MARKS SHIPPING PVT. LTD., MUMBAI V. A.C.I.T. CIR.4(2), MUMBAI

ITA 8412/MUM/2011

• Counselvise Citation: 841219914 RSA 2011
• Duration Of Justice: 1 year(s) 8 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 12-03-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 12-12-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SU RENDRA KUMAR
• Assessee Lawyers: PRAMOD KUMAR PARIDA
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

, , , , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI .. , ! ' , # !, $ BEFORE SHRI R.S.SYAL, AM AND SHRI VIVEK VARMA, JM ITA NO.8412/MUM/2011 : ASST.YEAR 2008-2009 M/S.MARKS SHIPPING PRIVATE LIMITED NO.401/402, 4 TH FLOOR, ATLANTA TOWER SAHAR ROAD, ANDHERI (EAST) MUMBAI 400 099. PAN : AAACM3203B. THE ASSTT.COMMISSIONER OF INCME-TAX CIRCLE 4(2) MUMBAI. ( %& / // / APPELLANT) ( ( ( ( / VS. ( )*%&/ RESPONDENT) %& + ++ + , , , , / APPELLANT BY : SHRI PRAMOD KUMAR PARIDA )*%& + , + , + , + , / RESPONDENT BY : SHRI SURENDRA KUMAR ( + - / / / / DATE OF HEARING : 28.08.2013 ./0 + - / DATE OF PRONOUNCEMENT : 30.08.2013 !1 !1 !1 !1 / / / / O R D E R PER R.S.SYAL (AM) : THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ON 22.09.2011 IN RELATION TO THE ASSESSMENT YEAR 2008-2009. 2. THE FIRST GROUND IS AGAINST THE CONFIRMATION OF DISALLOWANCE OF ` 4,03,711 U/S 14A OF THE ACT. BRIEFLY STATED THE FA CTS OF THIS GROUND ARE THAT THE ASSESSEE EARNED TAX FREE DIVIDEND INCO ME WHICH WAS CLAIMED AS EXEMPT. NO EXPENDITURE WAS ALLOCATED FOR EARNING SUCH TAX FREE INCOME. RESORTING TO PROVISIONS OF SECTION 14A READ WITH RULE 8D, THE ASSESSING OFFICER COMPUTED THE DISALLOWANCE UNDER CLAUSE ITA NO.8412/MUM/2011 M/S.MARKS SHIPPING PVT. LTD. 2 (III) TO RULE 8D(2) AT THE RATE OF % ON AVERAGE VA LUE OF INVESTMENTS. THIS RESULTED INTO AN ADDITION OF ` 4,03,171. NO RELIEF WAS ALLOWED IN THE FIRST APPEAL. 3. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD, IT IS SEEN THAT THE AS SESSEE EARNED EXEMPT INCOME BUT DID NOT SHOW ANY DISALLOWANCE U/S 14A. T HE ASSESSING OFFICER THOROUGHLY DISCUSSED THE ASSESSEES EXPLANA TION AND THEREAFTER CAME TO THE CONCLUSION THAT CERTAIN EXPE NSES INCURRED FOR EARNING SUCH EXEMPT INCOME WERE REQUIRED TO BE DISA LLOWED. IT IS PERTINENT TO NOTE THAT THE ASSESSMENT YEAR UNDER CO NSIDERATION IS 2008-2009. THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF GODREJ & BOYCE LTD. MFG. CO. V. DCIT [(2010) 328 IT R 81 (BOM)] HAS HELD THAT COMPUTATION U/S 14A HAS TO BE WORKED OUT UNDER RULE 8D WITH EFFECT FROM ASSESSMENT YEAR 2008-2009. AS T HE ASSESSING OFFICER COMPUTED DISALLOWANCE UNDER CLAUSE (III) TO RULE 8D(2) AT THE RATE OF % OF THE AVERAGE VALUE OF INVESTMENT, IN O UR CONSIDERED OPINION, NO INFIRMITY CAN BE FOUND IN THE IMPUGNED ORDER UPHOLDING THIS DISALLOWANCE. THIS GROUND IS NOT ALLOWED. 