SBI DFHI LTD, MUMBAI V. ADDL CIT RG 2(1), MUMBAI

ITA 6367/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3933 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2011-2012
• Appeal Filed On: 14-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHISHEK MESHR AM
• Keywords: Rule of consistency; Earning of tax free income
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL,MUMBAI BENCH E, MUMBAI BEFORE SHRI SANJAY ARORA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.6367/MUM/2014 ASSESSMENT YEAR: 2011-12 SBI DFHI LIMITED, 23, 3 RD FLOOR, VOLTAS HOUSE, J.N.HERADIA MARG, BELLARD ESTATE, MUMBAI-400001. PAN: AAACD0532B VS. ADDL. CIT, RANGE 2(1), AAYAKAR BHAVAN, M. K. ROAD, CHURCHGATE, MUMBAI-400020. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI BHAVIN SHAH (AR) REVENUE BY : SHRI ABHISHEK MESHR AM (DR) DATE OF HEARING : 09.05.2015 DATE OF ORDER : 10.05.2016 O R D E R PER PAWAN SINGH, JM: 1. THE PRESENT APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A)-4,MUMBAI DATED 04.08.2014 IN RESPECT OF ASSESSMENT YEAR (AY) 2011-12. THE ASSESSEE HAS RAISED ONLY ONE GROUND OF APPEAL WHICH IS AS UNDER: 1. THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN MAKING ADDITIONAL DISALLOWANCE OF INR 14 ,08,205/- (TOTAL DISALLOWANCE OF IRN 17,32,205/- AFTER CONSIDERING T HE DISALLOWANCE OF INR 3,24,000/- ALREADY OFFERED BY THE APPELLANT IN THE RETURN OF INCOME) BEING EXPENDITURE INCURRED IN RESPECT OF EA RNING OF EXEMPT INCOME. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY CARRYING BUSINESS AS PRIMARY DEALER IN GOVERNMENT SECURITIES AND MANY MA RKET OPERATIONS, FILED ITS RETURN OF INCOME FOR THE RELEVANT AY ON 27.09.2011 DECLARING TOTAL INCOME AT RS. 88,64,26,692/-. THE ASSESSMENT U/S. 143(3) WAS COMP LETED ON 13.02.2013 DETERMINING THE TOTAL INCOME OF ASSESSEE AT RS. 88, 80,58,770/-. IN THE ASSESSMENT 2 ITA NO. 6367/M/2014 SBI DFHI LTD. ORDER, THE AO DISALLOWED A SUM OF RS. 14,08,205/- U /S. 14A R.W.RULE 8D OF I.T. RULES. 3. AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE PREFERRE D AN APPEAL BEFORE THE CIT(A), BUT REMAINED UNSUCCESSFUL, AGAINST WHICH TH E PRESENT APPEAL IS FILED BEFORE US. 4. WE HAVE HEARD THE AUTHORISED REPRESENTATIVE (AR) OF THE ASSESSEE AND DEPARTMENTAL REPRESENTATIVE (DR) FOR REVENUE AND PE RUSED THE MATERIAL AVAILABLE ON RECORD. 5. AR OF THE ASSESSEE HAS ARGUED THAT THAT THE ISSUE R AISED IN THE PRESENT APPEAL IS COVERED BY ASSESSEES OWN CASE FOR AY 2010-2011 IN ITA NO. 975/MUM/2014 PASSED BY ITAT, MUMBAI AND FURTHER VIDE THE ORDER O F HONBLE JURISDICTIONAL HIGH COURT IN ASSESSEES OWN CASE IN RESPECT OF AY 2003-04 DATED 08.04.2015 IN ITA NO. 1472/2013 TITLED AS CIT VS. SBI DFHI LTD. D R FOR REVENUE SUPPORTED THE FINDING OF AUTHORITIES BELOW. 6. WE HAVE NOTICED THAT SIMILAR/IDENTICAL ISSUE CAME U P FOR CONSIDERATION BEFORE THIS TRIBUNAL IN ASSESSEES OWN CASE IN AY 2010-11 VIDE ITA NO. 975/MUM/2014 AND THE CO-ORDINATE BENCH OF THIS TRIBUNAL PASSED THE F OLLOWING ORDER: 4. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT THE LD. CIT(A) HAS ERRED IN NOT DIRECTING THE A.O. TO RESTR ICT THE DISALLOWANCE, AS PER SECTION 14A OF THE INCOME TAX ACT, 1961, TO RS. 2,59,000/-, WHICH WAS ALSO MADE BY THE ASSESSEE IN THE RETURN OF INCOME; THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF THE A.O. IN ALLOCATING THE INTEREST TO TAX FREE INVESTMENT; AND THAT WHILE DOING SO, THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT THE INVESTMENTS WERE MADE BY THE ASSESSEE OUT OF INTEREST FREE OWN FUNDS. 5. ON THE OTHER HAND, THE LD. D.R. HAS PLACED STRON G RELIANCE IN THE IMPUGNED ORDER. IT HAS BEEN CONTENDED THAT THE LD.C IT(A) HAS CORRECTLY FOLLOWED THE FIRST APPELLATE ORDER IN THE ASSESSEE' S OWN CASE FOR A.Y. 2009- 10, WHICH HAS BEEN ACCEPTED BY THE ASSESSEE ITSELF. 6. WE HAVE HEARD THE PARTIES AND HAVE PERUSED THE M ATERIAL ON RECORD. IN CIT VS. RELIANCE UTILITIES & POWER LTD., (2009) 3 13 ITR 340 (BOM), IT HAS BEEN HELD THAT WHEN THERE IS A COMMON POOL OF FUNDS , THERE IS A PRESUMPTION THAT THE INVESTMENT YIELDING TAX FREE RETURN IS MAD E BY THE ASSESSEE OUT OF ITS OWN FUNDS. 'RELIANCE UTILITIES AND POWER LTD.' (SUP RA) WAS FOLLOWED BY THE TRIBUNAL IN THE ASSESSEE'S OWN CASE FOR A.Y. 2003-0 4, IN ITA NO. 8645/MUM/2010 (ASSESSEE'S PAPER BOOK, PAGE NOS. 31- 34). THE TRIBUNAL DISMISSED THE APPEAL FILED BY THE REVENUE AGAINST T HE ACTION OF THE LD. CIT(A) IN DELETING THE DISALLOWANCE MADE BY THE A.O . ON ACCOUNT OF INTEREST U/S 14A OF THE ACT. FOR ASSESSMENT YEARS 2004-05 A ND 2005-06 (ASSESSEE'S PAPER BOOK PAGE NOS. 39-40), THE TRIBUNAL FOLLOWED ITS SAID DECISION FOR A.Y. 2003-04 7. THE FACTS IN THE YEAR UNDER CONSIDERATION ARE SI MILAR TO THOSE IN ASSESSMENT YEARS 2003-04 TO 2005-06. THIS YEAR, THE ASSESSEE'S OWN FUNDS, AS EVIDENT FROM THE ASSESSEE'S WRITTEN SUBMISSIONS FILED BEFORE THE LD, CIT(A) 3 ITA NO. 6367/M/2014 SBI DFHI LTD. (ASSESSEE'S PAPER BOOK PAGES 46 TO 47) ARE AT RS. 1 ,11,269.49, LACS (SHARE CAPITAL AND RESERVE AND SURPLUS) AS OF 31-3-2010 AS AGAINST THOSE OF RS. 1,08,562,52 LACS, AS OF 31-3-2009, THEREFORE, IN KE EPING WITH THE DECISION IN THE CASE OF 'RELIANCE UTILITIES AND POWER LTD.' (SU PRA) AND FOLLOWING THE DECISIONS IN THE ASSESSEE'S OWN CASE FOR ASSESSMENT YEARS 2003-04, 204-05 AND 2005-06, THE DISALLOWANCE MADE FOR THE YEAR UND ER CONSIDERATION AND CONFIRMED BY THE LD. CIT(A) ON ACCOUNT OF INTEREST U/S 14A OF THE ACT IS DELETED. ACCORDINGLY, GROUNDS 1 & 2 ARE ACCEPTED. 7. FURTHER WE HAVE NOTICED THAT THE REVENUE HAS FILED APPEAL AGAINST THE ORDER OF ITAT DATED 31.03.2013 (IN RESPECT OF AY 2003-04 AS SUBMITTED BY THE AR FOR ASSESSEE) VIDE ITA NO. 1472/13 TITLED AS CIT VS. SB I DHFL LTD. AND THE SAME WAS DISMISSED BY THE HONBLE JURISDICTIONAL HIGH CO URT VIDE ORDER DATED 08.04.2015, HOLDING THAT THERE WAS NO SUBSTANTIAL Q UESTION OF LAW RAISED WHICH REQUIRE DETERMINATION BY HIGH COURT. 8. WE HAVE SEEN THAT THE GROUND RAISED IN THE PRESENT APPEAL IS SQUARELY COVERED IN FAVOUR OF ASSESSEE IN ASSESSEES OWN CASE AS STATED ABOVE. HENCE, KEEPING IN VIEW THE PRINCIPLE OF CONSISTENCY, THE ORDER OF CO-ORDIN ATE BENCH AND THE OBSERVATIONS OF HONBLE JURISDICTIONAL HIGH COURT, GROUND RAISED IN THE PRESENT APPEAL IS ALLOWED. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 10 TH MAY, 2016. SD/- SD/- ( SANJAY ARORA ) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 10/05/2016 S.K.PS / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / (ASSTT.REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. !'# / GUARD FILE. $ //TRUE COPY/