RAMANUJ FINANCE P. LTD, MUMBAI V. ACIT CIR 9(3), MUMBAI

ITA 6088/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 7490 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2015-2016
• Appeal Filed On: 25-10-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Earning of tax free income; Rule 8D
• Section: 14A; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH D , MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO. 6088 /M UM /20 18 ASSESSMENT YEAR: 2015 - 16 RAMANUJ FINANCE P. LTD., MUMBAI 203, D,B.WING, SUMIT SA MARTH ARCHADE, AAREY ROAD, GOREGAON(W), MUMBAI, PIN - 400104. PAN: AAACS9126L VS. ACIT CIR 9(3) , MUMBAI (APPELLANT) (RESPONDENT) PRESENT FOR: APPELLANT BY : SHRI H . S. RAHEJA RESPONDENT BY : SMT JOTHILAKSHMI NAYAK , SR. DR DATE OF HEARING : 08.01.2020 DATE OF PRONOUNCEMENT : 29 .01 . 20 20 O R D E R PER RAJESH KUMAR , ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAINST THE ORDER DATED 29.05.2018 OF THE COMMISSIONER OF INCOM E TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT YEAR 2015 - 16. 2. THE ONLY ISSUE RAISED BY THE ASSESSEE IN THE VARIOUS GROUNDS OF APPEAL IS AGAINST THE ORDER OF LD. CIT(A) UPHOLDING THE DISALLOWANCE OF RS.1,70,813/ - AS MADE BY THE AO U/S 14A R.W. RULE 8D WITHOUT ITA NO.6088/MUM/2018 RAMANUJ FINANCE P. LTD., MUMBAI 2 APPRECIATING THE FACT THAT THE ASSESSEE ENGAGED IN THE BUSINESS OF TRADING OF SHARES AND SECURITIES. 3. THE FACTS IN BRIEF ARE THAT THE ASSESSEE HAS FILED RETURN OF INCOME ON 30.09.2015 DECLARING A TOTAL INCOME OF RS. 57,53,320/ - . THE CASE OF THE ASSESSEE IS SELECTED FOR SCRUTINY AND STATUTORY NOTICES WERE DULY ISSUED AND SERVED ON THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS. THE AO OBSERVED THAT THE ASSESSEE HAS EARNED DIVIDEND INCOME OF RS. 44,10,258/ - AND CLAIMED THE SAME AS EXEMPT INCOME U/S 10(34) OF THE ACT. A O FURTHER NOTED THAT THE ASSESSEE HAS NOT MADE ANY DISALLOWANCE U/S 14A OF THE ACT FOR EARNING OF EXEMPT INCOME. ACCORDINGLY THE AO CALLED UPON THE ASSESSEE TO EXPLAIN AS TO WHY THE EXPENSES SHOULD NOT BE DISALLOWED U/S 14A R.W.R 8D IN RE LATION TO EARNING OF DIVIDEND INCOME. 4. THE LD. AR SUBMITTED THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING IN SHARE AND SECURITIES AND THUS IT IS THE BUSINESS OF THE ASSESSEE TO EARN PROFIT. THE ASSESSEE HAD BORRO WED MONEY PURELY FOR THE PURPOSES OF TRADING IN SHARES AND UNSOLD ARE HELD AS STOCK - IN - TRADE, THEREFORE, NO DISALLOWANCE IS REQUIRED TO BE MADE. T HE AO REJECTED THE CONTENTION S OF THE ASSESSEE AND INVOKED THE PROVISION S OF SECTION 14A R.W.R 8D THEREBY WO RKING OUT THE DISALLOWANCE AT RS.1,70,813/ - . 5. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) UPHELD THE ORDER OF AO. THE LD. CIT(A) WHILE UPHOLDING THE ORDER OF AO OBSERVED THAT THE AMBIGUITY IN APPLICATION OF SECTION 14A R.W.R 8D IN THE HANDS OF INVES TORS WHO HELD SHARES AS STOCK - IN - TRADE HAS BEEN SET AT ARREST B Y THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF MAXOPP INVESTMENT LTD. V. CIT REPORTED IN 402 ITR 640(SC). ITA NO.6088/MUM/2018 RAMANUJ FINANCE P. LTD., MUMBAI 3 6. AFTER HEARING THE LD. DR AND PERUSING THE MATERIAL ON RECORD, WE OBSERVE T HAT THE LD. CIT(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE AND UPHELD THE ORDER OF AO BY FOLLOWING THE DECISION IN CIT VS MAXOPP INVESTMENT LTD. (SUPRA). IN OUR OPINION, THE LD. CIT(A) HAS CORRECTLY PASSED THE ORDER BY FOLLOWING THE DECISION OF APEX COUR T AND ACCORDINGLY WE ARE ALSO INCLINED TO UPHOLD THE SAME. 7. THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29.01 . 20 20 . SD/ - SD/ - ( SAKTIJIT DEY ) ( RAJESH KUMAR ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 29 .01 . 2020 . RS , SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI T HE CIT ( A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI. ITA NO.6088/MUM/2018 RAMANUJ FINANCE P. LTD., MUMBAI 4 DATE INITIAL WHETHER DICTATION PAD ENCLOSED WITH THE FILE : YES/NO (AS THE ORDER HAS BEEN TYPED WITH THE HELP OF MANUSCRIPT) 1. DRAFT DICTATED ON SR.PS 2. DRAFT PLACED BEFORE AUTHOR SR.PS 3. DRAFT PROPO SED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. DATE OF PRONOUNCEMENT SR.PS 7. FILE SENT TO THE BENCH CLERK SR.PS 8. DATE ON WHICH FILE GOES TO T HE HEAD CLERK 9. DATE OF DISPATCH OF ORDER