BALAJI INFRASTRUCTURE & DEVELOPMENT CO. LTD, MUMBAI V. ACIT CIR 2(1), MUMBAI

ITA 884/MUM/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 3002 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 29-04-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 01-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY KUMAR SONI
• Keywords: Unexplained cash credit; Opportunity of being heard; Earning of tax free income
• Section: 14A; 68

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.884/MUM/2013 ASSESSMENT YEAR 2009-10 M/S BALAJI INFRASTRUCTURE & DEVELOPMENT COMPANY LTD 6/A-3, 6 TH FLOOR, NEW EXCELSIOR BUILDING, A.K. NAYAK MARG, FORT, MUMBAI-400001 / VS. ACIT, CIRCLE-2(1), MUMBAI ( !' # /ASSESSEE) ( $ / REVENUE) PAN. NO. AAACB8155C !' # / ASSESSEE BY SHRI SUNIL NAHTA $ / REVENUE BY SHRI VIJAY KUMAR SONI $% & # ' / DATE OF HEARING : 26/10/2015 & # ' / DATE OF ORDER: 05/11/2015 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DA TED 24/12/2012 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI, THE ONLY GROUND RAISED IN THIS APPEAL PERTAINS TO I NVOKING THE PROVISIONS OF SECTION 14A OF THE ACT R.W.R.8D OF TH E INCOME TAX RULES AND DIRECTING THE ASSESSING OFFICER TO WO RK OUT THE M/S BALAJI INFRASTRUCTURE & DEVELOPMENT COMPANY LTD. ITA NO.884/MUM/2013 2 DISALLOWANCE U/S 14A OF A SUM COMPUTED BY APPLYING METHOD PRESCRIBED UNDER RULE 8D OR RS.12,15,034/-, WHICHEVER IS LOWER, ASSUMING THAT SAID EXPENDITURE MUST HAVE BEEN INCURRED BY THE ASSESSEE FOR EARNING EXEM PT INCOME AND FURTHER ERRED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER CONSIDERING THE VALUE OF INVESTME NT IN ASSOCIATE COMPANY I.E. BALAJI INFRA PROJECTS LTD. O F RS.31.75 CRORES IN THE QUALIFYING THE AMOUNT IN RECKONING T HE AVERAGE VALUE OF INVESTMENT FOR WORKING OUT THE DISALLOWANC E UNDER RULE-8D OF THE RULES. 2. DURING HEARING OF THIS APPEAL, THE LD. COUNSEL FOR THE ASSESSEE, SHRI SUNIL NAHATA, ADVANCED HIS ARGUM ENTS, WHICH ARE IDENTICAL TO THE GROUND RAISED BY SUBMITT ING THAT THE ASSESSEE NEITHER EARNED ANY INCOME NOR CLAIMED ANY EXEMPT INCOME. ON THE OTHER HAND, SHRI VIJAY KUMAR SONI. LD. DR, DEFENDED THE CONCLUSION ARRIVED AT IN THE I MPUGNED ORDER. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF INFRASTRUCTURE DEVELOPMENT, DURING THE RELEVANT YEA R, DECLARED INCOME OF RS.2,69,878/-. THE ASSESSEE RECEIVED SHAR E APPLICATION MONEY AMOUNTING TO RS.4,59,10,000/- WHI CH WAS HELD AS AN UNEXPLAINED CASH CREDIT BY THE LD. ASSES SING OFFICER AND ADDED U/S 68 OF THE ACT BY OPINING THAT THE ASS ESSEE COULD NOT PROVE THE EXISTENCE, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION. THE CLAIM OF THE A SSESSEE IS M/S BALAJI INFRASTRUCTURE & DEVELOPMENT COMPANY LTD. ITA NO.884/MUM/2013 3 THAT REQUISITE DETAILS OF SUCH MONEY WAS FILED BEFO RE THE ASSESSING OFFICER VIDE LETTER DATED 24/11/2011. TH E STAND OF THE ASSESSEE IS THAT THROUGH THIS LETTER, NAME, PAN , AMOUNT, CONFIRMATION LETTER, BANK STATEMENT WERE FILED BEFO RE THE ASSESSING OFFICER. THE ASSESSEE CLAIMED THAT RS.73 ,10,000/- WERE RECEIVED FROM M/S BALAJI INFRA PROJECTS LTD., A COMPANY WHICH IS ASSESSED IN THE SAME CHARGE OF THE ASSESSI NG OFFICER, THEREFORE, IT COULD HAVE BEEN VERIFIED BY THE ASSES SING OFFICER HIMSELF AND THE BALANCE SHARE APPLICATION MONEY OF RS.3,86,00,000/- WAS RECEIVED FROM M/S SAI GRANITE EXPORTERS AND DEVELOPMENT PVT. LTD. AND THE DETAILS OF WHICH WERE ALSO FILED BEFORE THE ASSESSING OFFICER. WE NO TE THAT THE LETTER DATED 07/09/2012 OF THE ASSESSEE HAS BEEN RE PRODUCED AS PAGE-2 ONWARDS IN THE IMPUGNED ORDER ALONG WITH THE CASE LAWS, RELIED UPON BY THE ASSESSEE. THE SUBMISSIONS OF THE ASSESSEE WERE FORWARDED TO THE ASSESSING OFFICER FO R GETTING THE REMAND REPORT, WHICH HAS ALSO BEEN REPRODUCED A T PAGE-8 ONWARDS OF THE IMPUGNED ORDER. THE REMAND REPORT D ATED 13/12/2012 HAS ALSO BEEN REPRODUCED AT PAGE-9 AND T HE REJOINDER DATED 17/12/2012 IS ALSO AVAILABLE AT PAG E 10 ONWARDS OF THE ORDER OF THE LD. FIRST APPELLATE AUT HORITY. THE ASSESSEE, DURING THE RELEVANT PERIOD, RECEIVED SHAR E APPLICATION MONEY TOTALING THE TUNE OF RS.4,59,10,0 00/-, WHICH CONSIST OF RS.73,10,000/-, RECEIVED FROM M/S BALAJI INFRA PROJECTS LTD. WHICH HAVE BEEN VERIFIED FROM T HE BOOKS OF ACCOUNTS BY THE ASSESSING OFFICER. THE STAND OF TH E ASSESSEE IS THAT THE ASSESSING OFFICER HAS INCLUDED THE SHAR E APPLICATION MONEY IN THE INVESTMENT FOR COMPUTING M/S BALAJI INFRASTRUCTURE & DEVELOPMENT COMPANY LTD. ITA NO.884/MUM/2013 4 DISALLOWANCE UNDER RULE-8D. TOTALITY OF FACTS CLEA RLY INDICATES THAT THE ASSESSING OFFICER WAS RIGHTLY DIRECTED TO RE-COMPUTE THE DISALLOWANCE UNDER RULE-8D AFTER EXCLUDING THE SHARE APPLICATION OF MONEY FOR VALUE OF INVESTMENT. IT IS ALSO SEEN THAT THE ASSESSEE CLAIM EXPENSES/LOSS OF RS.1,32,71 ,596/-, WHICH CONSIST OF LOSS ON SALE OF SHARES OF RS.1,20, 56,562/-. THE TOTAL OPERATIVE AND ADMINISTRATIVE EXPENSES WER E CHARGED TO PROFIT & LOSS ACCOUNT ARE THE TUNE OF RS.12,15,0 34/-. IT WAS CLAIMED THAT THE TOTAL DISALLOWANCE U/S 14A CANNOT EXCEED THIS AMOUNT. IN VIEW OF THIS FACT, AND THE CLAIM OF THE ASSESSEE, WE DIRECT THE LD. ASSESSING OFFICER TO EX AMINE THE FACTS AND THEN DECIDE IN ACCORDANCE WITH LAW, IN TH E LIGHT OF THE DECISION FROM HONBLE JURISDICTIONAL HIGH COURT IN GODREJ & BOYCE MFG. LTD. THE ASSESSEE BE GIVEN OPPORTUNITY OF BEING HEARD, THUS, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. FINALLY, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN T HE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 26/10/2015. SD/- SD/- ( RAJESH KUMAR ) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER % MUMBAI; ( DATED : 05/11/2015 F{X~{T? P.S/. . . %$&'()(*& / COPY OF THE ORDER FORWARDED TO : M/S BALAJI INFRASTRUCTURE & DEVELOPMENT COMPANY LTD. ITA NO.884/MUM/2013 5 1. *+,- / THE APPELLANT 2. ./,- / THE RESPONDENT. 3. 0 0 1# ( *+ ) / THE CIT, MUMBAI. 4. 0 0 1# / CIT(A)- , MUMBAI 5. 3$4 .# , 0 *+' * 5 , % / DR, ITAT, MUMBAI 6. 6! 7% / GUARD FILE. / BY ORDER, /3+# .# //TRUE COPY// / (DY./ASSTT. REGISTRAR) , % / ITAT, MUMBAI.