WESTERN OUTDOOR INTERACTIVE P. LTD, MUMBAI V. DCIT 2(3), MUMBAI

ITA 8583/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9476 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2008-2009
• Appeal Filed On: 19-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJARSHI DIWEDY
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH G , MUMBAI BEFORE SHRI RAJENDRA SINGH, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ITA NO. 8583/MUM/2011 ASSESSMENT YEAR : 2008-09 WESTERN OUTDOOR INTERACTIVE PVT. LTD. 7 TH FLOOR, NANAVATI MAHALAYA 18, HOMI MODI STREET, FORT MUMBAI-400 023. PAN NO. AAACW 0584 A VS. DY. COMMISSIONER OF INCOME TAX -2(3) AAYAKAR BHAVAN M.K. ROAD MUMBAI-400 020. (APPELLANT) (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY : SHRI RAJARSHI DIWEDY DATE OF HEARING : 5.12.2012 DATE OF PRONOUNCEMENT : 5.12.2012 O R D E R PER RAJENDRA SINGH, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER D ATED 4.11.2011 OF CIT(A) FOR THE ASSESSMENT YEAR 2008-09. T HE ONLY DISPUTE RAISED IN THIS APPEAL IS REGARDING DISALLOWANCE O F EXPENSES RELATING TO THE EXEMPT INCOME UNDER SECTION 14A OF THE INCOME TAX ACT, 1961 (THE ACT). 2. AT THE TIME OF HEARING OF THE APPEAL, NO ONE APP EARED ON BEHALF OF THE ASSESSEE THOUGH NOTICE OF HEARING HAD BEEN GIVEN WELL IN ADVANCE. NEITHER SOMEONE APPEARED NOR WAS ANY ADJOURN MENT ITA NO.8583/M/11 A.Y. 08-09 2 APPLICATION RECEIVED. WE, THEREFORE, PROCEED TO DECIDE THE APPEAL ON THE BASIS OF MATERIAL AVAILABLE ON RECORD AS ISSUE BEING SIMPLE CAN BE DECIDED BASED ON SUCH MATERIAL. 3. FACTS IN BRIEF ARE THAT THE AO DURING THE ASSESSMENT P ROCEEDINGS NOTED THAT THE ASSESSEE EARNED DIVIDEND INCOME OF RS.35, 00,948/-, WHICH IS EXEMPT FROM TAX. BUT THE ASSESSEE HAD NOT DISALL OWED ANY EXPENSES RELATING TO EXEMPT INCOME. THE AO THEREFORE A SKED THE ASSESSEE TO EXPLAIN AS TO WHY EXPENSES SHOULD NOT BE DISALL OWED. THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD NOT MADE ANY BORROW INGS FOR INVESTMENTS AND INVESTMENTS WERE MADE ONLY IN MUTUA L FUNDS. THEREFORE, NO EXPENSES WERE INCURRED. THE AO DID NOT A CCEPT THE EXPLANATION GIVEN AND COMPUTED THE DISALLOWANCE OF EXP ENSES OTHER THAN INTEREST UNDER RULE 8D WHICH CAME TO RS.18,26,166/ -. IN APPEAL, CIT(A) OBSERVED THAT NOT ONLY SALARY OF THE EMPLOYEES BUT ALSO SALARY OF DIRECTORS, FINANCE MANAGERS WHO TAKE DECISIONS REGARDI NG MAKING INVESTMENTS ARE ATTRIBUTABLE TOWARDS INCOME. HE, THEREFO RE, CONFIRMED THE DISALLOWANCE UNDER RULE 8D. 4. WE HAVE HEARD THE LD. DR PERUSED THE RECORDS AND CON SIDERED THE MATTER CAREFULLY. THE ASSESSEE HAS EARNED SUBSTANTIAL D IVIDEND INCOME OF RS.35,00,948/-. THE INVESTMENTS FROM WHICH DIV IDEND INCOME HAS ARISEN HAS BEEN MADE FROM OWN FUNDS WHICH IS NO T ITA NO.8583/M/11 A.Y. 08-09 3 DISPUTED. DISALLOWANCE OF EXPENSES HAVE BEEN MADE RELATI NG TO EXPENSES ATTRIBUTABLE TO MANAGEMENT OF INVESTMENT. DI SALLOWANCE HAS BEEN COMPUTED AS PER RULE 8D. THOUGH RULE 8D IS APPL ICABLE, THE CONTENTION OF THE ASSESSEE THAT NO EXPENSES HAD BEEN INCU RRED HAS NOT BEEN EXAMINED IN DETAIL. THE DETAILS OF INVESTMENTS M ADE AND MANPOWER REQUIRED TO TACKLE IT HAS NOT BEEN PLACED ON RECORD. CIT(A) HAS CONFIRMED THE ORDER OF AO IN A ROUTINE MANNER WIT HOUT ANY DETAILED EXAMINATION. WE, THEREFORE, SET ASIDE THE O RDER OF CIT(A) AND RESTORE THE MATTER BACK TO HIM FOR PASSING A FRESH ORDE R AFTER HEARING THE ASSESSEE. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR ST ATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 5.12.2012. SD/- SD/- (AMIT SHUKLA ) JUDICIAL MEMBER (RAJENDRA SINGH) ACCOUNTANT MEMBER MUMBAI, DATED: 05.12.2012. JV. ITA NO.8583/M/11 A.Y. 08-09 4 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR G BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.