VIJAN SHARE & SECURITIES PVT. LTD., MUMBAI V. ACIT 4 (2), MUMBAI

ITA 6567/MUM/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2525 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-12-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2010-2011
• Appeal Filed On: 08-11-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIVEK BATRA
• Assessee Lawyers: N H DUTIA
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE SHRI N.K . BILLAIYA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER / I .T.A. NO . 6567/MUM/2013 ( / ASSESSMENT YEAR : 2010 - 11 M/S. VIJAN SHARE & SECURITIES PVT. LTD., 301, DEV POOJA, NORTH AVENUE, SANTACRUZ (E), MUMBAI - 400 054 / VS. THE ACIT 4(2), AAYAKAR BHAVAN, MUMBAI - 400 020 ./ ./ PAN/GIR NO. : AAACV 1558R ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY: SHRI N.H. DUTIA / RESPONDENT BY: SHRI VIVEK BATRA / DATE OF HEARING : 01 . 1 2 .2015 / DATE OF PRONOUNCEMENT : 01 .12 .2015 / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST THE ORDER OF THE LD. CIT(A) - 8 , MUMBAI D ATED 1 2 . 9 .201 3 PERTAINING TO ASSESSMENT YEAR 20 1 0 - 11 . 2. THE ASSESSEE HAS RAISED TWO SUBSTANTIVE GROUNDS OF APPEAL. THE FIRST GROUND RELATES TO THE ADDITION OF RS. 1,28,651/ - BEING ITA. NO. 6567/M/2013 2 TRANSACTION CHARGES PAID TO STOCK EXCHA NGE WITHOUT DEDUCTING TAX AT SOURCE. 3. THIS ISSUE IS SQUARELY COVERED IN FAVO UR OF THE ASSESSEE BY THE DECISION OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF KOTAK SECURITIES LTD IN ITA NO. 3111 OF 2009 WHEREIN THE HONBLE HIGH COURT HAS HELD THAT SINCE THE ASSESSEE WAS NOT DEDUCTING TAX AT SOURCE ON PAYMENTS MADE TO THE STO CK EXCHANGE IN RELATION TO THE TRANSACTION CHARGES SINCE PAST MANY YEARS AND SINCE NO ADVERS E VIEW WAS TAKEN BY THE REVENUE, THEREFORE, SUDDENLY IT WAS NOT APPROPRIATE FOR THE REVENUE TO DISALLOW THE TRANSACTION CHARGES FOR WANT OF TDS AND SINCE THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT CAME MUCH LATER, THEN THE RETURN FILED BY THE ASSESSEE , THEREFORE , NO ADVERSE VIEW HAS TO BE TAKEN AGAINST THE ASSESSEE. SINCE THE ASSESSEE HAS STARTED DEDUCTING TAX FROM A.Y. 2011 - 12 I.E. IMMEDIATELY A FTER THE DECISION OF THE HONBLE HIGH COURT OF BOMBAY, IN OUR CONSIDERED OPINION, NO ADDITION SHOULD BE MADE DURING THE YEAR UNDER CONSIDERATION. GROUND NO. 1 IS ACCORDINGLY ALLOWED. 4. GROUND NO. 2 RELATES TO THE ADDITION OF RS. 87,951/ - MADE U/S. 14A OF THE ACT. 4.1. WHILE SCRUTINIZING THE RETURN OF INCOME, THE AO FOUND THAT THE ASSESSEE HAS EARNED DIVIDEND INCOME OF RS. 16,71 , 754/ - . THE AO FURTHER FOUND THAT THE ASSESSEE HAS NOT ALLOCATED ANY EXPENDITURE FOR EARNING THIS EXEMPT INCOME. INVOKING T HE PROVISIONS OF SEC. 14A R.W. RULE 8D, THE DISALLOWANCE WAS COMPUTED AT RS. 87,951/ - . ITA. NO. 6567/M/2013 3 4.2. AGGRIEVED BY THIS, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) AND STRONGLY CONTENDED THAT THE ASSESSEE HAS NOT INCURRED ANY EXPENDITURE FOR EARNING THE EXEMPT INCOME, THEREFORE, THERE IS NO QUESTION OF ANY DISALLOWANCE. THE LD. CIT(A) DID NOT ACCEPT THIS CONTENTION OF THE ASSESSEE. DRAWING SUPPORT FROM THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG. CO. LTD VS DCIT 328 ITR 81, THE LD. CIT(A) CONFIRMED THE ADDITION. 4.3. AGGRIEVED BY THIS, THE ASSESSEE IS BEFORE US. 4.4. THE LD. COUNSEL FOR THE ASSESSEE REITERATED WHAT HAS BEEN STATED BEFORE THE LOWER AUTHORITIES. IT IS THE SAY OF THE LD. COUNSEL THAT SINCE NO EXPENDITURE HAS BEEN INCURRED AND SINCE NO ADVERSE FINDING HAS BEEN GIVEN BY THE AO IN THIS RESPECT, THE DISALLOW ANCE MADE IS BAD IN LAW AND SHOULD BE DELETED. 4.5. THE LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDERS OF THE REVENUE AUTHORITIES. 4.6. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORDERS OF THE AUTHORITIES BELOW. UNDISPUTEDLY, RULE 8D IS AP PLICABLE FOR THE YEAR UNDER CONSIDERATION. IT IS ALSO AN ADMITTED FACT THAT THE ASSESSEE HAS NOT INCURRED ANY EXPENDITURE FOR EARNING THE EXEMPT INCOME. HOWEVER, AS PER THE RATIO LAID DOWN BY THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF GODREJ & BOYCE MFG. CO. LTD (SUPRA), A REASONABLE DISALLOWANCE NEED TO BE MADE. IN OUR CONSIDERED OPINION, A DISALLOWANCE OF 2% OF THE EXEMPT INCOME SHOULD MEET THE ENDS OF JUSTICE AND WHICH COMES TO RS. 33,435/ - . WE, ACCORDINGLY DIRECT THE ITA. NO. 6567/M/2013 4 AO TO RESTRICT THE DISALLOW ANCE TO RS. 33,435/ - . THE ASSESSEE WILL GET A RELIEF OF RS. 54,516/ - . GROUND NO. 2 IS PARTLY ALLOWED. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON 1 ST DECEMBER , 2015 SD/ - SD/ - ( PAWAN SINGH ) (N.K. BILLAIYA) /JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 1 ST DECEMBER , 2015 . . ./ RJ , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI