ACIT CIR 6(3), MUMBAI V. MORARJEE TEXTILES LTD, MUMBAI

ITA 6200/MUM/2013

• Counselvise Citation: 620019914 RSA 2013
• Duration Of Justice: 1 year(s) 11 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 22-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revised return
• Section: 14A

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI B BENCH , ,, , , ,, , BEFORE S/SH. RAJENDRA,ACCOUNTANT MEMBER & SAKTIJIT DEY,JUDICIAL MEMBER /.ITA NO. 6200/MUM/2013, /ASSESSMENT YEAR-2009-10 ACIT, CIRCLE-6(3) R.NO.522, 5 TH FLOOR AAYAKAR BHAVAN, M.K. ROAD MUMBAI-400 020. VS M/S.MORARJEE TEXTILES LTD. 2 ND FLOOR, PENINSULA SPENTA MATHURADAS MILLS COMPOUND SENAPATI BAPAT MARG, LOWER PAREL MUMBAI-400 013. PAN:AAACM 2725 R ( / APPELLANT) ( / RESPONDENT) /ASSESSEE BY : SHRI SAMIR TEKRIWAL / REVENUE BY : SHRI RONAK DOSHI / DATE OF HEARING : 08-10 -2015 / DATE OF PRONOUNCEMENT : 08 -10-2015 , 1961 1961 1961 1961 254 254 254 254( (( (1 11 1) )) ) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDER DATED 01.08.2013 OF CIT(A)-12 ,MUMBAI,THE ASSESSING OFFICER(AO) HAS FILED THE PRESENT APPEAL. ASSESSEE-COMPANY FILED ITS RETURN OF INCOME ON 26.0 9.2009.A REVISED RETURN WAS FILED ON 16.03. 2011,DECLARING TOTAL INCOME OF RS.(-)31.91 CRORES U NDER THE NORMAL PROVISIONS AND BOOK LOSS OF RS.30.03 CRORES U/S.115JB OF THE ACT.THE AO COMPLET ED THE ASSESSMENT U/S.143(3) OF THE ACT ON 30.12.2011,DETERMINING THE INCOME OF THE ASSESSEE A T RS.(-)30.17 CRORES.HE CALCULATED THE INCOME UNDER THE MAT PROVISIONS AT RS.(-)28.30 CROR ES. 2. EFFECTIVE GROUND OF APPEAL DEALS WITH THE VALUE OF CURRENT LIABILITIES AND PROVISIONS WITH REGARD TO CALCULATION OF THE DISALLOWANCE U/S.14A OF THE A CT R.W.RULE 8D OF THE INCOME TAX RULES, 1962(RULES).DURING THE ASSESSMENT PROCEEDINGS,THE A O FOUND THAT THE ASSESSEE HAD VOLUNTARILY MADE A DISALLOWANCE OF RS.1.87 CRORES U/S.14A OF TH E ACT.HOWEVER,THE AO WAS OF THE OPINION THAT SAME WAS NOT IN ACCORDANCE WITH THE PROVISIONS OF RULE 8D OF THE RULES.AFTER RECORDING HIS DISSATISFAC -TION ABOUT THE CORRECTNESS OF THE COMP UTATION MADE BY THE ASSESSEE,THE AO RECOMPUTED THE DISALLOWANCE AT RS.3.61 CRORES. 3. AGGRIEVED BY THE ORDER OF THE AO,THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA).BEFORE HIM IT WAS CONTENTED THAT TH E AO HAD ERRONEOUSLY INCLUDED THE FOREIGN INVESTMENTS WHILE CALCULATING THE AVERAGE VALUE OF INVESTMENT FOR 14A PURPOSES,THAT INCOME FROM SUCH INVESTMENTS WAS TAXABLE IN THE HANDS OF T HE ASSESSEE,THAT HE HAD MISTAKENLY TOOK FIGURE OF RS.1.41 CRORES BEING 0.5% OF AVERAGE VALU E OF INVESTMENT INSTEAD OF THE ACTUAL FIGURE OF RS 14. 19 LAKHS,THAT THE AO HAD ADDED BACK THE A MOUNT OF CURRENT LIABILITIES AND PROVISIONS WHILE CALCULATING THE AVERAGE VALUE OF TOTAL ASSETS .AFTER CONSIDERING THE SUBMISSIONS OF THE ITA/6200/13 MORARJEE T ,AY.0 9-10- 2 ASSESSEE AND THE ASSESSMENT ORDER,HE HELD THAT THE AO SHOULD VERIFY THE CLAIM MADE BY THE IT ABOUT THE TAXABLE INCOME ARISING FROM FOREIGN IN VESTMENT AND TO WORK OUT THE AVERAGE VALUE OF INVESTMENT FOR THE PURPOSE OF DISALLOWANCE TO BE MADE U/S.14A OF THE ACT.HE FURTHER DIRECTED THE AO TO VERIFY THE OTHER CLAIMS MADE BY THE ASSESSEE,ESPECIALLY ABOUT THE AMOUNT OF CURRENT LIABILITIES AND PROVISIONS.HE FUR THER DIRECTED THE AO TO VERIFY THE CLAIM OF THE ABOUT ADOPTING A WRONG FIGURE OF RS.1.41 CRO RES FOR MAKING DISALLOWANCE. 4. BEFORE US,THE DEPARTMENTAL REPRESENTATIVE(DR)SUPPOR TED THE ORDER OF THE AO.THE AUTHORISED REPRESENTATIVE RELIED UPON THE ORDER OF THE FAA AN D STATED THAT THE AO HAD MADE AN UNJUSTIFIED ADDITION U/S.14A OF THE ACT.HE RELIED UPON THE CASE S OF SHITANSHU BIPIN VORA(ITA//2585/MUM/ 2013-AY.2009-10,DATED 26.09.2014) AND KSM SECURITIE S AND FINANCE PVT.LTD.(ITA/3632/MUM/ 2013-AY.08-09.DTD.11.09.2015). 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT THE FAA HAD DIRECTED THE AO MAKE CERTAIN VERIFICATION.H E HAS NOT DELETED ANY ADDITION.HE HAS ASKED THE AO TO ADOPT CORRECT FIGURES FOR MAKING DISALLOW ANCE U/S.14A OF THE ACT.IF THE ASSESSEE IS FOLLOWING NET CURRENT ASSET METHOD FOR PREPARING TH E BALANCE SHEET THEN THE FACT HAS TO BE CONSIDERED FOR DECIDING THE ISSUE OF DISALLOWANCE.I N OUR OPINION NONE OF HIS DIRECTIONS SUFFER FROM ANY LEGAL INFIRMITY.SO,CONFIRMING HIS ORDER,WE DECIDE EFFECTIVE GROUND OF APPEAL AGAINST THE AO. AS A RESULT,APPEAL FILED BY THE AO STANDS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH ,OCTOBER,2015. 8 ,2015 SD/- SD/- ( / SHAKTIJIT DEY) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /MUMBAI, /DATE: 8.10. 2015 . . . .. . JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR A BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.