SEA GLIMPSE INVESTMENTS P.LTD, MUMBAI V. DCIT 3(3), MUMBAI

ITA 682/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75710 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-03-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 05-03-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 02-02-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: NITESH GANDHI
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUM BAI , , BEFORE SHRI SANJAY ARORA, AM AND SHRI AMIT SHUKLA, JM ./ I.T.A. NO. 682/MUM/2012 ( / ASSESSMENT YEAR: 2008-09) SEA GLIMPSE INVESTMENTS PRIVATE LIMITED, 112-A, EMBASSY CENTRE, NARIMAN POINT, MUMBAI-400 021 / VS. DY. CIT-3(3), AAYAKAR BHAVAN, MUMBAI-400 020 ' ./# ./PAN/GIR NO. AAACS 8600 H ( '$ /APPELLANT ) : ( %&'$ / RESPONDENT ) '$ ' ( / APPELLANT BY : SHRI NITESH GANDHI %&'$ ' ( / RESPONDENT BY : SHRI RAVI PRAKASH )* + ' , / DATE OF HEARING : 06.03.2014 -./ ' , / DATE OF PRONOUNCEMENT : 06.03.2014 / O R D E R PER SANJAY ARORA, A. M.: THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-7, MUMBAI (CIT(A) FOR SHO RT) DATED 02.11.2010, DISMISSING THE ASSESSEES APPEAL CONTESTING ITS ASSESSMENT U/S .143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR THE ASSESSMENT YEAR (A. Y.) 2008-09 VIDE ORDER DATED 16.09.2010. 2. OPENING THE ARGUMENTS FOR AND ON BEHALF OF THE A SSESSEE, IT WAS SUBMITTED BY THE LD. AUTHORIZED REPRESENTATIVE (AR), THE ASSESSEES COUNSEL, THAT THE PRINCIPAL ISSUE ARISING IN THE ASSESSEES APPEAL IS THE DISALLOWANC E U/S.14A IN THE SUM OF RS.99,84,676/-. 2 ITA NO. 682/MUM/2012 (A.Y. 2008-09) SEA GLIMPSE INVESTMENTS PVT. LTD. VS. DY. CIT THE ASSESSEE IS IN THE BUSINESS OF TRADING IN STOCK S AND SHARES AND, ACCORDINGLY, THE SHARES, ON WHICH DIVIDEND INCOME, EARNED IN THE SUM OF RS.31,40,934/-, WHICH IS TAX EXEMPT U/S.10(33) OF THE ACT, STANDS RECEIVED ARE H ELD BY IT ONLY BY WAY OF STOCK-IN-TRADE. NO EXPENDITURE PER SE IS, ACCORDINGLY, INCURRED IN RESPECT OF THE SAID S HARES, EVEN AS DIVIDEND INCOME ARISES INCIDENTALLY THEREON. 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. 3.1 EVEN AS OBSERVED BY THE BENCH DURING HEARING, T HE ISSUE WITH REGARD TO THE APPLICABILITY OR OTHERWISE OF SECTION 14A READ WITH RULE 8D IN RESPECT OF ASSET/S YIELDING INCOME NOT FORMING PART OF THE TOTAL INCOME, WHERE HELD AS STOCK-IN-TRADE, CAN BE SAID TO HAVE BEEN SET AT REST, AT LEAST INSOFAR AS THE APPE LLATE TRIBUNAL IS CONCERNED, WITH THE DECISION BY THE THIRD MEMBER IN THE CASE OF D. H. SECURITIES (P.) LTD. VS. DY. CIT (IN ITA NOS. 5163 & 5724/MUM/2011 DATED 06.12.2013). AS EXPLAINED THEREIN, AS ALSO IN DY. CIT VS. DAMANI ESTATES AND FINANCE P. LTD. [2013] 25 ITR (TRIB) 683 (MUM.), APPLYING THE DECISION IN THE CASE OF GODREJ & BOYCE MFG. CO. LTD. VS. DY. CIT [2010] 328 ITR 81 (BOM), RULE 8D WOULD NEVERTHELESS HAVE APPLI CATION, I.E., EVEN WHERE THE SHARES ARE HELD AS STOCK-IN-TRADE. THE DECISION IN THE CAS E OF DHANUKA & SONS VS. CIT [2011] 339 ITR 319 (CAL) IS ALSO ON THE SAME LINES. SO HOWEVER, AS FURTHER EXPLAINED IN THE AFORE-REFER RED DECISIONS BY THE TRIBUNAL, INTEREST ON THE BORROWED CAPITAL DEPLOYED IN SHARE- HOLDING, APART FROM YIELDING DIVIDEND INCOME, ALSO YIELDS SIMULTANEOUSLY INCOME BY WAY OF SHARE TRADING; THE SAME RATHER REPRESENTING THE PREDOMINANT OBJECT OF THE SAID HOL DING, SO THAT THE ENTIRE INTEREST COULD NOT BE ATTRIBUTABLE TO DIVIDEND INCOME ALONE. ACCOR DINGLY, ONLY 20% OF SUCH INTEREST STANDS HELD AS ATTRIBUTABLE TO INCOME NOT FORMING P ART OF THE TOTAL INCOME AND, ACCORDINGLY, EXIGIBLE FOR BEING DISALLOWED U/S.14A. UNDER THE CIRCUMSTANCES, THEREFORE, WE, WHILE CONF IRMING THE IMPUGNED DISALLOWANCE IN PRINCIPLE, RESTORE THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER (A.O.) TO COMPUTE THE SAME IN ACCORDANCE WITH THE D ECISION IN D. H. SECURITIES P. LTD. (SUPRA). THIS DECIDES GROUND NO.1 OF THE ASSESSEES APPEAL. 3 ITA NO. 682/MUM/2012 (A.Y. 2008-09) SEA GLIMPSE INVESTMENTS PVT. LTD. VS. DY. CIT 3.2 THE SECOND GROUND RELATES TO A LIKE ADJUSTMENT EFFECTED IN THE COMPUTATION OF BOOK PROFIT U/S.115JB OF THE ACT. THE ASSESSEES GRIEVAN CE IS AGAIN WITHOUT MERIT IN-AS-MUCH AS EXPLANATION 1(F) TO THE PROVISION, AS ALSO CONCEDED TO BY THE LD. AR DURING HEARING, ITSELF PROVIDES FOR THE SAID ADJUSTMENT. THE MATTER CAN AGAIN BE SAID TO HAVE ATTAINED FINALITY IN-SO-FAR AS THE TRIBUNAL IS CONCERNED IN VIEW OF A NUMBER OF DECISIONS CLARIFYING AND ENDORSING THE SAME, AS UNDER: - JSW ENERGY LTD. V. ASST. CIT (IN ITA NO. 498/MUM/2013 DATED 30/4/2013 R/W MA NO. 208/MUM/2013 DATED 27/12/2013); - ITO V. RBK SHARE BROKING PVT. LTD . (IN ITA NOS.7546 & 6678/MUM/2011 DATED 24.07.2013); - ESQUIRE PRIVATE LIMITED VS. DCIT (IN ITA NO.5688/MUM/2011 DATED 29.08.2012); - ITO VS. SEA WIND INVESTMENT & TDG. CO. LTD. (IN ITA NO.6320/MUM/2004 DATED 17.10.2007). WE, ACCORDINGLY, CONFIRM THE ADJUSTMENT UNDER EXPLANATION 1(F) TO S.115JB ON SO MUCH OF THE DISALLOWANCE U/S.14A AS WOULD STAND TO BE COMPUTED BY THE A.O. IN TERMS OF OUR DIRECTION VIDE PARA 3.1 OF THIS ORDER. WE DECID E ACCORDINGLY. 4. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY A LLOWED. 0/ 1 )2 30 ' * 4 ' 56 ORDER PRONOUNCED IN THE OPEN COURT ON MARCH 06, 201 4 SD/- SD/- (AMIT SHUKLA) (SANJAY ARORA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER 7+ MUMBAI; 8) DATED : 10.03.2014 *.)../ ROSHANI , SR. PS 4 ITA NO. 682/MUM/2012 (A.Y. 2008-09) SEA GLIMPSE INVESTMENTS PVT. LTD. VS. DY. CIT ! ' #$%& ' &$ / COPY OF THE ORDER FORWARDED TO : 1. '$ / THE APPELLANT 2. %&'$ / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. ;*< = %)>2 , , >2/ , 7+ / DR, ITAT, MUMBAI 6. = ?3 @ + / GUARD FILE ! ( / BY ORDER, )/(* + (DY./ASSTT. REGISTRAR) , 7+ / ITAT, MUMBAI