SOLID STONE COMPANY LTD, MUMBAI V. DCIT CIRCLE- 4(3)(2), MUMBAI

ITA 6564/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8318 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2014-2015
• Appeal Filed On: 19-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SUBHAM RATHI
• Keywords: Earning of tax free income; Rule 8D
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G, MUMBAI BEFORE SHRI PAWAN SINGH (JM) & SHRI S.RIFAUR RAHMA N(A.M.) ITA NO. 6564/MUM/2018(ASSESSMENT YEAR : 2014-15) SOLID STONE COMPANY LIMITED, 1501, MAKER CHAMBERS-V, NARIMAN POINT, MUMBAI-400 021 PAN : AAACS9989D VS THE DY.CIT, CIR.4(3)(2), MUMBAI APPELLANT RESPONDEDNT APPELLANT BY SHRI SUBHAM RATHI AR RESPONDENT BY SHRI VINOD KUMAR SR DR DATE OF HEARING 14-01-2020 DATE OF PRONOUNCEMENT 14 -01-2020 O R D E R PER PAWAN SINGH, JM : 1. THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORD ER OF CIT(A)-2, MUMBAI DATED 25-09-2018 FOR ASSESSMENT YEAR 2014-15 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUND OF APPEAL: - 1 ON FACTS & IN LAW, THE LEARNED COMMISSIO NER OF INCOME TAX (APPEALS)-2, MUMBAI [THE CIT (A)] ERRED IN CONF IRMING THE DISALLOWANCE MADE BY THE DEPUTY COMMISSIONER OF INC OME TAX, CIRCLE-4(3)(2), MUMBAI (THE 'AO') OF RS.3,11,975/- ON ACCOUNT OF SECTION 14A OF THE INCOME TAX ACT,1961 ('ACT 1 ). 2 ON FACTS & IN LAW, THE CIT (A) ERRED IN H OLDING THAT THE APPELLANT AGREED FOR DISALLOWANCE UNDER SECTION 14A OF THE ACT AND THEREBY ERRED IN CONFIRMING DISALLOWANCE MADE B Y THE AO OF RS.3,11,975/-. 2 ITA 6564/MUM/2018 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS A COMP ANY ENGAGED IN TRADING OF STONES. DURING THE ASSESSMENT, THE AO A SKED THE ASSESSEE TO FURNISH COMPLETE DETAILS OF INVESTMENT ON WHICH THE ASSESSEE EARNED EXEMPT INCOME AND ISSUED SHOW CAUSE NOTICE AS TO WHY DISALLOWANCE OF EXPENDITURE FOR EARNING EXEMPT INCOME SHOULD NOT BE MADE IN ACCORDANCE WITH SECTION 14A READ WIT H RULE 8D OF I.T. RULES, 1962. THE ASSESSEE FILED ITS REPLY AND CONTENDED THAT THE ASSESSEE MADE INVESTMENT IN SHARES FOR CONTROLLING STOCK. THE AO INVOKED THE PROVISIONS OF RULE 8D AND COMPUTED DISA LLOWANCE U/S 14A R.W.R. 8D(2)(II) AND 8D(2)(III) OF RS.3,11,975/ -. ON APPEAL, THE LD. CIT(A) UPHELD THE ADDITION. THUS, FURTHER AGGR IEVED, THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. 3. AT THE OUTSET OF HEARING, THE LD.AR OF THE ASSESSEE SUBMITS THAT GROUNDS OF APPEAL RAISED IN THE PRESENT APPEAL IS C OVERED IN FAVOUR OF ASSESSEE BY VARIOUS DECISIONS OF TRIBUNAL AND VA RIOUS HON BLE HIGH COURTS. THE LD.AR FURTHER SUBMITS THAT DURIN G THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS NOT EARNED ANY EXEM PT INCOME. THEREFORE, NO DISALLOWANCE U/S 14A IS WARRANTED. T HE LD.AR OF THE ASSESSEE ALSO FILED ITS P&L ACCOUNT ENDING ON MARCH , 2014. THE ASSESSEE FURTHER FURNISHED THE NOTE ON NON-APPLICAB ILITY OF SECTION 3 ITA 6564/MUM/2018 14A. THE ASSESSEE, IN THE BALANCE-SHEET / P&L ACCO UNT HAS NOT SHOWN ANY EXEMPT INCOME. IN SUPPORT OF HIS SUBMISS ION, THE LD.AR OF THE ASSESSEE RELIED UPON THE DECISION OF T RIBUNAL IN DCIT VS FUTURE MARKET NETWORK LTD IN ITA NO.5234/MUM/201 7 DATED 30-01-2019. 4. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTAT IVE (DR) FOR THE REVENUE RELIED UPON THE ORDER OF LOWER AUTHORITIES. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL AVAILABLE ON RECORD. ON PERUSAL OF ASSESSMENT RECO RD WE FIND THAT THERE IS NO FINDING OF THE ASSESSING OFFICER WITH R EGARD TO EARNING OF ANY EXEMPT INCOME BY ASSESSEE DURING THE RELEVANT P ERIOD UNDER CONSIDERATION. IT IS A SETTLED POSITION NOW IN TAX ATION LAW THAT IN CASE OF NO EXEMPT INCOME DURING THE YEAR, NO DISALL OWANCE TO BE MADE U/S 14A. SIMILAR VIEW WAS TAKEN BY CO-ORDINAT E BENCH OF THE TRIBUNAL IN DCIT VS FUTURE MARKET NETWORK LTD (SUPR A), RELIED BY LD. AR FOR THE ASSESSEE. IN THIS VIEW OF THE AFORE SAID DISCUSSIONS, WE DO NOT FIND ANY MERIT IN THE ADDITION/ DISALLOWA NCE MADE BY THE LOWER AUTHORITY. THUS, WE DIRECT THE AO TO DELETE THE ENTIRE DISALLOWANCE UNDER SECTION 14A. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. N O ORDER AS TO COST. 4 ITA 6564/MUM/2018 ORDER PRONOUNCED IN THE OPEN COURT ON 14 -01-2020. SD/- SD/- (S.RIFAUR RAHMAN) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIALMEMBER MUMBAI, DT : 14 TH JANUARY, 2019 PK/- COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI