ACIT 2(1), MUMBAI V. CONTAINER MARINE AGENCIES P. LTD, MUMBAI

ITA 892/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84230 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-11-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 31-07-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 01-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUM BAI , , BEFORE SHRI SANJAY ARORA, AM AND SHRI AMIT SHUKLA, JM ./ I.T.A. NO. 892/MUM/2013 ( / ASSESSMENT YEAR: 2009-10) DY. CIT-2(1), AAYAKAR BHAVAN, R. NO. 561, 5 TH FLOOR, M. K. ROAD, MUMBAI-400 020 / VS. CONTAINER MARINE AGENCIES PVT. LTD. 5 TH FLOOR, 502, GULAB BLG., 237, P D MELLO ROAD, FORT, MUMBAI-400 001 ! ./' ./PAN/GIR NO. AAACC 2032 M ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) !# & ' / APPELLANT BY : SHRI V. K. BORA $%!# & ' / RESPONDENT BY : SHRI NISHIT GANDHI () * & + / DATE OF HEARING : 10.11.2014 DATE OF ORDER : 13.11.2014 / O R D E R PER SANJAY ARORA, A. M.: THIS IS AN APPEAL BY THE REVENUE DIRECTED AGAINST T HE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-4, MUMBAI (CIT(A) FOR SHO RT) DATED 23.11.2012, PARTLY ALLOWING THE ASSESSEES APPEAL CONTESTING ITS ASSES SMENT U/S.143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR THE ASSESSMEN T YEAR (A.Y.) 2009-10 VIDE ORDER DATED 29.12.2011. 2. THE ONLY ISSUE ARISING IN THE INSTANT APPEAL IS THE VALIDITY IN LAW OF THE DIRECTION BY THE LD. CIT(A) WITH REGARD TO THE DISALLOWANCE U/S. 14A READ WITH RULE 8D OF THE INCOME TAX RULES, 1962 (THE RULES HEREINAFTER). THE FACT S IN BRIEF ARE THAT DISALLOWANCE U/S.14A IN RESPECT OF INDIRECT ADMINISTRATIVE EXPENDITURE W AS MADE U/S.14A(1) AT RS.9,97,441/-, 2 ITA NO. 892/MUM/2013 (A.Y. 2009-10) DY. CIT VS. CONTAINER MARINE AGENCIES PVT. LTD. APPLYING R. 8D(2)(III), I.E., AT 0.5% OF THE AVERAG E INVESTMENT HELD DURING THE YEAR. THE ASSESSEE BEFORE THE LD. CIT(A) CONTENDED THAT THE V ALUE OF THE INVESTMENT, AS CONSIDERED BY THE ASSESSING OFFICER (A.O.), ALSO INCLUDED THE VALUE OF THE ASSESSEES PROPERTY (AT RS.19.31 CRORES), SO THAT HIS ORDER IS TO THAT EXTE NT ERRONEOUS. THE LD. CIT(A), FINDING MERIT IN THE SAME, DIRECTED THE A.O. TO ALLOW RELIE F TO THE ASSESSEE AFTER DUE VERIFICATION, I.E., IF AND TO THE EXTENT THE VALUE OF THE INVESTM ENTS, AS RECKONED BY HIM, INCLUDED THE VALUE OF ANY PROPERTY/PREMISES. AGGRIEVED, THE REVE NUE IS IN APPEAL. 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. WE REPRODUCE HERE- IN-BELOW THE RELEVANT PART OF THE IMPUGNED ORDER: 7. I HAVE CONSIDERED THE FACTS OF THE CASE AND SUB MISSIONS OF THE ASSESSEE. HONBLE BOMBAY HIGH COURT HAS HELD IN THE CASE OF GODREJ & BOYCE MFG. CO. LTD. V. DY. CIT 328 ITR 81 THAT RULE 8D IS APPLICABLE FROM A.Y. 08-09, THEREFORE, A.O. HAS RIGHTLY APPLIE D RULE 8D, WHEREAS, A.O. HAS NOT GIVEN DETAIL OF ASSETS WHICH HAVE BEEN CONSIDERED WHILE CALCULATING DISALLOWANCE UNDER RULE 8D, THEREFORE, A.O. IS DIRECTED TO VERIFY IF THE VALUE OF ANY PROPERTY/PREMISES HAVE B EEN INCLUDED, INCOME OF WHICH IS NOT EXEMPT FROM INCOME-TAX, THEN THE SAME IS TO BE EXCLUDED FROM THE VALUE OF INVESTMENT FOR COMPUTING DISALLOWANCE UNDER RULE 8D. IN RESULT, THE GROUND IS PARTLY ALLOWED. WE ARE CLEARLY UNABLE TO FIND ANY INFIRMITY IN THE IMPUGNED DIRECTION, NOR COULD ANY BE POINTED OUT BY THE LD. DEPARTMENTAL REPRESEN TATIVE (DR), ON BEING QUESTIONED IN ITS RESPECT DURING HEARING. IN FACT, A PERUSAL OF T HE REVENUES GROUND WOULD REVEAL IT TO BE QUA INDIRECT INTEREST EXPENDITURE, COVERED UNDER RULE 8D(2)(II). AS SUCH, AS IT APPEARS; RATHER, PATENT, THE REVENUES GRIEVANCE IS PREMISED ON THE DISALLOWANCE BEING IN RESPECT OF INTEREST EXPENDITURE, AND TOWARD WHICH THE LD. C IT(A) HAD DIRECTED FOR EXCLUSION OF THE VALUE OF THE PROPERTY, AND WHICH COULD NOT BE IN-AS -MUCH AS THE VALUE OF THE TOTAL ASSETS U/R. 8D(2)(II) IS TO INCLUDE ALL THE ASSETS IN THE BALANCE-SHEET. THE SAME IS CLEARLY MISCONCEIVED IN-AS-MUCH AS THE ONLY DISALLOWANCE EF FECTED BY THE A.O. IS TOWARD INDIRECT ADMINISTRATIVE EXPENSE, COVERED UNDER R. 8D(2)(III) . THE LD. CIT(A) HAS NOT ISSUED ANY FINDING FOR EXCLUSION OF THE BOOK VALUE OF THE PROP ERTY/PREMISES FROM THE TOTAL ASSETS, 3 ITA NO. 892/MUM/2013 (A.Y. 2009-10) DY. CIT VS. CONTAINER MARINE AGENCIES PVT. LTD. BUT ONLY FROM THE VALUE OF INVESTMENTS, INCOME FROM WHICH DOES NOT FORM PART OF THE TOTAL INCOME. THE INSTANT CASE REPRESENTS A CLASSICAL EXAMPLE OF THE LACKADAISICAL ATTITUDE THAT PERMEATES THE REVENUES WORKING, AND WHICH WE OBSER VE ON ALMOST A DAILY BASIS. THE NEED FOR PROPER REPRESENTATION, BASED ON CLEAR UNDE RSTANDING OF FACTS AND LAW, CANNOT BE OVER-EMPHASIZED, AND IS ESSENTIAL TO ANY JUSTICE DE LIVERY SYSTEM, WHICH PREDICATES ON A CONFIDENCE OF THE PARTIES THEREIN. WE HOPE AND WISH TO BELIEVE THAT THE REVENUE SHALL TAKE DUE NOTE OF THESE OBSERVATIONS, AND INITIATE AND EX ECUTE STEPS, IN ITS OWN INTEREST, IN THIS REGARD. 4. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED . ,- . ) & , & /0 ORDER PRONOUNCED IN THE OPEN COURT ON NOVEMBER 10, 2014 AT THE CONCLUSION OF THE HEARING SD/- SD/- (AMIT SHUKLA) (SANJAY ARORA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER 1* MUMBAI; 2( DATED : 13.11.2014 ).(../ ROSHANI , SR. PS !' # $%&' (!'% / COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $%!# / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. 5)6 7 $(89 , + 89- , 1* / DR, ITAT, MUMBAI 6. 7 ;< = * / GUARD FILE !' / BY ORDER, )/* + (DY./ASSTT. REGISTRAR) , 1* / ITAT, MUMBAI