DCIT, New Delhi v. M/s. Mercantile Capital & Financial Services Pvt. Ltd., New Delhi

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E NEW DELHI BEFORE SHRI J. SUDHAKAR REDDY ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA JUDICIAL MEMBER ITA NO. 114 4 /DEL/201 4 AY: 20 10 - 11 D CIT CIRCLE 6 (1) VS. MERCANTILE CAPITAL & FINANCIAL N EW DELHI SERVICES P.LTD. G 71 GROUND FLOOR WORLD TRADE CENTRE BARAKHAMBA ROAD NEW DELHI 110 001 PAN: AAACD 9678 C (APPELLANT) (RESPONDENT) APPELLANT BY : SH. RAJESH KUMAR SR.D.R RESPONDENT BY : SH. SALIL AGGARWAL ADV. ORDER PER J.S UDHAKAR REDDY ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE REVENUE DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IX NEW DELHI DATED 12.12.2013 PERTAINING TO THE ASSESSMENT YEAR (A.Y.) 2010 - 11. 2. AFTER HEARING RIVAL SUBMISSIONS WE FIND THAT THE DIVIDEND EARNED BY THE ASSESSEE COMPANY IS RS.31 198/ - . THE ASSESSEE HAS SUO MOTO DISALLOWED AN AMOUNT OF RS.38 14 783/ - U/S 14A 2 OF THE ACT. THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. TAIKISHA ENGINEER ING INDIA LTD. 370 ITR 358 (DEL.) HAS HELD THAT WITHOUT RECORDING OBJECTIVE SATISFACTION AS REQUIRED UNDER SUB SECTION (2) TO S.14A OF THE INCOME TAX ACT 1961 (THE ACT) THAT THE A.O. IS NOT SATISFIED WITH THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE IN R ESPECT OF EXPENDITURE INCURRED IN RELATION TO EXEMPT INCOME RULE 8D OF ITAT RULES 1962 CANNOT BE INVOKED. 3. THE DELHI A BENCH OF THE TRIBUNAL IN ITA 2358/DEL/2013 IN THE CASE OF M/S AMAR PACKAGING P VT.LTD. VS. ITO ORDER DT. 29.4.2016 RELIED ON THE DECI SION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF JOINT INVESTMENTS PVT. LTD. VS. CIT (2015) 372 ITR 694 (DEL.) AND AT PARA 12 HELD AS FOLLOWS. 12. IN THE INSTANT CASE AO WORKED OUT THE DISALLOWANCE AS PER SECTION 14A READ WITH RULE 8D OF THE INCOME TAX RULES 1962 WHICH IS NOT SUSTAINABLE IN THE VIEW OF LAW LAID DOWN BY HON BLE JURISDICTIONAL HIGH COURT IN JUDGEMENT CITED AS JOINT INVESTMENTS PVT. LTD. VS. CIT (SUPRA) DISCUSSED IN PRECEDING PARA 11 AS THE DISALLOWANCE CANNOT EXCEED THE INCOME CLAIME D BY THE ASSESSEE AS EXEMPT INCOME. WE THEREFORE RESTRICT THE DISALLOWANCE OF RS.7 01 194/ - PARTICULARLY WHEN THE ASSESSEE HAS NOT PROVED ON RECORD AS TO HOW HIS FIGURE OF RS.54 217/ - WAS WORKED OUT. CONSEQUENTLY THE PRESENT APPEAL FILED BY THE ASSES SEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 3 3.1. AS THE DISALLOWANCE MADE BY THE ASSESSEE SUO MOTTO IS MORE THAN THE DIVIDEND INCOME EARNED BY IT WE UPHOLD THE CONTENTIONS OF THE ASSESSEE. 4 . IN THE RESULT THE APPEAL BY THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH S EPTEMBER 2016. SD/ - SD/ - (SUDHANSHU SRIVASTAVA) (J. SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: THE 29 TH SEPTEMBER 2016 M ANGA COPY FORWARDED TO: - 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR ITAT - TRUE COPY - BY ORDER ASSISTANT REGISTRAR ITAT DELHI BENCHES NEW DELHI