MEDITAB SPECIAKITIES PVT. LTD., Mumbai V. DCIT 2(2)(2), Mumbai

ITA 950/MUM/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4037 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2013-2014
• Appeal Filed On: 19-02-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIJAY JAISWAL
• Keywords: Earning of tax free income; Rule 8D
• Section: 14A; 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D, MUMBAI , , $ BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER & SHRI RAJESH KUMAR, ACCOUNTANT MEMBER . 950 //201 9 (. . 2013-14 ) ITA NO. 950/MUM/2019 (A.Y.2013-14) MEDITAB SPECIALITIES PVT. LTD. C-1, POOJA APARTMENTS, HARIYALI ESTATE, LBS MARG, VIKHROLI (W), MUMBAI-400083. PAN: AAACM6124A ...... - / APPELLANT VS. THE DCIT 2(2)(2), 5 TH FLOOR, AAYAKAR BHAVAN, M.M. MARG, MUMBAI 400020 ..... ./ RESPONDENT - 0/ APPELLANT BY : NONE . 0/ RESPONDENT BY : SHRI VIJAY JAISWAL (DR) 1 / DATE OF HEARING : 19/10/2020 1 / DATE OF PRONOUNCEMENT : 27/10/2020 / ORDER PER VIKAS AWASTHY, JM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-5, MUMBAI [IN SHORT THE (CIT(A)] DATED 2 ITA 950 MUM 201 9-MEDITAB SPECIALITIES PVT. LTD. 27.08.2018 FOR THE ASSESSMENT YEAR 2013-14. THE SOL ITARY ISSUE RAISED IN THE APPEAL BY THE ASSESSEE IS AGAINST THE DISALLOWANCE UNDER SECTION 14A OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS T HE ACT) R.W. RULE 8D OF INCOME TAX RULES. 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RE CORDS ARE: THE ASSESSEE IS ENGAGED IN MANUFACTURING OF PHARMACEUTICAL PRODU CTS. DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL, THE A SSESSEE MADE SUO-MOTO DISALLOWANCE UNDER SECTION 14A TO THE EXTENT OF RS. 21,93,202/- AS AGAINST THE TAX FREE DIVIDEND INCOME EARNED BY THE ASSESSEE FRO M MUTUAL FUNDS SCHEMES OF RS. 10,77,635/-. THE ASSESSING OFFICER IN SCRUTI NY ASSESSMENT PROCEEDINGS RE- COMPUTED THE DISALLOWANCE UNDER SECTION 14A R.W.RUL E 8D AND ENHANCED THE DISALLOWANCE BY RS. 13,50,570/-. THUS, MAKING THE T OTAL DISALLOWANCE OF RS. 35,43,772/- UNDER SECTION 14A OF THE ACT. 3. SHRI VIJAY JAISWAL REPRESENTING THE DEPARTMENT V EHEMENTLY DEFENDED THE IMPUGNED ORDER AND PRAYED FOR DISMISSING THE AP PEAL OF ASSESSEE. THE LD. DR SUBMITTED THAT THE CIT(A) HAS ALREADY GRANTED RE LIEF TO THE ASSESSEE IN DELETING THE DISALLOWANCE MADE UNDER SECTION 14A OF THE ACT BY FOLLOWING THE DECISION OF SPECIAL BENCH IN THE CASE OF VIREET INV ESTMENTS PVT. LTD. REPORTED AS 82 TAXMANN.COM 415. 4. WE FIND THAT IN GROUND NO. 1(D), THE ASSESSEE HA S RAISED AN ALTERNATE PLEA THAT THE DISALLOWANCE BE RESTRICTED TO THE EXE MPT INCOME EARNED DURING THE YEAR. THE SAID GROUND IS REPRODUCED HERE-IN-BEL OW: WITHOUT PREJUDICE TO ABOVE, THE LEARNED CIT(A) HA S ERRED IN NOT CONSIDERING THAT THE DISALLOWANCE UNDER SECTION 14A OF THE ACT SHOUL D NOT EXCEED THE AMOUNT OF EXEMPT INCOME EARNED DURING THE YEAR OF RS. 10,77,6 35/-. THE LEARNED CIT(A) OUGHT TO HAVE CONSIDERED THE ORDER OF HONOURABLE IT AT DATED 18.08.2017 IN 3 ITA 950 MUM 201 9-MEDITAB SPECIALITIES PVT. LTD. APPELLANTS OWN CASE FOR AY 2012-13, WHILE COMPUTIN G THE DISALLOWANCE UNDER SECTION 14A OF THE ACT 5. WE FIND MERIT IN GROUND 1(D) OF THE APPEAL BY AS SESSEE. THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF PRINCIPL E CIT VS. STATE BANK OF PATILA (393 ITR 476) HAS HELD THAT DISALLOWANCE UNDER SECT ION 14A SHOULD BE RESTRICTED TO THE EXEMPT INCOME EARNED. THE HONBLE SUPREME COURT OF INDIA IN THE CASE OF PRINCIPLE CIT VS. STATE BANK OF PATI LA REPORTED AS 99 TAXMANN.COM 286 HAS DISMISSED THE SLP OF REVENUE IN THE SAID CA SE. SIMILAR VIEW HAS BEEN TAKEN BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF PRINCIPLE CIT VS. BALLARPUR INDUSTRIES LTD. (ITA NO. 51/2016 DECIDED ON 13.10.2016). THUS, IN VIEW OF THE LAW SETTLED BY HONBLE APEX COURT AND T HE HONBLE JURISDICTIONAL HIGH COURT, WE FIND MERIT IN GROUND 1(D) OF THE APP EAL, HENCE, THE SAME IS ALLOWED. 6. SINCE, WE HAVE ACCEPTED GROUND NO. 1(D) OF THE A PPEAL, THE OTHER GROUNDS OF APPEAL RAISED WITHOUT PREJUDICE ON THE S AME ISSUE HAVE BECOME ACADEMIC, HENCE, NOT DELIBERATED UPON. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON TUESDAY THE 27 TH DAY OF OCTOBER, 2020. SD SD/- ./- SD/- ./- (RAJESH KUMAR) (VIKAS AW ASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / MUMBAI, 5/ DATED: 27/10/2020 S.K., PS . 6 . 6 . 6 . 6 COPY OF THE ORDER FORWARDED TO : 1. - / THE APPELLANT , 4 ITA 950 MUM 201 9-MEDITAB SPECIALITIES PVT. LTD. 2. . / THE RESPONDENT. 3. 7 ( )/ THE CIT(A)- 4. 7 CIT 5. . , . . . , / DR, ITAT, MUMBAI 6. : / GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI