ENAM FINANCIAL CONSULTANT P.LTD, MUMBAI V. DCIT (OSD) CIR 2(1), MUMBAI

ITA 5852/MUM/2014

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9981 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 19-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN
• Assessee Lawyers: M ANISH DESAI
• Keywords: Earning of tax free income; Question of law
• Section: 14A; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E, MUMBAI BEFORE SHRI G S PANNU, ACCOUNTANT MEMBER & SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO. 5852/MUM/2014 ASSESSMENT YEAR : 2010 2011 ENAM FINANCIAL CONSULTANT P LTD 809-12, DALAMAL TOWER, 8 TH FLOOR, FREE PRESS JOURNAL MARG NARIMAN POINT, MUMBAI 400 021 PAN AAACE1052H VS DCIT (OSD) CIR 2(1), MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MANISH DESAI RESPONDENT BY : SHRI V JUSTIN DATE OF HEARING : 23 . 08 .2017 DATE OF PRONOUNCEMENT : 30 .0 8 .2017 O R D E R PER PAWAN SINGH, JUDICIAL MEMBER: THIS APPEAL BY THE ASSESSEE U/S. 253 OF THE I T A CT, IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-4, MUMBAI, DATED 24.07.2014 FOR A Y 2010-11. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : REGARDING DISALLOWANCE OF RS 22,84,8517- U/S 14A OF THE INCOME TAX ACT AND ALSO WRONGLY ENHANCING THE BOOK PROFIT U/S 115 JB BY RS. 22,84,851/-- I.E. 14A DISALLOWANC E (A) THE LEARNED CIT (A) 4 HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ASSESSMENT OF THE APPELLANT ON THE B OOK PROFIT U/S 115 JB OF RS. 48,59,66,770/- (B) THE LEARNED CIT (A) 4 HAS ERRED IN CONFIRMING THE DISALLOWANCE U/S 14A MADE BY THE A.O. WITHOUT BRING ING ITA NO.5852/MUM/2014 ENAM FINANCIAL INVESTMENTS P LTD 2 ANYTHING ON RECORD TO PROVE THAT THE EXPENDITURE WE RE INCURRED TO EARN EXEMPT INCOME OR WITHOUT BRINGING ON RECORD ANYTHING TO SHOW DIRECT NEXUS BETWEEN THE EXPENDITURE INCURRED & THE EXEMPT INCOME. (C) THE LEARNED CIT (A) FURTHER ERRED IN CONFIRMING THE ENHANCEMENT OF BOOK PROFIT U/S 115 JB BY ADDING DISALLOWANCE U/S. 14 A OF RS. 22,84,851/- TO THE BOOK PROFIT FOR THE PURPOSE OF SECTION 115 JB. (D) THE LEARNED CIT (A) ERRED IN NOT CONSIDERING THE FA CTS THAT FOR THE PURPOSE OF BOOK PROFIT U/S. 115 JB LONG TERM CA PITAL GAIN IS NOT REDUCED FROM THE BOOK PROFIT BUT ONLY DIVIDE ND INCOME IS REDUCED HENCE IF AT ALL DISALLOWANCE U/S 14A IS TO BE ADDED TO THE BOOK PROFIT IT SHOULD BE DIVIDED BETWEEN DIV IDEND INCOME AND LONG TERM CAPITAL GAIN AND RESTRICT THE ADDITION TO THE AMOUNT RELATING TO DIVIDEND INCOME ONLY BECAUSE LONG TERM CAPITAL GAIN IS NOT REDUCED FROM BOOK PROFIT U /S 115 JB. (E) YOUR APPELLANT CRAVES LEAVE TO ADD TO AMEND, ALTER, DELETE AND / OR MODIFY THE ABOVE GROUNDS OF APPEAL ON OR B EFORE THE FINAL DATE OF HEARING. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FILED ITS RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR ON 28.09.20 10. THE ASSESSMENT WAS COMPLETED ON 12.03.2013 U/S. 143(3). THE ASSES SING OFFICER WHILE PASSING THE ASSESSMENT ORDER MADE DISALLOWANCE OF ` 22,84,851/- U/S. 14A WHILE CALCULATING BOOK PROFIT U/S 115JB THEREBY ENH ANCED THE BOOK PROFIT BY ` 22,84,851/-. ON APPEAL, THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. FURTHER AGGRIEVED BY THE ORDER OF THE CIT (A), THE ASSESSEE IS IN APPEAL BEFORE US. 3. THE LEARNED AR OF THE ASSESSEE SUBMITTED THAT TH E SPECIAL BENCH OF THE DELHI TRIBUNAL VIDE ITS ORDER DATED 16.06.2017 IN T HE CASE OF ACIT VS. VIREET INVESTMENT (P) LTD. 82 TAXMANN.COM 415 HAS CONSIDER ED SIMILAR GROUND AS ITA NO.5852/MUM/2014 ENAM FINANCIAL INVESTMENTS P LTD 3 RAISED BY THE ASSESSEE AND THE ORDER WAS PASSED AFT ER THE ORDER OF THE LEARNED CIT(A). THE SPECIAL BENCH HAS HELD THAT CO MPUTATION UNDER CLAUSE (F) OF EXPLANATION 1 TO SECTION 115JB(2), IS TO BE MADE WITHOUT RESORTING TO THE COMPUTATION AS CONTEMPLATED U/S. 14A READ WITH RULE 8D OF THE INCOME- TAX RULES, 1962. THE LEARNED AR ARGUED THAT THE MA TTER MAY BE REMANDED TO THE FILE OF THE CIT(A) OR THE ASSESSING OFFICER TO CONSIDER THE DECISION OF THE SPECIAL BENCH. 4. ON THE OTHER HAND, THE LEARNED DR HAS NO OBJECTI ON IF THE MATTER IS RESTORED TO THE FILE OF THE ASSESSING OFFICER. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE PARTIES AND FIND THAT SIMILAR QUESTION OF LAW AS RAISED BY THE ASSESSEE I N THE PRESENT APPEAL WAS CONSIDERED BY THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. VIREET INVESTMENT (P) LTD. (SUPRA). THE ASSESSING OFFICER /CIT(A) WAS NOT HAVING THE BENEFIT OF THE ORDER OF THE SPECIAL BENCH AS ST ATED ABOVE. CONSIDERING THE CONTENTION OF BOTH THE PARTIES AND IN ALL FAIRN ESS, THE MATTER IS REMANDED TO THE FILE OF THE ASSESSING OFFICER TO PASS THE OR DER AFRESH, IN ACCORDANCE WITH THE DECISION OF THE SPECIAL BENCH IN THE CASE OF ACIT VS. VIREET INVESTMENT (P) LTD. (SUPRA) AND IN ACCORDANCE WITH LAW. NEEDLESS TO SAY, THE ASSESSING OFFICER SHALL GRANT ADEQUATE AND SUFFICIE NT OPPORTUNITY TO THE ASSESSEE BEFORE PASSING THE ORDER. ITA NO.5852/MUM/2014 ENAM FINANCIAL INVESTMENTS P LTD 4 6. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATIST ICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH DAY OF AUGUST, 2017. SD/- SD/- (G S PANNU) (PAWAN S INGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED: 30 TH AUGUST, 2017 SA COPY OF THE ORDER FORWARDED TO : 1. THE APP ELL ANT. 2. THE RESPONDENT. 3. T HE CIT(A), MUMBAI 4. THE CIT 5. DR, E BENCH, ITAT, MUMBAI BY ORDER, #TRUE COPY # ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI