RADHA MADHAV INVESTMENTS LTD, MUMBAI v. DCIT 3(3), MUMBAI

ITA 3897/MUM/2012 | 2008-2009
Pronouncement Date: 23-10-2013 | Result: Allowed

Appeal Details

RSA Number 389719914 RSA 2012
Assessee PAN AAACR4063M
Bench Mumbai
Appeal Number ITA 3897/MUM/2012
Duration Of Justice 1 year(s) 4 month(s) 19 day(s)
Appellant RADHA MADHAV INVESTMENTS LTD, MUMBAI
Respondent DCIT 3(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 23-10-2013
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted D
Tribunal Order Date 23-10-2013
Date Of Final Hearing 15-10-2013
Next Hearing Date 15-10-2013
Assessment Year 2008-2009
Appeal Filed On 04-06-2012
Judgment Text
INCOME TAX APPELLATE TRIBUNAL MUMBAI - D BENCH. . . .. . . .. . !' !' !' !' ! ! ! ! BEFORE S/SH.I.P.BANSAL JUDICIAL MEMBE R & RAJENDRA ACCOUNTANT MEMBER /. /./. /. ITA NO.3897/MUM/2012 $ % $ % $ % $ %/ // / ASSESSMENT YEAR-2008-09 RADHA MADHAV INVESTMENT LTD. 11-A MITTAL CHAMBERS NARIMAN POINT MUMBAI- 400021 VS. DCIT 3(3) AAYAKAR BHAVAN MUMBAI. PAN: AAACR4063M ( &' / // / APPELLANT ) ( ()&' / RESPONDENT ) $ *+ ! $ *+ ! $ *+ ! $ *+ ! / // / ASSESSEE BY : SHRI ARVIND DALAL & SHRI RAJESH CHAMARIA - ! / REVENUE BY : SHRI D. PRABHAKAR REDDY $ - + $ - + $ - + $ - + / // / DATE OF HEARING : 15-10-2013 ./% - + / DATE OF PRONOUNCEMENT : 23-10-2013 $ $ $ $ 1961 - - - - 254 ) )) ) 1 ( (( ( ! +2+ !3 ! +2+ !3 ! +2+ !3 ! +2+ !3 ORDER U/S.254(1)OF THE INCOME-TAX ACT 1961(ACT) PER RAJENDRA AM: CHALLENGING THE ORDER DATED 16.01.2012 OF THE CIT(A )-7 MUMBAI ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1.THE LD. CIT (A) ERRED IN LAW AND FACTS IN ADJUDICATING GROUND NO. I ON THE BASIS OF SUBMISSIONS MADE ON GROUND NO. 2. THE REASONS GIVEN BY HIM FOR DOING SO ARE WRONG AND CONTR ARY TO THE FACTS OF THE CASE AND AGAINST THE PROVISIONS OF LAW. 2.THE LD. CIT (A) ERRED IN LAW AND FACTS IN REPRODUCING SUBMIS SIONS MADE BY THE ASSESSEE ON GROUND NO.2 BUT NOT ADJUDICATING THE GROUND NO 2. THE REASONS GIVEN BY HIM FOR DOING SO ARE WRONG AND CONTRARY TO THE FACTS OF THE CASE AND AGAINST THE PROVISIONS OF LAW. WITHOUT PREJUDICE TO THE ABOVE 3.THE LD.CIT(A) I LD A.O. ERRED IN LAW AND FACTS IN UPHOLDI NG ADDITION OF RS.4 49 81 339/- TO BOOK PROFITS U/S 115JB OF THE ACT BEING DISALLOWANCE OF EXPENSES U/S 14A OF THE ACT. THE REASONS GIVEN BY HIM FOR DOING SO ARE WRONG AND CONTRARY TO THE FACTS OF THE CASE AND AGAINST THE PROVISIONS OF LAW. 4.THE LD. CIT(A) / LD A.O. ERRED IN LAW AND FACTS IN UPHO LDING DISALLOWANCE RS.4 49 81 339/- U/S 14A OF THE ACT OUT OF EXPENSES INCLUDING WITH REFERENCE TO INVESTMENT OF R S. 384 CRORES IN PARTNERSHIP FIRM. THE REASONS GIVEN BY HIM FOR DOING SO ARE WRONG AND CONTRARY TO THE FACTS OF THE CASE AND AGAINST THE PROVISIONS OF LAW. (II) THE LD.CIT (A)/LD A.O. OUGHT TO HAVE HELD THAT PROVISIONS OF SECTION 14A OF THE ACT ARE NOT APPLICABLE TO INVESTMENTS MADE IN PARTNERSHIP FIRM AS INCOME THERE FRO M IS NOT EXEMPT. 5.WITHOUT PREJUDICE TO THE ABOVE THE LD. CIT (A) I LD A.O . OUGHT TO HAVE HELD THAT THERE IS NO EXPENSES INCURRED FOR EARNING THE INCOME FROM OR MAINTAIN THE INVESTMENTS AND HENCE DISALLOWANCE U/S 14 A IS WRONGLY DONE. 6.THE APPELLANT CRAVES THE LEAVE TO ADD AMEND OR ALTER ALL OR ANY OF THE GROUNDS OF APPEAL. ASSESSE-COMPANY ENGAGED IN THE BUSINESS OF TRADING IN RAW COTTON-BALES GAUR-SEEDS FINANCING AND INVESTING IN SHARES AND SECURITY FILED ITS RETURN O F INCOME ON 30.09.2008 DECLARING TOTAL INCOME OF RS.59 87 66 411/-.ON 27.03.2010 A REVISED RETURN OF INCOME DECLARING TOTAL INCOME AT RS.60.85 CRORES WAS FILED.ASSESSING OFFICER(AO)FINALISED THE ASSESSMENT U/S.143(3) OF THE ACT ASSESSING TOTAL INCOME AT RS.60 85 11 410/- UNDER THE NORMAL PROVISIONS AND DETERMINING THE BOOK PROFIT AT 2 ITA NO. 3897/MUM/2012 RADHA MADHAV INVESTMENT LTD. RS.6 42 02 92 729/- U/S. 115JB OF THE ACT.WHILE FINALISING THE ASSESSMENT HE ADDED RS.4 49 81 399/- U/S.14A R.W.S.RULE 8D OF THE ACT. 2. ASSESSEE HAD FILED SIX GROUNDS OF APPEAL.BEFORE US AUTHORISED REPRESENTATIVE (AR) OF THE ASSESSEE DID NOT PRESS GROUNDS NO.1 2 4 AND 5.THE REFORE SAME ARE DISMISSED AS NOT PRESSED. IT LEAVES US WITH ONLY ONE GROUND OF APPEAL (GOA NO .3) PERTAINING TO ADDITION OF RS. 4.49 CRORES MADE U/S.14A OF THE ACT TO THE BOOK PROFITS.DURING THE ASSESSMENT PROCEEDINGS AO FOUND THAT THE ASSESSEE HAD CLAIMED DIVIDEND INCOME OF RS. 14.18 C RORES BEING EXEMPT U/S. 10(34) OF THE ACT.HE FURTHER FOUND THAT IT HAD ALSO SHARE OF PROFIT IN P ARTNERSHIP FIRM AT RS. 3.65 LACS WHICH WAS CLAIMED AS EXEMPT U/S. 10(29) OF THE ACT.WHILE FINALISING T HE ASSESSMENT AO DISALLOWED EXPENSES OF RS. 4.49 CRORES CALCULATING @ OF .5% OF THE AVERAGE INV ESTMENT OUT OF THE BUSINESS EXPENSES OF RS. 11.43 CRORES. 2.1. ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPEL LATE AUTHORITY (FAA). AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE ASSESSMENT ORDER FAA HELD THAT RULE 8D WAS APPLICABLE IN THE CASE UNDER CONSIDERATION.HE REFERRED TO THE DECISION DELIVERED BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF GODREJ AND BOYCE MANUFACTURING CO. LTD.(328ITR81).HE FOUND THAT ASSESSEE HAD DISALLOWED RS. 4.49 CRORES U/S. 14A OF THE ACT AS PER RULE 8D WHILE THE RETURN OF INCOME THAT AO HAD ADDED THE SAME AMOUNT FOR CALCULATING T HE BOOK PROFITS U/S. 115JB OF THE ACT.HE HELD THAT ADDITION MADE BY THE AO WAS JUSTIFIED AND DISM ISSED THE APPEAL FILED BY THE ASSESSEE. 2.2. BEFORE US AUTHORISED REPRESENTATIVE(AR) OF THE ASSE SSEE RELIED UPON THE ORDERS OF GOETZE (INDIA) LTD.(32 SOT 101) BENGAL FINANCE AND INVESTM ENT PVT. LTD. (ITA NO. 5937/MUM/2012- 31.07.2012) RELIANCE CAPITAL LTD.(ITA NO. 3037/MUM /2008 2155/MUM/2008-15.02.2013) RELIANCE INDUSTRIAL INFRASTRUCTURE LTD.(ITA NO. 69- 70/MUM/2009- 5.4.2013) AND RELIANCE INDUSTR -IES LTD.(ITA NO. 4475/MUM/2007- 13.09.2013). DEPAR TMENTAL REPRESENTATIVE (DR) RELIED UPON THE ORDERS OF THE FAA. 2.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED TH E MATERIAL BEFORE US.WE FIND THAT ISSUE OF DISALLOWANCE U/S.14A OF THE ACT WHILE CALCULATING B OOK PROFITS U/S. 115JB OF THE ACT HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL I N THE CASES REFERRED ABOVE BY THE AR.WE FIND THAT FOLLOWING DECISIONS OF THE GOETZE INDIA LTD. ( SUPRA) K BENCH OF MUMBAI TRIBUNAL IN THE CASE OF RELIANCE INDUSTRIES LTD.(SUPRA) HAS HELD TH AT PRINCIPAL OF APPORTIONMENT AS PROVIDED U/S. 14A SHOULD NOT BE APPLIED WHILE COMPUTING THE BOOK PROFIT U/S. 115JB OF THE ACT. IN SO FAR AS DISALLOWANCE OF ADMINISTRATIVE EXPEN SES U/S 14A OF THE ACT IS CONCERNED FOR EARNING EXEMPT INCOME OF RS. 345 69 24 696/- WE ARE OF THE CONSIDERED VIEW THAT BY FOLLOWING THE ORDER OF LD. CIT(A) FOR THE PRECEDING ASSESSMENT YEAR I.E. ASSES SMENT YEAR 2002-03 IT WILL BE FAIR AND REASONABLE TO RESTRICT THE DISALLOWANCE TO 1 % OF THE EXEMPT I NCOME WHICH WORKS OUT TO RS. 3 45 69 250/-. HOWEVER IN REGARD TO DISALLOWANCE U/S 14A FOR COMP UTING BOOK PROFIT U/S 115JB OF THE ACT WE OBSERVE THAT SIMILAR ISSUE HAD COME UP BEFORE THE T RIBUNAL MUMBAI BENCH IN THE CASE OF RELIANCE INDUSTRIAL INFRASTRUCTURE LTD V/S ADDL. CIT IN ITA NOS. 69 AND 70/MUM/2009 (AY-2005-06 AND 2006- 07) AND TRIBUNAL VIDE ORDER DATED 5.4.2013 AFTER FO LLOWING THE DECISION OF DELHI BENCH OF TRIBUNAL IN GOETZE (INDIA) LTD (32 SOT 101) (DEL) AND THE DECIS ION OF MUMBAI BENCH OF THE TRIBUNAL IN M/S BENGAL FINANCE AND INVESTMENT P. LTD. IN ITA NO. 56 20/MUM/2010 DATED 31.07.2012 HAS HELD THAT WHILE COMPUTING BOOK PROFIT U/S 115JB OF THE ACT P ROVISIONS OF SECTION 14A CANNOT BE IMPORTED. THEREFORE AMOUNT DISALLOWED U/S 14A OF THE ACT CAN NOT BE CONSIDERED WHILE COMPUTING BOOK PROFIT U/S 115JB OF THE ACT. ACCORDINGLY THE ISSUE WAS DECIDE D IN FAVOUR OF THE ASSESSEE. IN VIEW OF ABOVE GROUND NO.4 OF THE APPEAL TAKEN BY THE ASSESSEE IS ALLOWED IN PART BY RESTRICTING THE DISALLOWANCE TO RS. 3 45 69 250/- TOWARDS ADMINISTR ATIVE AND GENERAL EXPENSES U/S 14A OF THE ACT TOWARDS EARNING OF EXEMPT INCOME U/S 10(23G) OF THE ACT WHILE COMPUTING TOTAL TAXABLE INCOME UNDER THE3 NORMAL PROVISIONS OF ACT. HOWE3VER NO DISALLO WANCE UNDER SECTION 14A BE CONSIDERED WHILE 3 ITA NO. 3897/MUM/2012 RADHA MADHAV INVESTMENT LTD. COMPUTING BOOK PROFIT U/S 115JB OF THE ACT. CONSEQU ENTLY GROUND NO.4 TAKEN BY THE DEPARTMENT IS REJECTED. FOLLOWING THE ABOVE GROUND NO.3 IS DECIDED IN FAVOU R OF THE ASSESSEE. AS A RESULT APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. * 4 $ *+ - 5 - + 67. ORDER PRONOUNCED IN TH E OPEN COURT ON 23 RD OCTOBER 2013 . !3 - ./% ! 8 9$ 23 :; 5 2013 / - 2 < SD/- SD/- ( . .. . . / I.P.BANSAL ) ( !' !' !' !' / RAJENDRA) / JUDICIAL MEMBER ! ! ! ! /ACCOUNTANT MEMBER / MUMBAI 9$ /DATE: 23 .10. 2013 SK !3 - (+= >!=%+ !3 - (+= >!=%+ !3 - (+= >!=%+ !3 - (+= >!=%+/ COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / &' 2. RESPONDENT / ()&' 3. THE CONCERNED CIT(A)/ ? @ 4. THE CONCERNED CIT/ ? @ 5. DR D BENCH ITAT MUMBAI / =A2 (+$ . . . 6. GUARD FILE/ 2 B )=+ (+ )=+ (+ )=+ (+ )=+ (+ //TRUE COPY// !3$ / BY ORDER C / 6 DY./ASST. REGISTRAR /ITAT MUMBAI