ACIT CIR 6(3)(2), MUMBAI V. KREDENCE MULTI TRADING CO., MUMBAI

ITA 780/MUM/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6901 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-06-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2012-2013
• Appeal Filed On: 03-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Earning of tax free income
• Section: 142(1); 14A

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, H MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER ITA NO.780/MUM/2017 ASSESSMENT YEAR: 2012-13 ACIT, CIRCLE-6(3)(2), ROOM NO.522, 5 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020 / VS. M/S KREDENCE MULTI TRADING LTD. 530, NEVVYAPAR BHAVAN, P. DEMELLO ROAD, CARNAC BUNDER, MUMBAI-40009 ( / REVENUE) ( #$% & /ASSESSEE) PAN. NO . AAACS0778A ' ( & ) / DATE OF HEARING : 20/06/2018 ( & ) / DATE OF ORDER: 20/06/2018 ! / REVENUE BY SHRI RAJAT MITTAL-DR #$% & ! / ASSESSEE BY NONE ITA NO.780/MUM/2017 KREDENCE MULTI TRADING LTD. 2 / O R D E R PER JOGINDER SINGH(JUDICIAL MEMBER) THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DATE D 30/11/2016 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI, RESTRICTING THE DISALLOWANCE OF RS.57,94,173/- MADE UNDER SECTION 14A OF THE INCOME TAX ACT, 1961 (HEREINAFTE R THE ACT) READ WITH RULE-8D OF THE RULES, TO THE EXTENT OF EX EMPT INCOME OF RS.2,49,084/-, CLAIMED BY THE ASSESSEE, I GNORING THE CBDT CIRCULAR NO. 5/2014 DATED 11/02/2014. 2. DURING HEARING, SHRI RAJAT MITTAL, LD. DR, DEFENDED THE ADDITION MADE BY THE LD. ASSESSING OFF ICER BY ADVANCING ARGUMENTS WHICH IS IDENTICAL TO THE GROUN D RAISED. NOBODY WAS PRESENT FOR THE ASSESSEE IN SPITE OF ISS UANCE OF RPAD NOTICE, THEREFORE, WE HAVE NO OPTION BUT TO PR OCEED EX- PARTE, QUA THE ASSESSEE AND TEND TO DISPOSE OF THIS APPEAL ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. 2.1. WE HAVE CONSIDERED THE SUBMISSIONS OF LD. DR AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE IS A LIMITED COMPANY E NGAGED IN TRADING OF IRON AND STEEL AND SHARES/SECURITIES, DE CLARED INCOME OF RS.3,54,65,793/- IN ITS RETURN, FILED ON ITA NO.780/MUM/2017 KREDENCE MULTI TRADING LTD. 3 28/09/2012, WHICH WAS PROCESSED UNDER SECTION 143(1 ) OF THE ACT, SUBSEQUENTLY, THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY, THEREFORE, NOTICE UNDER SECTION 143(2 ) AND 142(1) WERE SERVED UPON THE ASSESSEE. THE ASSESSEE ATTENDE D THE PROCEEDINGS FROM TIME TO TIME AND FURNISHED NECESSA RY DETAILS. DURING THE CONCERNED YEAR, THE ASSESSEE EA RNED DIVIDEND INCOME OF RS.7,49,805/- ON OLD SHARE INVES TMENT, WHICH WAS CLAIMED EXEMPT UNDER SECTION 10(34) OF TH E ACT. THE ASSESSEE EARNED PROFIT OF RS.10,72,550/- ON SAL E OF MUTUAL FUND AND ALSO INCURRED LOSS OF RS.15,73,271/ -, AGGREGATING NET LOSS OF RS.5,00,721/- ON SALE OF MU TUAL FUND. BEFORE THE LD. ASSESSING OFFICER, THE ASSESSEE CLAI MED THAT IT DID NOT INCUR ANY EXPENDITURE FOR EARNING DIVIDEND INCOME ON SHARES EXCEPT OF RS.73,614/- AS DIRECT EXPENSES, WH ICH WERE DISALLOWED BY THE ASSESSEE ITSELF IN ITS COMPUTATIO N. IT WAS CLAIMED BY THE ASSESSEE THAT EXEMPT INCOME OF RS.2, 49,084/- IS COVERED BY THE DECISION IN THE CASE OF DAGA GLOB AL CHEMICALS, WHEREIN, IT WAS HELD THAT DISALLOWANCE U NDER SECTION 14A R.W.R.8D SHOULD NOT EXCEED THE EXEMPT I NCOME. HOWEVER, THE LD. ASSESSING OFFICER MADE THE ADDITIO N. ON APPEAL BEFORE THE LD. COMMISSIONER OF INCOME TAX (A PPEAL), ITA NO.780/MUM/2017 KREDENCE MULTI TRADING LTD. 4 THE FACTUAL MATRIX WAS CONSIDERED AND FOLLOWING VAR IOUS DECISIONS IN CIT VS SBI DHFL LTD. (2015) 376 ITR 2 96 (BOM.), ACIT VS BANDEKAR BROTHERS PVT. LTD. (2015) 155 ITD 1171 AND AUCHTEL PRODUCTS LTD. VS ACIT (2012) 52 SO T 39 (URO) AND VARIOUS OTHER DECISIONS, THE LD. COMMISSI ONER OF INCOME TAX (APPEAL) RESTRICTED THE DISALLOWANCE TO THE EXEMPT INCOME. NO INTEREST BEARING FUNDS WERE UTILIZED FOR THE PURPOSES OF INVESTMENT. CONSIDERING THE AFORESAID D ECISIONS OF THE TRIBUNAL, WE ARE IN AGREEMENT WITH THE FINDI NG OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL) THAT DISALL OWANCE UNDER SECTION 14A OF THE ACT R.W.R 8D OF THE RULES CANNOT EXCEED THE EXEMPT INCOME. WE AFFIRM THE CONCLUSION DRAWN BY THE LD. COMMISSIONER OF INCOME TAX (APPEAL), THE REFORE, THE APPEAL OF THE REVENUE IS DISMISSED. FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. DR AT THE CONCLUSION OF HEARING ON 20/06/2018. SD/- SD/- ( MANOJ KUMAR AGGARWAL ) (JOGINDER SINGH) '!# / ACCOUNTANT MEMBER $!# /JUDICIAL MEMBER ' MUMBAI; + DATED : 20/06/2018 ITA NO.780/MUM/2017 KREDENCE MULTI TRADING LTD. 5 F{X~{T? P.S/. .. %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. -./ / THE APPELLANT (RESPECTIVE ASSESSEE) 2. 01./ / THE RESPONDENT. 3. 2 2 3& ( - ) / THE CIT, MUMBAI. 4. 2 2 3& / CIT(A)- , MUMBAI, 5. 56 0&# , 2 -) # 7 , ' / DR, ITAT, MUMBAI 6. 8$ 9' / GUARD FILE. ! / BY ORDER, /! (DY./ASSTT. REGISTRAR) , ' / ITAT, MUMBAI