DCIT 9(3)(2), MUMBAI V. GARDEN COURT DISTILLERIES P.LTD, MUMBAI

ITA 5562/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8471 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-11-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2013-2014
• Appeal Filed On: 14-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMAR LD
• Keywords: Earning of tax free income
• Section: 143(3); 14A

Judgement Text

ITA.NO.5562/MUM/2016 GARDEN COURT DISTILLERIES PRIVATE LIMITED ASSESSMENT YEAR-2013-14 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI . . , , BEFORE SHRI D.T. GARASIA, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.5562/MUM/2016 ( / ASSESSMENT YEAR: 2013-14) ASSISTANT COMMISSIONER OF INCOME TAX 9(3)(2) 418. 4 TH FLOOR AAYKAR BHAWAN MUMBAI 400 020 / VS. GARDEN COURT DISTILLERIES PVT. LTD. 303-304, 3 RD FLOOR RAHEJA PLAZA, NEXT TO AFCONS OFF. VEERA DESAI ROAD ANDHERI (W), MUMBAI-400053 !' ./ ./PAN/GIR NO. AAACG-1457-C ( '$ /APPELLANT ) : ( %&'$ / RESPONDENT ) A SSESSEE BY : NONE RE VENUE BY : SUMAN KUMAR, LD. SR. DR / DATE OF HEARING : 02/11/2017 / DATE OF PRONOUNCEMENT : 08/11 /2017 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY REVENUE FOR ASSESSMENT Y EAR [AY] 2013- 14 ASSAILS THE ORDER OF THE LD. COMMISSIONER OF INC OME-TAX (APPEALS)- 16 [CIT(A)], MUMBAI, APPEAL NO.CIT(A)-16/IT-665/ACIT 9(3)(2)/2015-16 DATED 17/06/2016. THE ASSESSMENT FOR IMPUGNED AY WAS FRAMED BY LD. ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCL E 9(3)(2) U/S 143(3) ITA.NO.5562/MUM/2016 GARDEN COURT DISTILLERIES PRIVATE LIMITED ASSESSMENT YEAR-2013-14 2 OF THE INCOME TAX ACT, 1961 ON 29/02/2016. THE SOLITARY ISSUE INVOLVED IN THE APPEAL IS DISALLOWANCE U/S 14A. NONE HAS APP EARED FOR ASSESSEE DESPITE NOTICE AND NO ADJOURNMENT APPLICATION IS ON RECORD. LEFT WITH NO OPTION, WE PROCEED TO DISPOSE-OFF THE SAME ON THE B ASIS OF MATERIAL AVAILABLE ON RECORD AND AFTER HEARING LD. DEPARTMEN TAL REPRESENTATIVE [DR]. 2.1 BRIEFLY STATED THE ASSESSEE BEING RESIDENT CORPORATE ASSESSEE ENGAGED IN THE BUSINESS OF GENERATION OF POWER WAS ASSESSED FOR IMPUGNED AY U/S 143(3) AT RS.1,76,70,860/- AS AGAIN ST RETURNED INCOME OF RS.1,47,05,590/- E-FILED BY THE ASSESSEE ON 19/09/2013. THE ASSESSEE HAS SUFFERED DISALLOWANCE U/S 14A FOR RS.2 9,65,268/- AND THE SAME IS THE SUBJECT MATTER OF THIS APPEAL. 2.2 DURING ASSESSMENT PROCEEDINGS, IT WAS NOTED THA T THE ASSESSEE EARNED EXEMPT DIVIDEND INCOME OF RS.2,99,750/- WHER EAS IT DID NOT MAKE ANY SUO-MOTO DISALLOWANCE U/S 14A AGAINST THE SAME. THE ASSESSEE CONTESTED THE SAME ON VARIOUS GROUNDS. HOW EVER, NOT CONVINCED, LD. AO, APPLYING RULE 8D , COMPUTED THE SAME AT RS.29,65,268/- WHICH COMPRISED OF INTEREST DISALLOWANCE AS PER RULE 8D(2)(II) FOR RS.26,77,816/- AND EXPENSES DISALLOWA NCE U/R 8D(2)(III) @0.5% OF AVERAGE INVESTMENT, WHICH CAME TO RS.2,87, 452/-. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH PARTIAL SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 17/06/2 016 WHERE INTEREST DISALLOWANCE WAS DELETED UPON NOTICING THAT THE BOR ROWED FUNDS OBTAINED BY THE ASSESSEE WERE MEANT FOR SPECIFIC PU RPOSES AND FURTHER, INTEREST FREE FUNDS HELD IN THE SHAPE OF SHARE CAPITAL FAR EXCEEDED THE INVESTMENTS MADE BY THE ASSESSEE. REGARDING EXPENSE DISALLOWANCE, ITA.NO.5562/MUM/2016 GARDEN COURT DISTILLERIES PRIVATE LIMITED ASSESSMENT YEAR-2013-14 3 LD. CIT(A) NOTED THAT THE INVESTMENTS WERE STRATEGI C INVESTMENT AND FURTHER, THE DISALLOWANCE WAS TO BE COMPUTED WITH R EFERENCE TO THOSE INVESTMENT WHICH YIELDED EXEMPT INCOME DURING THE Y EAR. THE DISALLOWANCE, THUS WORKED OUT, AMOUNTED TO RS.9,200 /-. AGGRIEVED, THE REVENUE IS IN FURTHER APPEAL BEFORE US. THE LD. DR PLACED RELIANCE ON THE STAND OF LD. AO. 4. HEARD AND PERUSED RELEVANT MATERIAL ON RECORD. W E FIND THE MATTER TO BE FACTUAL ONE. THE LD. CIT(A), AFTER DUE APPREC IATION OF MATERIAL, REACHED A CONCLUSION THAT OWN INTEREST FREE FUNDS F AR EXCEEDED THE INVESTMENT. SECONDLY, THE STRATEGIC INVESTMENT AND INVESTMENTS WHICH YIELDED NO EXEMPT INCOME WERE TO BE EXCLUDED FOR TH E PURPOSE OF COMPUTATION OF EXPENSES DISALLOWANCE. WE FIND THE A PPROACH TO BE A QUITE FAIR, REASONABLE & PLAUSIBLE AND THEREFORE, F IND NO REASON TO INTERFERE WITH THE SAME. 5. RESULTANTLY, REVENUES APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 08 TH NOVEMBER, 2017. SD/- SD/- (D.T. GARASIA) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED :08.11 .2017 SR.PS:- THIRUMALESH ITA.NO.5562/MUM/2016 GARDEN COURT DISTILLERIES PRIVATE LIMITED ASSESSMENT YEAR-2013-14 4 ! / 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