M.J. EXDPORTS P. LTD, MUMBAI V. DCIT CIR 3(2), MUMBAI

ITA 5983/MUM/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2104 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-11-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 09-10-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PRADEEP KR SINGH
• Assessee Lawyers: H N MOTIWALA
• Keywords: Earning of tax free income; Question of law
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B, MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH, JUDICIAL MEMBER ITA NO. 5983/MUM/2013 : (A.Y : 2010 - 11) M/S. M.J. EXPORTS PVT. LTD., C/O. H.N. MOTIWALLA & CO., 508, SHARDA CHAMBERS, 33, NEW MARINE LINES, MUMBAI 400 020 ( APPELLANT ) PAN : AADCM7712M VS. DCIT, CIRCLE - 3(2), MUMBAI (RESPONDENT) ASSESSEE BY : SHRI H.N. MOTIWALA REVENUE BY : SHRI PRADEEP KR. SINGH DATE OF HEARING : 20/10/2016 DATE OF PRONOUNCEMENT : 11 /11/2016 O R D E R PER G.S. PANNU , AM : THE CAPTIONED APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A) - 4 , MUMBAI DATED 20.08.2013 , PERTAINING TO THE ASSESSMENT YEAR 2010 - 11 , WHICH IN TURN HAS ARISEN FROM THE ORDER PASSED BY THE ASSESSING OFFICER, MUMBAI UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. IN THIS APPEAL, ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 2 M/S. M.J. EXPORTS PVT. LTD. ITA NO. 5983/MUM/2013 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 4, MUMBAI, ERRED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER IN RESPECT OF DISALLOWANCE OF EXPENSES AMOUNTING TO RS.1,31,209/ - UNDER SECTION 14A R.W. RULE 8D OF THE INCOME TAX RULES, 1962, PARTICULARLY WHEN THE APPELLANT HAS NOT I NCURRED ANY EXPENSES FOR EARNING EXEMPTED INCOME AND INVESTMENT OF RS.2,85,73,491/ - IS OUT OF ITS OWN CAPITAL AND FREE RESERVES OF RS.8,37,07,557/ - . 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 4, MUMBAI, ERRED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER IN RESPECT OF SHIV SAGAR PROPERTY AMOUNTING TO RS.33,63,676/ - IN THE HANDS OF THE APPELLANT, PARTICULARLY WHEN, THE APPELLANT IS NOT OWNER OF THE PROPERTY AND THE BOMBAY HIGH COURT HAS ADMITTED THIS QUESTION ON MARCH 22, 2013 FOR THE ASSESSMENT YEAR 2006/07 AND THEREFORE THE APPELLANT HAS FILED A DECLARATION UNDER SECTION 158A(1) OF THE ACT, IN FORM NO. 8 BEFORE THE SAID LEARNED COMMISSIONER OF INCOME TAX THAT WHATEVER DECISION OF QUESTION OF LA W WOULD BE FOLLOWED IN THE SUBSEQUENT YEARS, BUT NOT CONSIDERING THE SAME. 3. THE AFORESAID TWO GROUNDS OF APPEAL RAISED BY THE ASSESSEE SHALL BE DEAL T WITH IN SERIATIM . THE FIRST ISSUE IS IN RELATION TO DISALLOWANCE OF RS.1,31,209/ - MADE BY THE INCOME - TAX AUTHORITIES BY INVOKING PROVISIONS OF SEC. 14A OF THE ACT. IN THIS CONNECTION, THE RELEVANT FACTS ARE THAT ASSESSEE HAD EARNED DIVIDEND INCOME OF RS.1,99,644/ - , WHICH WAS EXEMPT. THE ASSESSING OFFICER NOTED THAT EXPENDITURE RELATABLE TO THE SAID EXE MPT INCOME HAS NOT BEEN DISALLOWED BY THE ASSESSEE, WHICH WAS A REQUIREMENT OF SEC. 14A OF THE ACT. ON BEING SHOW - CAUSED, ASSESSEE ASSERTED THAT IT HAS NOT INCURRED ANY EXPENDITURE IN RELATION TO THE EXEMPT INCOME AND, THEREFORE, NO DISALLOWANCE SHOULD BE MADE. THE ASSESSING OFFICER, HOWEVER, DISALLOWED A SUM OF RS.1,31,316/ - , WHICH WAS COMPUTED IN TERMS OF THE FORMULA CONTAINED IN RULE 8D(2)(III) 3 M/S. M.J. EXPORTS PVT. LTD. ITA NO. 5983/MUM/2013 OF THE INCOME TAX RULES, 1962. BEFORE THE CIT(A) ALSO, ASSESSEE MADE A SIMILAR ASSERTION AS WAS MADE BEFORE THE ASSESSING OFFICER AND CONTESTED THE DISALLOWANCE. THE CIT(A), HOWEVER, DISAGREED WITH THE ASSESSEE AND NOTED THAT THE ASSESSING OFFICER HAD CORRECTLY RECORDED HIS SATISFACTION ABOUT THE INCORRECTNESS OF THE CLAIM OF ASSESSEE OF NOT HAVING INCURRED ANY EXPENDITURE IN RELATION TO THE EXEMPT INCOME AND, THEREFORE, UPHELD THE DISALLOWANCE U/S 14A OF THE ACT COMPUTED IN TERMS OF RULE 8D(2)(III) OF THE RULES. 4. BEFORE US ALSO, THE ONLY PLEA OF ASSESSEE IS THAT THE ASSESSEE HAS NOT INCURRED ANY EXPENDITURE IN EARNING OF THE EXEMPT INCOME AND, THEREFORE, THE DISALLOWANCE IS NOT JUSTIFIED. IN OUR CONSIDERED OPINION, THE ASSESSING OFFICER WAS JUSTIFIED IN MAKING THE IMPUGNED DISALLOWANCE BECAUSE HE WAS NOT SATISFIED, HAVING REGARD TO THE ACCOUNTS OF THE ASSESS EE, THAT NO EXPENDITURE WAS INCURRED IN RELATION TO EARNING OF THE EXEMPT INCOME. NO DOUBT, THE PROPOSITION CANVASSED BY THE ASSESSEE IS TENABLE, SO HOWEVER, IT HAS TO BE EXAMINED IN THE CONTEXT OF FACTS OF EACH CASE. IN THE PRESENT CASE, HAVING REGARD T O THE DISCUSSION IN THE ASSESSMENT ORDER, WE FIND NO REASON TO DELETE THE DISALLOWANCE OF RS.1,31,316/ - MADE BY THE ASSESSING OFFICER BY INVOKING SEC. 14A OF THE ACT. THUS, ON THIS ASPECT, ASSESSEE FAILS. 5. IN THE SECOND GROUND, THE ISSUE RELATES TO ASSESSMENT OF RENTAL INCOME OF RS.33,63,677/ - PERTAINING TO SHIV SAGAR PROPERTY, WHICH HAS BEEN ASSESSED IN THE HANDS OF THE ASSESSEE, WHEREAS THE PLEA OF ASSESSEE IS THAT IT IS NOT THE OWNER OF SUCH PROPERTY. TH E DISPUTE IN THIS 4 M/S. M.J. EXPORTS PVT. LTD. ITA NO. 5983/MUM/2013 GROUND IS A RECURRING DISPUTE AND IN THE PAST YEARS ALSO, SIMILAR DISPUTE EXISTED BETWEEN THE ASSESSEE AND THE REVENUE. THE CIT(A) HAS NOTICED THAT IN ASSESSMENT YEAR 2006 - 07 VIDE ITA NO. 6618/MUM/2009 DATED 24.2.2012, TRIBUNAL HAD AFFIR MED THE STAND OF THE ASSESSING AUTHORITY. 6. THE LEARNED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT IN ASSESSMENT YEAR 2006 - 07, THE HON'BLE BOMBAY HIGH COURT HAD ADMITTED THE APPEAL OF ASSESSEE AND THE DISPUTE IN THIS YEAR IS IDENTICAL. THE LEARN ED REPRESENTATIVE REFERRED TO PAGES 18 AND 19 OF PAPER BOOK, WHEREIN A DECLARATION U/S 158A(1) OF THE ACT IN THE PRESCRIBED FORM NO.8 HAS BEEN FILED CONTENDING THAT IN VIEW OF IDENTICAL QUESTION PENDING BEFORE THE HON'BLE BOMBAY HIGH COURT, IN THE INSTANT YEAR THE ASSESSING OFFICER BE DIRECTED TO APPLY THE ULTIMATE DECISION ON THE SAID QUESTION OF LAW AS WOULD BE DECIDED IN THE EARLIER YEAR, THEREBY OBVIATING THE NECESSITY FOR ASSESSEE TO FILE APPEAL TO THE HON'BLE BOMBAY HIGH COURT IN THIS YEAR. TO THE AF ORESAID PLEA OF ASSESSEE, THERE IS NO OBJECTION RAISED BY THE LD. DR. 7. IN VIEW OF THE AFORESAID, INSOFAR AS THE ISSUE OF ASSESSABILITY OF RENTAL INCOME OF RS.33,63,677/ - RELATING TO SHIV SAGAR PROPERTY IS CONCERNED, SAME IS DIRECTED TO BE ASSESSED IN TH E HANDS OF THE ASSESSEE AS HELD BY THE INCOME - TAX AUTHORITIES FOLLOWING THE ORDER OF TRIBUNAL DATED 24.2.2012 (SUPRA) IN THE CASE OF ASSESSEE. SIMULTANEOUSLY, THE ASSESSING OFFICER IS DIRECTED TO APPLY THE FINAL DECISION ON THE QUESTION OF LAW, WHICH IS P ENDING BEFORE THE HON'BLE BOMBAY HIGH COURT IN THE EARLIER ASSESSMENT YEAR 2006 - 07 WITHOUT REQUIRING THE ASSESSEE TO FILE 5 M/S. M.J. EXPORTS PVT. LTD. ITA NO. 5983/MUM/2013 APPEAL TO THE HIGHER COURT IN THIS YEAR ON THE SAME ISSUE. IN THIS VIEW OF THE MATTER, THE ISSUE IS DECIDED AGAINST THE ASSESSEE, SUB JECT TO THE AFORESAID OBSERVATIONS. 8. RESULTANTLY, APPEAL OF THE ASSESSEE IS DISMISSED, AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 1 1 T H NOVEMBER, 2016. SD/ - SD/ - ( AMARJIT SINGH ) JUDICIAL MEMBER ( G.S. PANNU ) ACCOUNTANT MEMBER MUMBAI, DATE : 1 1 T H NOVEMBER , 2016 * SSL * COPY TO : 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R, B BENCH, MUMBAI 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR I.T.A.T, MUMBAI