ASST CIT CEN CIR 29, MUMBAI V. JAGATGURU INVESTMENT & TRADINGT CO. P. LTD, MUMBAI

ITA 7079/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9428 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Next Hearing Date: 23-10-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 19-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H S PARIKH; A B KOLI
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH J, MUMBAI BEFORE SHRI R. S. SYAL, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER ITA NO. 7079/MUM/2011 (ASSESSMENT YEAR: 2008-09) ASST. COMMISSIONER OF INCOME-TAX, CEN. CIRCLE 29, ROOM NO. 411, 4 TH FLOOR, AAYAKAR BHAVAN, MUMBAI -400 020 VS. M/S JAGATGURU INVESTMENT & TRADING CO. PVT. LTD., 612, RAHEJA CHAMBERS, NARIMAN POINT, MUMBAI -400 021 PAN: AAACJ 5737 E (APPELLANT) (RESPONDENT) APPELLANT-ASSESSEE BY : SHRI A.B. KOLI RESPONDENT-REVENUE BY : SHRI H.S. PARIKH DATE OF HEARING: 23.10.2012 DATE OF PRONOUNCEMENT: 21.11.2012 O R D E R PER VIVEK VARMA, JM: THE APPEAL IS FILED BY THE DEPARTMENT AGAINST THE ORDER O F CIT(A) 40, MUMBAI, DATED 19.08.2011, WHEREIN, THE DEPARTMENT HAS R AISED THE FOLLOWING GROUNDS: 1.A) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN THE LAW, THE LD. CIT (A) HAS ERRED IN HOLDING THAT THE INVESTMENTS FROM WHICH EXEMPT HAS ARISEN SHOULD BE CONSIDERED WHILE CALCULATING DISALLOWANCE U/S 14A R.W. RULE 8D B) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN THE LAW, THE LD. CIT (A) ERRED BY IGNORING THE DECISION OF HONBLE DELHI ITAT SPECIAL BENCH IN THE CASE OF CHEMIVEST LTD. VS ITO {2009} 121 ITD 318 (DELHI)(SB.) M/S JAGATGURU INVESTMENT & TRADING CO. PVT. LTD. ITA 7079/MUM/2011 2 2. GROUND NO. 1 RAISES THE ISSUE, WHETHER ALL INVESTMENTS, I.E. INCOME YIELDING AND NON INCOME YIELDING SHOULD BE TAKEN UP FOR CONSIDERATION FOR COMPUTATION OF DISALLOWANCE U/S 14A. 3. WE FIND THAT THE CIT (A) HAS DIRECTED THE AO TO COMP UTE THE DISALLOWANCE BY TAKING INTO CONSIDERATION INVESTMENTS, WHICH HAVE YIELDED EXEMPT INCOME IN THE FORM OF DIVIDEND, WHEREBY THE CIT(A) HAS DIRECTED THE AO TO EXCLUDE SILVER UTENSILS FORM THE COMPUTATION. 4. THE DEPARTMENT HAS CHALLENGED THIS FINDING. 5. THE AR RELIES ON THE ORDER OF THE CIT(A). 6. WE HAVE HEARD THE ARGUMENTS AND WE FIND THAT RULE 8D(2)(II) IS VERY CLEAR, WHERE IT USES THE EXPRESSION, . WHICH IS NOT DIRECTLY ATTRIBUTABLE TO ANY PARTICULAR INCOME. 7. IN OUR CONSIDERED OPINION, THE CIT(A) WAS CORRECT IN DIR ECTING THE AO TO EXCLUDE SILVER UTENSILS FROM THE TOTAL INVESTMENTS, FOR ENTERING THE FORMULA. 8. THE GROUND IS, THEREFORE, REJECTED. 9. IN GROUND NO. 2, THE DEPARTMENT STATES THAT THE CI T(A) IGNORED THE DECISION OF SB DELHI IN THE CASE OF CHEMIVEST LTD. VS IT O, REPORTED IN 121 ITD 318, WHEREIN, THE HONBLE SPECIAL BENCH HELD THA T DISALLOWANCE HAS TO BE MADE IN CASES WHERE THERE ARE NO EXPENSES AS WELL. 10. WE DO NOT FIND ANY FINDING IN THE IMPUGNED ORDER, WHERE , THE CIT(A) HAS HELD THAT THERE WOULD BE NO APPLICATION OF PROVIS IONS OF SECTION 14A WHERE THERE ARE NO EXPENSES FOR EARNING EX EMPT INCOME. M/S JAGATGURU INVESTMENT & TRADING CO. PVT. LTD. ITA 7079/MUM/2011 3 ON THE CONTRARY, THE CIT(A) HAS DIRECTED THE AO TO COMP UTE THE DISALLOWANCE, WHEREIN, HE DIRECTED THAT FOR THE PURPOSES OF COMPUTATION ONLY INCOME YIELDING INVESTMENTS HAVE TO BE IN CLUDED FOR THE PURPOSES OF COMPUTATION, WHICH, WE HAVE HELD IN GROUND N O. 1 THAT SILVER UTENSILS HAVE TO BE EXCLUDED. 11. THE GROUND IS, THEREFORE, REJECTED. 12. IN THE RESULT, THE APPEAL, AS FILED BY THE DEPARTMENT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 21/11/2012. SD/- (R. S. SYAL) ACCOUTANT MEMBER SD/- (VIVEK VARMA) JUDICIAL MEMBER MUMBAI, DATE: 21/11/2012 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A)- 40 , MUMBAI. 4) THE CIT CENTRAL-II, MUMBAI, 5) THE D.R. J BENCH, MUMBAI. 6) COPY TO GUARD FILE. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T., MUMBAI *CHAVAN