DCIT 4(1), MUMBAI V. BRIJMOHAN SAGARMAL CAPITAL SERVICES P. LTD, MUMBAI

ITA 5569/MUM/2013

• Counselvise Citation: 556919914 RSA 2013
• Duration Of Justice: 1 year(s) 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 24-06-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 27-08-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: KEYURI DESAI
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI RAJENDRA, ACCOUNTANT MEMBER ITA NO.5569/MUM/2013 ASSESSMENT YEAR: 2010-11 DCIT-4(1), ROOM NO.640, 6 TH FLOOR, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020 / VS. BRIJMOHAN SAGARMAL CAPITAL SERVICES P. LTD., 412, STOCK EXCHANGE TOWER, DALAL STREE, MUMBAI-400023 ( / REVENUE) ( !' # /ASSESSEE) P.A. NO. AAACB7335E / REVENUE BY SHRI JEETENDRA KUMAR-DR !' # / ASSESSEE BY MS. KEYURI DESAI $ % & # ' / DATE OF HEARING : 24/06/2015 & # ' / DATE OF ORDER: 24/07/2015 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DAT ED 28/06/2013 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI. THE ONLY GROUND RAISED BY THE REVENUE PERTAINS TO D ELETING BRIJMOHAN SAGARMAL CAPITAL SERVICES LTD. ITA NO.5569/MUM/2013 2 THE DISALLOWANCE OF RS.1,73,37,739/- MADE U/S 14A O F THE ACT READ WITH RULE -8D OF THE RULES, WITHOUT APPREC IATING THE DECISION OF THE SPECIAL BENCH IN THE CASE OF CH EMINVEST LTD. VS ITO 121 ITD 318, WHEREIN, IT WAS HELD THAT IF THE BORROWED FUND WERE INVESTED IN PURCHASE OF SHARE WH ICH ARE HELD BOTH AS INVESTMENT AND STOCK IN TRADE, THE REFORE, SECTION 14A WOULD BE APPLICABLE AND FURTHER IGNORIN G THE RATIO LAID DOWN BY HONBLE JURISDICTIONAL HIGH COUR T IN GODREJ & BOYCE MANUFACTURING COMPANY. 2. DURING HEARING OF THIS APPEAL, WE HAVE HEARD, SHRI JEETENDRA KUMAR, LD. DR, WHO ADVANCED HIS ARGUMENTS, WHICH ARE IDENTICAL TO THE GROUND RAISED . THE LD. DR. POINTED OUT THAT THE ISSUE IS COVERED IN FA VOUR OF THE REVENUE. ON THE OTHER HAND, MS. KEYURI DESAI, LD. COUNSEL FOR THE ASSESSEE, FAIRLY AGREED THAT THE IS SUE IS COVERED AGAINST THE ASSESSEE. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT THE ASSESSEE IS A PRIVATE COMPANY E NGAGED IN THE BUSINESS OF BROKERAGE AND DEALING IN SHARES, AS A MEMBER OF BOMBAY STOCK EXCHANGE. THE ASSESSEE HAVI NG INSUFFICIENT FUNDS TO TRADE IN SHARES, BORROWED FUN DS AND UTILIZE THE SAME FOR PURCHASE OF SHARES. THE TOTAL LOAN OUTSTANDING AS ON 31/03/2010 WERE TO THE TUNE OF RS.21,84,53,513/- AND THE CLOSING STOCK OF SHARES A S ON 31/03/2010 WERE TO THE TUNE OF RS.23,39,71,313/-. T HE HUGE BORROWED MONEY WAS UTILIZED FOR TRADING IN SHA RES. BRIJMOHAN SAGARMAL CAPITAL SERVICES LTD. ITA NO.5569/MUM/2013 3 THE ASSESSEE CLAIMED DIVIDEND INCOME OF RS.1,09,55, 090/- AND CLAIMED THE SAME AS EXEMPT. THE ASSESSEE DID N OT DISALLOW THE PROPORTIONATE EXPENSES RELATING TO CLA IMED EXEMPT INCOME. THE LD. ASSESSING OFFICER ASKED THE WORKING OF DISALLOWANCES U/S 14A OF THE ACT READ WI TH RULE-8D. THE WORKING, FILED BY THE ASSESSEE, WAS F OUND UNSATISFACTORY. ADMITTEDLY, THE ASSESSEE USED BOR ROWED FUNDS FOR MAKING INVESTMENT IN THE SHARES OF VARIOU S COMPANIES. THE IMPUGNED ASSESSMENT YEAR BEFORE US IS 2010-11, THEREFORE, THE CASE OF GODREJ & BOYCE MFG. COMPANY IS VERY MUCH APPLICABLE TO THE FACTS OF THE PRESENT APPEAL. THUS, FOLLOWING THE AFORESAID DECI SION, WE FIND MERIT IN THE CONCLUSION DRAWN BY THE LD. ASSES SING OFFICER. THE STAND OF THE LD. COMMISSIONER OF INCOM E TAX (APPEALS) IS REVERSED. FINALLY, THE APPEAL OF THE REVENUE IS ALLOWED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 24/06/2015. S D/ - (RAJENDRA) SD/ - (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER $ % MUMBAI; ( DATED : 24/07/2015 F{X~{T? P.S/. . . %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. *+,- / THE APPELLANT 2. ./,- / THE RESPONDENT. 3. 0 0 $ 1# ( *+ ) / THE CIT, MUMBAI. BRIJMOHAN SAGARMAL CAPITAL SERVICES LTD. ITA NO.5569/MUM/2013 4 4. 0 0 $ 1# / CIT(A)- , MUMBAI 5. 34 .# , 0 *+' * 5 , $ % / DR, ITAT, MUMBAI 6. 6! 7% / GUARD FILE. / BY ORDER, /3+# .# //TRUE COPY// / (DY./ASSTT. REGISTRAR) , $ % / ITAT, MUMBAI