TECHNO PRODUCTS (B) P.LTD, MUMBAI V. ASST CIT RG 8(3), MUMBAI

ITA 6615/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79499 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 17-07-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 31-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PITAMBAR DAS
• Assessee Lawyers: RAHUL K HAKANI
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

E IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE S/SHRI H.L. KARWA, HONBLE PRESIDENT AND P.M . JAGTAP, AM .. , .. , ./ I.T.A. NO.6615 /MUM/2012 ( / ASSESSMENT YEAR : 2009-2010 M/S TECHNO PRODUCTS (B) P. LTD., UNITOP HOUSE, C WING, EAST WEST ESTATE, SAFED POOL, ANDHERI KURLA ROAD, MUMBAI 400 072. / VS. ASSTT. COMMISSIONER OF INCOME TAX RANGE 8(3), AAYAKAR BHAWAN, M.K. MARG, MUMBAI 400 072. ./ PAN : AAACT4030E ( ! / APPELLANT ) .. ( '#! / RESPONDENT ) A PPELLANT BY SHRI RAHUL K. HAKANI R E SPONDENT BY : SHRI PITAMBAR DAS ' ( / DATE OF HEARING : 17-07-2014 ' ( / DATE OF PRONOUNCEMENT :30-7-2014 [ / O R D E R PER P.M. JAGTAP, A.M . : .. , THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF LD. CIT (A) - 18, MUMBAI DATED 21-08-2012 AND THE SOLITARY ISSUE ARISING OUT OF THE SAME RELATES TO THE DISALLOWANCE OF RS. 2,34,745/- MADE BY THE A.O. AND CONFIRMED BY THE LD. CIT(A) U/S 14A READ WITH RULE 8-D OF THE INCOME TAX RULES, 1962. 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY WH ICH IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF CHEMICALS. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY IT ON 27- 09-2009 DECLARING TOTAL ITA 6615/M/12 2 INCOME OF RS. 2,12,06,030/-. IN THE SAID RETURN, DI VIDEND INCOME OF RS. 11,14,370/- RECEIVED IN THE YEAR UNDER CONSIDERATIO N WAS CLAIMED AS EXEMPT BY THE ASSESSEE. HOWEVER, NO DISALLOWANCE ON ACCOUN T OF EXPENSES INCURRED IN RELATION TO THE EARNING OF THE SAID INCOME WAS OFFE RED BY THE ASSESSEE. THE A.O., THEREFORE, APPLIED THE PROVISIONS OF RULE 8-D OF THE INCOME TAX RULES, 1962 TO COMPUTE THE EXPENSES INCURRED BY THE ASSESS EE IN RELATION TO THE EARNING OF EXEMPT INCOME AT RS. 2,34,745/- AND DISA LLOWANCE TO THAT EXTENT WAS MADE BY HIM U/S 14A OF THE INCOME TAX ACT, 1961 . ON APPEAL, THE LD. CIT(A) CONFIRMED THE SAID DISALLOWANCE MADE BY THE A.O. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 3. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IN THE CASE OF CIT VS. METALMAN AUTO P. LTD. [2011] 336 ITR 434 (P&H) CITED BY THE LD. COUN SEL FOR THE ASSESSEE, THE HONBLE PUNJAB & HARYANA HIGH COURT HAS HELD THAT T HE DISALLOWANCE U/S 14A OF THE ACT REQUIRES A FINDING OF INCURRENCE OF EXPENDITURE FOR EARNING THE EXEMPT INCOME AND THERE CANNOT BE A PRESUMPTION THA T CERTAIN EXPENDITURE IS BOUND TO BE INCURRED FOR EARNING THE EXEMPT INCOME. A PERUSAL OF THE ASSESSMENT ORDER PASSED BY THE A.O. IN THE PRESENT CASE SHOWS THAT THERE IS NO FINDING RECORDED BY THE A.O. TO POINT OUT ANY EX PENDITURE ACTUALLY INCURRED BY THE ASSESSEE FOR EARNING OF THE EXEMPT INCOME TO JUSTIFY THE DISALLOWANCE MADE U/S 14A OF THE ACT. WE THEREFORE SET ASIDE TH E IMPUGNED ORDER OF THE LD. CIT(A) CONFIRMING THE DISALLOWANCE MADE BY THE A.O. AND RESTORE THIS MATTER TO THE FILE OF THE A.O. FOR DECIDING THE ISS UE RELATING TO THE DISALLOWANCE U/S 14A OF THE ACT AFTER VERIFYING THE RELEVANT REC ORD TO FIND OUT WHETHER THERE IS ANY EXPENDITURE ACTUALLY INCURRED BY THE ASSESSE E FOR EARNING THE EXEMPT INCOME. ITA 6615/M/12 3 4. IN THE RESULT, APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH JULY, 2014. ' . / 0 30-7-2014 ' SD/- SD/- (H.L. KARWA) (P.M. JAGTAP ) /PRESIDENT ACCOUNTANT MEMBER MUMBAI ; 0 DATED 30-7-2014 [ .;../ RK , SR. PS ' #%& '& / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. '#! / THE RESPONDENT. 3. < () / THE CIT(A) - 18, MUMBAI 4. < / CIT - 8, MUMBAI 5. ? ';;A , ( A , / DR, ITAT, MUMBAI E BENCH 6. / GUARD FILE. / BY ORDER, #? '; //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI