D.C.I.T. 3(1), MUMBAI V. BAJAJ CAPITAL VENTURE PVT. LTD., MUMBAI

ITA 5967/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84283 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-11-2014
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 24-11-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 01-10-2012
• Court: TRIBUNAL
• Department Lawyers: S AKHILENDRA YADAV SR
• Assessee Lawyers: S VENKATARAMAN
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ./I.T.A. NO. 5967/M/2012 ( AY: 2009 - 2010 ) DCIT - 3(1), MUMBAI. / VS. BAJAJ CAPITAL VENTURE PVT LTD., BAJAJ BHAVAN, 2 ND FLOOR, JAMANLAL BAJAJ MARG, 226, NARIMAN POINT, MUMBAI 400 021. ./ PAN : AAACA 3565 F ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI S. AKHILENDRA YADAV, SR. AR / RESPONDENT BY : SHRI S. VENKAT ARAMAN / DATE OF HEARING : 24.11.2014 / DATE OF PRONOUNCEMENT : 24 .11.2014 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE REVENUE ON 1.10.2012 IS AGAINST THE ORDER OF THE CIT (A) - 5, MUMBAI DATED 20.7.2012 FOR THE ASSESSMENT YEAR 2009 - 2010. 2. IN THIS APPEAL, REVENUE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) WAS JUSTIFIED IN TREATING THE INTEREST OF RS. 3,55,37,740/ - EARNED ON MONEY LENT BY THE ASSESSEE AS INCOME FROM PROFIT AND GAINS OF BUSINESS OR PROFESSION AS AGAINST INCOME FROM OTHER SOURCES HELD BY THE ASSESSING OFFICER. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LD CIT (A) WAS JUSTIFIED IN HOLDING THAT THE DISALLOWANCE OUT OF INTEREST EXPENDITURE BE RESTRICTED TO RS. 63,21,566/ - AS AGAINST THE DISALLOWANCE U/S 14A OF T HE IT ACT OF RS. 5,33,35,926/ - MADE BY THE ASSESSING OFFICER WITHOUT APPRECIATING THAT THE INTEREST EXPENDITURE CLAIMED WAS DIRECTLY RELATABLE TO THE ACTIVITY OF INVESTMENT IN SHARES / MUTUAL FUNDS AND SUBSIDIARIES. 3. WHETHER ON THE FACTS AND IN THE CIRCU MSTANCES OF THE CASE AND IN LAW, LD CIT (A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS. 9,61,170/ - MADE U/S 14A R.W. RULE 8D(2)(III), WITHOUT APPRECIATING THAT DISALLOWANCE OUT OF ADMINISTRATIVE EXPENSES WAS MADE BY THE ASSESSING OFFICER BY APPLYING THE PROVISIONS OF SECTION 36(1)(III) AS WELL, AFTER CRITICAL ANALYSIS OF THE EXPENSES CLAIMED IN 2 RESPECT TO THE BUSINESS OPERATION OF THE ASSESSEE COMPANY ON WHICH NO FINDING IS GIVEN BY THE LD CIT (A). 3. AT THE OUTSET, SHRI VENKATARAMAN, LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE ABOVE GROUNDS AND MENTIONED THAT SIMILAR ISSUES WERE CAME UP BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE AY 2008 - 2009 VIDE ITA NO.4005/M/2012, ORDER DATED 2.8.2013 , WHEREIN THE ITAT DECIDED THE ISSUES IN FAVOUR OF THE ASSESSEE . IN THE REGARD, LD COUNSEL FOR THE ASSESSEE FILED A COPY OF THE SAID ORDER OF THE TRIBUNAL (SUPRA) AND READ OUT THE RELEV ANT PARAS 7 AND 12 OF THE SAID TRIBUNALS ORDER. 4. ON THE OTHER HAND, LD DR RELIED ON THE ORDERS OF THE REVENUE AU THORITIES. 5. WE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE CITED ORDER OF THE TRIBUNAL (SUPRA), DATED 2.8.2013. ON PERUSAL OF THE SAID TRIBUNALS ORDER, WHEREIN ONE OF US (AM) IS A PARTY TO THE SAID ORDER OF T HE TRIBUNAL, WE FIND THE GROUND NO.1 RAISED IN THE INSTANT APPEAL IS EXACTLY IDENTICAL TO THAT OF THE ISSUE DECIDED BY THE ITAT VIDE PARA 7 OF ITS ORDER (SUPRA) DATED 2.8.2013 . THEREFORE, F OR THE SAKE OF COMPLETENESS OF THIS ORDER, THE SAID PARA 7 IS REPR ODUCED HERE WHICH READS AS UNDER: 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE MATERIAL PLACED BEFORE US ON THIS ISSUE. ON PERUSAL OF THE ORDER OF THE CIT (A) ORDER, WE ARE OF THE OPINION THAT THE CIT (A)S DECISION, IN TREATING THE INTEREST INCOME OF RS. 1,25,22,877/ - EARNED ON MONEY LENDING OPERATION AS PROFITS & GAINS OF BUSINESS OR PROFESSION, IS REASONABLE AND IT DOES NOT CALL FOR ANY INTERFERENCE. IN THIS REGARD, WE HAVE CONSIDERED OBJECT CLAUS E AUTHORIZING THE ASSESSEE TO CONDUCT THE BUSINESS OF MONEY LENDING AND THE ENTRIES IN THE BOOKS OF ACCOUNTS AND THE BANK ACCOUNTS. ACCORDINGLY, GROUND NO.1 RAISED BY THE REVENUE IS DISMISSED . 6. CONSIDERING THE COMMONNESS OF THE ISSUE INVOLVED IN THE PRESENT APPEAL WITH THAT OF THE ISSUE DECIDED BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE AY 2008 - 2009 (SUPRA) AND RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL, WE ARE OF THE OPINION THAT THE D ECISION OF THE CIT (A) HOLDING THAT THE INTEREST EARNED ON MONEY LENDING OPERATION OF RS. 3,55,37,740/ - AROSE FROM A SYSTEMATIC AND ORGANIZED ACTIVITY CARRIED ON WITH A MOTIVE OF PROFIT AND HENCE OUGHT TO BE TAXED UNDER THE HEAD PROFITS AND GAINS OF BUSIN ESS OR PROFESSION IS FAIR AND REASONABLE AND IT DOES 3 NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, THE GROUND NO.1 RAISED BY THE ASSESSEE IS ALLOWED. 7. IN CONNECTION WITH GROUND NOS.2 AND 3, WHICH RELATE TO DISALLOWANCE U/S 14A, WE FIND THE IDENTICAL ISSU E WAS DECIDED BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE AY 2008 - 2009 (SUPRA) VIDE PARA 12 OF THE SAID ORDER DATED 2.8.2013. THEREFORE, C ONSIDERING THE IMPORTANCE OF THE SAID PARA 12 AND FOR THE SAKE OF COMPLETENESS OF THIS ORDER , THE SAME IS REPRODUC ED WHICH READS AS UNDER: 12. WE HAVE HEARD BOTH THE PARTIES ON THIS ISSUE AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES. THE LIMITED ISSUE RAISED BEFORE US IS RESTRICTED TO THE CORRECTNESS OF THE CALCULATION OF DISALLOWANCE AS PER RULE - 8D OF THE ACT. AFTER DISCUSSION OF THE PARTIES IN THE OPEN COURT, WE ARE OF THE OPINION THAT THE DISALLOWANCE CONFIRMED BY THE CIT (A) IS PROPER BUT THE SAME IS SUBJECTED TO THE CORRECTNESS OF THE CALCULATIONS AS PER CLAUSE - (II) & (III) OF RULE - 8D(2). AO MAY EXAMINE T HE CORRECTNESS BEFORE RESTRICTING THE DISALLOWANCE AS HELD BY THE CIT (A). IN THIS REGARD, WE CONFIRM THE ORDER OF THE CIT (A) IN SUBSTANCE AND THEREFORE, IT DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GROUND NO.2 & 3 RAISED BY THE REVENUE ARE DISMI SSED . 8. CONSIDERING THE COVERED NATURE OF THE ISSUE IN ASSESSEES OWN CASE, WE ARE OF THE OPINION THAT THE DISALLOWANCE CONFIRMED BY THE CIT (A) IS PROPER BUT THE SAME IS SUBJECTED TO THE CORRECTNESS OF THE CALCULATIONS AS PER CLAUSE (II) & (III) OF RULE - 8D(2) OF THE IT RULES, 1962. ASSESSING OFFICER MAY EXAMINE THE CORRECTNESS BEFORE RESTRICTING THE DISALLOWANCE AS HEL D BY THE CIT (A). THEREFORE, IN SUBSTANCE, THE ORDER OF THE CIT (A) DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GROUND NOS.2 AN D 3 ARE DISMISSED. 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN T HE OPEN COURT ON 24 TH NOVEMBER, 2014. SD/ - SD/ - ( AMIT SHUKLA ) (D. KARUNAKARA RAO ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; 2 4 /11/2014 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 4 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI