ASSOCIATED CONTAINER LINE P.LTD, MUMBAI V. DCIT 5(1), MUMBAI

ITA 5758/MUM/2015

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6730 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 22-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR YADAV
• Assessee Lawyers: ATUL M DESHPANDE SR MANAGER
• Keywords: Earning of tax free income
• Section: 143(3); 14A

Judgement Text

P A G E | 1 ITA NOS. 5758 & 5759/MUM/2015 AYS. 2010 - 11 & 2011 - 12 ASSOCIATED CONTAINER LINE PVT. LTD. VS. DCIT - 5(1) IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, M UMBAI BEFORE SHRI G.S.PANNU, AM AND SHRI RAVISH SOOD, JM ITA NO S.5758 & 5759 /MUM/201 5 ( / ASSESSMENT YEAR S :2010 - 11 & 2011 - 12 ) ASSOCIATED CONTAINER LINE PVT. LTD. 901, PENINSULA TOWER, GANPATRAO KADAM MARG, LOWER PAREL (W) MUMBAI 400 013 / VS. DCIT - 5(1) MUMBAI ./ ./ PAN NO. AAACA9239L ( / APPELLANT) : ( / RESPONDENT ) / APPELLANT BY : SHRI ATUL M. DESHPANDE SR. MANAGER / RESPONDENT BY : SHRI RAJESH KUMAR YADAV, D.R / DATE OF HEARING : 06.06.2018 / DATE OF PRONOUNCEMENT : 27 .06.2018 / O R D E R PER RAVISH SOOD, JUDICIAL MEMBER: THE PRESENT APPEALS FILED BY THE ASSESSEE FOR A.Y (S) 2010 - 11 AND 2011 - 12 ARE DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) - 10, MUMBAI, EACH DATED 14.09.2015, WHICH IN ITSELF ARISES FROM THE RESPECTIVE ORDERS PASSED BY THE A.O UNDER SEC.143(3) OF THE INCOME TAX ACT, 1961 (FOR SHORT ACT), DATED 14.02.2013 AND 30.01.2014, RESPECTIVELY. AS CERTAIN COMMON ISSUES ARE INVOLVED IN THE AFOREMENTIONED APPEALS, THEREFORE, THE SAME ARE BEING TAKEN UP TOGETHER AND ARE DISPOSED OF BY WAY OF CONSOLIDATE ORDER. WE SHALL FIRST ADVERT TO THE APPEAL FILED BY THE ASSESSEE FOR A.Y 2010 - 11. THE P A G E | 2 ITA NOS. 5758 & 5759/MUM/2015 AYS. 2010 - 11 & 2011 - 12 ASSOCIATED CONTAINER LINE PVT. LTD. VS. DCIT - 5(1) ASSESSEE ASSAILING THE ORDER OF THE CIT(A) HAD RAISED BEFORE US THE FO LLOWING GROUNDS OF APPEAL: 1. DISALLOWANCE OF RS. 2,29,151/ - UNDER SECTION 14A OF THE INCOME TAX ACT READ WITH RULE 8D OF INCOME TAX RULES 1962. THE ASSESSING OFFICER ERRED IN APPLYING PROVISIONS OF SECTION 14 A OF INCOME TAX ACT 1961 READ WITH RULE 8D O F INCOME TAX RULES 1962. REASONS GIVEN BY THE ASSESSING OFFICER WHILE MAKING ABOVE ADDITION ARE INSUFFICIENT AND CONTRARY TO THE FACTS AND EVIDENCE ON RECORDS AND WITHOUT APPLICATION OF MIND. 2. ADDITION OF RS. 33,956/ - ON ACCOUNT OF DIFFERENCE IN RECONCILIATION WITH BALANC E AS PER THE BOOKS OF ACCOUNT OF THE ASSESSEE AND AS PER THE BOOKS OF ACCOUNT OF CONTINENTAL WAREHOUSING CORPORATION (N.S.) LTD. THE ASSESSING OFFICER ERRED IN MAKING ADDITION OF A SUM OF RS. 33,956/ - BEING DIFFERENCE IN CLOSING BALANCES AS ON 31 ST MARCH 2010 AS PER THE BOOKS OF ACCOUNT OF THE ASSESSEE AND CONTINENTAL WAREHOUSING CORPORATION (N.S.) LTD. REASONS GIVEN BY THE ASSESSING OFFICER WHILE MAKING ABOVE ADDITION ARE INSUFFICIENT AND IN SPITE OF THE FACT THAT THE ASSESSEE HAS GIVEN FULL PARTICULARS OF THE DIFFERENCE AND EXPLAINED THAT THE DIFFERENCE IS DUE TO INCORRECT ENTRIES PASSED BY CONTINENTAL WAREHOUSING CO R PORATION (N.S.) LTD. IN ITS BOOKS OF ACCOUNT. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY WHICH IS ENGAGED IN THE BUSINESS OF PROVIDING FREIGHT FORWARDING SE RVICES TO SHIPPERS/EXPORTERS FOR EXPORT OF THEIR CARGO TO VARIOUS INTERNATIONAL DESTINATIONS HAD E - FILED ITS RETURN OF INCOME FOR A.Y 2010 - 11 ON 28.09 .2010, DECLARING TOTAL INCOME OF RS.1,98,56,010/ - . THE CASE OF THE ASSESSEE WAS THEREAFTER TAKEN UP FOR SCRUTINY ASSESSMENT UNDER SEC. 143(2) OF THE ACT. 3. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS THE A.O MADE THE FOLLOWING ADDITIONS/DISALLOWANCE IN THE HANDS OF TH E ASSESSEE : SR. NO. PARTICULARS AMOUNT 1. DISALLOWANCE UNDER SEC.14A RS.2,29,151/ - 2. DIFFERENCE IN RECONCILIATION OF PURCHASES RS. 33,956/ - P A G E | 3 ITA NOS. 5758 & 5759/MUM/2015 AYS. 2010 - 11 & 2011 - 12 ASSOCIATED CONTAINER LINE PVT. LTD. VS. DCIT - 5(1) ON THE BASIS OF THE AFORESAID FACTS THE INCOME OF THE ASSESSEE COMPANY WAS ASSESSED AT RS.2 ,01,20,510/ - . 4. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). THE CIT(A) AFTER DELIBERATING ON THE CONTENTIONS ADVANCED BY THE ASSESSEE , WAS HOWEVER NOT PERSUADED TO SUBSCRIBE TO THE SAME A N D DISMISSED THE APPEAL. 5. THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAD CARRIED THE MATTER IN APPEAL BEFORE US . THE D ULY AUTHORIZED SENIOR MANAGER (ACCOUNTS AND FINANCE) (FOR SHORT A.R) OF THE ASSESSEE COMPANY AT THE VERY OUTSET SUBMITTED THAT THE LOWER AUTHORITIE S HAD ERRED IN MAKING A DISALLOWANCE OF RS.2,29,151/ - UNDER SEC.14A R.W. RULE 8D. IT WAS SUBMITTED BY THE LD. A.R THAT THE A.O HAD ERRED IN DISLODGING THE CLAIM OF THE ASSESSEE THAT NO DISALLOWANCE WAS CALLED FOR IN ITS HANDS UNDER SEC. 14A OF THE ACT. IT WAS SUBMITTED BY THE LD. A.R THAT THE A.O WITHOUT ARRIVING AT A SATISFACTION THAT HAVING REGARD TO THE ACCOUNTS OF THE ASSESSEE, AS PLACED BEFORE HIM, IT WAS NOT POSSIBLE TO GENERATE THE REQUISITE SATISFACTION AS REGARDS THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE THAT NO DISALLOWANCE WAS LIABLE TO BE MADE IN ITS HANDS UNDER SEC. 14A OF THE ACT , HAD MOST ARBITRARILY SCRAPPED THE CLAIM OF THE ASSESSEE AND MADE A DISALLOWANCE OF RS. 2,29,151/ - UNDER SEC. 14A R.W RULE 8D. ALTERNATIVELY, IT WAS SUBMITTED BY TH E LD. A.R THAT AS 85% OF THE TOTAL DIVIDEND INCOME WAS EARNED BY THE ASSESSEE FROM INVESTMENTS MADE I N MUTUAL FUNDS, THUS NO EXPENSE DEBITED BY THE ASSESSEE IN ITS PROFIT & LOSS ACCOUNT FOR THE YEAR UNDER CONSIDERATION COULD BE ATTRIBUTED TO EITHER MAKING OR MONITORING OF THE SAID INVESTMENTS . IT WAS THUS THE CLAIM OF THE LD. A.R THAT AS NO EXPENSE WAS INCURRED FOR EARNING OF THE TAX FREE DIVIDEND INCOME BY THE ASSESSEE, HENCE THE DISALLOWANCE MADE BY THE A.O UNDER SEC.14A R.W. RULE 8D AND SUSTAINED BY THE CIT(A) WAS LIABLE TO BE STRUCK DOWN. ALTERNATIVELY , IT WAS SUBMITTED BY THE LD. A.R THAT EVEN OTHERWISE THE DISALLOWANCE OF RS. 2,29,151/ - MADE BY THE A.O UNDER SEC. 14A WAS SUBSTANTIALLY EXCESSIVE. THE LD. A.R IN ORDER TO FORTIFY HIS AFO RESAID CONTENTION SUBMITTED THAT IN ITS OWN CASE FOR A.Y 2005 - 06 A P A G E | 4 ITA NOS. 5758 & 5759/MUM/2015 AYS. 2010 - 11 & 2011 - 12 ASSOCIATED CONTAINER LINE PVT. LTD. VS. DCIT - 5(1) COORDINATE BENCH OF THE TRIBUNAL VIZ. ITAT A BENCH, MUMBAI HA D HELD A DISALLOWANCE UNDER SEC. 14A OF RS.25,000/ - AS REASONABLE IN THE CASE OF THE ASSESSEE. IT WAS FURTHER SUBMITTED BY THE LD. A.R THAT THE LOWER AUTHORITIES FAILING TO APPRECIATE THE EXPLANATION OF THE ASSESSEE IN THE RIGHT PERSPECTIVE, AS REGARDS THE REASONS LEADING TO THE VARIANCE IN THE BALANCE REFLECTED AGAINST THE ACCOUNT OF M/S CONTINENTAL WAREHOUSING CORPORATION (NS) LTD. IN THE BOOKS OF ACCOUNT OF THE ASSESSEE , AS IN COMPARISON WITH THAT SHOWN BY THE AFORESAID PARTY, HAD WRONGLY MADE AN ADDITION OF RS.33,956/ - IN THE HANDS OF THE ASSESSEE COMPANY. IT WAS SUBMITTED BY THE LD. A.R. THAT THE IMPUGNED VARIANCE WAS ON ACCO UNT OF INCORRECT ENTRIES PASSED BY M/S CONTINENTAL WAREHOUSING CORPORATION (NS) LTD. IN ITS BOOKS OF ACCOUNT. IT WAS SUBMITTED BY THE LD. A.R THAT AS THE BALANCE PAYABLE TO M/S CONTINENTAL WAREHOUSING CORPORATION (NS) LTD. WAS SHOWN BY THE ASSESSEE AT A LOWER FIGURE , AS AGAINST THAT CLAIMED BY THE SAID PARTY AS RECOVERABLE FROM THE ASSESSEE , THUS THE SAID VARIANCE DID NOT HAVE ANY BEARING ON THE TAXABLE INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIV E ( FOR SHORT D.R) RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. 6. WE HAVE HEARD THE AUTHORIZED REPRESENTATIVES FOR BOTH THE PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE HAD DURIN G THE YEAR UNDER CONSIDERATION EARNED A DIVIDEND INCOME OF RS.11,67,933/ - ON EXEMPT INCOME YIELDING INVESTMENTS OF RS.7,12,52,078/ - . T HE ASSESSEE HAD NOT ATTRIBUTED ANY PART OF THE EXPENSES AS HAVING BEEN INCURRED FOR EARNING OF TH E AFORESAID EXEMPT INCOME . ON A QUERY BY THE A.O AS TO WHY THE DISALLOWANCE UNDER SEC.14A MAY NOT BE MADE IN RESPECT OF THE EXEMPT DIVIDEND INCOME, IT WAS SUBMITTED BY THE ASSESSEE THAT AS IT HAD NOT INCURRED ANY EXPENSE OTHER THAN DEMAT CHARGES, HENCE NO DISALLOWANCE UNDER SEC.14 A WAS CALLED FOR IN ITS HANDS. WE FIND THAT THE A.O HAD DISLODGED THE CLAIM OF THE ASSESSEE THAT NO EXPENSE WAS ATTRIBUTABLE TO EARNING OF THE EXEMPT DIVIDEND INCOME, MERELY ON THE BASIS OF AN OBSERVATION THAT IT WAS BEYOND COMPREHENSION THAT NO PART OF TH E EXPENSE S AGGREGATING TO RS.2,50,32,263/ - DEBITED BY THE P A G E | 5 ITA NOS. 5758 & 5759/MUM/2015 AYS. 2010 - 11 & 2011 - 12 ASSOCIATED CONTAINER LINE PVT. LTD. VS. DCIT - 5(1) ASSESSEE IN ITS PROFIT AND LOSS ACCOUNT COULD BE RELATED TO EARNING OF THE EXEMPT DIVIDEND INCOME BY THE ASSESSEE. 7. WE HAVE DELIBERATED AT LENGTH ON THE ORDERS OF THE LOWER AUTHORITIES , AND ARE OF THE CONSIDERED VIEW THAT THE A.O WHILE DISLODGING THE CLAIM OF THE ASSESSEE THAT AS NO PART OF THE EXPENSES DEBITED IN THE PROFIT AND LOSS ACCOUNT WAS RELATABLE TO EARNING OF THE EXEMPT DIVIDEND INCOME, THUS NO DISALLOWANCE UNDER SEC. 14A WAS CALLED FOR IN ITS HANDS, HAD FAILED TO RECORD HIS SATISFACTION AS REGARDS THE CORRECTNESS OF SUCH CLAIM , HAVING REGARD TO THE ACCOUNTS OF THE ASSESSEE. RATHER, WE FIND THAT THE A.O HAD DISLODGED THE CLAIM OF THE ASSESSEE THAT NO DISALLOWANCE UNDER SEC. 14A WAS LIABL E TO BE MADE IN ITS HANDS BY HOLDING A CONVICTION THAT IT WAS BEYOND COMPREHENSION THAT NO EXPENSE INCURRED BY THE ASSESSEE COULD BE RELATED TO EARNING OF EXEMPT DIVIDEND INCOME. WE ARE OF THE CONSIDERED VIEW THAT IN THE BACKDROP OF THE JUDGMENT OF THE HON BLE SUPREME COURT IN THE CASE OF GODREJ & BOYCE MANUFACTURING CO. LTD. VS. DCIT & ANR . (2017) 394 ITR 449 (SC), IT WAS OBLIGATORY ON THE PART OF THE A . O TO HAVE RECORD ED HIS SATISFACTION , HAVING REGARD TO THE ACCOUNTS OF THE ASSESSEE, AS TO WHY THE LATTER S CLAIM THAT NO EXPENDITURE WAS ATTRIBUTABLE TO EARNING OF THE EXEMPT DIVIDEND INCOME WAS NOT TO BE ACCEPTED. THE HONBLE SUPREME COURT WHILE DELIBERATING ON THE SAID ISSUE AT LENGTH HAD OBSERVED AS UNDER: 37. WE DO NOT SEE HOW IN THE AFORESAID FACT SITUATION A DIFFERENT VIEW COULD HAVE BEEN TAKEN FOR THE ASSESSMENT YEAR 2002 - 2003. SUB - SECTIONS (2) AND (3) OF SECTION 14A OF THE ACT READ WITH RULE 8D OF THE RULES MERELY PRESCRIBE A FORMULA FOR DETERMINATION OF EXPENDITURE INCURRED IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THE ACT IN A SITUATION WHERE THE ASSESSING OFFICER IS NOT SATISFIED WITH THE CLAIM OF THE ASSESSEE. WHETHER SUCH DETERMINATION IS TO BE MADE ON APPLICATION OF THE FORMULA PRESCRIBED UNDER RULE 8D OR IN THE BEST JUDGMENT OF THE ASSESSING OFFICER, WHAT THE LAW POSTULATES IS THE REQUIREMENT OF A SATISFACTION IN THE ASSESSING OFFICER THAT HAVING REGARD TO THE ACCOUNTS OF THE ASSESSEE, AS PLACED BEFORE HIM, IT IS NOT POSSIBLE TO GENERATE THE REQUISITE SATISFACTION WITH REGARD TO THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE. IT IS ONLY THEREAFTER THAT THE PROVISIONS OF SECTION 14A(2) AND (3) READ WITH RULE 8D OF THE RULES OR A BEST JUDGMENT DETERMINATION, AS EARLIER PR EVAILING, WOULD BECOME APPLICABLE. P A G E | 6 ITA NOS. 5758 & 5759/MUM/2015 AYS. 2010 - 11 & 2011 - 12 ASSOCIATED CONTAINER LINE PVT. LTD. VS. DCIT - 5(1) WE FIND THAT IN THE CASE BEFORE US, THE CLAIM OF THE ASSESSEE THAT NO DISALLOWANCE UNDER SEC .14A WAS CALLED FOR IN ITS CASE HAD BEEN DISLODGED BY THE A.O, NOT ON THE GROUND THAT HAVING REGARD TO THE ACCOUNTS OF THE ASSE SSEE, AS PLACED BEFORE HIM, IT WAS NOT POSSIBLE TO GENERATE THE REQUISITE SATISFACTION WITH REGARD TO THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE THAT NO EXPENDITURE WAS INCURRED FOR EARNING OF THE EXEMPT DIVIDEND INCOME, BUT RATHER THE SAME WAS NOT ACCEP TED FOR THE REASON THAT AS PER THE A.O IT WAS BEYOND COMPREHENSION THAT NO EXPENSE DEBITED BY THE ASSESSEE IN THE PROFIT & LOSS ACCOUNT COULD BE RELATED TO EARNING OF THE EXEMPT DIVIDEND INCOME BY THE ASSESSEE . WE HAVE DELIBERATED ON THE AFORESAID OBSERVAT IONS OF THE A.O AND ARE UNABLE TO PERSUADE OURSELVES TO SUBSCRIBE TO THE SAME. WE ARE OF THE CONSIDERED VIEW THAT AS THE A.O WHILE DISLODGING THE CLAIM OF THE ASSESSEE , THAT NO EXPENSE WAS ATTRIBUTABLE TO EARNIN G OF THE EXEMPT DIVIDEND INCOME HAD FAILED TO COMPLY WITH THE STATUTORY REQUIREMENT OF ARRIVING AT A SATISFACTION HAVING REGARD TO THE ACCOUNTS OF THE ASSESSEE, AS PLACED BEFORE HIM, THAT IT WAS NOT POSSIBLE TO GENERATE THE REQUISITE SATISFACTION WITH REGARD TO THE CORRECTNESS OF THE SAID CLAIM OF THE ASSESSE E, THEREFORE, IT CAN SAFELY BE CONCLUDED THAT THE MANDATE OF THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF GODREJ & BOYCE MANUFACTURING CO. LTD. VS. DCIT & ANR. (2017) 394 ITR449 (SC) HAD NOT BEEN SATISFIED BY HIM. WE THUS, HOLDING A CONVICTION THAT AS THE ORDER PASSED BY THE A.O IN THE CASE BEFORE US IS NOT IN CONFORMITY WITH THE JUDGMENT OF THE HONBLE APEX COURT IN THE CASE OF GODREJ & BOYCE MANUFACTURING COMPANY (SUPRA), HENCE THE DISALLOWANCE OF RS.2,29,151/ - MADE BY THE A.O CANNO T BE SUSTAINED AND IS LIABLE TO BE VACATED. WE THUS, SET ASIDE THE ORDER OF THE CIT(A) AND DELETE THE DISALLOWANCE OF RS.2,29,151/ - MADE BY THE A.O UNDER SEC.14A R.W. RULE 8D . 8. WE SHALL NOW ADVERT TO THE ADDITION OF RS.33,956/ - MADE BY THE A.O ON ACCOUNT OF DIFFERENCE IN THE ACCOUNT OF M/S CONTINENTAL WAREHOUSING CORPORATION (NS) LTD . WE FIND THAT THE ASSESSEE HAD SUBMITTED BEFORE THE LOWER AUTHORITIES THAT THE AFORESAID DIFFERENCE OF RS.33,956/ - WAS ON P A G E | 7 ITA NOS. 5758 & 5759/MUM/2015 AYS. 2010 - 11 & 2011 - 12 ASSOCIATED CONTAINER LINE PVT. LTD. VS. DCIT - 5(1) ACCOUNT OF TWO REASONS VIZ. (I) NON - POSTING OF TDS E NTRY OF RS.32,346/ - BY THE AFORESAID PARTY VIZ. M/S CONTINENTAL WAREHOUSING (NS) LTD ; AND (II) DIFFERE NCE IN OPENING BALANCE OF RS.1,6 10/ - . WE FIND THAT BOTH OF THE LOWER AUTHORITIES HAD SUMMARILY DISREGARDED THE CLAIM OF THE ASSESSEE, NOT ONLY AS REGARDS THE REASON S LEADING TO THE IMPUGNED VARIANCE IN THE RESPECTIVE BALANCES , BUT RATHER HAD ALSO BRUSHED ASIDE ITS CONTENTION THAT THE SAID VARIANCE WOULD NOT HAVE ANY BEARING ON THE INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION . WE HAVE DELIBERATED ON THE CONCEDED FACTS LEADING TO THE AFORESAID VARIANCE OF RS.33,956/ - AND F IND SUBSTANTIAL FORCE IN THE CLAIM RAISED BY THE ASSESSEE BEFORE THE LOWER AUTHORITIES . WE CONCEDEDLY THE DIFFERENCE OF RS.32, 346/ - HAD ARISEN ON ACCOUNT OF NON - POSTING OF A TDS ENTRY BY THE AFOREMENTIONED PARTY VIZ. CONTINENTAL WAREHOUSING CORPORATION (NS) LTD, IN THE ACCOUNT OF THE ASSESSEE AS APPEARING IN ITS BOOKS OF ACCOUNTS. WE FIND OURSELVES TO BE IN AGREEMENT WITH THE CONTENTION OF THE LD. A.R THAT THE FAI LURE ON THE PART OF THE AFORESAID PARTY TO POST THE TDS ENTRY OF RS.32,346/ - , LEADING TO THE IMPUGNED VARIANCE TO THE SAID EXTENT , AS AGAINST THE BALANCE SHOWN BY THE ASSESSEE TO BE PAYABLE TO THE SAI D PARTY , WILL NOT HAVE ANY BEARING ON THE INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. WE THUS, IN THE BACKDROP OF OUR AFORESAID OBSERVATIONS ARE OF THE CONSIDERED VIEW THAT NO ADDITION IN RESPECT OF THE IMPUGNED VARIANCE OF RS.32 , 346 / - WAS CALLED FOR I N THE HANDS OF THE ASSESSEE. WE THUS , IN TERMS OF OUR AFORESAID OBSERVATIONS DELETE THE ADDITION OF RS.32,346/ - SUSTAINED BY THE CIT(A). 9. WE FURTHER FIND THAT THE CIT(A) HAD SUSTAINED AN ADDITION OF RS.1,610/ - ON ACCOUNT OF O PENING BALANCE DIFFERENCE IN THE ACCOUNT OF THE AFOREMENTIONED PARTY VIZ. M/S CONTINENTAL WAREHOUSING CORPORATION (NS) LTD. WE ARE OF THE CONSIDERED VIEW THAT A S THE DIFFERENCE IN THE OPENING BALANCE HAD EMERGED ON ACCOUNT OF TRANSACTIONS PERTAINING TO THE PRECEDING YEAR/YEARS, THUS THE SAME SHALL IN NO WAY HAVE ANY B EARING ON THE INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. WE THUS , NOT FINDING OURSELVES TO BE IN AGREEMENT WITH THE VIEW TAKEN BY THE CIT(A), DELETE THE ADDITION OF RS.1,610/ - SUSTAINED BY HIM. I N TERMS OF OUR AFORESAID P A G E | 8 ITA NOS. 5758 & 5759/MUM/2015 AYS. 2010 - 11 & 2011 - 12 ASSOCIATED CONTAINER LINE PVT. LTD. VS. DCIT - 5(1) OBSERVATIONS THE ADDITION OF RS.33,956/ - SUSTAINED BY THE CIT(A) IS DELETED . THE GROUND OF APPEAL NO. 2 IS ALLOWED . 10. THE APPEAL OF THE ASSESSEE IS ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. A.Y. 2011 - 12 ITA NO. 5759/MUM/2015 11. WE SHALL NOW ADVERT TO THE APPEAL FILED BY THE ASSESSEE FOR A.Y 2011 - 12. THE ASSESSEE ASSAILING THE ORDER OF THE CIT(A) HAD RAISED BEFORE US THE FOLLOWING GROUNDS OF APPEAL: 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED A.O. ERRED IN INVOKING THE PROVISIONS OF SECTION 14A AND THEREBY DISALLOWING A SUM OF RS.4,06,350/ - BY APPLYING PROVISIONS OF RULE 8D OF INCOME TAX RULES 1962. 2. REASONS GIVEN BY A.O. FOR INVOKING THE PROVISIONS OF SECTION 14A AND THEREBY DISALLOWING A SUM OF RS. 4,06,350/ - BY APPLYING PROVISIONS OF RULE 8D OF INCOME TAX RULES 1962, ARE WRONG INSUFFICIENT AND CONTRARY TO THE FACTS AND EVIDENCE ON RECORD. 3. IN TH E FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE A.O. ERRED IN DISALLOWING RS. 50,000/ - OUT OF OTHER ADMINISTRATIVE EXPENSES OF RS. 3,27,492/ - . 4. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER, MODIFY OR OMIT ANY OF THE AFORESAID GROUNDS OF APPEAL AS OCCASION MAY ARISE OF DEMAND. 12. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE HAD E - FILED ITS RETURN OF INCOME FOR A.Y 2011 - 12 ON 29.09.2011, DECLARING TOTAL INCOME AT RS. 4,07,58,340/ - . THE INCOME OF THE ASSESSEE WAS ASSESSED UNDER SEC. 143(3) AT RS.4,12,14,690/ - . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A.O HAD INTER ALIA MADE THE FOLLOWING ADDITIONS/DISALLOWANCE: SR. NO. PARTICULARS AMOUNT 1. DISALLOWANCE UNDER SEC.14A R.W. RULE 8D RS.4,06,350/ - 2. DISALLOWANCE OF ADMINISTRATIVE EXPENSES RS.50,000/ - 13. WE SHALL FIRST ADVERT TO THE DISALLOWANCE OF RS.4,06,350/ - MADE BY THE A.O UNDER SEC. 14A R.W. RULE 8D, WHICH THEREAFTER HAD BEEN SUSTAINED BY P A G E | 9 ITA NOS. 5758 & 5759/MUM/2015 AYS. 2010 - 11 & 2011 - 12 ASSOCIATED CONTAINER LINE PVT. LTD. VS. DCIT - 5(1) THE CI T(A). WE HAVE PERUSED T HE ORDER OF THE A.O AND FIND THAT HE WHILE DISLODGING THE CLAIM OF THE ASSESSEE THAT NO EXPENDITURE DEBITED IN THE PROFIT & LOSS ACCOUNT WAS ATTRIBUTABLE TO EARNING OF THE EXEMPT DIVIDEND INCOME OF RS. 18,70,574/ - , HA S HOWEVER FAILED TO ARRIVE AT A SATISFACTION HAVING REGARD TO THE ACCOUNTS OF THE ASSESSEE, AS PLACED BEFORE HIM, THAT IT WAS NOT POSSIBLE TO GENERATE THE REQUISITE SATISFACTION WITH REGARD TO THE CORRECTNESS OF THE SAID CLAIM OF THE ASSESSEE . RATHER , WE FIND THAT THE SAID CLAIM OF THE ASSESSEE THAT NO EXPENSE WAS INCURRED FOR EARNING OF THE EXEMPT DIVIDEND INCOME HAD BEEN MOST CASUAL LY DISLODGED BY THE A.O , BY OBSERVING THAT THE ASSESSEE OUGHT TO HAVE MADE DISALLOW ANCE OF EXPENDITURE IN RELATION TO THE INCOME WHICH DOES NOT OR SHAL L NOT FORM PART OF TOTAL INCOME AS REQUIRED UNDER SEC. 14A IN ACCORDANCE WITH THE PROVISIONS OF RULE 8D. WE THOUGH FIND THAT THE A.O WHILE MAKING THE DISALLOWANCE HAD MADE A MENTION OF HAVING REFERRED TO THE ACCOUNTS OF THE ASSESSEE COMPANY FOR THE YEAR UN DER CONSIDERATION AND THAT HE WAS NOT SATISFIED WITH THE CORRECTNESS OF THE SAME, BUT HE HAD NOT SAID A WORD AS TO WHY HE WAS UNABLE TO GENERATE THE REQUISITE SATISFACTION WITH REGARD TO THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE THAT NO EXPENDITURE WAS RELATABLE TO EARNING OF THE EXEMPT DIVIDEND INCOME. WE ARE OF THE CONSIDERED VIEW THAT THE A.O WHILE DISLODGING THE CLAIM OF THE ASSESSEE THAT NO EXPENSE WAS RELATABLE TO EARNING OF THE EXEMPT DIVIDEND INCOME OUGHT TO HAVE MADE A MENTION OF THE EXPENSES WH ICH WERE BOOKED BY THE ASSESSEE IN ITS BOOKS ACCOUNT, AND IN THE BACKDROP OF THE SAME SHOULD HAVE POINTED OUT THAT THE INCURRING OF THE SAME HAD AN INEXTRICABLE NEXUS WITH THE EARNING OF THE EXEMPT DIVIDEND INCOME. WE THUS, ARE OF CONSIDERED VIEW THAT AS O BSERVED BY US IN THE CASE OF THE ASSESSEE FOR THE IMMEDIATELY PRECEDING YEAR, VIZ. A.Y 2010 - 11 , IN THE YEAR UNDER CONSIDERATION ALSO THE A.O WHILE DISLODGING THE CLAIM OF THE ASSESSEE THAT NO DISALLOWANCE WAS CALLED FOR IN ITS HANDS UNDER SEC. 14A, HAD FAILED TO GENERATE THE REQUISITE SATISFACTION WITH REGARD TO THE CORRECTNESS OF THE SAID CLAIM OF THE ASSESSEE . WE THUS, ARE OF THE CONSIDERED VIEW THAT AS THE DISALLOWANCE MADE BY THE A.O UNDER SEC. 14A R.W RUE 8D IS NOT AS PER THE MANDATE OF THE JUDG MENT OF THE HONBLE SUPREME COURT IN THE CASE OF GODREJ & BOYCE MANUFACTURING COMPANY VS. DCIT AND ANR. P A G E | 10 ITA NOS. 5758 & 5759/MUM/2015 AYS. 2010 - 11 & 2011 - 12 ASSOCIATED CONTAINER LINE PVT. LTD. VS. DCIT - 5(1) (2017) 394 ITR 449 (SC) , HENCE THE SAME CANNOT BE SUSTAINED AND IS LIABLE TO BE VACATED. T HE ORDER PASSED BY THE CIT(A) IN CONTEXT OF THE ISSUE UNDER CO NSIDERATION IS SET ASIDE AND THE DISALLOWANCE UNDER SEC. 14A R.W RULE 8D OF RS.4,06,350/ - SUSTAINED BY THE CIT(A) IS DEL E T ED . THE GROUND OF APPEAL NO. 1 AND 2 RAISED BY THE ASSESSEE IS ALLOWED. 14. WE SHALL NOW ADVERT TO THE DISALLOWANCE OF AMOUNT OF RS. 50,000/ - MADE BY THE A.O OUT OF THE ADMINISTRATIVE EXPENSES OF RS.3,27,482/ - WHICH WERE BOOKED BY THE ASSESSEE IN ITS PROFIT AND LOSS ACCOUNT. WE FIND THAT THE A.O WHILE MAKING THE DISALLOWANCE OF RS.50,000/ - HAD OBSERVED THAT ON VERIFICATION OF THE BILLS AND VOUCHERS PERTAINING TO THE ADMINISTRATIVE EXPENSES , SOME BILLS/VOUCHERS WERE FOUND TO BE UNDATED OR UNSIGNED AND MANY VOUCHERS WERE NOT SU PPORTED WITH RELEVANT BILLS. WE HAVE DELIBERATED ON THE AFORESAID OBSERVATIONS OF THE LOWER AUTHORITIES AND ARE UNABLE TO PERSUADE OURSELVES TO SUBSCRIBE TO THE SAME. WE FIND THAT THOUGH THERE IS A MENTION BY THE LOWER AUTHORITIES THAT SOME BILLS/VOUCHERS PERTAINING TO THE ADMINISTRATIVE EXPENSES WERE FOUND TO BE UNDATED OR UNSIGNED AND MANY VOUCHERS WERE NOT SUPPORTED WITH RELEVANT BILLS, BUT SURPRISINGLY THERE IS NOT A MENTION OF A SINGL E SUCH BILL/VOUCHER WHICH IS FOUND TO BE SUFFERING FROM ANY SUCH ALLE GED INFIRMITY. WE ARE OF THE CONSIDERED VIEW THAT IN THE CASE BEFORE US , AS THERE IS NO EVIDENCE WHICH COULD SUPPORT THE CLAIM OF THE A.O THAT SOME OF THE BILLS/VOUCHERS WERE FOUND TO BE UNDATED OR UNSIGNED OR NOT BACKED BY RELEVANT BILLS, IT IS DI FFICULT FOR US TO SUBSCRIBE TO THE DISALLOWANCE MADE BY HIM IN THE THIN AIR. WE THUS, IN THE BACKDROP OF OUR AFORESAID OBSERVATIONS ARE UNABLE TO UPHOLD THE ADHOC DISA LLOWANCE OF RS.50,000/ - SUSTAINED BY THE CIT(A). WE THUS SET ASIDE THE ORDER OF THE CIT(A) IN CONTEXT OF THE ISSUE UNDER CONSIDERATION AND DELETE THE ADDITION OF RS.50,000/ - MADE IN THE HANDS OF THE ASSESSEE. THE GROUND OF APPEAL NO. 3 IS ALLOWED. 15. THAT AS THE GROUND OF APPEAL NO. 4 IS GENERAL, THE SAME IS DISMISSED AS NOT PRESSED. P A G E | 11 ITA NOS. 5758 & 5759/MUM/2015 AYS. 2010 - 11 & 2011 - 12 ASSOCIATED CONTAINER LINE PVT. LTD. VS. DCIT - 5(1) 16. THE APPEAL FILED BY THE ASSESSEE IS ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. 17. THE APPEAL S OF THE ASSESSEE FOR A.Y 2010 - 11 I.E ITA NO. 5758/MUM /2015 AND FOR A.Y 2011 - 12 I.E ITA NO. 5759/MUM/2015 ARE ALLOWED IN TERMS OF OUR AFORESAID OBSERVATION S. ORDER PRONO UNCED IN THE OPEN COURT ON 27 .06.2018 SD/ - SD/ - (G.S.PANNU) (RAVISH SOOD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; 27 .06.2018 PS. ROHIT / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI P A G E | 12 ITA NOS. 5758 & 5759/MUM/2015 AYS. 2010 - 11 & 2011 - 12 ASSOCIATED CONTAINER LINE PVT. LTD. VS. DCIT - 5(1)