Appeal Details
Counselvise Citation
[2018] 126 COUNSELVISE.COM (IT) 0970 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 2 month(s) 7 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
03-01-2018
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
Not Allotted
Assessment Year
2011-2012
Appeal Filed On
27-10-2016
Judgement Text
, , , , INCOME-TAX APPELLATE TRIBUNAL GBENCH M UMBAI , , BEFORE S/SH. RAJENDRA,ACCOUNTANT MEMBER & RAVISH SOOD, JUDICIAL MEMBER ./I.T.A./6334/MUM/2016, /ASSESSMENT YEAR: 2012-13 ACIT-3(1)(2) ROOM NO.607, 6TH FLOOR, AAYAKAR BHAVAN MUMBAI-400 020. VS. M/S. EDELWEISS FINANCE & INVESTMENT LTD. EDELWEISS HOUSE, OFF CST RD. KALINA SANTACRUZ (E) MUMBAI-400 093. PAN:AAACC 2233 N ( /APPELLANT ) ( / RESPONDENT ) REVENUE BY: SHRI ABHIJIT PATANKAR-CIT-DR ASSESSEE BY: SHRI RAVIKANT PATHAK / DATE OF HEARING: 09/11/2017 / DATE OF PRONOUNCEMENT: 03/01/2018 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) , / PER RAJENDRA, AM - CHALLENGING THE ORDER DATED 29/07/2016 OF CIT(A)-8, THE ASSESSING OFFICER (AO)HAS FILED THE PRESENT APPEAL.ASSESSEE-COMPANY IS A NON-BANKING C OMPANY REGISTERED WITH RBI. IT CARRIES ON THE BUSINESS OF FINANCING,MONEY-LENDING,CORPORAT E LENDING,PROVIDING FINANCE OR LOANS AGAINST SHARES,STOCKS, BONDS, DEBENTURES OR OTHER S IMILAR INSTRUMENTS,APART FROM TRADING / INVESTING IN SECURITIES AND COMMODITIES INCLUDING D ERIVATIVES.IT FILED ITS RETURN OF INCOME ON 27/09/2012,DECLARING TOTAL INCOME AT RS.11,05,70,11 0/-.THE AO COMPLETED THE ASSESSMENT U/S.143(3)OF THE ACT,ON 14/04/2015 DETERMINING ITS INCOME OF THE ASSESSEE AT RS.27.23 CRORES. 2.THE AO HAS RAISED TWO GROUNDS OF APPEAL WITH REGA RD TO DISALLOWANCE U/S.14A R.W.R. 8D OF THE RULES.IT WAS BROUGHT TO OUR NOTICE THAT WHILE A DJUDICATING THE CROSS APPEALS FILED BY THE ASSESSEE AND THE AO FOR THE AY.S 2008-09, 2009-10 A ND 2010-11,THE TRIBUNAL ON 16/12/2016, HAD DECIDED BOTH THE ISSUES AGAINST THE AO.WE ARE R EPRODUCING THE RELEVANT PORTION FROM THE ORDER OF THE TRIBUNAL (ITA/6610/M/11;7658/M/11; 179 1/M/13) AND SAME READ AS UNDER :- ..7. IN THE CROSS APPEAL (ITA NO.7658/M/2011), TH E REVENUE RAISED VARIOUS ISSUES. THE FIRST ISSUE RAISED IN THIS APPEAL RELATES TO THE DISALLOWANCE U /S 8D(2)(II) OF THE RULES. BRINGING OUR ATTENTION T O THE CHART FILED IN THIS REGARD, LD COUNSEL FOR THE ASSE SSEE SUBMITTED THAT THE CIT (A) GRANTED RELIEF ON T HE ISSUE OF APPLICABILITY OF CLAUSE (II) OF RULE 8D(2) RELATING TO INTEREST DISALLOWANCE. IN THIS REGARD, CIT (A) HELD THAT THE CASE IS COVERED BY THE JUDGMENT O F THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS RELIANCE UTILITIES & POWER LIMITED (313 I TR 340) (BOM). FURTHER, CIT (A) ALSO RELIED ON ANOTHER JUDGMENT OF THE BOMBAY HIGH COURT IN THE CA SE OF HDFC BANK LIMITED VS. DCIT (383 ITR 529) (BOM) AND MENTIONED THAT THE ASSESSEE IS HAVIN G EXCESS INTEREST FREE FUNDS IN SUCH CASE, NO DISALLOWANCE IS CALLED FOR UNDER CLAUSE (II) OF RUL E 8D(2) OF THE RULES. WE AGREE WITH THE SAID DECISI ON OF THE CIT (A) ON THIS ISSUE AND THEREFORE, THE CON CLUSIONS DRAWN BY THE CIT (A) ARE UPHELD. FURTHER, 6334/MUM/2016-(12-13)- M/S.EDELWEISS FINANCE & INVESTMENTS LTD. 2 LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT FOR COMP UTING THE AVERAGE INVESTMENT, THE INVESTMENT IN STOCK-IN-TRADE SHOULD EXCLUDED FOR THE PURPOSE OF Q UANTIFYING THE DISALLOWANCE WHICH ARE REQUIRED TO BE MADE UNDER CLAUSES (II) AND (III) OF RULE 8D(2) OF THE RULES. IN THIS REGARD, LD COUNSEL FOR THE ASSESSEE RELIED ON THE JUDGMENT OF THE CIT VS. INDI A ADVANTAGE SECURITIES LTD [380 ITR 471 (BOM)]. AFTER HEARING BOTH THE PARTIES, WE FIND, THE ORDER OF THE CIT (A) ON THIS ISSUE IS FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INTERFERENCE. THUS, GROUND S NO.1 & 2 RAISED BY THE REVENUE ARE DISMISSED. XXXXX 13. THE ISSUE RAISED IN GROUNDS NO.2 TO 4 OF THIS A PPEAL RELATES TO THE DISALLOWANCE U/S 14A READ WITH RULE 8D(2) OF THE ACT. REVENUE IS AGGRIEVED WITH TH E RELIEF GRANTED BY THE CIT (A) CONSIDERING THE APPLICABILITY OF THE CLAUSES (II) AND (III) OF RULE 8D(2) OF THE RULES. IN THE FIRST APPELLATE PROCEED INGS, CIT (A) GRANTED RELIEF TO THE ASSESSEE IN RESPECT O F THE ADDITION MADE IN CLAUSE (II) OF RULE 8D(2) OF THE RULES, RELYING ON THE BINDING JUDGMENT OF THE HONB LE JURISDICTIONAL HIGH COURT IN 6 THE CASE OF CIT V S RELIANCE UTILITIES & POWER LIMITED (313 ITR 340) (B OM). BEFORE US, LD COUNSEL FOR THE ASSESSEE RELIED HEAVILY ON THE JUDGMENT OF THE OF THE BOMBAY HIGH C OURT IN THE CASE OF HDFC BANK LIMITED VS. DCIT (383 ITR 529) (BOM), WHICH IS IN SUBSTANCE RELEVANT FOR THE PROPOSITION NO DISALLOWANCE UNDER CLAUSE (II) IS NEEDED IF THE OWN FUNDS ARE MORE THAN THE I NVESTMENT. CONSIDERING THE SAME, WE AGREE WITH THE CONCLUSIONS DRAWN BY THE CIT (A) ON THIS ISSUE. SIM ILARLY, REFERRING TO THE RELIEF GRANTED BY THE CIT (A) IN EXCLUDING THE INVESTMENTS IN STOCK-IN-TRADE FOR THE PURPOSE OF DISALLOWANCE UNDER RULE 8D(2)(II) AN D (III) OF THE RULES, AFTER HEARING THE LD REPRESENTA TIVES OF BOTH THE PARTIES, WE ARE OF THE OPINION, T HE SAID CONCLUSIONS DRAWN BY THE CIT (A) ARE FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INTERFERENCE. FURTHER, IT IS RELEVANT TO MENTION TH AT WHILE CALCULATING THE AVERAGE INVESTMENTS, ONLY THE DIVIDEND YIELDED INVESTMENTS SHOULD ALONE BE CONSID ERED FOR QUANTIFYING THE DISALLOWANCE UNDER CLAUSE (III) OF RULE 8D(2) OF THE RULES. IN OUR OPINION, O N THIS ISSUE ALSO, THE CONCLUSIONS DRAWN BY THE CIT (A) ARE SUSTAINABLE. THEREFORE, THE ORDER OF THE CIT (A ) ON THIS ISSUE IS FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, RELEVANT GR OUNDS RAISED BY THE REVENUE ARE DISMISSED. RESPECTFULLY, FOLLOWING THE ABOVE ORDER OF THE TRIB UNAL, WE DECIDE BOTH THE GROUNDS AGAINST THE AO. AS A RESULT, APPEAL FILED BY THE AO STANDS DISMISSE D. . ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD JANUARY,2018. 03 ,2018 SD/- SD/- ( (( ( /RAVISH SOOD) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; /DATED : 03 .01.2018. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR G BENCH, ITAT, MUMBAI / , , . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.
Mehul