RAJKUMAR DEVANSH (HUF), MUMBAI v. ADDL. CIT RG-12(2), (NOW ASSESSED WITH ACIT-17(2)), MUMBAI

ITA 700/MUM/2018 | 2011-2012
Pronouncement Date: 28-11-2019 | Result: Allowed

Appeal Details

RSA Number 70019914 RSA 2018
Assessee PAN AACHR1090M
Bench Mumbai
Appeal Number ITA 700/MUM/2018
Duration Of Justice 1 year(s) 9 month(s) 23 day(s)
Appellant RAJKUMAR DEVANSH (HUF), MUMBAI
Respondent ADDL. CIT RG-12(2), (NOW ASSESSED WITH ACIT-17(2)), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 28-11-2019
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted D
Tribunal Order Date 28-11-2019
Last Hearing Date 18-03-2019
First Hearing Date 18-03-2019
Assessment Year 2011-2012
Appeal Filed On 05-02-2018
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D MUMBAI BEFORE SHRI C.N. PRAS AD HON'BLE JUDICIAL MEMBER AND SHRI S. RIFAUR REHMAN HON'BLE ACCOUNTANT MEMBER IT A. NO. 700 /MUM/201 8 (A.Y: 2011 - 12) RAJKUMAR DEVANSH (HUF) B - 66/67 6 TH FLOOR B - WING MITTAL TOWER NARIMAN POINT MUMBAI 400 021 PA N: AACHR1090M V. ADDL. COMMISSIONER OF INCOME TAX RANGE 12(2) {NOW ASSESSED WITH ACIT 17(2)} 1 ST FLOOR AAYAKAR BHAVAN M.K. ROAD MUMBAI 400 0 20 (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI DHARMESH SHAH SHRI DHAVAL SHAH DEPARTMENT BY : JOTHI L AKSHMI NAYAK DATE OF HEARING : 30 .09.2019 DATE OF PRONOUNCEMENT : 28 .11 .2019 O R D E R PER C.N. PRASAD (JM) 1. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) - 28 MUMBAI [HEREINAFTER FOR SHORT 'LD. CIT(A)] DATED 08.12.2017 FOR THE A.Y. 2011 - 12. 2. THE FIRST GROUND IN THE GROUNDS OF APPEAL OF THE ASSESSEE IS IN RESPECT OF DISALL OWANCE MADE U/S. 36(1)(I II) OF THE ACT. 2 ITA.NO. 700/MUM/2018 (A.Y: 2011 - 12) RAJKUMAR DEVANSH (HUF) 3. AT THE OUTSET LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ASSESSEE IS HAVING CAPITAL AND RESERVES OF .37 CRORES AS ON 01.04.2011 AND ASSESSEE HAS SUFFICIENT INTEREST FREE FUNDS FOR MAKING INVESTMENTS AND THERE IS N O LIABILITY AS ON LAST DATE OF THE YEAR. THEREFORE NO DISALLOWANCE U/S. 36(1)(III) IS WARRANTED. RELIANCE WAS PLACED ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF RELIANCE INDUSTRIES LTD IN CA.NO. 10 OF 2019 DATED 02.01.2019 DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF RELIANCE UTILITIES AND POWER LTD [ 313 ITR 340]. 4. ON THE OTHER HAND LD. DR STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE HEARD THE RIVAL SUBMIS SIONS AN D PERUSED THE ORDERS OF THE AUTHORITIES BELOW. WE HAVE GONE THROUGH THE BALANCE SHEET AND PROFIT & LOSS ACCOUNT AND FIND THAT THERE IS MERIT IN THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE. THEREFORE IN VIEW OF THE SUBMISSION S MADE WE ARE OF THE VIEW THAT THIS MATTER HAS TO GO BACK TO THE FILE OF THE ASSESSING OFFICER FOR DENOVO ADJUDICATION IN THE LIGHT OF THE DECISIONS RELIED ON BY THE ASSESSEE. THUS WE RESTORE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR DENOVO ADJUDICATION AFTE R PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 3 ITA.NO. 700/MUM/2018 (A.Y: 2011 - 12) RAJKUMAR DEVANSH (HUF) 6. COMING TO GROUND NO.2 OF THE GROUNDS OF APPEAL IT RELATES TO THE DISALLOWANCE U/S. 14A R.W. RULE 8D(2)(III) OF I.T. RULES. LD. COUNSEL FOR THE ASSESSEE SUBMIT T E D THAT FOR THE PURPOSE OF COMP UTING AVERAGE VALUE OF INVESTMENTS ONLY THOSE INVESTMENTS WHICH YIELD DIVIDEND INCOME SHOULD BE CONSIDERED IN VIEW OF THE DECISION OF THE SPECIAL BENCH OF DELHI IN THE CASE OF ACIT V. VIREET INVESTMEN TS PRIVATE LIMITED [165 ITD 27]. IT IS ALSO SUBMITTED T HAT LD. CIT(A) HELD THAT EVEN THE INVESTMENTS SOLD SHOULD BE CONSIDERED IN ARRIVING AT AVERAGE VALUE OF INVESTMENTS WHEN IT IS NOT SPECIFIED IN THE PROVISIONS OF RULE 8D(2)(III) OF I.T. RULES. 7. ON THE OTHER HAND LD. DR STRONGLY SUPPORTED THE O RDERS OF THE AUTHORITIES BELOW. 8. ON HEARING BOTH THE SIDES WE ARE OF THE VIEW THAT THIS ISSUE SHOULD GO BACK TO THE FILE OF THE ASSESSING OFFICER AND ASSESSING OFFICER SHALL COMPUTE THE DISALLOWANCE KEEPING IN VIEW THE DECISION OF THE SPECIAL BENCH OF DELHI IN THE CASE OF ACIT V. VIREET INVESTMENTS PRIVATE LIMITED (SUPRA) . FURTHER WE OBSERVE THAT A PPARENTLY THE PROVISION OF RULE 8D(2)(III) OF IT. RULES DO NOT SPECIFY THAT THE INVESTMENTS WHICH WERE SOLD SHOULD ALSO BE CONSIDERED FOR THE PURPOSE OF COMPUTING THE AVERAG E VALUE OF INVESTMENTS. THE PROVISION SPECIFIES ONLY THE OPENING AND CLOSING INVESTMENTS BUT DOES NOT INCLUDE THE INVESTMENTS SOLD. HENCE THIS FINDING 4 ITA.NO. 700/MUM/2018 (A.Y: 2011 - 12) RAJKUMAR DEVANSH (HUF) OF THE LD. CIT(A) IS CONTRARY TO THE PROVISIONS OF RULE 8D(2)(III) OF I.T. RULES. THUS THE ISSUE IS R ESTORED TO THE FILE OF THE ASSESSING OFFICER FOR RE - COMPUTING THE DISALLOWANCE U/S. 14A R.W. RULE 8D(2)(III) OF I.T. RULES KEEPING IN VIEW THE DECISION OF THE SPECIAL BENCH IN THE CASE OF ACIT V . VIREET INVESTMENTS PRIVATE LIMITED (SUPRA). 9. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THE 28 TH NOVEMBER 2019 SD/ - SD/ - ( S. RIFAUR REHMAN ) (C.N. PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI / DATED 28 / 1 1 / 2019 GIRIDHAR S R. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) MUMBAI. 4. CIT 5. DR ITAT MUMBAI 6. GUARD FILE. //TRUE COPY// BY ORDER (ASSTT. REGISTRAR) ITAT MUM