FAMOUS STUDIOS LTD, MUMBAI V. DCIT CIR 6(2), MUMBAI

ITA 6777/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92348 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2010-2011
• Appeal Filed On: 25-11-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Section: 14A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F MUMBAI . . , , BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI N.K.BILLAIYA, ACCOUNTANT MEMBER . / ITA NO. 6777/MUM/2013 / ASSESSMENT YEAR 2010-11 M/S. FAMOUS STUDIOS LTD., 20, FAMOUS CINE BUILDING, DR. E. MOSSESS ROAD, MAHALAXMI, MUMBAI 400011 / VS. THE DY.CIT, CIR. 6(2), AAYKAR BHAVAN, ROOM 509, 5 TH FLOOR, MK MARG, NEW MARINE LINES, MUMBAI 400020. ! ./ ./ PAN/GIR NO. : AAACF 7895D ( !$ / APPELLANT ) .. ( %&!$ / RESPONDENT ) ASSESSEE BY SHRI NITESH JOSHI RESPONDENT BY : SHRI P.K.BEERLA ( ) * / DATE OF HEARING : 21/04/2015 ( ) * / DATE OF PRONOUNCEMENT : 21/04/2015 / O R D E R PER I.P.BANSAL, JM: THIS IS AN APPEAL FILED BY THE ASSESSEE AND IT IS DIRECTED AGAINST ORDER PASSED BY LD. CIT(A)-12, MUMBAI DATED 18/1/2013 FO R ASSESSMENT YEAR 2010- 11. GROUNDS OF APPEAL READ AS UNDER: 1. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEAL S) ERRED IN UPHOLDING AND CONFIRMING THE DISALLOWANCE OUT OF IN TEREST PAID ON FUNDS BORROWED AND UTILIZED FOR BUSINESS OF THE APPELLANT , UNDER RULE 8D(2)(II) R. W. SECTION 14A OF THE INCOME-TAX ACT, 1961. . / ITA NO. 1978/MUM/2013 / ASSESSMENT YEAR 2009-10 2 IT IS SUBMITTED THAT THE APPELLANT HAD MADE INVESTM ENTS IN SHARES OUT OF ITS OWN FUNDS. ALL INTEREST BEARING BORROWINGS ARE FOR SPECIFIC PURPOSE AND AS SUCH NO DISALLOWANCE IS CALLED FOR UNDER RUL E 8D (2) (II) OF INCOME-TAX RULES 1962. THE CONCLUSION ARRIVED AT THE LEARNED ASSESSING OFF ICER AND THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) IS ERRONEOUS A ND CONTRARY TO THE FACTS AND LAW. 2. THE AO CALCULATED THE DISALLOWANCE AS PER RULE-8 D AS UNDER: 5.2 SUB-SECTION (2) OF SECTION 14A OF THE I.T. ACT , 1961 IS AMPLY CLEAR IN TERMS OF DETERMINING THE EXPENDITURE INCURRED IN RELATION TO INCOME NOT INCLUDED IN TOTAL INCOME, WHICH HAS TO BE WORKE D OUT AS PRESCRIBED IN RULE 8D OF THE I.T. RULES. IN VIEW OF THE SAME , THE DISALLOWANCE U/S. 14A OF THE I.T ACT, 1961 IS WORKED OUT AS UNDER: DETERMINING AMOUNT OF EXPENDITURE IN RELATION TO IN COME WHICH DOES NOT FORM PART OF TOTAL INCOME AGGREGATE OF THE FOLLOWING AMOUNTS (I) THE AMOUNT OF EXPENDITURE DIRECTLY RELATING TO INCOME WHICH DOES NOT FORM PART OF TOTAL INCOME 11,681 (II) IN CASE WHERE THE ASSESSEE HAS INCURRED EXPEND ITURE BY WAY OF INTEREST DURING THE PREVIOUS YEAR WHICH IS NOT DIRE CTLY ATTRIBUTABLE TO ANY PARTICULAR INCOME OR RECEIPT, AN AMOUNT COMPUTED IN ACCORDANCE WITH THE FOLLOWING FORMULA N AMELY A X B /C 640874 A. AMOUNT OF EXPENDITURE BY WAY OF INTEREST OTHER THAT THE AMOUNT OF INTEREST INCLUDED IN (I) INCURRED DURING THE PREVIOUS YEAR 6736122 B. THE AVERAGE OF VALUE OF INVESTMENT, INCOME FROM WHICH DOES NOT OR SHALL NOT FORM PART OF THE TOTAL INCOME, AS APPEARING IN THE BALANCE SHEET OF THE ASSESSEE, ON THE FIRST DAY AND THE LAST DAY OF THE PREVIOUS YEAR; 30134472 C. THE AVERAGE OF TOTAL ASSETS AS APPEARING IN THE BALANCE SHEET OF THE ASSESSEE, ON THE FIRST DAY OF THE PREVIOUS YEAR; 316738383 (III) AN AMOUNT EQUAL TO ONE-HALF PERCENT OF THE AVERAGE OF VALUE OF INVESTMENT, INCOME FROM WHICH DOES NOT OR SHALL NOT FORM PART OF THE TOTAL INCOME, AS APPEARING IN THE BALANCE SHEET OF THE ASSESSEE, ON THE FIRST DAY AND THE LAST DAY OF THE PREVIOUS YEAR . 1,50,672 TOTAL AMOUNT OF EXPENDITURE RELATED TO INCOME WHICH DOES NOT FORM PART OF TOTAL INCOME. 8,03,227 2.1 IN THE AFOREMENTIONED CALCULATION THE ASSESSEE HAS OBJECTED THE ADDITION OF RS.6,40,874/- ON THE GROUND THAT IN VIEW OF AV AILABILITY OF OWN FUNDS DISALLOWANCE ON ACCOUNT OF INTEREST COULD NOT BE MA DE AS PER DECISION OF . / ITA NO. 1978/MUM/2013 / ASSESSMENT YEAR 2009-10 3 HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. RE LIANCE UTILITIES AND POWER LTD. 313 ITR 340 (BOM) AND ALSO THE DECISION OF HON BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. HDFC BANK LTD., 366 ITR 505 (BO M). 3. IN THIS VIEW OF THE SITUATION, AFTER HEARING BOT H THE PARTIES, WE RESTORE THIS ISSUE TO THE FILE OF AO WITH A DIRECTION TO RE -ADJUDICATE THE ISSUE REGARDING DISALLOWANCE OF A SUM OF RS.6,40,874/- IN THE LIGHT OF AFOREMENTIONED TWO DECISIONS OF HONBLE BOMBAY HIGH COURT. REST OF THE DISALLOWANCE IS UPHELD. WE DIRECT ACCORDINGLY. 4. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS CONSIDERED TO BE PARTLY ALLOWED FOR STATISTICAL PURPOSES IN THE MANNER AFOR ESAID. ORDER PRONOUNCED IN THE OPEN COURT ON 21/04/2015 ( 0 1 2 21/04/2015 ( SD/- SD/- ( / N.K.BILLAIYA ) ( . . / I.P. BANSAL ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; 1 DATED 21/04/2015 / COPY OF THE ORDER FORWARDED TO : 1. !$ / THE APPELLANT 2. %&!$ / THE RESPONDENT. 3. 4) ( ) / THE CIT(A)- 4. 4) / CIT 5. 56 %)78 , * 78 , / DR, ITAT, MUMBAI 6. 9 / GUARD FILE. / BY ORDER, & 5) %) //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI . . ./ VM , SR. PS . / ITA NO. 1978/MUM/2013 / ASSESSMENT YEAR 2009-10 4 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 21/04/2015 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 22/04/2015 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7. FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER