D.C.I.T.-2(3), MUMBAI V. RAJESH CONSTRUCTION CO. LTD., MUMBAI

ITA 7484/MUM/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1837 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2013
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 22-01-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 08-11-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DIPAK KUMAR SINHA
• Assessee Lawyers: MITESH M SHAH
• Keywords: Earning of tax free income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH D BENCH BEFORE SHRI R.S.SYAL(AM) AND DR.T.M PAVALAN (JM) ITA NO.7484/MUM/2011 ASSESSMENT YEAR: 2008-09 DCIT 2(3), AAYAKAR BHAVAN, M.K. ROAD, MUMBAI. RAJESH CONSTRUCTION CO. LTD., 139, 2 ND FLOOR, SEKSARIA CHAMBERS, N.M. ROAD, FORT, MUMBAI-01 PA NO.AADCR 4153 R (APPELLANT) VS. (RESPONDENT) APPELLANT BY : SHRI DIPAK KUMAR SINHA RESPONDENT BY: SHRI MITESH M SHAH DATE OF HEARING: 22.1.2013 DATE OF PRONOUNCEMENT: 30 .1.2013 ORDER PER R.S.SYAL, AM: THIS APPEAL BY THE REVENUE ARISES OUT OF THE ORDER PASSED BY THE CIT(A) ON 4.8.2011 IN RELATION TO THE ASS ESSMENT YEAR 2008-09. ITA NO.7484/MUM/2011 ASSESSMENT YEAR: 2008-09 2 2 2. THE ONLY ISSUE RAISED IN THIS APPEAL IS AGAINST THE DELETION OF ADDITION OF RS.17,97,564/- WHICH WAS MADE BY THE AO U/S.14A OF THE ACT. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT DU RING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS OBSERVED BY THE AO THAT THE ASSESSEE HAD EARNED INCOME FROM INVESTMENT S WHICH WAS CLAIMED AS EXEMPT. SINCE NO DISALLOWANCE WAS O FFERED BY THE ASSESSEE U/S.14A OF THE ACT, THE ASSESSING AUT HORITY CALLED UPON THE ASSESSEE TO WORK OUT THE DISALLOWABLE AMOU NT U/S.14A. THE ASSESSEE, WITHOUT PREJUDICE TO ITS MAIN ARGUMEN TS ABOUT NO DISALLOWANCE CALLED FOR IN THE PRESENT CIRCUMSTANCE S, WORKED OUT THE AMOUNT DISALLOWABLE AT RS.17,97,564/-. THE SAI D AMOUNT WAS ADDED BY THE AO. 4. IN THE FIRST APPEAL, LD CIT(A) ACCEPTED THE ASSE SSEES CONTENTION THAT THE ASSESSEE HAD NOT EARNED ANY EXE MPT INCOME IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEA R UNDER CONSIDERATION AND FURTHER IT HAD ITS OWN TAX FREE F UNDS AVAILABLE ITA NO.7484/MUM/2011 ASSESSMENT YEAR: 2008-09 3 3 AT ITS DISPOSAL TO THE TUNE OF RS.17.19 CRORES AS A GAINST INVESTMENTS MADE AT RS.10.63 CRORES. HE, THEREFORE , ORDERED FOR THE DELETION OF ADDITION. 5. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD, IT IS OBSERVED AS A PR ELIMINARY FACT THAT ASSESSEE DID NOT EARN ANY EXEMPT INCOME DURING THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR UNDER CON SIDERATION. THE SIMPLE FACT THAT THE ASSESSEE HAD NOT EARNED AN Y EXEMPT INCOME DURING THE PREVIOUS YEAR, IS NO BASIS FOR HO LDING THAT NO DISALLOWANCE CAN BE MADE UNDER SECTION 14A. THE SPE CIAL BENCH OF THE TRIBUNAL IN THE CASE OF CHEMINVEST LTD. V. I NCOME-TAX OFFICER(2009) 317 ITR (AT) 86 (DEL)(SB) HAS HELD TH AT THE DISALLOWANCE OF EXPENDITURE U/S.14A IS CALLED FOR E VEN IF THERE IS NO EXEMPT INCOME. THE PRINCIPAL CONTENTION RAISED BY THE AO IN THIS REGARD IS THEREFORE REPELLED. AS REGARD THE ARGUMENTS ADVANCED BY LD A.R. THAT ASSESSEE HAD SUFFICIENT IN TEREST FREE FUNDS AT ITS DISPOSAL, WE FIND THAT THIS ASPECT HAS NOT BEEN EXAMINED BY THE AO. RATHER, THE ASSESSEE AT ITS OW N WORKED ITA NO.7484/MUM/2011 ASSESSMENT YEAR: 2008-09 4 4 OUT CERTAIN DISALLOWANCE OF INTEREST AT THE INSTANC E OF THE AO. AS THE ASSESSMENT YEAR UNDER CONSIDERATION IS 2008- 09, THE DISALLOWANCE U/S.14A WOULD BE REQUIRED TO BE MADE I N ACCORDANCE WITH RULE 8D AS HAS BEEN HELD BY THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF GODREJ BOY CE MFG CO. LTD. VS DCIT (2010) 328 ITR 81 (BOM). RESPECTFULL Y FOLLOWING THE PRECEDENT, WE SET ASIDE THE IMPUGNED ORDER AND REMIT THE MATTER TO THE FILE OF THE AO FOR COMPUTING DISALLOW ANCE U/.S.14A AFRESH AS PER LAW AFTER ALLOWING A REASONABLE OPPOR TUNITY OF HEARD TO THE ASSESSEE. 6. IN THE RESULT, APPEAL FILED BY DEPARTMENT IS ALL OWED IN PART FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 30 TH JANUARY, 2013 SD/- (DR.T.M PAVALAN) JUDICIAL MEMBER SD/- (R.S.SYAL) ACCOUNTANT MEMBER MUMBAI, DATED 30 TH JANUARY, 2013 ITA NO.7484/MUM/2011 ASSESSMENT YEAR: 2008-09 5 5 PARIDA COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS),6, MUMBAI 4. COMMISSIONER OF INCOME TAX, 2 , MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH D MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI