ARYADOOT TRANSPORT P. LTD, MUMBAI V. DCIT CEN CIR 6(4), MUMBAI

ITA 5549/MUM/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1059 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Appeal Filed On: 01-10-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S MICHAEL JERALDLD
• Assessee Lawyers: HARSH SHAHLD
• Keywords: Earning of tax free income
• Section: 143(3); 14A

Judgement Text

1 ITA NO.5549/MUM/2018 ARYADOOT TRANSPORT PRIVATE LTD. ASSESSMENT YEAR-2015-16 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI , , BEFORE HONBLE SHRI VIKAS AWASTHY, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.5549/MUM/2018 ( / ASSESSMENT YEAR: 2015-16) ARYADOOT TRANSPORT P.LTD. UNIT NO.801, GODREJ COLISEUM C-WING, OFF SOMAIYA HOSPITAL ROAD SION, MUMBAI-400 022. / VS. D CIT - C ENTRAL C IRCLE - 6 ( 4 ) ROOM NO.1925, 19 TH FLOOR AIR INDIA BUILDING, NARIMAN POINT MUMBAI-400 021. ./ ./PAN/GIR NO. AAACA-4793-K ( /APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI HARSH SHAH-LD. AR / RESPONDENT BY : SHRI S. MICHAEL JERALD- LD. DR / DATE OF HEARING : 18/12/2019 / DATE OF PRONOUNCEMENT : 18/12/2019 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER): - 1. AFORESAID APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [IN SHORT REFERRED TO AS AY] 2015-16 CONTEST THE ORDER OF LD. COMMIS SIONER OF INCOME-TAX (APPEALS)-54, MUMBAI [IN SHORT REFERRED TO AS CIT( A)], APPEAL NO. CIT(A)- 2 ITA NO.5549/MUM/2018 ARYADOOT TRANSPORT PRIVATE LTD. ASSESSMENT YEAR-2015-16 54/ IT-10085/DCCC.6(4)/2017-18 DATED 23/07/2018 ON FOLLOWING GROUNDS OF APPEAL: - 1. THE LEARNED CIT (A) ERRED IN CONFIRMING DISALL OWANCE OF RS. 7,15,298/- BY ASSESSING OFFICER UNDER SECTION 14A R.W.R. 8D. 2. THE LEARNED CIT (A) ERRED IN NOT CONSIDERING PL EA OF THE APPELLANT FOR NOT TO CONSIDER VALUE OF STRATEGIC INVESTMENTS FOR THE PURPOSE OF C OMPUTING AMOUNT OF DISALLOWANCE UNDER SECTION 14A R.W.R. 8D. 3. THE LEARNED CIT (A) ERRED IN NOT CONSIDERING AP PELLANT'S ALTERNATIVE REQUEST TO RESTRICT DISALLOWANCE TO 0.5 % OF AVERAGE INVESTMENT IN THE SHARES OF GROUP COMPAN IES ARYA OMNITALK WIRELESS SOLUTIONS PVT. LTD. & ARYA OMNITA LK RADIO TRUNKING SERVICES PVT. LTD. (AS ON 31.03.2014 & 31.03.2015) BY EXCLUDING CAPITA L BALANCE IN M/S. MALGHAM BROTHERS - FIRM IN WHICH APPELLANT IS A PARTNER. 4. THE LEARNED CIT (A) ERRED IN NOT CONSIDERING SE VERAL JUDGEMENTS QUOTED BY APPELLANT IN SUBMISSION DATED 17.07.2018 IE J. M. FINANCIAL LTD. VS. AC1T ITA NO. 4521/ MUM / TRIBUNAL], GARWARE WALL ROPES [ ITA NO. 5408/ MUM / 2012] ETC. AS EVIDENT FROM GROUNDS OF APPEAL, THE SOLE SUBJECT MATTER OF PRESENT APPEAL IS DISALLOWANCE U/S 14A. 2. WE HAVE CAREFULLY HEARD AND CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED RELEVANT MATERIAL ON RECORD AND ALSO DELIBE RATED ON JUDICIAL PRONOUNCEMENTS AS CITED BEFORE US. OUR ADJUDICATION TO THE ISSUE WOULD BE AS GIVEN IN SUCCEEDING PARAGRAPHS. 3. FACTS ON RECORD WOULD REVEAL THAT THE ASSESSEE B EING RESIDENT CORPORATE ASSESSEE, STATED TO BE ENGAGED IN THE BUS INESS OF PROVIDING TRUCK TRAILERS, WAS ASSESSED FOR YEAR UNDER CONSIDERATION U/S. 143(3) ON 11/05/2017 WHEREIN THE ASSESSEE WAS SADDLED WITH DI SALLOWANCE U/S 14A FOR RS.7.15 LACS IN VIEW OF THE FACT THAT IT EARNED EXEMPT DIVIDEND INCOME OF RS.43.21 LACS AND ANOTHER EXEMPT INCOME OF RS.4.80 LACS, BEING SHARE OF PROFIT IN PARTNERSHIP FIRM NAMELY MANGHAM BROTHERS. THE ASSESSEE HAD OFFERED SUO-MOTO DISALLOWANCE OF RS.0.10 LACS AGAIN ST THE SAME IN ITS COMPUTATION OF INCOME. HOWEVER, NOT SATISFIED, LD.A O INVOKING THE 3 ITA NO.5549/MUM/2018 ARYADOOT TRANSPORT PRIVATE LTD. ASSESSMENT YEAR-2015-16 PROVISIONS OF SEC.14A R.W.R. 8D, COMPUTED AGGREGATE DISALLOWANCE OF RS.7.25 LACS WHICH COMPRISED-OFF OF INTEREST DISALL OWANCE U/R 8D(2)(II) FOR RS.0.04 LACS AND EXPENSE DISALLOWANCE U/R 8D(2)(III ) FOR RS.7.21 LACS. AFTER ADJUSTING THE SUO-MOTO DISALLOWANCE AS OFFERE D BY THE ASSESSEE, NET DISALLOWANCE THUS WORKED OUT TO BE RS.7.15 LACS, WH ICH WAS ADDED BACK TO THE INCOME OF THE ASSESSEE. THE STAND OF LD. AO, UP ON CONFIRMATION BY LEARNED FIRST APPELLATE AUTHORITY VIDE IMPUGNED ORD ER DATED 23/07/2018, IS UNDER CHALLENGE BEFORE US. 4. THE LD. AR, DRAWING OUR ATTENTION TO FINANCIAL S TATEMENTS, PLEADED FOR EXCLUSION OF THOSE INVESTMENTS WHICH DID NOT YIELD ANY EXEMPT DIVIDEND INCOME DURING THE YEAR. RELIANCE WAS PLACED ON THE DECISION OF DELHI TRIBUNAL (SPECIAL BENCH) RENDERED IN ACIT VS. VIREET INVESTMENT (P.) LTD. [82 TAXMANN.COM 415] FOR THE SAID SUBMISSIONS. IN THE SIMILAR MANNER, LD . AR PLEADED FOR EXCLUSION OF INVESTMENTS MADE IN PAR TNERSHIP FIRM IN TERMS OF DECISION OF THIS TRIBUNAL RENDERED IN HITESH D.GAJARIA V/S ACIT (ITA NO. 993/MUM/2007 ORDER DATED 14/11/2008) WHEREIN THE COORDINATE BENCH RELYING UPON THE DECISION OF TRIBUNAL IN SUDHIR KAPADIA V/S ITO (ITA NO.7888/MUM/2003 ORDER DATED 26/02/2007) HELD THAT THE SHARE OF INCOME FROM FIRM WAS NOT EXEMPT IN ABSOLUTE SENSE. IT WAS ONLY TO AVOID DOUBLE TAXATION, ONCE IN THE HANDS OF THE FIRM AND THEREAF TER, IN THE HANDS OF THE PARTNERS AND THEREFORE, THE DISALLOWANCE U/S 14A WO ULD NOT APPLY TO THESE INVESTMENTS. THE REVENUE IS UNABLE TO CONTROVERT TH E SUBMISSIONS WITH ANY CONTRARY DECISIONS. 4 ITA NO.5549/MUM/2018 ARYADOOT TRANSPORT PRIVATE LTD. ASSESSMENT YEAR-2015-16 5. CONCURRING WITH ABOVE SUBMISSIONS AS MADE BY LD. AR, WE DIRECT LD. AO TO RECOMPUTE DISALLOWANCE U/S 14A AFTER EXCLUDIN G THOSE INVESTMENTS WHICH HAVE NOT YIELDED ANY EXEMPT INCOME DURING THE YEAR AND ALSO AFTER EXCLUDING INVESTMENT MADE BY THE ASSESSEE IN THE PA RTNERSHIP FIRM. 6. THE APPEAL STANDS PARTLY ALLOWED IN TERMS OF OUR ABOVE ORDER. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH DECEMBER, 2019. SD/- SD/- (VIKAS AWASTHY) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 18/12/2019 SR.PS:-JAISY VARGHESE / COPY OF THE ORDER FORWARDED TO : 1. ' / THE APPELLANT 2. #$ ' / THE RESPONDENT 3. % ( ) / THE CIT(A) 4. % / CIT CONCERNED 5. &'#() , ) , / DR, ITAT, MUMBAI 6. '+,- / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.