VALUABLE INFRASTRUCTURE P.LTD, MUMBAI V. DCIT 8(3), MUMBAI

ITA 6679/MUM/2013

• Counselvise Citation: 667919914 RSA 2013
• Duration Of Justice: 1 year(s) 10 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 22-09-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 18-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RISHABH S HAH
• Keywords: Opportunity of being heard; Earning of tax free income

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ITA NO.6679/MUM/2013 ASSESSMENT YEAR: 2009-10 M/S VALUABLE INFRASTRUCTURE P. LTD. C/O- KARNAVAT & CO. 2A KITAB MAHAL, 1 ST FLOOR, 192 DR. D.N. ROAD, MUMBAI-400001 / VS. DCIT-8(3), MUMBAI ( ! ' /ASSESSEE) ( # / REVENUE) PAN. NO. AAAC V2734M ITA NO.6680/MUM/2013 ASSESSMENT YEAR: 2010-11 M/S VALUABLE TECHNOLOGIES LTD. C/O- KARNAVAT & CO. 2A KITAB MAHAL, 1 ST FLOOR, 192 DR. D.N. ROAD, MUMBAI-400001 / VS. DCIT-8(3), MUMBAI ( ! ' /ASSESSEE) ( # / REVENUE) PAN. NO.AAACV2732 P ! ' / ASSESSEE BY SHRI RISHABH SHAH # / REVENUE BY SHRI CHANDIP SINGH -DR M/S VALUABLE INFRASTRUCTURE PVT. LTD. & M/S VALUABLE TECHNOLOGIES LTD. ITA NO.6679/MUM/2013 & 6680/MUM/2013 2 $ #% & ' ' / DATE OF HEARING : 06/10/2015 & ' ' / DATE OF ORDER: 14/10/2015 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDERS DATED 29/07/2011 AND 19/09/2013 FOR ASSESSMENT YEAR 2009-10 & 2010-11 RESPECTIVELY, OF THE LD. FIRST AP PELLATE AUTHORITY, MUMBAI. 2. DURING HEARING OF THIS APPEAL, WE HAVE HEARD SH RI RISHABH SHAH, LD. COUNSEL FOR THE ASSESSEE AND SHRI CHANDIP SINGH, LD. DR. AT THE OUTSET, THE LD. COUNS EL FOR THE ASSESSEE DID NOT PRESS GROUND NO.2 (ITA NO.6680/MUM/2013) WITH RESPECT TO DISALLOWANCE OF RS.2,03,162/- UNDER THE HEAD SHARE ISSUE EXPENSES. THE LD. DR HAD NO OBJECTION, THEREFORE, THIS GROUND IS DISMISSED AS NOT PRESSED. 2.1. WITH RESPECT TO REJECTION OF CLAIM OF ASSESSE E U/S 14A(2) READ WITH RULE 8D OF THE INCOME TAX RULES. IT WAS CONTENDED BY THE LD. COUNSEL THAT FOR A.Y. 2008-09, IDENTICALLY, THE ISSUE WAS REMANDED BACK TO THE FIL E OF LD. ASSESSING OFFICER AS NO BORROWED FUNDS WERE USED BY THE ASSESSEE. THE LD. COUNSEL PLACED ON RECORD COPY OF THE ORDER OF THE TRIBUNAL DATED 23/11/2012 (ITA NO.8187/MUM /2011). IT WAS PRAYED THAT SINCE THE IS SUE AND FACTS ARE IDENTICAL, BOTH THESE APPEALS MAY BE SENT TO M/S VALUABLE INFRASTRUCTURE PVT. LTD. & M/S VALUABLE TECHNOLOGIES LTD. ITA NO.6679/MUM/2013 & 6680/MUM/2013 3 THE FILE OF THE ASSESSING OFFICER. THIS FACTUAL MA TRIX/PRAYER WAS NOT CONTROVERTED BY LD. DR. 2.2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN VIEW O F THE ABOVE, WE ARE REPRODUCING HEREUNDER THE RELEVANT PO RTION OF THE ORDER DATED 23/11/2012 (A.Y. 2008-09) FOR RE ADY REFERENCE:- THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE CIT[A]-18 MUMBAI DATED 29.07.2011 PERTAINING TO THE ASSESSMENT YEAR 2008 -09 . 2. THE ASSESSEE HAS SHOWN ITS GRIEVANCE BY RAISING TWO GROUNDS OF APPEAL.BY GROUND NO.1 , THE ASSESSEE HAS CHALLENGED THE CORRECTNESS OF THE ORDERS OF THE LOW ER AUTHORITIES WHO OUGHT TO HAVE CONSIDERED THE DISALL OWABLE EXPENDITURE AS COMPUTED BY THE ASSESSEE AS PER THE PROVISIONS OF SEC.14A[2] OF THE ACT. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT FO R THE YEAR UNDER CONSIDERATION THE ASSESSEE FILED ITS RETURN O F INCOME ELECTRONICALLY ON 16.06.2009 DECLARING TOTAL INCOME AT RS. 37,72,32,984.00 . THE RETURN WAS SELECTED FOR SCRUT INY ASSESSMENT AND ACCORDINGLY STATUTORY NOTICES U/S 14 3[2] / 142[1]] WERE ISSUED AND SERVED UPON THE ASSESSEE. 4. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS THE AO NOTICED THAT THE ASSESSEE HAS EARNED DIVIDEND INCOM E OF RS.11096991.00 WHICH IT CLAIMED TO BE EXEMPT FROM T AX . M/S VALUABLE INFRASTRUCTURE PVT. LTD. & M/S VALUABLE TECHNOLOGIES LTD. ITA NO.6679/MUM/2013 & 6680/MUM/2013 4 THE AO OBSERVED THAT THE ASSESSEE HAS NOT ATTRIBUTE D ANY EXPENDITURE FOR EARNING EXEMPT INCOME NOR IT HAS DISALLOWED ANY EXPENSE IN ITS COMPUTATION OF INCOME FOR THE YEAR UNDER CONSIDERATION. THE AO INVOKED THE PROVIS IONS OF SEC.14A R.W RULE 8D OF THE ACT, AND CALCULATED THE DISALLOWABLE EXPENDITURE AT RS.14,06,325.00 , AND A DDED TO THE INCOME OF THE ASSESSEE . 5. THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT[A ] BUT WITHOUT ANY SUCCESS. THE CIT[A] CONFIRMED THE DISAL LOWABLE EXPENDITURE AS CALCULATED BY THE AO ON THE GROUND T HAT SUCH DISALLOWANCE IS SUPPORTED BY THE DECISION OF THE HO NBLE HIGH COURT OF BOMBAY IN THE CASE OF GODREJ & BOYCE 328 ITR 81 . 6. ASSESSEE IS AGGRIEVED BY THIS FINDING OF THE CI T[A] AND IS BEFORE US. THE COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE ORDER OF THE CIT[A] IS AGAINST THE FACTS OF THE CAS E AND PROVISIONS OF SEC.14A[2] . THE COUNSEL ARGUED THAT THE AO GROSSLY ERRED IN NOT ACCEPTING THE COMPUTATION OF DISALLOWABLE EXPENDITURE AS SUBMITTED BY THE ASSESS EE DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS. TH E COUNSEL DREW OUR ATTENTION TO THE WORKING EXHIBITED AT PAGE 2 OF THE PAPER BOOK SUBMITTED DURING THE COURSE OF THIS APPELLATE PROCEEDING AND SUBMITTED THAT THE TOTAL DISALLOWABLE EXPENSE COMES TO ONLY RS. 2,200.00. 7. PER CONTRA LD. DR RELIED UPON THE FINDINGS OF TH E LOWER AUTHORITIES. M/S VALUABLE INFRASTRUCTURE PVT. LTD. & M/S VALUABLE TECHNOLOGIES LTD. ITA NO.6679/MUM/2013 & 6680/MUM/2013 5 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND ALSO THE 3 PAGE S PAPER BOOK SUBMITTED BY THE COUNSEL BEFORE US. THE UNDISP UTED FACT IS THAT THE ASSESSEE HAS EARNED DIVIDEND INCOM E WHICH IT CLAIMED TO BE EXEMPT FROM TAX. IT IS ALSO NOT IN DI SPUTE THAT PROPORTIONATE EXPENSES ARE TO BE DISALLOWED FOR EAR NING EXEMPT INCOME AS PER THE PROVISIONS OF SEC.14A R.W RULE 8D OF THE ACT. HOWEVER, AT THE SAME TIME IT IS INCUMBE NT UPON THE AO TO FIRST VERIFY THE DISALLOWABLE EXPENDITURE AS CALCULATED BY THE ASSESSEE IN THE LIGHT OF THE PROV ISIONS OF SEC.14A[2] OF THE ACT, WHICH IS AS UNDER: 2) THE ASSESSING OFFICER SHALL DETERMINE THE AMOUN T OF EXPENDITURE INCURRED IN RELATION TO SUCH INCOME WHI CH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THIS ACT IN ACCORDANCE WITH SUCH METHOD AS MAY BE PRESCRIBED, I F THE ASSESSING OFFICER, HAVING REGARD TO THE ACCOUNTS OF THE ASSESSEE, IS NOT SATISFIED WITH THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE IN RESPECT OF SUCH EXPENDITURE IN RELA TION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THIS ACT. 9. AS THE ASSESSEE HAS GIVEN A CALCULATION OF DISAL LOWABLE EXPENDITURE DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS ITSELF WHICH THE AO OUGHT TO HAVE CONSI DERED BEFORE PROCEEDING FURTHER AND THE SAME HAS ALSO NOT BEEN ACCEPTED BY THE CIT[A] , WE HAVE NO HESITATION TO H OLD THAT BOTH THE LOWER AUTHORITIES HAVE ERRED . M/S VALUABLE INFRASTRUCTURE PVT. LTD. & M/S VALUABLE TECHNOLOGIES LTD. ITA NO.6679/MUM/2013 & 6680/MUM/2013 6 10. IN THE INTEREST OF JUSTICE AND FAIR PLAY, WE RE STORE THIS ISSUE BACK TO THE FILES OF THE AO . THE AO IS DIREC TED TO CONSIDER THE CALCULATION OF THE ASSESSEE FOR DISALL OWABLE EXPENDITURE IN THE LIGHT OF THE FACTS OF THE CASE. THE AO IS ALSO DIRECTED TO VERIFY THE INVESTMENTS VIS-A-VIS B ORROWED FUNDS, WHETHER THE ASSESSEE HAS INCURRED ANY FINANC E COST, AFTER GIVING AREASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. GROUND NO.1 IS ALLOWED FOR STATISTICAL PU RPOSE. 2.3. IF THE OBSERVATION MADE IN THE ASSESSMENT ORD ER, LEADING TO ADDITION MADE TO THE TOTAL INCOME, CONCL USION DRAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY THE LD. RESPECTIVE COUNSEL AND T HE CONCLUSION DRAWN IN THE ORDER OF THE TRIBUNAL DATED 23/11/2012 (SUPRA), IF KEPT IN JUXTAPOSITION AND AN ALYZED, WE FIND THAT THE BENCH FOR A.Y. 2008-09, IN VIEW OF THE DECISION FROM HONBLE JURISDICTIONAL HIGH COURT IN GODREJ & BOYCE 328 ITR 81 (BOM.) RESTORED THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER TO CONSIDER THE CALCU LATION OF THE ASSESSEE FOR DISALLOWABLE EXPENDITURE IN ACCORD ANCE WITH LAW BY ANALYZING/VERIFYING INVESTMENTS VIS--V IS BORROWED FUNDS AFTER PROVIDING REASONABLE OPPORTUNI TY OF BEING HEARD TO THE ASSESSEE. SINCE THE FACTS ARE ID ENTICAL, WE REMAND BOTH THESE APPEALS TO THE FILE OF THE LD. ASSESSING OFFICER TO EXAMINE THE CLAIM OF THE ASSES SEE AFRESH, IN THE LIGHT OF THE DECISION FROM HONBLE JURISDICTIONAL HIGH COURT IN GODREJ & BOYCE (SUPRA) AND DECIDE IN ACCORDANCE WITH LAW. THE ASSESSEE BE GIVE N M/S VALUABLE INFRASTRUCTURE PVT. LTD. & M/S VALUABLE TECHNOLOGIES LTD. ITA NO.6679/MUM/2013 & 6680/MUM/2013 7 OPPORTUNITY OF BEING HEARD. THUS, BOTH THE APPEALS ARE DISPOSED OFF IN TERMS INDICATED HEREINABOVE. FINALLY, APPEAL IN ITA NO.6679/MUM/2013 IS ALLOW ED FOR STATISTICAL PURPOSES, WHEREAS, APPEAL IN ITA NO.6680/MUM/2013 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 06/10/2015. SD/- SD/- ( RAMIT KOCHAR ) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER $ % MUMBAI; ) DATED : 14/10/2015 F{X~{T? P.S/. .. %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. +,-. / THE APPELLANT 2. /0-. / THE RESPONDENT. 3. 1 1 $ 2' ( +, ) / THE CIT, MUMBAI. 4. 1 1 $ 2' / CIT(A)- , MUMBAI 5. 4#5 /' , 1 +,' + 6 , $ % / DR, ITAT, MUMBAI 6. 7 % / GUARD FILE. / BY ORDER, 04,' /' //TRUE COPY// / (DY./ASSTT. REGISTRAR) , $ % / ITAT, MUMBAI.