ACIT CEN CIR 6, MUMBAI V. EVERSMILE CONSTRUCTION CO. P. LTD, MUMBAI

ITA 6142/MUM/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100786 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 23-02-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 05-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMIT KUMAR
• Section: 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI , , , BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI N.K . BILLAIYA, A CCOUNTANT M EMBER / I .T.A. NO . 6142/MUM/2012 ( / ASSESSMENT YEAR : 2009 - 10 THE ACIT, CENTRAL CIRCLE - 6, MUMBAI - 400 020 / VS. M/S. EVERSMILE CONSTRUCTION CO. PVT. LTD., D.B. HOUSE, YASHODHAM, GEN. A.K. VAIDYA MARG, GOREGAON (E), MUMBAI - 400 063 ./ ./ PAN/GIR NO. : AAACE 0875E ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY: SHRI SUMIT KUMAR / RESPONDENT BY : SHRI AARTI VISANJI / DATE OF HEARING : 19 . 0 8 .2015 / DATE OF PRONOUNCEMENT : 19 .0 8 .2015 / 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) - 3 6, MUMBAI DT. 20 . 7 .2012 PERTAINING TO ASSESSMENT YEAR 200 9 - 1 0. 2. THE SOLE GRIEVANCE OF THE REVENUE IS THAT THE LD. CIT(A) ERRED IN RESTRICTING THE DISALLOWANCE U/S. 14A R.W. RULE 8D. ITA. NO . 6142/M/2012 2 3. THE ASSESSEE IS IN THE BUSINESS OF DEVELOPMENT AND CONSTRUCTION OF PROPERTIES IN THE CAPACITY OF DEVELOPERS/CONTRACTORS DEALING IN PROPERTY AND ACTING AS AGENTS. THE ASSESSEE IS ALSO A PARTNER IN THE FIRM OF M/S. DYNAMIX REALITY. WHILE SCRUTINIZING THE RETURN OF INCOME, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS NOT MADE ANY DISALLOWANCE U/S. 14A OF THE ACT. THE AO PROCEEDED BY COMPUTING THE DISALLOWANCE AS PER THE PROVISIONS OF SEC. 14A R.W. RULE 8D OF THE ACT AND MADE A DISALLOWANCE OF RS. 36,02,877/ - . 4. AGGR IEVED BY THIS, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A). IT WAS STRONGLY SUBMITTED BEFORE THE LD. CIT(A) THAT THE INVESTMENTS MADE AND HELD ARE IN EQUITY/PREFERENCE SHARES OF SUBSIDIARY COMPANIES/ASSOCIATED COMPANIES AND BY WAY OF CAPITAL CON TRIBUTION IN PARTNERSHIP FIRM AND THEREFORE ARE OF STRATEGIC NATURE. AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS, THE LD. CIT(A) WAS CONVINCED WITH THE DISALLOWANCE OF RS. 7,28,280/ - OFFERED BY THE ASSESSEE DURING THE COURSE OF THE APPELLATE PROCEEDI NGS AND CONSIDERED THE SAME AS REASONABLE AND DIRECTED THE AO TO DELETE THE BALANCE DISALLOWANCE. 5. AGGRIEVED BY WHICH THE REVENUE IS BEFORE US. 6. THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY SUPPORTED THE FINDINGS OF THE AO. 7. THE LD. COUNSEL FOR THE ASSESSEE EXPLAINED THE FACTUAL MATRIX OF THE CASE IN HAND AND IN PARTICULAR THE LD. COUNSEL DEMONSTRATED BY REFERRING TO THE RELEVANT DOCUMENTARY EVIDENCES THAT THE INVESTMENTS ARE OF STRATEGIC IN NATURE MADE IN THE SUBSIDIARY COMPANIES/ASSOCIATED CONC ERNS, THEREFORE, THE FACTS OF THE CASE ARE SQUARELY COVERED BY THE DECISION OF THE TRIBUNAL, MUMBAI BENCH IN THE CASE OF M/S. J.M. ITA. NO . 6142/M/2012 3 FINANCIAL LTD., IN ITA NO. 4521/M/2012 WHEREIN BOTH OF US ( S/SHRI VIJAY PAL RAO, JM AND N.K. BILLAIYA, AM) ARE PARTIES. 8 . WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORDERS OF THE AUTHORITIES BELOW. WE HAVE ALSO CAREFULLY PERUSED THE RELEVANT DOCUMENTARY EVIDENCES REFERRED TO DURING THE COURSE OF THE PROCEEDINGS. UNDOUBTEDLY AND UNDISPUTEDLY ALL THE INVESTMENTS MADE B Y THE ASSESSEE ARE IN SUBSIDIARY COMPANY/ASSOCIATED COMPANIES AS CAPITAL CONTRIBUTION IN PARTNERSHIP FIRM/ASSOCIATI O N OF PERSONS. IN ITS NOTE TO ACCOUNTS AND AT POINT NO. 10, THE ASSESSEE HAS DISCLOSED THE RELATIONSHIP UNDER THE HEAD RELATED PARTY DISCL OSURE WHICH IS AT PAGE - 24 OF THE PAPER BOOK AND THE DETAILS OF INVESTMENTS ARE AT PAGES 16 & 17 OF THE PAPER BOOK. CONSIDERING THE FACTS IN TOTALITY, WE FIND THAT THE RELATED ISSUES ARE SQUARELY DECIDED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE B Y THE DECISION OF THE TRIBUNAL IN THE CASE OF JM FINANCIAL (SUPRA) WHICH HAS BEEN FOLLOWED BY THE TRIBUNAL DELHI BENCH IN ITA NO. 4245/DEL/2011, AHMEDABAD BENCH IN ITA NO. 2839/AHD/2011 AND RECENTLY BY THE TRIBUNAL, LUCKNOW BENCH IN ITA NO. 538/LKW/2012. 8.1. AS THE ASSESSEE HAS OFFERED THE DISALLOWANCE AT RS. 7,28,280/ - BEFORE THE FIRST APPELLATE AUTHORITY WHICH HAS BEEN ACCEPTED BY HIM, IN OUR CONSIDERED OPINION, THE SAME SHOULD BE TAKEN AS REASONABLE ON THE FACTS OF THE CASE, NO INTERFERE IS CALLED FOR. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. OR DER PRONOUNCED IN THE OPEN COURT ON 19 TH AUGUST , 2015 SD/ - SD/ - ( VIJAY PAL RAO ) (N.K. BILLAIYA) /JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 19 TH AUGUST , 2015 . . ./ RJ , SR. PS ITA. NO . 6142/M/2012 4 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI