ACIT 6(2)(1), MUMBAI V. CHARBUJA INDUSTRIES P.LTD, MUMBAI

ITA 6348/MUM/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6142 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 25-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D G PANSARI
• Keywords: Earning of tax free income; Rule 8D; Set aside
• Section: 14A

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL C BENCH MUMB AI BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER & SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ITA NO. 6348/MUM/2017 (ASSESSMENT YEAR 2013-14) ACIT-6(2)(1) ROOM NO. 504, 5 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-20. VS. M/S CHARBHUJA INDUSTRIES PVT. LTD., 502/503, ABHAY STEEL HOUSE, BARODA STREET, P. DEMELLO ROAD, MASJID BUNDER, MUMBAI-400009. PAN: AABCC7512P APPELLANT RESPONDENT APPELLANT BY : SHRI D.G. PANSARI (DR) RESPONDENT BY : NONE DATE OF HEARING : 16.01.2019 DATE OF PRONOUNCEMEN T : 16.01.2019 ORDER UNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORDE R OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-12, MUMBAI (THE LD. CIT(A) DAT ED 26.07.2017 FOR ASSESSMENT YEAR 2013-14. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN DELETING THE DISALLOWANCE MADE U/S. 14A R.W.RULE 8D(2)(II) AND 14A R.W.RULE 8D(2)(III) OF RS. 69,53,624/- IGNORING THE CBDT CIRCULAR NO.5/2004 DATED 11/02/2014 THAT DISALLOWANCE U/S.14A HAS TO B E MADE IRRESPECTIVE OF THE ITA NO. 6348/MUM2017 M/S CHARBHUJA INDUSTRIES PVT. LTD. 2 FACT WHETHER ANY EXEMPT INCOME HAS BEEN EARNED DURI NG THE YEAR BY THE ASSESSEE OR NOT? 2. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(AP PEALS) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE AO BE RESTORED . 2. NONE APPEARED ON BEHALF OF ASSESSEE DESPITE SERVICE OF NOTICE THROUGH RPAD. WE HAVE HEARD THE SUBMISSION OF LD. DEPARTMEN TAL REPRESENTATIVE (DR) FOR THE REVENUE AND PERUSED THE MATERIAL AVAIL ABLE ON RECORD. THE LD. DR SUPPORTED THE ORDER OF ASSESSING OFFICER. THE LD . DR FURTHER SUBMITS THAT THE LD. CIT(A) NOT FOLLOWED THE CIRCULAR NO.5/ 2004 DATED 11.02.2014 THAT DISALLOWANCE UNDER SECTION 14A HAS TO BE MADE IRRESPECTIVE OF FACT WHETHER ANY EXEMPT INCOME HAS BEEN EARNED DURING TH E YEAR OR NOT. THE ASSESSING OFFICER MADE THE ADDITION UNDER SECTION 1 4A OF RS. 69,53,624/- BY RESORTING THE FORMULA PRESCRIBED UNDER RULE 8D. 3. WE HAVE CONSIDERED THE SUBMISSION OF LD. DR AND ALS O GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE ASSESSING OFFICER MADE THE DISALLOWANCE OF RS. 69,53,624/- ON HIS OBSERVATION THAT ASSESSEE HA S SHOWN INVESTMENT OF RS. 12.59 CRORE IN THREE EQUITY SHARE IN ASSESSEES OWN SUBSIDIARY. THE ASSESSING OFFICER BY RESORTING TO THE FORMULA PRESC RIBED UNDER RULE 8D MADE INTEREST DISALLOWANCE OF RS. 63,40,991/- UNDER RULE 8D(2)(II), RS. 6,12,633/- UNDER RULE 8D(2)(III). THUS, THE ASSESSI NG OFFICER MADE TOTAL DISALLOWANCE UNDER SECTION 14A OF RS. 69,53,624/-. THE LD. CIT(A) DELETED THE ENTIRE DISALLOWANCE ON THE BASIS OF DECISION OF HONBLE DELHI HIGH COURT ITA NO. 6348/MUM2017 M/S CHARBHUJA INDUSTRIES PVT. LTD. 3 IN CHEMINVEST LTD. (317 ITR 86) HOLDING THAT DURING THE YEAR, THE ASSESSEE HAS NOT EARNED EXEMPT INCOME, THEREFORE, THE DISALL OWANCE UNDER SECTION 14A IS INCORRECT. NO CONTRARY FACT OR LAW IS BROUGH T TO OUR NOTICE TO TAKE A DIFFERENT VIEW, THEREFORE, RESPECTFULLY FOLLOWING T HE DECISION OF HONBLE DELHI HIGH COURT IN CHEMINVEST LTD. (SUPRA), WE AFF IRM THE ORDER OF LD. CIT(A). 4. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 16/ 01/2019. SD/ SD/- RAMIT KOCHAR PAWAN SINGH ACCOUNTANT MEMBER J UDICIAL MEMBER MUMBAI, DATE: 16.01.2019 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR C BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI