DCIT 3(3)(1), MUMBAI V. SHAPOORJI PALLONJI INFRASTRUCTURE CAPITAL COMPANY LTD, MUMBAI

ITA 5629/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8646 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-11-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 19-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Earning of tax free income; Proportionate interest
• Section: 14A; 115JB

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, C MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.5629/MUM/2016 ASSESSMENT YEAR: 2011-12 DCIT-3(3)(1), ROOM NO.609, 6 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020 / VS. M/S SHAPOORJI PALLONJI INFRASTRUCTURE CAPITAL COMPANY LTD. 41/44, S.P. CENTRE, MINOO DESAI MARG, COLABA, MUMBAI-400005 ( / REVENUE) ( !' # /ASSESSEE) PAN. NO. AABCS4370B $ % # & / DATE OF HEARING : 02/11/2017 % # & / DATE OF ORDER: 02/11/2017 ! / REVENUE BY SHRI RAJAT MITTAL-DR !' # ! / ASSESSEE BY NONE ITA NO. 5629/MUM/2016 M/S SHAPOORJI PALLONJI INFRASTRUCTURE CAPITAL COMPANY LIMITED. 2 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE REVENUE IS IN APPEAL, CHALLENGING THE IMPUGNED ORDER DATED 29/06/2016 OF THE LD. FIRST APPELLATE AUTHORI TY, MUMBAI, DELETING THE DISALLOWANCE MADE U/S 14A OF T HE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) R.W.R 8-D OF TH E I.T. RULES 1962. 2. DURING HEARING, SHRI RAJAT MITTAL, LD. DR, DEFE NDED THE ADDITION MADE BY THE ASSESSING OFFICER. NONE WA S PRESENT FOR THE ASSESSEE IN SPITE OF ISSUANCE OF REGISTERED AD NOTICE ISSUED ON 13/10/2017. THE ASSESSEE NEITHER PRESENTE D ITSELF NOR MOVED ADJOURNMENT PETITION. IT SEEMS THAT THE A SSESSEE HAS NOTHING TO SAY, THEREFORE, WE HAVE NO OPTION BU T TO PROCEED EX-PARTE, QUA THE ASSESSEE AND TEND TO DISPOSE OF T HIS APPEAL ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. 2.1. WE HAVE CONSIDERED THE SUBMISSIONS OF LD. DR AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINES S OF MAKING INVESTMENT IN INFRASTRUCTURE PROJECTS, DECLA RED TOTAL INCOME OF RS.22,45,90,364/- ON 22/09/2011 AND BOOKE D LOSS AT RS.3,00,31,665/- U/S 115JB OF THE ACT. FROM THE RECORD OF ITA NO. 5629/MUM/2016 M/S SHAPOORJI PALLONJI INFRASTRUCTURE CAPITAL COMPANY LIMITED. 3 THE ASSESSEE, IT WAS GATHERED THAT THE ASSESSEE HAD SHOWN UNSECURED LOANS FROM IDFCL OF RS.48 CRORE AS ON 31/ 03/2011 AND UNSECURED LOAN FROM THE HOLDING COMPANY OF RS.23,50,000/- AND AGAINST SUCH UNSECURED LOANS CLA IMED INTEREST EXPENDITURE OF RS.65,54,694/-. THE LD. ASS ESSING OFFICER IGNORED THE SUBMISSIONS OF THE ASSESSEE AND WORKED OUT THE DISALLOWANCE AS PER FORMULA SPECIFIED IN RULE-8 D, RESULTING INTO DISALLOWANCE OF RS.1,13,15,225/- U/S 14A R.W.R . 8-D. THE PROPORTIONATE INTEREST EXPENSES AMOUNTING TO RS.59, 77,581/- WERE DISALLOWED AND ADDED BACK TO THE TOTAL INCOME. ON APPEAL BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEAL), THE FACTUAL MATRIX WAS CONSIDERED AND RELIEF WAS GRANTE D TO THE ASSESSEE, WHICH IS UNDER CHALLENGED BEFORE THIS TRI BUNAL. IT IS NOTED THAT THE ASSESSEE MADE SUO-MOTO DISALLOWANCE OF INTEREST OF RS.5,35,28,118/- AND OF OTHER EXPENSES AT RS.2,5 0,000/- OUT OF THE TOTAL EXPENDITURE OF RS.6,55,46,945/-. THE E XPLANATION OF THE ASSESSEE WAS REJECTED BY THE ASSESSING OFFICER INVOKING THE PROVISION OF SECTION -14A R.W.R-8D OF THE RULES. WE FIND THAT THERE IS NO JUSTIFICATION GIVEN BY THE ASSESSING OF FICER AGAINST METHODOLOGY OF COMPUTING OF EXPENSES ATTRIBUTABLE T O EARNING EXEMPT INCOME. THE OWN INTEREST FREE FUNDS BY WAY OF SHARE ITA NO. 5629/MUM/2016 M/S SHAPOORJI PALLONJI INFRASTRUCTURE CAPITAL COMPANY LIMITED. 4 CAPITAL AND RESERVES/SURPLUS ARE OF RS.316.79 CRORE S, WHICH WERE MORE THAN THE INVESTMENT OF RS.130.08 CRORES. IN THE LIGHT OF THE DECISION FROM HON'BLE JURISDICTIONAL HIGH CO URT IN THE CASE OF RELIANCE UTILITIES & POWER LTD. 313 ITR 340 (BOM.), PUKHRAJ CHUNNILAL BAFNA VS DCIT (2014) 65 SOT 187. OWN CASE OF THE ASSESSEE FOR ASSESSMENT YEAR 2010-11 AN D 2009- 10, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CO MMISSIONER OF INCOME TAX (APPEAL), RESULTANTLY, THE APPEAL OF THE REVENUE IS DISMISSED. FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN TH E PRESENCE OF THE LD. DR AT THE CONCLUSION OF THE HEA RING ON 02/11/2017. SD/- SD/- ( RAJESH KUMAR ) (JOGINDER SINGH) '!# / ACCOUNTANT MEMBER $!# /JUDICIAL MEMBER $ MUMBAI; ( DATED : 02/11/2017 F{X~{T? P.S / /. .. %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. *+,- / THE APPELLANT (RESPECTIVE ASSESSEE) 2. ./,- / THE ASSESSEE. 3. 0 0 1# ( *+ ) / THE CIT, MUMBAI. 4. 0 0 1# / CIT(A)- , MUMBAI, 5. 34 .# , 0 *+& * 5 , $ / DR, ITA NO. 5629/MUM/2016 M/S SHAPOORJI PALLONJI INFRASTRUCTURE CAPITAL COMPANY LIMITED. 5 ITAT, MUMBAI 6. 6! 7$ / GUARD FILE. ! / BY ORDER, /3+# .# //TRUE COPY// /! (DY./ASSTT. REGISTRAR) , $ / ITAT, MUMBAI