ACG ARTS & PROPERTIES P. LTD, MUMBAI V. ASST CIT CEN CIR 42, MUMBAI

ITA 7582/MUM/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8188 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2017
• Appeal Filed By: Assessee
• Bench Allotted: H
• Next Hearing Date: 07-02-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 26-12-2013
• Court: TRIBUNAL
• Department Lawyers: M C OMI NINGSHEN
• Assessee Lawyers: MANISH V SHAH
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES H, MUMBAI BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER, AND SHRI ASHWANITANEJA, ACCOUNTANT MEMBER ITA NO.7582/MUM/2013 ASSESSMENT YEAR: 2009-10 ACG ARTS & PROPERTIES P. LTD 1001 DALAMAL HOUSE, 10 TH FLOOR, NARIMAN POINT, MUMBAI PIN: 400021 PAN: AAACU0615L VS. ASST CIT CEN CIR 42 AAYAKAR BHAVAN, GR FLOOR, M.K. MARG MUMBAI PIN: 400020 (APPELLANT) (RESPONDENT ) APPELLANT BY SHRI MANISH V. SHAH, AR RESPONDENT BY SHRI MC OMI NINGSHEN, DR DATE OF HEARING: 07/02/2017 DATE OF ORDER: 15/02/2017 O R D E R PER ASHWANITANEJA, AM: THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (HEREINAFTER REFERRED AS LD. CIT(A))MUMBAI-38, DATED 27/11/2013 PASSED AGAINST THE ASSESSMENT ORDER OF THE ASSESSING OFFICER (IN SHORT AO) U/S 143 (3) DATED 30/01/2011 FOR AY 2009-10 ON THE FOLLOWIN G GROUNDS. GROUND I 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 38, MUMBAI (CIT(A)) ERRED IN UPHOLDING THE ORDER OF T HE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCL E 42, MUMBAI (AO) IN MAKING ADDITION OF RS. 9,33,311/- U/S 14A AGAINST DIVIDEND INCOME EARNED RS. 3,07,126/- A S PER RULE 8D. IN ABSENCE OF EXPENSES DIRECTLY OR IND IRECTLY RELATABLE TO EARNING INCOME 14-A ADDITION CANNOT BE MADE. 2. THIS HAS BEEN REFLECTED BY THE AUDITOR IN THE TAX A UDIT REPORT CLAUSE 17(I). 3. THE APPELLANT THEREFORE, PRAYS THAT THE A.O. BE DIR ECTED TO DELETE 14A ADDITION. GROUND II 1. WITHOUT PREJUDICE TO GROUND NO.1 IF ANY DISALLOWANC E WERE TO BE MADE FOLLOWING RULE 8D ONLY SHARES & MUTUAL F UND ON WHICH DIVIDEND WAS RECEIVED IS TO BE CONSIDER. 2. THE APPELLANT THEREFORE PRAYS THAT THE A.O. DIRECTE D TO CONSIDER ONLY SHARES & MUTUAL FUND ON WHICH DIVIDEN D WAS RECEIVED FOR THE PURPOSE OF RULE *D. GROUND III THE APPELLANT CRAVES ITS LEAVE TO ADD TO, ALTER, MO DIFY, DELETE ALL/OR ANY OF THE GROUNDS OF APPEAL. 2. THE SOLITARY ISSUE RAISED IN THIS APPEAL IS WITH RE SPECT TO DISALLOWANCE MADE U/S 14A. DURING THE COURSE OF HEA RING IT WAS STATED BY THE LD. COUNSEL OF THE ASSESSEE THAT THE DISALLOWANCE U/S 14A HAS BEEN MADE BY THE AO AND CONFIRMED BY TH E LD. CIT(A) WITHOUT CONSIDERING THE POINT THAT INVESTMEN T MADE BY THE ASSESSEE IN TAX FREE SECURITIES COMPRISE SUBSTANTIA L AMOUNT OF INVESTMENT MADE IN THE GROUP COMPANIES FOR STRATEGI C REASONS. THEREFORE, LIMITED PRAYER OF THE ASSESSEE IS THAT F OR MAKING DISALLOWANCE U/S 14A, THIS STRATEGIC INVESTMENT SHO ULD BE EXCLUDED AND DISALLOWANCE CAN BE MADE ONLY ON THE B ALANCE AMOUNT OF INVESTMENT. IN SUPPORT OF HIS ARGUMENT HE PLACED RELIANCE UPON THE JUDGEMENT OF HONBLE DELHI HIGH C OURT IN THE CASE OF CHEMINVEST VS. CIT 378 ITR 33 AND JUDGEMENT OF MUMBAI BENCH OF TRIBUNAL IN THE CASE OF J.M. FINANCIAL CON SULTANTS PRIVATE LTD. VS. DCIT (ITA NO. 1863/M/2013 AND KOTA K MAHINDRA CAPITAL COMPANY LTD VS. DCIT (ITA NO. 5748 AND 248 OF 2012) (MUM. TRIB). PER CONTRA LD. DR RELIED UPON THE ORDE R OF LOWER AUTHORITIES. 3. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY THE LD. COUNSEL BEFORE US AND FIND THAT THIS ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE IN THE JUDGEMENTS RELIED UPON BEFORE U S. THEREFORE, ACCEPTING THE REQUEST OF THE ASSESSEE, WE SEND THIS ISSUE BACK TO THE FILE OF AO FOR GIVING OPPORTUNITY TO THE ASSESS EE TO SUBMIT DETAILS OF STRATEGIC INVESTMENTS. THE ASSESSEE SHAL L PLACE ON RECORD REQUISITE DETAILS TO SATISFY THE AO ABOUT TH E STRATEGIC INVESTMENT. THE AO SHALL EXCLUDE THE AMOUNT OF STRA TEGIC INVESTMENTS AND THE DISALLOWANCE U/S 14A SHALL BE M ADE ON THE BALANCE AMOUNT OF INVESTMENT. 4. AS A RESULT, APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER WAS PRONOUNCED IN THE OPEN COURT AT THE CONCL USION OF THE HEARING. SD/- (D.T. GARASIA) SD/- (ASHWANITANEJA) JUDICIALMEMBER ACCOUNTANT MEMBER MUMBAIDATED : 15/02/2017 EAF FA CAFA COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT, MUMBAI. 4. CIT(A)-, MUMBAI 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, TRUE COPY (DY./ASSTT.REGISTRAR) ITAT, MUMBAI