DCIT 8 (1)(2), MUMBAI V. M/S SAMIDHA FOODS PVT LTD., MUMBAI

ITA 6539/MUM/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 9674 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2010-2011
• Appeal Filed On: 15-10-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY KUMAR MENON
• Keywords: Earning of tax free income; Tax effect; Rule 8D
• Section: 143(3); 14A; 147

Judgement Text

1 ITA 6539/MUM/2019 IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY (JUDICIAL MEMBER) AND SHRI RAJESH KUMAR (ACCOUNTANT MEMBER) I.T.A. NO.6539/MUM/2019 (ASSESSMENT YEAR 2010-11) DCIT-8(1)(2), MUMBAI VS M/S SAMIDHA FOODS PVT LTD 1 ST FLOOR, KAPADIA CHAMBER, 51, BHARUCH STREET, MUMBAI-400 009 PAN : AAECS7746Q APPELLANT RESPONDENT APPELLANT BY SHRI VIJAYKUMAR MENON (DR) RESPONDENT BY NONE DATE OF HEARING 29-06-2021 DATE OF PRONOUNCEMENT 29-07-2021 O R D E R PER: SAKTIJIT DEY, JM: THIS IS AN APPEAL BY THE REVENUE AGAINST ORDER DAT ED 31-07-2019 OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-24, MUMBAI FOR THE ASSESSMENT YEAR 2010-11 2. THE DISPUTE IN THE PRESENT APPEAL IS CONFINED TO PARTIAL DELETION OF DISALLOWANCE MADE UNDER SECTION 14A OF THE INCOME T AX ACT, 1961. 3. BRIEFLY THE FACTS ARE, THE ASSESSEE, A RESIDENT COMPANY, IS STATED TO BE ENGAGED IN THE BUSINESS OF TRADING IN COMMODITIES. FOR THE ASSESSMENT YEAR UNDER DISPUTE, ASSESSEE HAD FILED ITS RETURN OF INCOME ON 15-10-2010 DECLARING TOTAL 2 ITA 6539/MUM/2019 INCOME OF RS.42,00,530/-. ASSESSMENT IN CASE OF THE ASSESSEE WAS ORIGINALLY COMPLETED UNDER SECTION 143(3) OF THE ACT VIDE ORDE R DATED 26-03-2013 DETERMINING TOTAL INCOME AT RS.2,07,47,870/-. SUBSE QUENTLY, BEING OF THE VIEW THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMEN T, THE ASSESSING OFFICER REOPENED THE ASSESSMENT UNDER SECTION 147 OF THE AC T. IN COURSE OF THE RE- ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER CALLE D UPON THE ASSESSEE TO EXPLAIN WHY DISALLOWANCE UNDER SECTION 14A R.W.R. 8D SHOULD NOT BE COMPUTED IN RESPECT OF THE EXEMPT INCOME EARNED BY WAY OF DIVIDEND AMOU NTING TO RS.3,19,136/- THOUGH, THE ASSESSEE OBJECTED TO THE PROPOSED DISALL OWANCE, HOWEVER, THE ASSESSING OFFICER REJECTING THE EXPLANATION OF THE A SSESSEE PROCEEDED TO COMPUTE DISALLOWANCE UNDER RULE 8D AND WORKED OUT A DISALLO WANCE OF RS.9,97,929/-. ASSESSEE CONTESTED THE AFORESAID DISALLOWANCE BEFOR E LEARNED COMMISSIONER (APPEALS). PARTLY ACCEPTING THE SUBMISSIONS OF THE ASSESSEE, LEARNED COMMISSIONER (APPEALS) DIRECTED THE ASSESSING OFFIC ER TO RESTRICT THE DISALLOWANCE UNDER SECTION 14A R.W.R. 8D TO RS.3,19,136/-, BEING THE EXEMPT INCOME EARNED BY THE ASSESSEE DURING THE YEAR. 4. WHEN THE APPEAL WAS CALLED FOR HEARING, NONE APP EARED FOR THE ASSESSEE. CONSIDERING THE NATURE OF DISPUTE, WE PROCEED TO DI SPOSE OF THE APPEAL EX PARTE QUA THE ASSESSEE AFTER HEARING THE LEARNED DEPARTME NTAL REPRESENTATIVE AND BASED ON MATERIALS ON RECORD. 5. UNDISPUTEDLY, DURING THE YEAR UNDER CONSIDERATIO N THE ASSESSEE HAD EARNED EXEMPT INCOME AMOUNTING TO RS.3,19,136/-. WHEREAS, THE ASSESSING OFFICER, APPLYING RULE 8D, HAS DISALLOWED AN AMOUNT OF RS.9, 97,929/-. IN OTHER WORDS, THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IS FAR I N EXCESS OF THE EXEMPT INCOME EARNED DURING THE YEAR. NOW, IT IS A FAIRLY SETTLED LEGAL POSITION THAT DISALLOWANCE 3 ITA 6539/MUM/2019 OF EXPENDITURE UNDER SECTION 14A R.W.R.8D CANNOT EX CEED THE EXEMPT INCOME EARNED DURING THE YEAR. THE JUDICIAL PRECEDENTS RELI ED UPON BY LEARNED COMMISSIONER (APPEALS) CLEARLY EXPRESS SUCH VIEW. T HEREFORE, THE DECISION OF LEARNED COMMISSIONER (APPEALS) DESERVES TO BE UPHEL D. 6. EVEN OTHERWISE ALSO, AS WE FIND FROM RECORD, TAX EFFECT ON THE AMOUNT DISPUTED BY THE REVENUE IN THE PRESENT APPEAL IS MU CH BELOW THE MONETARY LIMIT OF RS.50 LAKHS STIPULATED FOR FILING APPEAL BY THE DEPARTMENT BEFORE THE TRIBUNAL AS PER CIRCULAR NO.17 OF 2019 DATED 08-08-2019 ISSU ED BY THE CENTRAL BOARD OF DIRECT TAXES (CBDT). THERE IS NOTHING ON RECORD TO SUGGEST THAT THE PRESENT APPEAL IS PROTECTED UNDER ANY OF THE EXCEPTIONS PROVIDED T O THE AFORESAID CIRCULAR. THEREFORE, ON THE GROUND OF TAX EFFECT ALSO, THE PR ESENT APPEAL OF THE REVENUE IS NOT MAINTAINABLE. 7. THAT BEING THE CASE, WE DO NOT FIND ANY INFIRMIT Y IN THE DECISION OF LEARNED COMMISSIONER (APPEALS) ON THE ISSUE IN DISPUTE. GR OUNDS ARE DISMISSED. 8. IN THE RESULT, APPEAL IS DISMISSED. ORDER PRONOUNCED ON 29/07/2021. SD/- SD/- RAJESH KUMAR SAKTIJIT DEY ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DT : 29/07/2021 PAVANAN 4 ITA 6539/MUM/2019 COPY TO : 1. APPELLANT 2. RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) 5. THE DR, ITAT, MUMBAI 6. GUARD FILE /TRUE COPY/ BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI