LOGICA TECHNOSYS P.LTD, MUMBAI V. DCIT CEN CIR 09, MUMBAI

ITA 573/MUM/2016

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 6006 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 05-02-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANADI VARMA
• Assessee Lawyers: FORAM BHANUSHALI ARS
• Keywords: Earning of tax free income; Rule 8D
• Section: 14A; 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A , MUMBAI BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO. 57 3 /MUM/201 6 ASSESSMENT YEAR : 20 0 9 - 1 0 LOGICA TECHNOSYS PVT. LTD., (NOW MERGED WITH SPRUCE TRADING PRIVATE LIMITED), FLAT NO. 2898, BLDG NO. 67, 1 ST FLOOR, JALKIRAN CHS LTD., GANDHI NAGAR, BANDRA (EAST), MUMBAI [PAN : AA ACL 654 3 F ] VS. D EPUT Y C OMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 09 , MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY : MS. MANSHI PADHIAR & MS. FORAM BHANUSHALI, ARS RESPONDENT BY : SHRI AN A D I VARMA , CIT - DR DATE OF HEARING : 11 - 1 2 - 2018 DATE OF PRONOUNCEMENT : 31 - 12 - 2018 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS) , MUMBAI - 48 , DATED 30 - 11 - 201 5 . ITA NO. 57 3 /MUM/ 20 16 : 2 : 2. THE ASSESSEE HAS RAISED SEVEN GROUNDS IN THE MEMORANDUM OF APPEAL FILED BY IT CHALLENG ING THE ORDER OF CIT(A) ON TECHNICAL GROUNDS AS WELL AS ON MERITS. 3. THE TECHNICAL GROUNDS PERTAIN TO NON - RECORDING OF SATISFACTION BY THE ASSESSING OFFICER (AO) OF THE SEARCHED PERSON AND ALSO THAT THE ADDITION MADE IS NOT BASED UPON THE INCRIMINATING MATERI AL FOUN D DURING THE COURSE OF SEARCH . ALL THESE TECHNICAL GROUNDS WERE NOT PRESSED AT THE TIME OF HEARING AND W ERE DISMISSED ACCORDINGLY AS NOT PRESSED. 4. ASSESSEE ALSO CHALLENGED BY WAY OF WITHOUT PREJUDIC E , GROUND NO. 3, THE CONFIRMATION OF ADDITION OF RS. 5,40,135/ - U/S. 14A OF THE ACT, R.W. RULE 8D OF THE INCOME TAX RULES (RULES) . 5 . AT THE OUTSET , LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ASSESSEE EARNED BY WAY OF EXEMPT INCOME OF RS. 15/ - ONLY WHICH HAS BEEN NOTED BY THE AO IN PARA 4.1 OF THE ASSESSMENT ORDER. LD. AR SUBMITTED THAT SINCE THE ASSESSEE HAS ONLY EARNED RS. 15/ - BY WAY OF EXEMPT INCOME, THE DISALLOWANCE U/S. 14A OF THE ACT R.W. RULE 8D , CANNOT EXCEED THE SAID AMOUNT AND ACCOR D INGLY PRAYED THAT THE ITA NO. 57 3 /MUM/ 20 16 : 3 : ADDITION/DISALLOWANCE U/S. 14A R.W. RULE 8D SHOULD BE RESTRICTED TO RS. 15/ - ONLY . I N DEFEN S E OF HIS ARGUMENTS . LD. AR RELIED ON THE ORDER OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE S OF PR. CIT VS. BALLARPUR INDUSTRIES LTD. IT A 51 OF 2016 DATED 13.10.2016 , CHEMINVEST LTD VS CIT (2015) 378ITR33(DELHI), CIT VS CORRTECH ENERGY PVT LTD 233 TAXMAN 130 (GUJRAT) AND CIT VS LAKHANI MARKETTING INC (2015)226 TAXMAN45 (P & H) . 6 . LD. DR ON THE OTHER HAND, RELIED ON THE ORDERS OF AUTHORITIES BELOW AND PRAYED BE FOR E THE BENCH THAT THE APPEAL OF ASSESSEE SHOULD BE DISMISSED AS THE PROVISIONS OF SECTION 14A R.W. RULE 8D ARE MANDATOR IL Y TO BE APPLIED. 7 . WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD, THE DECISION RELIED UPON BY THE L D . AR , INCLUDING THE IMPUGNED ORDER . W E FIND FROM THE ORDER OF AO THAT EXEMPT INCOME DURING THE YEAR WAS ONLY RS. 15/ - , WHICH HAS BEEN RECORDED IN PARA 4.1 OF THE ASSESSMENT ORDER. WE FIND MERIT IN THE CONTENTIONS OF LD. AR THAT IN ANY CASE, THE DISALLOWANCE CANNOT BE EXCEEDED THE AMOUNT OF EXEMPT INCOME IN THE LIGHT OF THE RATIO LAID DOWN BY THE HON'BLE ITA NO. 57 3 /MUM/ 20 16 : 4 : JURISDICTIONAL HIGH COURT IN THE CASE OF PR. CIT V S. BALLARPUR INDUSTRIES LTD. ITA 51 OF 2016 DATED 13.10.2016 . THE L D C OUNSEL ALSO RELIED ON A SERIES OF OTHER DECISIONS NAMELY CHEMINVEST LTD VS CIT (2015) 378ITR33(DELHI), CIT VS CORRTECH ENERGY PVT LTD 233 TAXMAN 130 (GUJRAT) AND CIT VS LAKHANI MARKETTING INC (2015)226 TAXMAN45 (P & H). THEREFORE RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY THE JURISDICTIONAL HIGH COURT IN THE SAID CASE S , WE DIRECT THE AO TO RESTRICT THE DISALLOWANCE TO RS. 15/ - ONLY. GROUND IS ALLOWED. 8 . IN THE RESULT, THE APPEAL OF ASSESSEE I S PARTLY ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST DAY OF DECEMBER, 2018 SD/ - SD/ - (MAHAVIR SINGH) (RAJESH KUMAR) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / MUMBAI; / DATED : 31 ST DECEMBER, 2018 TNMM ITA NO. 57 3 /MUM/ 20 16 : 5 : / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) , MUMBAI 4. / CIT , MUMBAI 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE / BY ORDER, //TRUE COPY// / (DY./ASST. REGISTRAR) , / ITAT, MUMBAI