SPACO TECHNOLOGIES (I) P.LTD, MUMBAI V. DCIT RG 5(3), MUMBAI

ITA 7589/MUM/2013

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9867 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 13-06-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 26-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V VIDYADHAR
• Assessee Lawyers: RITURAJ H GURJAR
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

1 , INCOME-TAX APPELLATE TRIBUNAL -GBENCH M UMBAI , . . , BEFORE S/SH.RAJENDRA,ACCOUNTANT MEMBER AND C. N. PRASAD,JUDICIAL MEMBER ./I.T.A./7589/MUM/2013, /ASSESSMENT YEAR: 2010-11 SPACO TECHNOLOGIES (I) PVT.LTD. 901, PRASAD CHAMBERS, OPERA HOUSE MUMBAI-400 004. PAN:AABCS 5307 E VS. DCIT-5(3) AAYAKAR BHAVAN MUMBAI. ( /APPELLANT) ( / RESPONDENT) / REVENUE BY: SHRI V. VIDYADHAR /ASSESSEE BY: SHRI RITURAJ H. GURJAR / DATE OF HEARING: 11/07/2017 / DATE OF PRONOUNCEMENT: 11/07/2017 , / PER RAJENDRA A.M. - CHALLENGING THE ORDER DATED 25/10/2013 OF CIT (A)-9 ,MUMBAI,THE ASSESSEE HAS FILED THE PRESENT APPEAL.ASSESSEE-COMPANY,ENGAGED IN THE BUSI NESS OF MANUFACTURING AND TRADING IN CARBURETORS AND PARTS THEREOF,FILED ITS RETURN OF I NCOME ON 29/09/2010, DECLARING INCOME OF RS. 8.52 CRORES. THE ASSESSING OFFICER (AO) COMPLET ED THE ASSESSMENT, UNDER SECTION 143 (3) OF THE ACT, ON 05/ 03/2013,DETERMINING ITS INCOME A T RS. 10.01 CRORES. 2. EFFECTIVE GROUND OF APPEAL IS ABOUT DISALLOWANCE MA DE UNDER SECTION 14A OF THE ACT, AMOUNTING TO RS.1.48 CRORES.DURING THE ASSESSMENT P ROCEEDINGS, THE AO FOUND THAT THE ASSESSEE HAD EARNED DIVIDEND INCOME OF RS.20.63CROR ES,THAT ON ITS OWN IT HAD MADE A DISALLOWANCE OF RS. 1.46 LAKHS.HE DIRECTED IT TO FU RNISH DETAILS OF EXPENDITURE INCURRED FOR ATTRIBUTABLE FOR EARNING THE EXEMPT INCOME IN VIEW OF THE PROVISIONS OF SECTION 14A READ WITH RULE 8D OF THE INCOME TAX RULES, 1962 (RULES).THE A SSESSEE ARGUED THAT IT HAD NOT INCURRED AN EXPENDITURE FOR EARNING THE DIVIDEND INCOME.AS P ER THE AO THE ASSESSEE DID NOT FURNISH ANY EVIDENCE THAT IT HAD USED ITS OWN FUND FOR MAKI NG INVESTMENTS.INVOKING THE PROVISIONS OF RULE 8D OF THE RULES,HE MADE A DISALLOWANCE OF RS. 1.50 CRORES (RS. 93.10 LAKHS UNDER THE HEAD INTEREST EXPENDITURE AND RS. 55.72 LAKHS UNDER THE HEAD 0.5% OF AVERAGE VALUE OF INVESTMENT). 3. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE PREF ERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY(FAA)AND MADE ELABORATE SUBMISSI ONS. IT RELIED UPON CERTAIN CASE LAWS 2 INCLUDING THE CASE OF RELIANCE UTILITIES AND POWER LTD. (313 ITR 340).THE FAA REFERRED TO THE ORDER OF HIS PREDECESSOR FOR THE AY.2009-10 AND CONFIRMED THE ORDER OF THE AO. 4. DURING THE COURSE OF HEARING BEFORE US, THE AUTHORI SED REPRESENTATIVE (AR) CONTENDED THAT THE ASSESSEE HAD SUFFICIENT OWN FUNDS TO MAKE INVES TMENTS, THAT IT HAD NOT UTILISED ANY BORROWED FUNDS, THAT THE AO/FAA HAD NOT CONSIDERED THE SUBMISSIONS MADE BY THE ASSESSEE. HE REFERRED TO PAGES 131-141 OF THE PAPER BOOK. THE DEPARTMENTAL REPRESENTATIVE (DR) SUPPORTED THE ORDER OF THE FAA. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US INCLUDING THE BALANCE SHEET FOR THE YEAR UNDER CONSIDERATION. WE FIND THAT THE ASSESSEE HAD SUFFICIENT OWN FUNDS DURING THE YEAR UNDER CONSIDERATION FOR MAKIN G THE INVESTMENTS.BOTH THE AUTHORITIES HAVE NOT DELIBERATED UPON THE ARGUMENTS ADVANCED BY THE ASSESSEE AND THE CASE LAWS REFERRED BY IT. THEREFORE, WE ARE OF THE OPINION,THAT IN THE INTEREST OF JUSTICE, THE MATTER SHOULD BE RESTORED BACK TO THE FILE OF THE AO FOR FRESH ADJUD ICATION. HE IS DIRECTED TO AFFORD A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE.EFFECTIVE GR OUND OF APPEAL IS DECIDED IN FAVOUR OF THE ASSESSEE, IN PART. AS A RESULT,APPEAL FILED BY TH E ASSESSEE STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN TH E OPEN COURT ON 11 TH , JULY , 2017. 11 , 2017 SD/- SD/- ( . . / C.N.PRASAD ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; /DATED : 11.07.2017. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR A BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.