DULARI R. TRAILOKYA, MUMBAI V. ASST CIT 24(1), MUMBAI

ITA 926/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8022 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2017
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 24-02-2016
• Court: TRIBUNAL
• Department Lawyers: ARJU GARODIA
• Assessee Lawyers: VIPUL SHAH
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA , ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER ITA NO.926/MUM./2016 ( ASSESSMENT YEAR : 2010 - 11 ) SMT. DULARI R. TRAILOKYA 212 RAJARAM INDL. ESTATE RAMACHANDRA, LANE, OPP. SNDT COLLEGE, MALAD (W), MUMBAI 400 064 PAN ABOPT2484L . APPELLANT V/S ACIT 24(1) C - 13, R.NO 513, 5 TH FLOOR, PRATYAKSHKAR BHAVAN, BKC, BANDRA (E) MUMBAI 400 051 . RESPONDENT ASSESSEE BY : SHRI. VIPUL SHAH REVENUE BY : MS. ARJU GARODIA DATE OF HEARING 15.02.2017 DATE OF ORDER 28.02.2017 O R D E R PER: SHAMIM YAHYA THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORDER OF LEARNED CIT - A DATED 15/12/2015, AND PERTAINS TO ASSESSMENT YEAR 2010 11. 2. THE GROUNDS OF APPEAL READ AS UNDER; SMT. DULARI R. TRAILOKYA ITA NO.926/MUM./2016 2 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND LAW THE LEARNED COMMISSIONER OF INCOME TAX - APPEAL (CRC - A) ERRED IN CONFIRMING THE ADDITIONS MADE BY THE ASSESSING OFFICER BY DISALLOWING RSJ,25,000/ - U/S 14A OF THE INCOME TAX ACT, 1961 WITHOUT APPRECIATING THAT FACT THAT; 1.1 THE APPELLANT HAD SUBMITTED THE NEXUS OF AMOUNT RECEIVED AND AMOUNT INVESTED AND NO EXPENDITURE HAS BEEN INCURRED BY THE APPELLANT. 1.2 THE LEARNED AO HAD NOT RECORDED HIS DIS - SATISFACTION ABOUT THE CLAIM OF THE APPELLANT. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND LAW THE LEARNED CIT - A ERRED IN NOT CONSIDERING AND DISTINGUISHING T HE CASE LAWS RELIED UPON BY THE APPELLANT DURING THE COURSE OF HEARING. 3. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER, MODIFY, SUBSTITUTE OR DELETE ANY OR ALL ABOVE GROUND(S) OF APPEAL. 3. B RIEFLY STATED FACTS OF THE CASE IS THAT THE APPELLANT IS T HE PROPRIETOR OF M/S. G TECH SOLUTION WHICH DEALS IN COMPUTER SOFTWARE, ACCESSORIES ETC. THE ASSESSEE HAS EARNED EXEMPT DIVIDEND INCOME OF RS.1,25,630/ - ON INVESTMENT IN BIRLA SUNLIF E FLOATING RATE FUND. THE ASSESSEE DID NOT ALLOCATE ANY EXPENSES IN RELATI ON TO THE SAID DIVIDEND INCOME. THE AO INVOKED PROVISIONS OF SECTION 14A R.W.R. 8D AND MADE SMT. DULARI R. TRAILOKYA ITA NO.926/MUM./2016 3 DISALLOWANCE OF RS.1,25,000/ - UNDER RULE 8D(2)(III) @ 0.5% OF AVERAGE VALUE OF INVESTMENT. 4. UPON ASSESSEES APPEAL LD. CIT - A NOTED THE SUBMISSIONS OF THE ASSESS EE AS UNDER; IN THE APPELLATE PROCEEDINGS, IT WAS SUBMITTED THAT THE APPELLANT HAS INVESTED RS.5 CRORE IN FLOATING RATE FUND - WEEKLY DIVIDEND SCHEME OF B IRLA SUN LIFE MUTUAL FUND ON 10 TH MA RCH, 2010 OUT OF ADVANCE OF RS. 7.99 CRORE RECEIVED FROM ITS CUST OMER MAHINDRA & MAHINDRA LTD. THE MUTUAL FUND UNITS WERE REDEEMED ON 6TI MAY, 2010, SO OUT OF 57 DAYS OF INVESTMENT, A PERIOD OF ONLY 20 DAYS FALLS IN THE YEAR UNDER REVIEW. IT WAS CLAIMED THAT THERE WAS NO DIRECT OR INDIRECT EXPENSES INCURRED FOR MAKING T HE AFORESAID INVESTMENT. THEREAFTER, THE APPELLANT HAS REPRODUCED LEGAL PROVISIONS AND RELIED ON SEVERAL JUDICIAL PRONOUNCEMENTS IN SUPPORT OF ITS SUBMISSION THAT RULE 8D IS TO BE APPLIED ONLY WHEN THE AO HAVING REGARD TO THE ACCOUNTS OF THE ASSESSEE IS NO T SATISFIED WITH THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE. AS PER APPELLANT, THE AO HAS NOT RECORDED HIS DIS - SATISFACTION. IT WAS FURTHER STATED THAT THE INVESTMENT WAS MADE T HROUGH A FINANCIAL CONSULTANT M/ S. ARTHASHASHTRA FINANCIAL PLANNERS PVT. LTD. WHO VISITED THE OFFICE OF THE ASSESSEE AND COLLECTED THE APPLICATION FORM AND CHEQUE AND SUBMITTED THE SAME WITH THE MUTUAL FUND. THE SMT. DULARI R. TRAILOKYA ITA NO.926/MUM./2016 4 DIVIDEND WAS PAID WEEKLY AND THE SAME WAS RE - INVESTED, SO THERE WAS NO EFFORT MADE BY THE ASSESSEE FOR DEPOSITING THE SAI D INCOME IN THE BANK. THE REDEMPTION PROCEEDS WERE DIRECTLY CREDITED TO THE BANK ACCOUNT OF THE ASSESSEE. 5. H OWEVER LEARNED CIT - A WAS NOT CON VINCED. HE HELD THAT ASSESSEE WAS INCURRING EXPENDITURE ON ADMINISTR IV OTHER EXPENSES - THAT ADVANCE WAS RECEI VED IN THE COURSE OF BUSINESS. HENCE MAKING OF INVESTMENT CANNOT BE SEEN IN ISOLATION. THAT MOREOVER BUSINESS INFRASTRUCTURE WAS USE D FOR TAKING DECISION OF MAKING INVESTMENT. HENCE LEARNED CIT - A AFFIRMED THE ASSESSING OFFICERS ACTION. AGAINST ABOVE ORDER ASSESSEE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT ASSESSEE HAS NOT INCURRED ANY EXPENDITURE IN MAKING THE INVESTMENT IN EARNING THAT EXEMPT INCOME. HE REITERATED TH A T ASSESSING OFFICER HAS NOT RECORDED ANY SATISFACTION THAT ASSESSEE HAS INCURRED EXPENDITURE FOR MAKING THE INVESTMENT AND EARNING THE DIVIDEND INCOME, HE REITERATED THAT ASSESSEE HAS RECEIVED ADVANC E AND INVESTED THE SAME IN SUN LIFE MUTUAL FUND. THE INV ESTMENT WAS MADE T HROUGH FINANCIAL CONSULTANT I N THE OFFICE OF THE ASSESSEE WHO COLLECTE D THE APPLICATION FORM AND CHEQUE AND SUBMITTED THE SAME WITH THE MUTUAL FUND. THE DIVIDEND SMT. DULARI R. TRAILOKYA ITA NO.926/MUM./2016 5 WAS PAID AND THE SAME WAS REINVESTED, SO THERE WAS NO EFFORT MADE BY THE ASS ESSEE FOR DEPOSITING THE SAID INCOME TO TH E BANK. THE REDEMPTION PROCEEDS WERE DIRECTLY CREDITED WITH THE BANK ACCOUNT OF THE ASSESSEE. THE INVESTMENT WAS HELD ONLY FOR A PERIOD OF 20 DAYS DURING THE FINANCIAL YEAR UNDER REVIEW. IN THESE CIRCUMSTANCES WE A GREE WITH THE LEARNED COUNSEL OF THE ASSESSEE THAT NO COGENT MATERIAL HAS BEEN BROUGHT ON RECORD BY THE AUTHORITIES BELOW T O NEGATE ASSESSEES PLEA THAT NO EXPENDITURE H AVE ACTUALLY BEEN INCURRED TO EARN THE SAID DIVIDEND INCOME. IN THE SE CIRCUMSTANCES WE S ET ASIDE THE ORDERS OF AUTHORITIES BELOW AND HOLD THAT NO DISALLOWANCE SHOULD BE M ADE FOR EARNING THE EXEMPT DIVIDEND INCOME IN THIS CASE. IN THE RESULT THIS APPEAL BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 .02.2017 SD/ - SD/ - SANJAY GARG SHAMIM YAHIYA JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED : 28 .02.2017 SMT. DULARI R. TRAILOKYA ITA NO.926/MUM./2016 6 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE . TRUE COPY BY ORDER NISHANT VERMA SR. PRIVATE SECRETARY (DY./ASSTT.REGISTRAR) ITAT, MUMBAI