SANAT M DALAL, MUMBAI V. ITO 4(2)(3), MUMBAI

ITA 7915/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78755 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-05-2014
• Appeal Filed By: Assessee
• Bench Allotted: E
• Next Hearing Date: 18-11-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 23-11-2011
• Court: TRIBUNAL
• Assessee Lawyers: DR K SHIVRAM
• Keywords: Additional evidence
• Section: 14A

Judgement Text

E IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIVEK VARMA, JM ./I.T.A. NO. 7915/M/2011 ( / ASSESSMENT YEAR: 2008 - 200 9 ) SANAT M DALAL, 1211, P.J. TOWER, STOCK EXCHANGE, DALAL STREET, MUMBAI - 400020. / VS. ITO - 4(2)(3), MUMBAI. ./ PAN : AAAFS 6151 J ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : DR. K. SHIVRAM / RESPONDENT BY : SHRI RAVI PRAKASH, DR / DA TE OF HEARING : 01.05 .2014 / DATE OF PRONOUNCEMENT : 01.05 .2014 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 23.11.2011 IS AGAINST THE ORDER OF THE CIT (A) - 9, MUMBAI DATED 16.9.2011 FOR THE ASSESSMENT YEAR 2008 - 2009. 2. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. THE LD CIT (A) ERRED IN UPHO LDING THE ORDER OF THE AO DISALLOWING THE AMOUNT OF RS. 31,09,076/ - UNDER SECTION 14A R.W. RULE 8D WITHOUT APPRECIATING THAT SECTION 14A IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE AS THE INVESTMENT IN SHARES ARE MADE AS PER THE SCHEME OF CORPORATIZ ATION BY STOCK EXCHANGE AND IT WAS NOT FOR THE PURPOSE OF EARNING OF DIVIDEND INCOME, SECONDLY NO DISALLOWANCE CAN BE MADE ON NOTIONAL BASIS UNLESS THE AO IS ABLE TO SHOW DIRECT NEXUS OF EXEMPTED INCOME AND EXPENDITURE INCURRED IN RELATION TO SUCH INCOME. 2. THE LD CIT (A) FAILED TO APPRECIATE THAT DURING THE YEAR DIVIDEND DIVIDEND INCOME RECEIVED WAS ONLY RS. 628/ - , FURTHER THE INVESTMENT IN UNQUOTED EQUITY SHARES OF M/S. SANAT M. DALAL SECURITIES P. LTD WAS DUE TO BUSINESS NECESSITY AND THE UNQUOTED EQUIT Y SHARES WOULD BE TAXABLE ON SALE, AS SUCH EXEMPTION U/S 10(38) OF THE ACT WAS NOT APPLICABLE, THEREFORE THE DISALLOWANCE U/S 14A MAY BE DELETED. 3. WITHOUT PREJUDICE TO ABOVE THE DIVIDEND INCOME RECEIVED WAS ONLY RS. 628/ - THEREFORE, THE DISALLOWANCE U/S 14A CANNOT EXCEED MORE THAN 628/ - . 2 3. AT THE OUTSET, DR. K. SHIVRAM, LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE LETTER DATED 26 TH APRIL, 2014 AND MENTIONED THAT THE PAPER BOOK NO. II WITH SL. NO.9 TO 20 CONSISTS OF VARIOUS PAPERS WHICH WERE NOT SUBMITTED BEFORE THE LOWER AUTHORITIES. FOR THIS, ASSESSEE HAS GIVEN DETAILED DISCUSSION GIVING REASONS FOR SUCH FAILURE TO SUBMIT THE SAME BEFORE THE REVENUE AUTHORITIES. FURTHER, LD COUNSEL BROUGHT OUR ATTENTION TO THE LIST OF THE ITEMS OF THE SAI D PAPER BOOK - II I.E., STATEMENT OF INVESTMENT, SOURCE OF INVESTMENT IN SANAT M. DALAL SECURITIES PVT LTD; YEAR WISE STATEMENT OF SOURCES OF FUNDS AND APPLICATION OF FUNDS FROM 1997 TO 2008; FUND FLOW STATEMENT OF M/S. SANAT M. DALAL FOR FINANCIAL YEAR 1997 - 1998; INVESTMENT SUMMARY AS ON 31 ST MARCH, 2008; CERTIFICATE OF INCORPORATION OF M/S. SANAT M. DALAL SECUIRITIES PVT LTD DATED 8.12.1997; TAX AUDIT REPORT AND BALANCE SHEET OF M/S. SANAT M DALAL AS ON 31.3.1998; PROFIT & LOSS A/C. AS ON 31.3.1999; DETAILS OF INTEREST PAID AS ON 31.3.1998; DETAILS OF INTEREST PAID AS ON 31.3.1999; BALANCE SHEET AND P&L A/C AS ON 31.3.2002; DETAILS OF INTEREST PAID AS ON 31.3.2002 AND INTEREST PAID FOR THE FINANCIAL YEAR 2007 - 08 AND MENTIONED THAT THESE PAPERS WILL GO TO THE ROOT OF THE MATTER AND THERE IS A NEED FOR ADMITTING THE SAME AND REQUESTED FOR ORDERING THE FRESH ADJUDICATION OF THE ISSUE BEFORE THE REVENUE AUTHORITIES. 4. ON THE OTHER HAND, LD DR FAIRLY ADMITTED THE FACT THAT THE SAID PAPERS WERE FILED FOR THE FIR ST TIME BEFORE US AND THEY ARE RELEVANT FOR ADJUDICATION OF THE ISSUES RAISED IN THE PRESENT APPEAL. 5. WE HAVE HEARD BOTH THE PARTIES AND EXAMINED THE ISSUES INVOLVED IN THE APPEAL AND THE RELEVANT PAPERS FILED BEFORE US. ON PERUSAL OF THE SAID ADDITIONA L EVIDENCES, WE ARE OF THE CONSIDERED OPINION THAT THE ADDITIONAL EVIDENCES SHOULD BE ADMITTED AND WE ORDER FOR FRESH ADJUDICATION OF THE ISSUES. WE ORDER ACCORDINGLY. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS DECIDED IN THE ABOVE MENTIONED MANNER. ORDER PRONOUNCED THE OPEN COURT ON 1 ST DAY OF MAY , 2014. S D / - S D / - (VIVEK VARMA) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 1.5.2014 . . ./ OKK , SR. PS 3 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI