SHREYAS MORAKHIA & FAMILY ASSETS P.LTD, MUMBAI V. ITO 7(2)(3), MUMBAI

ITA 5680/MUM/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8083 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-12-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 18-12-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN
• Keywords: Earning of tax free income
• Section: 14A; 10

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI MAHAVIR SINGH , JM AND SHRI RAJESH KUMAR, AM I .T.A. NO. 5680 /MUM/201 5 ( / ASSESSMENT YEAR : 2 0 11 - 12 ) M/S SHREVAS MORAKHIA A ND FAMILY ASSETS PVT LTD., (FORMERLY KNOWN AS SHIVA SHAKTI PROPERTIES PVT.LTD), 706, RAHEJA JOURNAL MARG, 214, NARIMAN POINT, MUMBAI - 400021 VS. INCOME TAX OFFICER - 7(2)(3), AAYAKAR BHAVAN, MAHARSHI KARVE MARG, MUMBAI - 400020 / APPELLANT .. / RESPONDENT ./ PAN : AAFCS8009P / ASSESSEE BY : NONE /RE VENUE BY : SHRI V .JUSTIN / DATE OF HEARING : 1 3 .12.2017 / DATE OF PRONOUNCEMENT : 15. 12 . 20 17 / O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE CHALLENGING THE ORDER DATED 30.11.2015 PASSED BY THE LD.CIT(A) - 14 , MUMBAI FOR THE ASSESSMENT YEAR 2011 - 12. AT THE OUTSET, WE WOULD LIKE TO MENTION HERE THAT NEITHER THE ASSESSEE NOR HIS AUTHORIZED REPRESENTATIVE APPEARED BEFORE THIS TRIBUNAL WHEN THE APPEAL WAS CALLED FOR HEARING NOR ANY APPLICATION SEEKING ADJOURNMENT OF THE HEARING WAS RECEIVED IN THE OFFICE OF THE TRIBUNAL DESPITE SERVICE OF NOTICE ITA .5680/ /MUM/201 5 2 THR OUGH RPAD. THEREFORE, WE PROCEED TO DISPOSE OF THE APPEAL OF THE ASSESSEE EX - PARTE ON MERIT AFTER HEARING THE LD.DR. 3. THE ONLY ISSUE RAISED BY THE ASSESSEE IN THE GROUNDS OF APPEAL AS AGAINST THE CONFIRMATION OF THE ADDITION TO THE TUNE OF RS.52,59,2 95/ - BY THE LD.CIT(A) AS MADE BY THE AO UNDER SECTION 14A OF THE INCOME TAX ACT, 1961 READ WITH RULE 8D OF THE INCOME TAX RULES, 1962. 4. FACTS OF THE CASE ARE THAT THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS OBSERVED THAT THE ASSESSEE HAS DI SALLOWED A SUM OF RS.1 , 15 , 612/ - UNDER SECTION 14A OF THE ACT, WHEREAS THE DIVIDEND INCOME EARNED BY THE ASSESSEE DURING THE YEAR RS.2,73,57,057/ - WHICH WAS CLAIMED AS EXEMPT INCOME UNDER SECTION 10 OF THE ACT. THE ASSESSEE WAS ASKED TO PRODUCE THE DETAI LS OF WORKING OF DISALLOWANCE UNDER SECTION 14A OF THE ACT . THE ASSESSEE FURNISHED DETAILS UNDER RULE 8D(2)(III) CALCULATING DISALLOWANCE AT RS.52,59,295/ - . HOWEVER, THE AO CALCULATED THE DISALLOWANCE AT RS.76,10,449/ - U/R 8D(2)(II) AND (III) WHICH WAS R ESTRICTED TO RS.65,80,214/ - AFTER TAKING INTO ACCOUNT THE EXPENSES CLAIMED BY THE ASSESSEE AS WELL AS SUO MOTU DISALLOWANCE OF RS.1,15,612/ - AS HAS BEEN GIVEN IN PARA 4.3 OF THE ASSESSMENT ORDER. IN THE APPELLATE PROCEEDINGS, THE LD.CIT(A) PARTLY ALLO WED THE APPEAL OF THE ASSESSEE BY SUSTAINING THE DISALLOWANCE UNDER RULE 8D(2)(II I ) TO RS.52,59,295/ - IN RESPECT OF OTHER EXPENSES ONLY BY RELYING ON THE DECISION OF HIS PREDECESSOR FOR THE ASSESSMENT YEAR 2009 - 10 WHILE DIRECTING THE AO TO MAKE DISALLOW ANCE OF INTEREST BY TAKING THE NET INTEREST EXPENSES ONLY. ITA .5680/ /MUM/201 5 3 5 . WE HAVE PERUSED THE MATERIAL PLACED BEFORE US AND HEARD THE LD.DR, WE FIND FROM THE RECORD THAT THE ASSESSEE HAS FILED A COPY OF TRIBUNAL ORDER IN ASSESSEES CASE FOR THE ASSESSMENT YEAR 2008 - 0 9 IN ITA NO.776/M/2012 DATED 20.10.2015, WHERE IN AN IDENTICAL ISSUE ON IDENTICAL FACTS HAS BEEN DECIDED. IN THE SAID ORDER, VIDE PARA 7 , IT HAS BEEN OBSERVED THAT THE DISALLOWANCE SHOULD BE WORKED OUT ON PROPORTIONATE METHOD UNDER RULE 8D(2)(III) AND DE TERMINED DISALLOWANCE AT RS.35,120/ - APPLYING THE PROPORTIONATE METHOD ON THE TOTAL INCOME AND DIVIDEND INCOME EARNED AND TOTAL EXPENSES IN THE CURRENT YEAR. THE ONLY DIFFERENCE IN THE FACTS ARE WITH REGARD TO THE QUANTUM OF AMOUNT OF DIVIDEND INCOME EARNED AND THE QUANTUM OF EXPENSES. 6 . CONSIDERING THE DECISION OF THE CO - ORDINATE BENCH OF THE TRIBUNAL AND THE OVERALL EXPENSES AS WELL AS THE INCOME AND TOTAL INCOME OF THE ASSESSEE , WE ARE OF THE VIEW THAT IT WOULD BE FAIR AND REASONABLE IF A SUM O F RS.10 LAKHS IS DISALLOWED UNDER RULE 8D(2)(III). ACCORDINGLY, WE DIRECT THE AO TO DISALLOW A SUM OF RS.10 LAKHS UNDER RULE 8D(2)(III). RESULTANTLY, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 7 . IN THE RESULT, APPEAL FILED BY T HE ASSESSEE PARTLY AL LOWED. O RDER WAS PRONOUNCED IN THE OPEN COURT ON 15TH DEC, 2017 . S D SD ( MAHAVIR SINGH ) ( RAJESH KUMAR ) / JUDICI AL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 15. 12 .2017 SRL,SR.PS ITA .5680/ /MUM/201 5 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, T RUE COPY / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI