SHREE SATYANARAYAN INVESTMENTS COMPANY LIMITED, MUMBAI V. INCOME TAX OFFICER, WARD 1(3)(2), MUMBAI

ITA 6651/MUM/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4821 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Assessment Year: 2014-2015
• Appeal Filed On: 20-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CH ARUN KUMAR SINGH LD
• Assessee Lawyers: P R KOTHARI LD
• Keywords: Earning of tax free income
• Section: 143(3); 14A; 115JB

Judgement Text

ITA 6651/MUM/2017 SHREE SATYANARAYAN INVESTMENTS CO.LTD. ASSESSMENT YEAR: 2014-15 1 IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI , , BEFORE HONBLE SHRI PAWAN SINGH, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.6651/MUM/2017 ( / ASSESSMENT YEAR: 2014-15) S HREE SATYANARYAN INVESTMENTS CO. LTD. 3 RD FLOOR, SHREE NIWAS HOUSE HAZARIMAL SOMANI MARG FORT, MUMBAI-400 001 / VS. INCOME TAX OFFICER WARD-1(3)(2) ROOM NO.541 AAYKAR BHAWAN M.K.MARG, MUMBAI-400 020 ./ ./PAN/GIR NO. AABCS-4627-H ( /APPELLANT ) : ( / RESPONDENT ) ASSESSEE BY : MR. P.R. KOTHARI - LD. AR REVENUE BY : CH. ARUN KUMAR SINGH - LD.DR !' / DATE OF HEARING : 06/02/2019 !' / DATE OF PRONOUNCEMENT : 14/02/2019 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2014-15 CONTEST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-3, MUMBAI, [CIT(A)], APPEAL NO. CIT(A)-3/IT-177/ITO-1(3)(2)/16-17 DATED 17/07/2017 ON FOLLOWING GROUNDS OF APPEAL: - ITA 6651/MUM/2017 SHREE SATYANARAYAN INVESTMENTS CO.LTD. ASSESSMENT YEAR: 2014-15 2 1. AGAINST ADDITIONAL DISALLOWANCE OF RS.700580/- U /S 14A: A) FOR THAT ON FACTS AND IN CIRCUMSTANCES OF CASE A ND IN LAW, LD. COMMISSIONER OF INCOME TAX (APPEALS) [CIT(APPEALS)] ERRED IN CONFIRMING LD. ASSESSING OFFICERS (A/OS) ACTION OF MAKING AN ADD ITIONAL DISALLOWANCE OF RS.700580/- U/S 14A OF INCOME TAX ACT, 1961 (OVER A ND ABOVE RS.792842/- SUO-MOTO DISALLOWED BY APPELLANT.). B) FOR THAT ON FACTS AND IN CIRCUMSTANCES OF CASE A ND IN LAW, LD. CIT(APPEALS) ERRED IN CONFIRMING LD. A/OS ACTION O F TAKING AVERAGE VALUE OF INVESTMENTS IN THE SUM OF RS.298663728/- INSTEAD OF RS.158496440/- FOR THE PURPOSE OF RULE 8D OF INCOME TAX RULES, 1962. 2. AGAINST OVER CHARGING OF INTEREST U/S 234C: FOR THAT ON FACTS AND IN CIRCUMSTANCES AND IN LAW, LD. COMMISSIONER OF INCOME TAX(APPEALS) ERRED IN CONFIRMING LD. A/OS A CTION OF CHARGING INTEREST U/S 234C OF INCOME TAX ACT, 1961 IN THE SUM OF RS.1 0617/- WHICH WAS BASED ON ASSESSED INCOME INSTEAD OF RETURNED INCOME. 2.1 FACTS IN BRIEF ARE THAT THE ASSESSEE BEING RESIDENT CORPORATE ENTITY STATED TO BE ENGAGED IN FINANCE AND INVESTMENT ACTIVITIES WAS ASSESSED FOR IMPUGNED AY ON 15/09/2016 IN SCRUTINY ASSESSMEN T U/S 143(3) BY LD. INCOME TAX OFFICER-1(3)(2), MUMBAI [AO]. THE INCOME UNDER NORMAL PROVISION WAS DETERMINED AT RS.31.11 LACS AFTER SOL E DISALLOWANCE U/S 14A FOR RS.7 LACS AS AGAINST RETURNED INCOME OF RS. 24.10 LACS E-FILED BY THE ASSESSEE ON 27/09/2014. THE INCOME U/S 115JB WAS DETERMINED AT RS.52.50 LACS AS AGAINST RS.45.49 LACS COMPUTED BY THE ASSESSEE. THE DISALLOWANCE OF RS.7 LACS U/S 14A IS THE SOLE S UBJECT MATTER OF PRESENT APPEAL BEFORE US. 2.2. DURING ASSESSMENT PROCEEDINGS, IT TRANSPIRED T HAT THE ASSESSEE EARNED EXEMPT INCOME OF RS.106.97 LACS AND OFFERED SUO-MOTO EXPENSE DISALLOWANCE OF RS.7.92 LACS AGAINST THE SA ME. THE SAID DISALLOWANCE WAS WORKED OUT BY TAKING INTO CONSIDER ATION THOSE INVESTMENTS WHICH YIELDED EXEMPT INCOME DURING THE YEAR. HOWEVER, LD. AO OPINED THAT DISALLOWANCE WAS TO BE WORKED OUT CO NSIDERING THE TOTAL ITA 6651/MUM/2017 SHREE SATYANARAYAN INVESTMENTS CO.LTD. ASSESSMENT YEAR: 2014-15 3 INVESTMENTS IRRESPECTIVE OF THE FACT WHETHER THE SA ME YIELDED ANY EXEMPT INCOME DURING THE YEAR OR NOT. ACCORDINGLY, THE DISALLOWANCE WAS WORKED OUT UNDER RULE 8D(2)(III) AT RS.14.93 LACS, BEING 0.5% OF AVERAGE INVESTMENTS OF RS.29.86 CRORES. AFTER ADJUS TING THE SUO-MOTO DISALLOWANCE OFFERED BY THE ASSESSEE, THE NET DISAL LOWANCE THUS WORKED OUT TO BE RS.7 LACS, WHICH WAS ADDED TO THE INCOME OF THE ASSESSEE. THE STAND OF LD. AO, UPON CONFIRMATION BY FIRST APP ELLATE AUTHORITY VIDE IMPUGNED ORDER DATED 17/07/2017, IS UNDER APPEAL BE FORE US. 3. RIVAL SUBMISSIONS HAVE BEEN HEARD. UPON CAREFUL CON SIDERATION, WE FIND THAT THE DISALLOWANCE OFFERED BY THE ASSESSEE IS IN LINE WITH THE DECISION OF DELHI TRIBUNAL (SPECIAL BENCH) RENDERED IN ACIT VS. VIREET INVESTMENT (P.) LTD. [82 TAXMANN.COM 415] WHEREIN IT HAS BEEN HELD THAT ONLY EXEMPT INCOME YIELDING INVESTMENTS WERE T O BE CONSIDERED TO ARRIVE AT THE SAID DISALLOWANCE. THEREFORE, THE ADD ITIONAL EXPENSE DISALLOWANCE, AS COMPUTED BY LD. AO COULD NOT BE SU STAINED. RESPECTFULLY FOLLOWING THE BINDING JUDICIAL PRECEDE NT, BY DELETING ADDITIONAL DISALLOWANCE OF RS.7 LACS, WE ALLOW THIS GROUND OF ASSESSEES APPEAL. 4. IN GROUND NUMBER 2, THE ASSESSEE IS AGGRIEVED BY ERRONEOUS COMPUTATION OF INTEREST U/S 234C. IT HAS BEEN SUBMI TTED THAT THE INTEREST WAS TO BE COMPUTED BASED ON RETURNED INCOME INSTEAD OF ASSESSED INCOME AS DONE BY LOWER AUTHORITIES. KEEPING IN VIE W THE SAME, LD. AO IS DIRECTED TO COMPUTE CORRECT AMOUNT OF INTEREST U /S 234C AS PER LAW. THIS GROUND OF ASSESSEES APPEAL STANDS ALLOWED FOR STATISTICAL PURPOSES. 5. THE APPEAL STANDS ALLOWED IN TERMS OF OUR ABOVE ORDER. ITA 6651/MUM/2017 SHREE SATYANARAYAN INVESTMENTS CO.LTD. ASSESSMENT YEAR: 2014-15 4 ORDER PRONOUNCED IN THE OPEN COURT ON14TH FEBRUARY, 2019 SD/- SD/- (PAWAN SINGH) (MAN OJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER % MUMBAI; DATED : 14.02.2019 SR. PS THIRUMALESH / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. '# ! / THE RESPONDENT 3. $$% ( ) / THE CIT(A) 4. $$% / CIT CONCERNED 5. & ''() , $) , / DR, ITAT, MUMBAI 6. ' +,- / GUARD FILE % % / BY ORDER, / % (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.