DCIT 8(1) (OSD), MUMBAI V. EXPRESSIT LOGISTIC WORLDWIDE LTD, MUMBAI

ITA 6113/MUM/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 5101 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 17-12-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 05-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARMINDER
• Assessee Lawyers: A T JAIN
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E B ENCH, MUMBAI . . , , !'# , $ % BEFORE SHRI I.P. BANSAL, JM AND SHRI N.K. BILLAI YA, AM ./ I.T.A. NO.6113/MUM/2011 ( & & & & / ASSESSMENT YEAR :2008-09 THE DCIT-8(1), AAYAKAR BHAVAN, MUMBAI-400 020 M/S.EXPRESSIT LOGISTIC WORLDWIDE LTD., B-42, QUEENS APARTMENT, NARGIS DUTT ROAD, BANDRA (W), MUMBAI-400 050 ' $ ./ () ./PAN/GIR NO. : AABCE 0314K ( '* /APPELLANT ) .. ( +,'* / RESPONDENT ) '* - / APPELLANT BY : ` SMT. PARMINDER +,'* . - /RESPONDENT BY : SHRI A.T. JAIN . /0$ / DATE OF HEARING :17.12.2013 12& . /0$ / DATE OF PRONOUNCEMENT :20.12.2013 3 / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-16, MUMBAI DT.17.6.2011 PERTAINING TO A.Y. 2 008-09. 2. THE REVENUE HAS RAISED 4 SUBSTANTIVE GROUNDS OF APPEAL. GROUND NO. 1 RELATES TO DELETION OF THE ADDITION ON ACCOUN T OF DEVELOPMENT EXPENSES OF RS. 3,68,82,621/-. ITA NO.6113/M/2011 2 3. AT THE VERY OUTSET, THE LD. COUNSEL FOR THE ASSE SSEE SUBMITTED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE A SSESSEE BY THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE IN EARLIER ASSE SSMENT YEARS. 4. THE LD. DEPARTMENTAL REPRESENTATIVE COULD NOT BR ING ANY DISTINGUISHING FACTS ON RECORD. 5. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE LOWE R AUTHORITIES. WE FIND THAT THE LD. CIT(A) HAS DELETED THE ADDITION S FOLLOWING THE DECISION OF HIS PREDECESSOR FOR A.Y. 2004-05, 2006-07 AND 20 07-08. WE FIND THAT THE TRIBUNAL IN ITA NO. 5997/M/08 FOR A.Y. 2004-05 HAD THE OCCASION TO CONSIDER IDENTICAL GROUND THOUGH WITH DIFFERENT QU ANTUM AND HAS CONFIRMED THE FINDINGS OF THE LD. CIT(A) AT PARA-3 ON PAGE-4 OF ITS ORDER. WE FURTHER FIND THAT THE TRIBUNAL IN ITA NO. 8374/ M/2010 FOR A.Y. 2006-07 HAS DECIDED THIS ISSUE IN FAVOUR OF THE ASS ESSEE FOLLOWING THE EARLIER YEAR ORDER OF THE TRIBUNAL WHICH CAN BE SEE N AT PARA-6 ON PAGE-3 OF THE ORDER. SIMILAR VIEW HAS TAKEN BY THE TRIBUNA L FOR A.Y. 2007-08 IN ITA NO. 8886/M/2010. SIMILAR FINDINGS HAVE BEEN GI VEN BY THE TRIBUNAL AT PARA-5 ON PAGE-3 OF ITS ORDER. AS NO DISTINGUIS HING FACTS HAVE BEEN BROUGHT ON RECORD BEFORE US, RESPECTFULLY FOLLOWING THE EARLIER DECISIONS OF THE TRIBUNAL, FINDINGS OF THE LD. CIT(A) ARE CON FIRMED. GROUND NO. 1 IS ACCORDINGLY DISMISSED. 6. GROUND NO. 2,3 & 4 RELATE TO THE DELETION OF ADD ITION MADE AS PER PROVISIONS OF SEC. 14A R.W. RULE 8D OF THE ACT. 7. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE HAS INVESTED ITS FUNDS IN THE QUO TED AND UNQUOTED SHARES/MUTUAL FUNDS AMOUNTING TO RS. 15,00,000/-. THE ASSESSEE WAS ASKED TO FURNISH DETAILS OF EXPENSES INCURRED FOR EARNING EXEMPT INCOME AND ASSESSEE WAS ALSO ASKED TO SHOW CAUSE AS TO WHY PROVISIONS OF SEC. ITA NO.6113/M/2011 3 14A R.W. RULE 8D SHOULD NOT BE APPLIED. THE ASSESS EE SUBMITTED THAT THE INVESTMENTS HAVE BEEN MADE FROM ITS OWN FUNDS AND R ESERVES AND NO INTEREST BEARING FUNDS HAVE BEEN UTILIZED FOR MAKIN G INVESTMENTS. THE STATEMENTS OF THE ASSESSEE DID NOT FIND ANY FAVOUR FROM THE AO WHO WENT ON TO COMPUTE THE DISALLOWANCE AS PER RULE 8D AND C OMPUTED THE TOTAL DISALLOWANCE AT RS. 76,508/-. 8. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT(A). BEFORE THE LD. CIT(A), IT WAS STRONGLY CONTENDED THAT THERE WA S NO DIRECT NEXUS BETWEEN THE INTEREST EXPENSES INCURRED AND EXEMPT I NCOME EARNED. THE LD. CIT(A) FOLLOWING THE DECISION OF THE HONBLE P UNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS HERO CYCLES LTD 31 DTR 301 OBSERVED THAT THE AO REMOTELY SUGGESTED THAT THERE IS A NEX US WITHOUT BRINGING ON RECORD ANY MATERIAL FACTS. THE LD. CIT(A) FURTHER OBSERVED THAT ON THE CONTRARY, THE ASSESSEE HAS BROUGHT OUT EVIDENCE ON RECORD THAT THE ENTIRE PAYMENT HAS BEEN MADE THROUGH ITS OWN RESERVE AND S URPLUS AND ACCORDINGLY DELETED THE ADDITION MADE BY THE AO. 9. AGGRIEVED BY THIS, THE REVENUE IS IN APPEAL BEFO RE US. 10. THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY RE LIED UPON THE FINDINGS OF THE AO. 11. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT HE RELIES ON THE DECISION OF THE LD. CIT(A). 12. WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF TH E LOWER AUTHORITIES. WE FIND MERIT IN THE FINDINGS OF THE LD. CIT(A) THA T THE AO COULD NOT BRING ANY MATERIAL EVIDENCE ON RECORD WHICH COULD S UGGEST SOME NEXUS BETWEEN BORROWED FUNDS AND INVESTMENTS MADE BY THE ASSESSEE. ON THE ITA NO.6113/M/2011 4 CONTRARY, THE LD. CIT(A) HAS GIVEN CATEGORICAL FIN DING THAT THE INVESTMENTS MADE BY THE ASSESSEE ARE FROM ITS OWN FUNDS AND RESERVES. AS NO DISTINGUISHING FACTS HAVE BEEN BROUGHT BEFOR E US, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDINGS OF THE LD . CIT(A). GROUND NO. 2,3 & 4 ARE ACCORDINGLY DISMISSED. 13. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 20.12.2013 . 3 . 2& $ 4 5620.12.2013 2 . < SD/ SD/ (I.P. BANSAL ) (N. K. BILLAIYA) /JUDICIAL MEMBER $ / ACCOUNTANT MEMBER MUMBAI; 5 DATED 20 /12/2013 . . ./ RJ , SR. PS 3 . +/ 3 . +/ 3 . +/ 3 . +/ = &/ = &/ = &/ = &/ / COPY OF THE ORDER FORWARDED TO : 1. '* / THE APPELLANT 2. +,'* / THE RESPONDENT. 3. > ( ) / THE CIT(A)- 4. > / CIT 5. ?< +/ , , / DR, ITAT, MUMBAI 6. <@ A / GUARD FILE. 3 3 3 3 / BY ORDER, , / +/ //TRUE COPY// B BB B / C ( C ( C ( C ( (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI