ADDL CIT RG 4(1), MUMBAI V. BRICS SECURITIES LTD, MUMBAI

ITA 710/MUM/2013

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9184 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 19-03-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 28-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JEETENDRA KUMAR
• Assessee Lawyers: RAJNIKANT CHANIYARI
• Keywords: Business income
• Section: 14A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI , , BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI N.K . BILLAIYA, A CCOUNTANT M EMBER / I .T.A. NO . 710/MUM/2013 ( / ASSESSMENT YEAR : 2009 - 10 THE DCIT - 4(1), AAYAKAR BHAVAN, MUMBAI - 400 020 / VS. M/S. BRICS SECURITIES LTD., SADHANA HOUSE, 1 ST FLOOR, 570, P.B. MARG, BEHIND MAHINDRA TOWER, WORLI, MUMBAI - 400 018 ./ ./ PAN/GIR NO. : AAACB 4908R ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY: SHRI JEETENDRA KUMAR / RESPONDENT BY : SHRI RAJNIKANT CHANIYARI / DATE OF HEARING : 19 . 0 3 .2015 / DATE OF PRONOUNCEMENT : 25 .03 .2015 / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A) - 8, MUMBAI DT. 2.11.2012 PERTAINING TO ASSESSMENT YEAR 2009 - 10. ITA. NO. 710/M/13 2 2. THE SOLE GRIEVANCE OF THE REVENUE IS THAT THE LD. CIT(A) ERRED IN ALLOWING THE APPEAL OF THE ASSESSEE BY DELETING THE ADDITION MADE BY THE AO U/S. 14A OF THE ACT. 3. THE ASSESSEE IS A SHARE AND STOCK BROKER . THE RETURN FOR THE YEAR UNDER CONSIDERATION WAS SELECTED FOR SCRUTINY ASSESSMENT. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS EARNED EXEMPT I NCOME. THE ASSESSEE WAS ASKED TO FURNISH THE COMPUTATION OF EXPENDITURE TO BE DISALLOWED AS PER PROVISIONS OF SEC. 14A OF THE ACT R.W. RULE 8D. 3.1. THE ASSESSEE FILED A DETAILED REPLY VIDE LETTER DT. 4.11.2011. THE ASSESSEE FILED A DETAILED COMPUTATI ON OF DISALLOWANCE U/S. 14A R.W. RULE 8D AT RS. 13,74,717/ - . HOWEVER, THE AO OBSERVED THAT THE ASSESSEE HAS NOT TAKEN INTO ACCOUNT THE STOCK - IN - TRADE OF THE SHARES. THE AO RECOMPUTED THE DISALLOWANCE AFTER TAKING INTO ACCOUNT THE STOCK IN TRADE AND MADE AN ADDITIONAL DISALLOWANCE OF RS. 13,01,834/ - OVER AND ABOVE COMPUTED BY THE ASSESSEE AT RS. 13,74,717/ - . 4. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A). IT WAS STRONGLY POINTED OUT BEFORE THE LD. CIT(A) THAT THE DIVIDEND INCOME OF RS. 14,12,9 71/ - COMPRISES OF DIVIDEND FROM SHARES HELD FOR TRADING AT RS, 11,12,971/ - AND DIVIDEND FROM SHARES IN BOMBAY STOCK EXCHANGE LTD. AT RS. 3,00,000/ - . IT WAS THE CONTENTION OF THE ASSESSEE THAT THE MAIN OBJECTIVE OF TRADING IN SECURITIES IS TO EARN PROFIT ON SALE OF THE SAME WHICH IS OFFERED TO INCOME TAX UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION. EARNING OF DIVIDEND INCOME IS ONLY INCIDENTAL TO HOLDING EQUITY SHARES IN COURSE OF TRADING. IT WAS FURTHER EXPLAINED THAT THE ASSESSEE HAS NOT MADE ANY INVESTMENT DURING THE YEAR THEREFORE THERE ITA. NO. 710/M/13 3 IS NO QUESTION OF UTILIZING BORROWED FUNDS FOR MAKING INVESTMENT WHICH EARNED TAX FREE INCOME. THE ASSESSEE DEMONSTRATED ITS CASH NET WORTH AS ON 31.3.2009 AT RS. 159.20 LAKHS. 4.1. THE ASSESSEE FURTHE R EXPLAINED THAT 6.85% IIFCL BOND WERE BROUGHT ON 30TH MARCH, 2009 AND SOLD ON 2ND APRIL, 2009 AND NO INTEREST WAS RECEIVED ON THE SAID STOCK - IN - TRADE DURING THE YEAR UNDER CONSIDERATION. THE PURCHASE OF BIRLA SUNLIFE SHORT TERM FUND YIELD NO DIVIDEND INC OME AND WHENEVER THIS UNITS ARE SOLD, IT WILL RESULT INTO PROFITS OR GAINS UNDER THE HEAD BUSINESS INCOME. THE OPENING STOCK IN TRADE COMPRISES OF GOVERNMENT SECURITIES WHICH CARRIES TAXABLE INTEREST. 5. AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS, THE LD. CIT(A) WAS CONVINCED THAT NO FURTHER DISALLOWANCE IS NEEDED OVER AND ABOVE THE DISALLOWANCE OFFERED BY THE ASSESSEE. THE LD. CIT(A) DIRECTED TO DELETE THE ADDITION. 6. AGGRIEVED BY THIS, THE REVENUE IS BEFORE US. 7. THE LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE FINDINGS OF THE AO AND IN SUPPORT RELIED UPON THE DECISION OF THE TRIBUNAL MUMBAI BENCH IN THE CASE OF AMIT P. PANDYA 50 TAXMANN.COM 276, AND DELHI BENCH IN THE CASE OF CHEMINVEST LTD. VS ITO 121 ITD 318. 8. PER CONTRA, TH E LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE FINDINGS OF THE LD. CIT(A). 9. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTHORITIES BELOW. THE ONLY POINT OF DISPUTE IS WHETHER THE SHARES HELD AS STOCK - IN - TRADE WOULD FORM PART OF THE COMPUTATION OF DISAL LOWANCE U/S. 14A R.W. RULE 8D. THERE IS NO DISPUTE IN SO FAR AS THE COMPUTATION OF DISALLOWANCE MADE BY ITA. NO. 710/M/13 4 THE ASSESSEE IS CONCERNED, EXCEPT THAT ACCORDING TO THE AO STOCK - IN - TRADE SHOULD ALSO HAVE BEEN TAKEN INTO CONSIDERATION. IN OUR CONSIDERED VIEW, THE LD. CIT(A) HAS GIVEN AN ELABORATE DISCUSSION AT PARA - 2.6, 2.7 AND 2.8 OF HIS ORDER. CONSIDERING THE FACTUAL MATRIX AS DISCUSSED HEREINABOVE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A). 10. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. OR DER PRONOUNCED IN THE OPEN COURT ON 25 TH MARCH, 2015 SD/ - SD/ - ( VIJAY PAL RAO ) (N.K. BILLAIYA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 25 TH MARCH, 2015 . . ./ RJ , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI