INDSEC SECURITIES & FINANCE LTD, MUMBAI V. DCIT RG 4(1)(1), MUMBAI

ITA 805/MUM/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2819 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2016
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 06-02-2015
• Court: TRIBUNAL
• Department Lawyers: AJAY
• Section: 14A; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) I.T.A. NO. 805 /MUM/ 20 15 (ASSESSMENT YEAR 2011 - 12 ) M/S. INDSEC SECURITIES & FINANCE LTD. 301/302, 215 ATRIUM A WING, ANDHERI - KURLA ROAD CHAKALA, ANDHERI EAST MUMBAI - 400 093. VS. DCIT RANGE 4(1)(1)/ DY.CIT RANGE4(1) AAYAKAR BHAVAN M.K. ROAD MUMBAI - 400 020. ( APPELLANT ) ( RESPONDENT ) PAN NO . AAACI1958G ASSESSEE BY SHRI MALAV P. SHETH DEPARTMENT BY SHRI AJAY DATE OF HEARING 11 . 7 . 201 6 DATE OF PRONOUNCE MENT 11 . 7 . 201 6 O R D E R THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 3.11.2014 PASSED BY LEARNED CIT(A) - 8, MUMBAI AND IT RELATES TO A.Y. 2011 - 12. 2. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LEARNED CIT(A) IN CONFIRMING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER U/S. 14A OF THE ACT AND ALSO ADDING THE SAME TO THE BOOK PROFIT COMPUTED U/S. 115JB OF THE ACT. 3. I HAVE HEARD THE PARTIES AND PERUSED THE RECORD. THE ASSESSEE IS A SHARE BROKER AND A CORPORATE MEMBER OF BSE AND NSE ETC. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE EARNED DIVIDEND INCOME OF ` 4,43,200/ - AND CLAIMED THE SAME AS EXEMPT. THE ASSESSEE DISALLOW ED A SUM OF ` 2,68,585/ - U/S. 14A OF THE ACT. THE ASSESSING OFFICER NOTICED THAT THE DISALLOWANCE W AS NOT IN ACCORDANCE WITH RULE 8D OF THE I.T. RULES AND ACCORDINGLY COMPUTED THE DISALLOWANCE AT ` 11,71,957 / - U/R. 8D(2)(III) OF THE I.T. RULES. ACCORDINGLY HE MADE AN ADDITION OF RS.9,03,372/ - , BEING THE DIFFERENCE BETWEEN THE AMOUNT M/S. INDSEC SECURITIES & FINANCE LTD. 2 COMPUTED BY HIM AND THE DISALLOWANCE MADE BY THE ASSESSEE. LEARNED CIT(A) ALSO CONFIRMED THE SAME AND HENCE THE ASSESSEE HAS FILED THIS APPEAL BEFORE US . 4. LEARNED COUNSEL APPEARING FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS NOT MADE ANY FRESH INVESTMENT DURING T HE YEAR UNDER CONSIDERATION AND ALL THE INVESTMENTS HAVE BEEN BROUGHT FORWARD FROM THE EARLIER YEARS. INVITING OUR ATTENTION TO PAGE NO. 4 OF THE ASSESSMENT ORDER, HE SUBMITTED THAT THE INVESTMENTS HAVE BEEN HELD BY THE ASSESSEE FOR A PERIOD RANGING FROM 7 48 DAYS TO 3656 DAYS. HE SUBMITTED THAT THE ASSESSEE HAS RECEIVED DIVIDEND INCOME OF ` 4,43,200/ - ONLY AND THE SAME HAS ALSO BEEN DIRECTLY CREDITED TO THE BANK ACCOUNT OF THE ASSESSEE. ACCORDINGLY, HE SUBMITTED THAT THE DISALLOWANCE OF ` 2,68,585/ - MADE BY THE ASSESSEE IS QUITE REASONABLE AND ACCORDINGLY PRAYED THAT THE ADDITION CONFIRMED BY LEARNED CIT(A) BE DELETED. 5. ON THE CONTRARY LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE WORKING GIVEN BY THE ASSESSEE HAS BEEN SPECIFICALLY REJECTED BY TH E ASSESSING OFFICER AND HENCE HE WAS JUSTIFIED IN COMPUTING THE DISALLOWANCE AS PER RULE 8D OF THE I.T. RULES. 6. HAVING HEARD THE RIVAL SUBMISSIONS, I AM OF THE VIEW THAT THERE IS MERIT IN THE SUBMISSIONS OF THE ASSESSEE. AS PER PROVISIONS OF SECTION 14 A OF THE ACT, THE WORKINGS MADE BY THE ASSESSEE SHOULD BE EXAMINED BY THE ASSESSING OFFICER HAVING REGARD TO THE ACCOUNTS OF THE ASSESSEE. ONLY IF HE IS NOT SATISFIED WITH THE WORKINGS BY HAVING REGARD TO THE ACCOUNTS, HE MAY RESORT TO COMPUTE THE DISALLOWA NCE AS PER RULE 8D. IN THE INSTANT CASE, IT IS AN UNDISPUTED FACT THAT THE ASSESSEE HAS NOT MADE ANY NEW INVESTMENT OR SOLD ANY EXISTING INVEST MENT DURING THE YEAR UNDER CONSIDERATION. ALL THE INVESTMENTS HAVE BEEN HELD BY THE ASSESSEE FOR QUITE A LONG TI ME. SO, THE ONLY ACTIVITY WITH REGARD TO THE I NVESTMENT WAS RECEIPT OF DIVIDEND INCOME AND THE SAME HAS ALSO BEEN DIRECTLY CREDITED TO THE BANK ACCOUNT OF THE ASSESSEE. UNDER THESE SET OF FACTS, I AM OF THE VIEW THAT THE DISALLOWANCE OF ` 2,68,585/ - MADE BY THE M/S. INDSEC SECURITIES & FINANCE LTD. 3 ASSESSEE IS QUITE REASONABLE HAVING REGARD TO THE INVESTMENTS ACTIVITY AS WELL AS ACCOUNTS OF THE ASSESSEE. ACCORDINGLY, I SET ASIDE THE ORDER OF LEARNED CIT(A) ON THIS ISSUE AND DIRECT THE ASSESSING OFFICER TO RESTRICT THE DISALLOWANCE TO THE ABOV E SAID AMOUNT. 7. LEARNED AR FAIRLY AGREED THAT THE DISALLOWANCE MADE UNDER NORMAL PROVISIONS OF THE ACT MAY BE ADOPTED FOR THE PURPOSE OF SECTION 115JB OF THE ACT. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO ADOPT THE AMOUNT OF DISALLOWANCE UNDER N ORMAL PROVISIONS OF THE ACT FOR THE PURPOSE OF COMPUTING BOOK PROFIT U/S. 115JB OF THE ACT. 8. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 11 .7.2016 SD/ - (B.R.BASKARAN ) ACCOUNTANT MEMBER MUMBAI ; DATED : 11 / 7 / 20 1 6 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. B Y ORDER, //TRUE COPY// ( DY./ASSTT. REGISTRAR) ITAT, MUMBAI PS