Appeal Details
Counselvise Citation
[2014] 120 COUNSELVISE.COM (IT) 8080 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 year(s) 10 month(s) 6 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
15-09-2014
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
G
Next Hearing Date
15-09-2014
Assessment Year
2008-2009
Appeal Filed On
09-11-2011
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL 'G' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ITA NO. 7557 & 7575 /MUM/2011 (ASSESSMENT YEARS: 2008-09 & 2007-08) M/S. WELSPUN FINTRADE LTD. VS. ADDL. CIT - 7(3) (FORMERLY WELSPUN TRADING LTD.) TRADE WORD, B-WING, 9TH FLOOR KAMALA MILLS COMPOUND, S.B MARG LOWER PAREL (W), MUMBAI 400013 AAYAKAR BHAVAN, M.K. ROAD MUMBAI 400020 PAN - AAACW2877J APPELLANT RESPONDENT APPELLANT BY: SHRI F.V. IRANI RESPONDENT BY: SMT. PARMINDER DATE OF HEARING: 15.09.2014 DATE OF PRONOUNCEMENT: 15.09.2014 O R D E R PER D. MANMOHAN, V.P. THESE TWO APPEALS FILED BY THE ASSESSEE COMPANY ARE DIRECTED AGAINST THE ORDERS PASSED BY THE CIT(A)-13, MUMBAI AND THEY PERTAIN TO ASSESSMENT YEARS 2008-09 AND 2007-08. 2. IN RESPECT OF AY 2007-08 THE FOLLOWING GROUNDS WERE URGED BY THE ASSESSEE:- 1.A) ON THE FACT AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) ERRED IN UPHOLDING THE VIEW TAKEN BY THE AO THAT NET INTEREST OF RS.1,11,17,775/- WAS NOT PAID FOR THE P URPOSES OF THE BUSINESS AND THEREBY FURTHER ERRED IN CONFIRMING TH E ADDITION MADE BY THE AO BY WAY OF DISALLOWING THE SAID INTER EST U/S.37 OF THE INCOME TAX ACT, 1961. B) THE LD. CIT(A) FAILED TO APPRECIATE THAT INTEREST W AS PAID ON THE CAPITAL BORROWED FOR THE PURPOSES OF THE BUSINESS O F TRADING IN STEEL PIPES. C) IN REACHING TO THE CONCLUSION AND CONFIRMING THE DI SALLOWANCE OF SUCH INTEREST, THE ID. CIT(A) OMITTED TO CONSIDER R ELEVANT FACTORS, CONSIDERATIONS, PRINCIPLES AND EVIDENCES WHILE HE W AS ITA NO. 7557 & 7575/MUM/2011 M/S. WELSPUN FINTRADE LTD. 2 OVERWHELMED, INFLUENCED AND PREJUDICED BY IRRELEVAN T CONSIDERATIONS AND FACTORS. D) IN ANY CASE, THE DISALLOWABLE PART OF INTEREST PAID IS EXCESSIVE AND UNREASONABLE. 2.A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN UPHOLDING THE VIEW TAKEN BY THE AO THAT DISALLOWABLE PART OF THE EXPENDITURE U/S. 14A R.W. RULE 8D WORKS OUT TO RS.1,03,45,718/- AND THEREBY FURTHER ERRED I N CONFIRMING THE ADDITION OF RS. 1,11,17,775/- MADE BY THE AO TO THE INCOME OF THE APPELLANT BY WAY OF DISALLOWING CERTAIN EXPE NDITURE ALLEGED TO HAVE BEEN INCURRED RELATING TO EXEMPT IN COME INVOKING THE PROVISIONS OF SECTION 14A R.W. RULE 8D. B) THE LD. CIT(A) FAILED TO APPRECIATE THAT:- (I) INTEREST WAS PAID IN RESPECT OF CAPITAL BORROWED FO R THE PURPOSES OF THE BUSINESS OF TRADING IN STEEL PIPES; (II) THERE IS NO REASON AND BASIS IN REACHING TO DISSATI SFACTION WITH THE CORRECTNESS OF THE CLAIM OF THE APPELLANT THAT NO EXPENDITURE OTHER THAN DEMATE CHARGES OF ` 2,688/- WAS INCURRED IN RELATION TO DIVIDEND INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME; (III) THE MOST OF THE SHARES HAVE BEEN ACQUIRED FOR CONTR OLLING INTEREST IN GROUP COMPANIES; (IV) THE APPELLANT INCURRED ADMINISTRATIVE EXPENSES OF ` 26,36,425/- ON THE BUSINESS OF TRADING IN STEEL PIP ES AND INVESTMENT IN SHARES; AND (V) THE MAJOR PART OF THESE EXPENSES WERE INCURRED IN R ELATION TO THE TRADING BUSINESS AND AS SUCH DISALLOWANCE OF TH E ENTIRE EXPENSES IS ILLOGICAL AND IRRATIONAL ON THE FACTS O F THE CASE. C) IN REACHING TO THE CONCLUSION AND CONFIRMING SU CH ADDITION THE ID. CIT(A) OMITTED TO CONSIDER RELEVANT FACTORS, CONSID ERATIONS, PRINCIPLES AND EVIDENCES WHILE HE WAS OVERWHELMED, INFLUENCED AND PREJUDICED BY IRRELEVANT CONSIDERATIONS AND FAC TORS. 3.A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF ` 1,11,17,775/- MADE BY THE AO TO THE BOOK PROFIT REPRESENTING DISALLOWA BLE PART OF CERTAIN EXPENDITURE U/S.14A R.W. RULE 8D AND THEREB Y FURTHER ERRED IN CONFIRMING LEVY OF TAX U/S.115JB ON THE SA ME. B) THE ID. AO FAILED TO APPRECIATE BOOK PROFIT AS SHOWN IN THE PROFIT AND LOSS ACCOUNT MAY BE ACCEPTED WITHOUT ANY ARTIFI CIAL VARIATION. 4. THE LD. CIT(A) ERRED IN NOT DISPOSING OFF THE G ROUND NO.5 RAISED DISPUTING THE CHARGE OF INTEREST U/S.234B AND 234C OF THE INCOME TAX ACT, 1961. THE APPELLANT DENIES ITS LIABILITY F OR SUCH INTEREST. ITA NO. 7557 & 7575/MUM/2011 M/S. WELSPUN FINTRADE LTD. 3 3. AT THE TIME OF HEARING THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN RESPECT OF AY 2006-07 APPEAL OF THE ASSESSE E, ON THE SAME ISSUES, HAVE COME UP FOR HEARING BEFORE THE APPELLATE TRIBU NAL (ITA NO. 1326/MUM/2010 DATED 23.11.2011) WHEREIN THE TRIBUNA L RESTORED THE MATTER TO THE FILE OF THE AO TO RECONSIDER THE ISSU ES IN LINE WITH THE DIRECTIONS GIVEN THEREIN. HE THEREFORE SUBMITTED TH AT THE ISSUE BEING IDENTICAL IN THIS APPEAL AS WELL AS FOR AY 2008-09 THE ORDER PASSED BY THE CIT(A), ON THESE ISSUES, BE SET ASIDE AND THE MATTE R MAY BE RESTORED TO THE FILE OF THE AO FOR READJUDICATION AFRESH. 4. THE LEARNED D.R. ADMITTED THAT THE ISSUES ARE IDENT ICAL EXCEPT THE FACT THAT FOR AY 2008-09 GROUND NO. 4 PERTAINS TO PENALT Y PROCEEDINGS UNDER SECTION 271(1)(C) WHICH DOES NOT ARISE OUT OF THE O RDER OF THE AO. 5. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT HE IS NOT INTERESTED IN PRESSING THAT GROUND SINCE IT CAN BE AGITATED WHEN PENALTY PROCEEDINGS ARE ACTUALLY INITIATED. 6. HAVING REGARD TO THE CIRCUMSTANCES OF THE CASE WE R EJECT GROUND NO. 4 IN THE APPEAL FILED BY THE ASSESSEE FOR 2008-09 AS NOT PRESSED WHEREAS WITH REGARD TO OTHER GROUNDS THE MATTER IS SET ASIDE TO THE FILE OF THE AO FOR READJUDICATION IN THE LIGHT OF THE DIRECTIONS GIVEN IN THE AFORECITED JUDGEMENT OF THE TRIBUNAL. WE HAVE PASSED A DETAILED ORDER IN THIS REGARD IN ITA NO. 7550/MUM/2011 OF EVEN DATE. WE DISPOSE OF THE MATTE R ACCORDINGLY. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE COMPANY FOR AY 2007-08 IS TREATED AS ALLOWED AND THE APPEAL FOR 2008-09 IS TR EATED AS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH SEPTEMBER, 2014. SD/- SD/- ( D. KARUNAKARA RAO ) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI, DATED: 15 TH SEPTEMBER, 2014 ITA NO. 7557 & 7575/MUM/2011 M/S. WELSPUN FINTRADE LTD. 4 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 13, MUMBAI 4. THE CIT 7, MUMBAI CITY 5. THE DR, G BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.
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