ACIT CEN CIR 22, V. SRIPAL S. MORAKHIA,

MA 137/MUM/2010

• Counselvise Citation: [2010] 123 COUNSELVISE.COM (IT) 4985 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 12 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 09-09-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 1999-2000
• Appeal Filed On: 26-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K SINGDR
• Keywords: Retrospective amendment
• Section: 14A

Judgement Text

1 MA NO137/MUM/2010 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E MUMBAI BEFORE SHRI D MANMOHAN, VP & SHRI R K PANDA, AM M.A NO. 137/MUM/2010 ARISING OUT OF ITA NO.3184/MUM/2007 (ASSESSMENT YEAR 1999-00) THE ASST COMMR OF INCOME TAX CEN.CIR 22, MUMBAI SHRI SRIPAL S MORKHAIA TULSIANI CHAMBERS NARIMAN POINT MUMBAI 21 (APPELLANT) VS (RESPONDENT) PAN AAHPM4512E ASSESSEE BY: SHRI HIRO RAI REVENUE BY: S K SING/DR O R D E R PER R K PANDA: THE REVENUE, THROUGH THIS MISCELLANEOUS APPLICATIO N REQUESTS THE TRIBUNAL TO RECALL/RECTIFY THE ORDER PASSED BY IT U/S 254(2) OF THE I T ACT. 2 IN THIS CASE, THE ASSESSING OFFICER HAD DISALLOWED AN AMOUNT OF `. 23,93,206/- U/S 14A OF THE I T ACT ON THE GROUND THAT BORROWED FUNDS HAVE BEEN UTILISED IN INVESTMENT OF SHARES, THE DIVIDEND INCOME OF WHICH IS EXEMPT FROM TAX. ON APPEAL, THE CIT(A), ON THE BASIS OF THE ORDER FOR THE PRECE DING YEAR, RESTRICTED SUCH DISALLOWANCE TO `. 8,80,796/-. WHEN THE MATTER CAME BEFORE THE TRIBUNA L, THE TRIBUNAL DISMISSED THE APPEAL FILED BY THE REVENUE ON THE GROUND THAT THERE IS NO FRESH INVESTMENT DURING THE YEAR AND THE NET INTERE ST FREE LOAN AVAILABLE WITH THE ASSESSEE HAS GONE UP TO ` 11.73 CRORES DURING THE YEAR AS AGAINST ` 11.15 CRORES IN THE PRECEDING YEAR. SINCE THE CIT(A) HAS RESTRIC TED THE DISALLOWANCE U/S 14A TO ` .8,08,796/- IN THE PRECEDING ASSESSMENT YEAR; THERE FORE, IN ABSENCE OF ANY CONTRARY 2 MA NO137/MUM/2010 DECISION, THE TRIBUNAL UPHELD THE ACTION OF THE CIT (A) IN RESTRICTING THE DISALLOWANCE U/S 14A TO ` 8,80,796/-. 3 THE REVENUE, THROUGH THIS MISCELLANEOUS APPLICATI ON HAS SUBMITTED AS UNDER: THE ITAT HAS RESTRICTED THE DISALLOWANCE U/S 14A A MOUNTING TO ` 23,93,206/- TO ` 8,80,796/- HOLDING THAT THE AMOUNT OF DISALLOWANCE CANNOT EXCEED THE DISALLOWANCE MADE IN THE EARLIER YEAR. THE PROVISIONS OF SECTION 14A HAVE BEEN INSERTED BY THE FINANCE ACT, 2001 WITH RETROSPECTIVE EFFECT FROM 1.4.1962. THE METHOD OF COMPUTING THE DISALLOWANCE HAS BEEN PRESCRIBED IN RULE 8D. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAD CLEARLY BROUGHT OUT THE FACT THAT THE ENTIRE INVEST MENT IN SHARES HAD BEEN MADE OUT OF BORROWED CAPITAL AND HENCE THE INTEREST OF ` . 23,93,206/ IS CLEARLY DISALLOWABLE. THE EXPENSES ATTRIBUTABLE TO INVESTMENT IN SHARES OUGHT TO BE WORKED OUT IN ACCORDANCE WITH THE METHOD PRES CRIBED IN RULES 8D . 4 AFTER CONSIDERING THE RIVAL ARGUMENTS MADE BY BOT H SIDES, WE DO NOT FIND ANY MISTAKE APPARENT FROM THE ORDER OF THE TRIBUNAL. TH E TRIBUNAL HAS GIVEN A CLEAR CUT FINDING THAT THERE IS NO INCREASE IN THE INVESTMENT S DURING THE YEAR IN COMPARISON TO THE INVESTMENTS IN THE PRECEDING YEAR. FURTHER, IN TEREST FREE LOANS HAS ALSO GONE UP FROM `. 11.15 CRORES IN THE PRECEDING YEAR TO ` 11.73 CRORES DURING THE IMPUGNED YEAR. SINCE THE ISSUE HAS BEEN DECIDED ON THE FACT S OF THE CASE AND SINCE THE LD DR COULD NOT POINT OUT ANY MISTAKE APPARENT IN THE ORD ER OF THE TRIBUNAL; THEREFORE, THE MISCELLANEOUS APPLICATION FILED BY THE REVENUE DESE RVES TO BE DISMISSED. THE SAME IS ACCORDINGLY DISMISSED. 5 IN THE RESULT, THE MISCELLANEOUS APPLICATION FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON THE 9 TH DAY OF SEPT 2010. SD/- SD/- (D MANMOHAN ) VICE PRESIDENT ( R K PANDA ) ACCOUNTANT MEMBER PLACE: MUMBAI : DATED:9 TH SEPT 2010 RAJ* 3 MA NO137/MUM/2010 COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI