MCX-SX CLEARING CORPORATION LIMITED, MUMBAI V. DCIT -8(2), MUMBAI

ITA 6575/MUM/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0959 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 08-11-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PAVAN KUMAR BEER LA
• Keywords: Earning of tax free income
• Section: 14A; 11

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI N.K . BILLAIYA, A CCOUNTANT M EMBER / I .T.A. NO . 6575/MUM/2013 ( / ASSESSMENT YEAR : 2010 - 11 M/S. MCX - SX CLEARING CORPORATION LTD., 2 ND FLOOR EXCHANGE SQUARE, CTS NO. 255, SUREN ROAD, CHAKALA, MUMBAI - 400 093 / VS. THE DCIT - 8(2), AAYAKAR BHAVAN, MUMBAI - 400 020 ./ ./ PAN/GIR NO. : AAFCM 7981E ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY: SHRI K. GOPAL / RESPONDENT BY : SHRI PAVAN KUMAR BEERLA / DATE OF HEARING : 01 . 0 4 .2015 / DATE OF PRONOUNCEMENT : 08 .0 4 .2015 / O R D E R PER N.K. BILLAIYA, AM: THIS IS AN APPEAL BY THE ASSESSEE PREFERRED AGAINST THE ORDER OF THE LD. CIT(A) - 17, MUMBAI DATED 1.08.2013 PERTAINING TO ASSESSMENT YEAR 2010 - 11. 2. THE ASSESSEE IS AGGRIEVED BY THE ADDITIONS MADE UNDER RULE 8D AND UPHELD BY THE LD. CIT(A). ITA. NO. 6575/M/13 2 3. THE ASSESSEE IS IN THE BUSINESS OF CLEARING & SETTLEMENT OF CURRENCY FUTURE S CONTRACTS. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS EARNED RS. 2,10,29,044/ - BY WAY OF DIVIDEND AND THE SAME HAS BEEN CLAIMED TO BE EXEMPT. THE ASSESSEE WAS ASKED TO FURNISH THE DETAIL S OF EXPENDITURE ATTRIBUTABLE TO INVESTMENT AND EXEMPT INCOME AS PER SEC. 14A READ WITH RULE 8D OF THE ACT. 3.1. THE ASSESSEE SUBMITTED THE FOLLOWING COMPUTATION OF DISALLOWANCE AND CLAIMED THAT THE SAME IS ON SCIENTIFIC BASIS . SR. NO. PARTICULAR S AMT.IN RS. BASIS OF DISAL LK OWANCE 1. RENT 31,104/ - ON THE BASIS OF RENT PAID FOR AREA ALLOCATED TO TREASURY DEPARTMENT. 2. SALARY 2,22,888/ - ON THE BASIS OF SALARY PAID TO PERSON WORKING FOR TREASURY DEPARTMENT. 3. TRAVELLING & CONVEYANCE EXPENSES 14,361/ - ON THE BASIS OF EXPENSES APPORTION TO TREASURY DEPARTMENT. 4. COMMUNICATION EXPENSES 4,519/ - - DO - 5. PRINTING & STATIONARY EXPENSES 6,573/ - - DO - TOTAL 2,79,445/ - 3.2. AFTER CONSIDERING THE COMPUTATION OF DISALLOWANCE AND THE DECISION OF THE TRIBUNAL IN THE CASE OF CHEMINVEST LTD. VS ITO 317 ITR 86(AT), THE AO PROCEED ED BY COMPUTING THE DISALLOWANCE AS PER THE PROCEDURE PRESCRIBED UNDER RULE 8D AND COMPUTED THE DISALLOWANCE AT RS.15,11,8 43 AND AFTER DEDUCTING THE DISALLOWANCE MADE BY THE ASSESSEE THE AO ADDED RS. 12,32,398/ - U/S. 14A R.W. RULE 8D OF THE ACT. ITA. NO. 6575/M/13 3 4. AGGRIEVED BY THIS, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) BUT WITHOUT ANY SUCCESS. 5. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE VEHEMENTLY ARGUED THAT THE AO HAS NOT FOUND ANY FAULT IN THE COMPUTATION OF THE DISALLOWANCE MADE BY THE ASSESSEE AND WITHOUT REJECTING THE COMPUTATION, THE AO SHOULD NOT HAVE PROCEEDED TO APPLY RULE 8D. IN ALTE RNATIVE, THE LD. COUNSEL FOR THE ASSESSEE STATED THAT THE DISALLOWANCE SHOULD BE RESTRICTED TO 1% AS HAS BEEN MADE IN A.Y. 2009 - 10 BY THE LD. CIT(A) VIDE ORDER DT. 31.10.2012. 6. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE STATED THAT APPLICATION OF RULE 8D IS MANDATORY FROM A.Y. 2008 - 09 AND RULE 8D HAS PRESCRIBED A FORMULA WHICH IS VERY SCIENTIFIC AND THEREFORE THE DECISION OF THE LOWER AUTHORITIES ARE CORRECT AND DESERVE TO BE UPHELD. 7. HAVING HEARD THE RIVAL SUBMISSIONS, WE HAVE CAREFULLY PERU SED THE ORDERS OF THE AUTHORITIES BELOW. THE ASSESSMENT YEAR UNDER CONSIDERATION IS A.Y. 2010 - 11 AND IT IS AN UNDISPUTED FACT THAT RULE 8D IS APPLICABLE. THE MAIN CONTENTION OF THE LD. COUNSEL IS THAT THE AO HAS NOT RECORDED ANY DISSATISFACTION IN SO FAR AS THE COMPUTATION OF DISALLOWANCES GIVEN BY THE ASSESSEE. WE FIND THAT THE LD. CIT(A) AT PARA 1.3.1 OF HIS ORDER HAS CATEGORICALLY STATED THAT THOUGH THE ASSESSEE HAS CLAIMED TO HAVE COMPUTED THE DISALLOWANCE ON A SCIENTIFIC BASIS BUT IS NOT ABLE TO SHO W FROM ITS BOOKS OF ACCOUNT THAT THE EXPENSES ARE ALLOCATED ON SOME GENUINE AND CREDITABLE BASIS. THE LD. CIT(A) FURTHER OBSERVED THAT THE AO HAS SPECIFICALLY MENTIONED AFTER EXAMINATION OF THE ACCOUNTS THAT THE EXPENSES ARE PURELY ALLOCATED ON ADHOC BASI S AND ARE INSUFFICIENT. WE FIND THAT THESE FACTUAL OBSERVATIONS CLEARLY SHOW THAT THE AO HAS SHOWN ITA. NO. 6575/M/13 4 HIS DISSATISFACTION ON THE DISALLOWANCE COMPUTED BY THE ASSESSEE. UNDER THESE CIRCUMSTANCES, WE AGREE WITH THE LD. CIT(A) THAT THE AO WAS LEFT WITH NO OPT ION BUT TO COMPUTE THE DISALLOWANCE BASED ON THE FORMULA PROVIDED UNDER RULE 8D OF THE ACT. WE, ACCORDINGLY, DECLINE TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A). 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. OR DER PRONOUNCED IN THE OPEN COURT ON 8 TH APRIL , 2015 SD/ - SD/ - ( JOGINDER SINGH ) (N.K. BILLAIYA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 8 TH APRIL , 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