT. 3. + + , ( %& ) / THE CIT, MUMBAI. 4. + + , / CIT(A)- , MUMBAI, 5. /01 )2 , + %& %23 , / DR, ITAT, MUMBAI 6. 14 5 / GUARD FILE. / BY ORDER, */& ) //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI