SVS SECURITIES P. LTD, MUMBAI v. ACIT RG 4(2), MUMBAI

ITA 7442/MUM/2013 | 2010-2011
Pronouncement Date: 26-10-2016 | Result: Allowed

Appeal Details

RSA Number 744219914 RSA 2013
Assessee PAN AABCS5982K
Bench Mumbai
Appeal Number ITA 7442/MUM/2013
Duration Of Justice 2 year(s) 10 month(s) 9 day(s)
Appellant SVS SECURITIES P. LTD, MUMBAI
Respondent ACIT RG 4(2), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 26-10-2016
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted E
Tribunal Order Date 26-10-2016
Date Of Final Hearing 25-07-2016
Next Hearing Date 25-07-2016
Assessment Year 2010-2011
Appeal Filed On 17-12-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL E B ENCH MUMBAI BEFORE SHRI RAJENDRA ACCOUNTANT MEMBER AND SHRI C.N. PRASAD JUDICIAL MEMBER / I .TA NO. 7442/MUM/2013 ( / ASSESSMENT YEAR: 2010-11 M/S. SVS SECURITIES PVT. LTD. 32-B KHATAU BLDG. ALKESH DINESH MODI MARG FORT MUMBAI-400 023 / VS. THE ACIT RANGE - 4(2) AAYAKAR BHAVAN MUMBAI-400 020 ./ ./ PAN/GIR NO. AABCS 5982K ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY: SHRI VIRAG M. SHAH / RESPONDENT BY: SHRI R.K. SHAH / DATE OF HEARING :28.07.2016 ! / DATE OF PRONOUNCEMENT :26.10.2016 / O R D E R PER C.N. PRASAD JM: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A)-8 MUMBAI DATED 11.10.2013 PERTAINING TO ASS ESSMENT YEAR 2010-11. 2. THE ONLY ISSUE IN THE APPEAL OF THE ASSESSEE IS THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ORDER OF THE ASSESSI NG OFFICER IN RESPECT OF DISALLOWANCE U/S. 14A R.W.R 8D ON ACCOUN T OF STOCK IN TRADE IN CALCULATION OF AVERAGE INVESTMENTS AS PER RULE 8 DOF I.T. RULES. ITA NO. 7442/M/2013 2 3. THE MAIN CONTENTION OF THE ASSESSEE IN THIS APPE AL IS THAT FOR THE PURPOSE OF COMPUTING THE DISALLOWANCE U/S. 14A R.W. RULE 8D THE STOCK IN TRADE SHOULD BE EXCLUDED FOR THE PURPOSE O F COMPUTING AVERAGE INVESTMENTS AND FOR THIS PROPOSITION THE LD . COUNSEL FOR THE ASSESSEE PLACED RELIANCE ON THE DECISION OF THE HON 'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS INDIA ADVANTAGE SECURIT IES LTD (380 ITR 471). 4. THE LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED TH E ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND THE CASE LAW RELIED ON. THE ISSUE IN APPEAL HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE CO-OR DINATE BENCH IN VARIOUS DECISIONS. IN THE CASE OF M/S. FIDUCIARY E UROMAX GLOBAL MARKETS LTD. VS DCIT IN ITA NO. 1349/M/2012 & 95/M /14 DATED 29.6.2016 THE CO-ORDINATE BENCH CONSIDERING THE DE CISION OF THE BOMBAY HIGH COURT IN THE CASE OF INDIA ADVANTAGE SE CURITIES LTD. (SUPRA) HELD THAT THE INVESTMENTS HELD IN STOCK IN TRADE SHOULD BE EXCLUDED FOR THE PURPOSE OF COMPUTING DISALLOWANCE UNDER RULE 8D R.W. SECTION 14A OF THE ACT OBSERVING AS UNDER: 17. SO FAR AS THE NEXT CONTENTION THAT WHILE CALCUL ATING THE DISALLOWANCE UNDER SECTION 14A THE AMOUNT USED FOR THE PURCHASE OF THE SHARES WHICH ARE HELD AS STOCK IN TRADE IS REQU IRED TO BE EXCLUDED FROM THE PURVIEW OF DISALLOWANCE U/S 14 A OF THE ACT IS CONCERNED THE LD. A.R. IN THIS RESPECT HAS RELIED UPON THE DECI SION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF ' CIT VS. INDIA ADVANTAGE SECURITIES LTD .' IN ITA NO.1131 OF 2013 VIDE ORDER DATED 17.03.20 15 WHEREIN THE HON'BLE BOMBAY HIGH COURT HAS UPHELD THE FINDING OF THE TRIBUNAL HOLDING THAT WHILE MAKING THE DISALLOWANCE UNDER RU LE 8D THE SHARES HELD AS STOCK IN TRADE SHOULD NOT BE CONSIDERED; ON LY THE SHARES TAKEN AS INVESTMENT IN THE ACCOUNT BE CONSIDERED FOR COMP UTATION OF DISALLOWANCE OF EXPENDITURE UNDER RULE 8D. THE LD. A.R. HAS SUBMITTED THAT THE DIVIDEND EARNED IN RESPECT OF SH ARES HELD IN STOCK IN ITA NO. 7442/M/2013 3 TRADE IS INCIDENTAL TO THE BUSINESS OF THE ASSESSEE AND THE INVESTMENT IN THE SHARES HELD AS STOCK IN TRADE WAS NOT MADE FOR EARNING OF EXEMPT INCOME. 18. WE HAVE EXAMINED THE ABOVE CONTENTIONS OF THE LD. AR. WE FIND THAT THE TRIBUNAL IN THE CASE OF 'DCIT VS. IND IA ADVANTAGE SECURITIES LTD.' IN ITA NO.6711/M/2011 VIDE ORDER D ATED 14.09.2012 WHILE RELYING UPON THE DECISION OF THE HON'BLE KERA LA HIGH COURT IN THE CASE OF 'CIT VS. SMT. LEENA M/S. FIDUCIARY EURO MAX GLOBAL MARKETS LTD. RAMACHANDRAN (339 ITR 296) AND FURTHER ON THE DECISION OF THE HON'BLE HIGH COURT OF KARNATAKA IN THE CASE OF 'CCI LTD. VS. JCIT' 250 CTR 291 HAS HELD THAT DISALLOWAN CE UNDER SECTION 14A IN RELATION TO DIVIDEND RECEIVED FROM TRADING SHAR ES CANNOT BE MADE. THE SAID FINDING OF THE TRIBUNAL HAS BEEN UPH ELD BY THE HON'BLE JURISDICTIONAL BOMBAY HIGH COURT IN THE CASE OF ' CIT VS. INDIA ADVANTAGE SECURITIES LTD .' IN ITA NO.1131 OF 2013 VIDE ORDER DATED 17.03.2015 (SUPRA). THE SAID DECISION HOLDS BINDING PRECEDENT UPON THIS TRIBUNAL. MOREOVER THE ASSESSEE HAS ALREADY OF FERED THE DIVIDEND INCOME EARNED ON THE SHARES HELD AS STOCK IN TRADE AS BUSINESS INCOME OF THE ASSESSEE. 19. RESPECTFULLY FOLLOWING THE ABOVE REFERRED TO D ECISIONS OF THE HIGHER COURTS THIS ISSUE IS ACCORDINGLY DECIDED IN FAVOUR OF THE ASSESSEE AND THE DISALLOWANCE MADE BY THE AO IN THE CASE OF THE ASSESSEE UNDER SECTION 14A OF THE ACT IS HEREBY ORDERED TO BE DELETED. RESPECTFULLY FOLLOWING THE SAID DECISION WE ALLOW THE GROUND OF APPEAL OF THE ASSESSEE ON THIS ISSUE. 6. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH OCTOBER 2016. SD/- SD/- (RAJENDRA) (C.N. PRASAD ) ' / ACCOUNTANT MEMBER $ %' /JUDICIAL MEMBER MUMBAI; (' DATED 26 TH OCTOBER 2016 . % . ./ RJ SR. PS ITA NO. 7442/M/2013 4 !'#$#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ) ( ) / THE CIT(A)- 4. ) / CIT 5. *+ %%-. -.! / DR ITAT MUMBAI 6. /01 / GUARD FILE. / BY ORDER *% //TRUE COPY// / (DY./ASSTT. REGISTRAR) / ITAT MUMBAI