4. THE GROUND NO.2 IS AGAINST NOT ALLOWING PMS CHAR GES AGGREGATING TO ` 10,29,016 RELATING TO EARNING OF SHORT TERM CAPITAL GAIN. THE ASSESSEE INCURRED THIS EXPENDITURE ON ACC OUNT OF PORTFOLIO MANAGEMENT CHARGES ATTRIBUTABLE TO SHORT TERM CAPIT AL GAIN. THIS AMOUNT WAS DEDUCTED WHILE COMPUTING INCOME FROM SHO RT TERM CAPITAL GAIN. THE ASSESSING OFFICER DID NOT ALLOW T HIS DEDUCTION. NO RELIEF WAS ALLOWED IN THE FIRST APPEAL. ITA NO.8412/MUM/2011 M/S.MARKS SHIPPING PVT. LTD. 3 5. HAVING HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE RELEVANT MATERIAL ON RECORD, IT IS NOTICED THAT SIMILAR ISSU E CAME UP FOR CONSIDERATION BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2005-2006. A COPY OF THE ORDER PASS ED BY THE TRIBUNAL IN ITA NO.5001/MUM/2009 DATED 11.04.2012 H AS BEEN PLACED ON RECORD. IN THIS ORDER THE TRIBUNAL HAS DI SCUSSED SUCH ISSUE TAKEN UP BY THE ASSESSEE THROUGH GROUND NO.5. AFTER CONSIDERING THE RELEVANT POSITION, THE TRIBUNAL HAS REFUSED TO GRA NT DEDUCTION FOR THIS EXPENDITURE. AS THE FACTS FOR THE CURRENT YEAR ARE ADMITTEDLY SIMILAR, RESPECTFULLY FOLLOWING THE PRECEDENT, WE UPHOLD THE DISALLOWANCE. THIS GROUND FAILS. 6. LAST GROUND OF THE APPEAL IS ABOUT NOT ALLOWING DEDUCTION IN RESPECT OF TRANSPORT CHARGES OF ` 5,11,461 PAID TO SHREE GANESH LIFTERS. THE FACTS OF THIS GROUND ARE THAT THE ASSE SSEE MADE PAYMENT OF ` 1.23 CRORE TO TRANSPORTERS. THIS SUM INCLUDED AN AM OUNT OF ` 5,11,461 PAID TO SHREE GANESH LIFTERS. RELYING ON T HE VIEW TAKEN BY HIM ON THIS ISSUE IN EARLIER YEAR, THE ASSESSING OF FICER DISALLOWED THIS AMOUNT. NO RELIEF WAS ALLOWED IN THE FIRST APPEAL. 7. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD, WE FIND THAT THIS ISSU E CAME UP FOR CONSIDERATION BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE IMMEDIATELY PRECEDING ASSESSMENT YEAR 2007-2008. VI DE ORDER DATED 15.06.2012 IN ITA NO.3530/MUM/2011, THE TRIBUNAL H AS RESTORED THIS MATTER TO THE FILE OF A.O. FOR DECIDING IT AFR ESH. IN THE ABSENCE OF ITA NO.8412/MUM/2011 M/S.MARKS SHIPPING PVT. LTD. 4 ANY CHANGE IN THE FACTUAL POSITION ON THIS ISSUE, W E SET ASIDE THE IMPUGNED ORDER AND REMIT THE MATTER TO THE FILE OF THE A.O. FOR DECIDING IT AFRESH IN CONFORMITY WITH THE DIRECTION OF THE TRIBUNAL IN THE EARLIER YEAR. 8. 2 -3 4 5+ 678 9 91 - : + ;- <= IN THE RESULT, THE APPEAL IS PARTLY ALLOWED FOR STATISTICA L PURPOSES. ORDER PRONOUNCED ON THIS 30 TH DAY OF AUGUST, 2013. !1 + ./0 >!(3 / + ? SD/- SD/- (VIVEK VARMA) (R.S.SYAL) # ! # ! # ! # ! / JUDICIAL MEMBER ! ! ! ! / ACCOUNTANT MEMBER MUMBAI ; >!( DATED : 30 TH AUGUST, 2013. DEVDAS* !1 + )#-9' @'0- !1 + )#-9' @'0- !1 + )#-9' @'0- !1 + )#-9' @'0-/ COPY OF THE ORDER FORWARDED TO : 1. %& / THE APPELLANT 2. )*%& / THE RESPONDENT. 3. A () / THE CIT, MUMBAI. 4. A / CIT(A) 9, MUMBAI. 5. 'D? )#-#( , , / DR, ITAT, MUMBAI 6. ?E F / GUARD FILE. !1( !1( !1( !1( / BY ORDER, *'- )#- //TRUE COPY// 6 6 6 6/ // /< ; < ; < ; < ; ( DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI