JSW HOLDINGS LTD, MUMBAI V. DCIT 5(2), MUMBAI

ITA 6963/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93063 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Assessment Year: 2010-2011
• Appeal Filed On: 29-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LOVE KUMAR
• Assessee Lawyers: HIRO RAO
• Section: 14A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUMBAI BEFORE S/SHRI I.P. BANSAL, (JM) AND B.R.BASKARAN (AM) . . , . . , ./ I.T .A. NO . 6963/ MUM/20 13 ( / ASSESSMENT YEAR : 20 10 - 11 ) M/S JSW HOLDINGS LTD., ( FORMERLY JINDAL SOUTH WEST HOLDINGS LTD.), JINDAL MANSION, 5A, DR.G DESHMUKH MARG, MUMBAI - 400026 / VS. DY. COMMISSIONER OF INCOME TAX 5(2), MUMBAI . ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN/GIR NO. : AABCJ1531J / : APPELLANT BY: SHRI HIRO RAO / RE SPONDENT BY : SHRI LOVE KUMAR / DATE OF H EARING : 29.6. 2015 / DATE OF PRONOUNCEMENT : 29.6. 2015 / O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER : THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 10 - 09 - 2013 PASSED BY LD CIT(A) - 9, MUMBAI FOR ASSESSMENT YEAR 2010 - 11 CONFIRMING THE DISALLOWANCE OF RS.89,49,612/ - MADE BY THE ASSESSING OFFICER U/S 14A OF THE ACT OVER AND ABOVE THE AMOUNT DISALLOWED BY THE ASSESSEE. 2. THE LD COUNSEL APPEARING FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS A HOLDING COMPANY AND IT HAS INVESTED ONLY IN ITS SUBSIDIARIES. ITA NO. 6963 / M/ 1 3 2 HENCE ALL THE INVESTMENTS ARE STRATEGIC IN NATURE. THE LD COUNSEL SUBMITTED THAT THE ASSESSEE ITSELF HAD DISALLOWED A SUM OF RS.35,37,388/ - U/S 14A OF THE ACT AGAINST THE DIVIDEND INCOME OF R S.206.63 LAKHS EARNED BY IT. HOWEVER, THE ASSESSING OFFICER ENHANCED THE DISALLOWANCE TO RS.124.87 LAKHS, BEING 0.5% OF THE AVERAGE VALUE OF INVESTMENTS COMPUTED AS PER RULE 8D(2)(III) OF THE I.T RULES AND ACCORDINGLY DISALLOWED THE DIFFERENCE AMOUNT OF R S.89,49,612/ - . THE LD COUNSEL SUBMITTED THAT THE LD CIT(A) ALSO CONFIRMED THE ORDER OF THE ASSESSING OFFICER. 3. THE LD COUNSEL FURTHER SUBMITTED THAT THE ASSESSEE, BEING A HOLDING COMPANY, HAS MADE ONLY STRATEGIC INVESTMENTS IN ITS SUBSIDIARIES AND HENCE THERE IS NO QUESTION OF MAKING ANY INVESTMENT DECISION, WHICH MAY HAVE INVOLVED HUGE ADMINISTRATIVE EXPENSES. THE LD A.R FURTHER PLACED RELIANCE ON FOLLOWING DECISIONS RENDERED BY THE TRIBUNAL AND SUBMITTED THAT IN THE FOLLOWING CASES, THE DISALLOWA NCE MADE U/S 14A OF THE ACT HAS BEEN DELETED, SINCE THE INVESTMENTS WERE FOUND TO BE STRATEGIC INVESTMENTS MADE IN SUBSIDIARY COMPANIES OR THEY WERE LONG TERM. (A) M/S JM FINANCIAL LTD. VS. ADDL CIT (ITA NO.4521/MUM/2012 DT. 26.3.14) (B) GARWARE WALL ROPES LTD VS. ADDL. CIT (2014)(65 SOT 86)(MUM) (C) M/S SMART CHIP LTD (ITA NO.1923,5196,5367/MUM/2012 DT.28.11.14. THE LD A.R INVITED THEN OUR ATTENTION TO THE BALANCE SHEET AND SUBMITTED THAT THE OPENING BALANCE OF INVESTME NT CONTINUES DURING THE INSTANT YEAR ALSO. ACCORDINGLY HE SUBMITTED THAT THERE WAS NO OCCASION FOR THE ASSESSEE TO INCUR EXPENDITURE. ACCORDINGLY HE SUBMITTED THAT THE ENHANCEMENT OF DISALLOWANCE MADE BY THE AO, WHICH WAS CONFIRMED BY LD CIT(A), REQUIRES TO BE DELETED. ITA NO. 6963 / M/ 1 3 3 4. ON THE CONTRARY, THE LD D.R SUBMITTED THAT THE ASSESSEE IS RAISING CONTENTION WITH REGARD TO STRATEGIC INVESTMENTS FOR THE FIRST TIME BEFORE THE TRIBUNAL AND HENCE THE SAID CLAIM REQUIRES EXAMINATION. 5. WE HAVE HEARD RIVAL CONTENTIO NS AND PERUSED THE RECORD. FROM THE PERUSAL OF THE BALANCE SHEET PERTAINING TO THE YEAR UNDER CONSIDERATION, WE NOTICE THAT THERE ARE NO INVESTMENTS MADE/SOLD DURING THE INSTANT YEAR AND HENCE THE OPENING BALANCE OF INVESTMENTS CONTINUES DURING THE YEAR A LSO. FURTHER, THE LD A.R HAS PUT IN NEW CONTENTIONS THAT THE INVESTMENTS ALREADY MADE BY THE ASSESSEE ARE STRATEGIC INVESTMENTS MADE IN SUBSIDIARIES. THE LD A.R ALSO PLACED RELIANCE ON CERTAIN CASE LAW TO SUPPORT HIS CONTENTIONS THAT THE DISALLOWANCE U/S 14A NEED NOT BE COMPUTED IN TERMS OF RULE 8D IN CASE OF STRATEGIC INVESTMENTS. ON THE CONTRARY, THE LD D.R HAS SUBMITTED THAT THE CONTENTIONS OF THE ASSESSEE REQUIRE EXAMINATION, SINCE IT INVOLVES VERIFICATION OF FACTS RELATING TO THE SAID CONTENTION. 6. HAVING HEARD RIVAL CONTENTIONS, WE ARE OF THE VIEW THAT THE CLAIM OF THE ASSESSEE WITH REGARD TO STRATEGIC INVESTMENTS REQUIRES EXAMINATION AT THE END OF THE ASSESSING OFFICER, SINCE THE SAID CLAIM HAS NOT BEEN EXAMINED BY THE TAX AUTHORITIES. ACC ORDINGLY, WE SET ASIDE THE ORDER OF LD CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION TO EXAMINE THE CLAIM OF THE ASSESSEE BY DULY CONSIDERING VARIOUS CASE LAWS RELIED UPON BY THE ASSESSEE AND TAKE APPROPRIATE DECISIO N IN ACCORDANCE WITH THE LAW. ITA NO. 6963 / M/ 1 3 4 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 29TH JUNE , 2015 . 29TH JUNE , 201 5 SD SD ( . . / I.P. BANSAL ) ( . . / B.R. BASKARAN ) / JUDICIAL MEMBER / ACCOUNTANT MEMB ER MUMBAI: 29TH JUNE , 201 5 . . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. 6. , , / DR, ITAT, MUMBAI CONCERNED / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI