NARMINA TRADE INVESTMENT P.LTD, MUMBAI V. ITO WD 8(2)-3, MUMBAI

ITA 6275/MUM/2012

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9186 (ITAT-MUMBAI)
• Duration Of Justice: 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 12-10-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: DHIRENDRA M SHAH
• Section: 14A

Judgement Text

. , IN THE INCOME TAX APPELLATE TRIBUNAL SMC , BENCH MUMBAI , BEFORE SHRI R. K. GUPTA , JM ITA NO. 6275 / MUM/ 20 1 2 ( ASSESSME NT YEAR : 200 9 - 20 10 ) M/S NARMINA TRADE - INVESTMENT PVT. LTD., PLOT NO. 123,ROAD NO. 17, MAROL, M.I.D.C., ANDHERI (EAST), MUMBAI - 400 093 VS. ITO WD 8(2) - 3 , MUMBAI - 20 PAN/GIR NO. : A ABCN 2574 L ( APPELLANT ) .. ( RESPONDENT ) /ASSESSEE BY : MR. DHIRENDRA M. SHAH /REVENUE BY : MR. MOHIT JAIN DATE OF HEARING : 5 TH DEC . , 2012 DATE OF PRONOUNCEMENT : 7 TH DEC. ,2012 O R D E R THIS IS AN APPEAL PREFERRED BY THE ASSESSEE AGAINST THE ORDER DATED 3 - 8 - 2012 OF LEANED CIT(A) - 17 , MUMBAI RELA TING TO THE ASSESSMENT YEAR 200 9 - 10 . 2 . THE ASSESSEE IS OBJECTING THE CONFIRMING THE DISALLOWANCE OF RS.2,33,062/ - MADE BY T HE ASSESSING OFFICER UNDER SECTION 14A R.W.RULE 8D . ITA NO. 6275 /20 1 2 2 3 . DURING THE ASSESSMENT PROCEEDING, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS SHOWN DIVIDEND INCOME OF RS. 4,49,247/ - . THE ASSESSING OFFICER ALSO NOTICED THAT THE ASSESSEE HAS NOT DISALLOWED A NY EXPENDITURE UNDER SECTION 14A IN THE COMPUTATION OF INCOME. BEFORE THE LEARNED CIT(A) , IT WAS SUBMITTED THAT THE TOTAL EXPENSES CLAIMED BY THE ASSESSEE ARE OF RS .23,626/ - , WHICH HAS B EEN INCURRED AS COMMON EXPENSES AND THE BALANCE EXPENSES ARE INCURRED TOWARDS OTHER BUSINESS ACTIVITIES. THEREFORE, IT WAS SUBMITTED THAT A PROPORTIONATE EXPENDITURE OF RS. 23 , 626 / - CAN BE CONSIDERED FOR DISALLOWANCE UNDER SECTION 14A. HOWEVER, THE LEARNED CIT(A) WAS NOT SATISFIED WITH THE CONTENTION OF THE ASSESSEE AS HE NO TED THAT THE ASSESSEE HAS DEBITED A SUM OF RS. 3,13,701/ - TOWARDS GENERAL ADMINISTRATIVE EXPENSES AND RS. 1 , 55 , 8 66/ - HAS BEEN DEBITED BY WAY OF INTEREST. ACCORDINGLY, HE CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 4 . AFTER HEARING THE RIVAL SUBMISSIONS A ND CONSIDERING THE MATERIAL ON RECORD, I FOUND THAT THE ASSESSEE DESERVES TO SUCCEED ON THE ISSUE INVOLVED IN PART . I NOTED THAT OUT OF TOTAL EXPENSES INCURRED BY THE ASSESSEE, MAJOR EXPENSES ARE INCURRED FOR BUSINESS PURPOSE , WHICH DO NOT HAVE CONNECTION WITH THE EARNING OF DIVIDEND OF PURCHASE OF SHARES . I FURTHER NOTED THAT THOUGH THE ASSESSE E HAD DEBITED EXPENSES ON ACCOUNT OF INTEREST AT RS. 1,55,866/ - BUT ENTIRE INTEREST EXPENDITURE IS NOT FOR THE AMOUNT WHICH WAS BORROWED FOR THE PURPOSE OF BUYING THE SHARES AS SOME OF THE INTEREST HAS BEEN PAID ON THE INTEREST WHICH WAS ITA NO. 6275 /20 1 2 3 USED FOR OTHER BUSINESS. THE TOTAL EXPENSES INCURRED BY THE ASSESSEE IS TO BE SAID ABOUT RS. 23,626/ - . THE DETAIL OF EXPENSES IS PLACED AT PAGE 11. THE TOTAL EXPENSES ARE OF RS. 3,13,701 / - . RS.1,93,7 9 2/ - ARE ON ACCOUNT OF LOSS IN SHARES WHICH CANNOT BE CONSIDERED FOR THE PURPOSE OF SECTION 14A . RS. 90,000/ - IS ON ACCOUNT OF RENT AND TAX, AGAIN THIS PART OF EXPENSES CANNOT BE CONSIDERED FOR DISALLOWANCE UNDER SECTION 14A. THE REMAINING EXP ENSES IS ABOUT RS. 30,000/ - OR SO. BESIDES THIS, CERTAIN EXPENSES ARE ON ACCOUNT OF INTEREST, WHICH IS NOT ENTIRELY FOR THE PURPOSE OF TAKING LOAN FOR THE PURPOSE OF BUYING SHARES. DURING THE YEAR, THE ASSESSEE HAS BORROWED ABOUT RS. 12,95,000/ - AND INTEREST ON THIS AMOUNT HAS BEEN PAID OF RS.27,158/ - ONLY. 5 . LEARNED COUNSEL OF THE ASSESSEE HAS ALSO FILED A CHART OF THE INTEREST PAID FOR THE PURPOSE OF BORROWED FUNDS FOR PURCHASE OF SHARES . T OTAL INTEREST AS PER THIS CHART IS RS. 27,158/ - , WHICH CAN BE DISAL LOWED UNDER SECTION 14A R.W.RULE 8D. T OTAL OTHER EXPENSES WHICH RELATES TO BUSINESS ARE AT RS. 13,397/ - AND OUT OF THESE EXPENSES, RELATING TO SHARE IF ESTIMATED, THEN IT CAN BE RS. 1000/ - OR RS. 2000/ - . TAKING INTO CONSIDERATION THIS ASPECT AND IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE VIEW THAT IF A TOTAL DISALLOWANCE OF RS. 29,000/ - IS MADE UNDER SECTION 14A R.W.RULE 8D, IT WILL MEET THE END OF JUSTICE. ACCORDINGLY, I SUSTAIN THE DISALLOWANCE OF RS. 29,000/ - AND REMAINING DISALLOWANCE IS D EL E TED. I ORDER ACCORDINGLY. ITA NO. 6275 /20 1 2 4 6 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED IN PART . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 7 TH DAY OF DEC . 2012. 2012 SD/ - ( ) ( R.K.GUPTA ) / JUDICIAL MEMBER MUMBAI ; DATED : 07 / 1 2 / 2012 . /PKM , PS COPY OF TH E ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) - X, MUMBAI. 4. / CIT 5. / DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// / BY ORDER, ( DY./ASSTT. REGISTRAR) / ITAT, MUMBAI