WINDIA INFRASTRUCTURE FINANCE LTD, MUMBAI v. ASST CIT RG 1(3), MUMBAI

ITA 7639/MUM/2014 | 2010-2011
Pronouncement Date: 30-09-2016 | Result: Allowed

Appeal Details

RSA Number 763919914 RSA 2014
Assessee PAN AAACG1345D
Bench Mumbai
Appeal Number ITA 7639/MUM/2014
Duration Of Justice 1 year(s) 9 month(s) 7 day(s)
Appellant WINDIA INFRASTRUCTURE FINANCE LTD, MUMBAI
Respondent ASST CIT RG 1(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 30-09-2016
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted G
Tribunal Order Date 30-09-2016
Assessment Year 2010-2011
Appeal Filed On 23-12-2014
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL BENCH G MU MBAI BEFORE SHRI B.R.BASKARAN ACCOUNTANT MEMBER AN D SHRI PAWAN SINGH JUDICIAL MEMBER ITA NO. 7639/MUM/2014 FOR AY - 2010-11 M/S WINDIA INFRASTRUCTURE FINANCE LTD. EMPIRE HOUSE 214 D. N. ROAD A.K. NAYAK MARG FORT MUMBAI-400001 PAN: AAACG1345D V S. THE ACIT-RANGE 1(3) AAYAKAR BHAVAN MUMBAI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI ANUJ KRISNADWA LA (AR) REVENUE BY : SHRI VIVEK PERAMPUR NA (SR. DR) DATE OF HEARING : 27.07.2016 DATE OF PRONOUNCEMENT : 30.09.2016 O R D E R PER PAWAN SINGH JM: 1. 1. THIS APPEAL U/S. 253 OF THE INCOME-TAX ACT IS DI RECTED BY ASSESSEE AGAINST THE ORDER OF CIT(A)-2 MUMBAI DATED 20.10.2014 FOR ASSESSMENT YEAR (AY) 2010-11). 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE FILED RET URN OF INCOME FOR THE RELEVANT AY ON 30.09.2010 DECLARING TOTAL INCOME OF RS. 3 66 08 240/-. INITIALLY THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT. SUB SEQUENTLY IT WAS SELECTED FOR SCRUTINY. WHILE FRAMING THE ASSESSMENT THE ASSESSI NG OFFICER (AO) OBSERVED THAT ASSESSEE RECEIVED DIVIDEND INCOME OF RS. 8 30 693/- WHICH WAS CLAIMED AS EXEMPTED U/S 10(34). THE ASSESSEE WAS ASKED TO EXPL AIN WHY DISALLOWANCE U/S. 14A R.W. RULE 8D SHOULD NOT BE INVOKED. THE ASSESSE E FILED ITS REPLY AND CONTENDED THAT THERE IS NO EXPENDITURE HAS INCURRED TO EARN TO EXEMPT INCOME THEREFORE NO DISALLOWANCE IS CALLED FOR. THE CONTE NTION OF THE ASSESSEE WAS NOT ACCEPTED AND THE AO WORKED OUT THE DISALLOWANCE AS PER SECTION 14A R.W. RULE 8D AND CALCULATED THE DISALLOWANCE OF RS. 5 17 407/ -. A THE ASSESSEE HAS ALREADY 2 ITA NO. 7639/M/2014 M/S WINDIA INFRASTRUCTURE FINAN CE LTD. DISALLOWED A SUM OF RS. 1 24 349/- THUS A SUM OF RS . 3 92 508/- (5 10 407/- 1 24 349/-) WAS ADDED IN THE INCOME OF ASSESSEE. A GGRIEVED BY THE ORDER OF AO THE ASSESSEE FILED APPEAL BEFORE THE CIT(A) WHEREI N THE DISALLOWANCE WAS RESTRICTED TO RS. 3 15 878/- HOLDING THAT DISALLOWA NCE OF RS. 77 630/- MADE UNDER RULE 8D(2)(II) WAS NOT WARRANTED. FURTHER AGG RIEVED BY THE ORDER OF AO THE ASSESSEE FILED THE PRESENT APPEAL BEFORE US AGA INST SUSTAINING THE DISALLOWANCE OF RS. 3 15 878/- U/S. 14A OF THE ACT. 3. WE HAVE HEARD LD. AUTHORISED REPRESENTATIVE (AR) OF THE ASSESSEE AND LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR REVENUE AN D PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. AR FOR ASSESSEE ARGUE D THAT THE ASSESSEE HAS MADE INVESTMENT ONLY IN SUBSIDIARIES AND ITS GROUP CONCE RNS. NO ADMINISTRATIVE COST WAS INCURRED AND HENCE NO DISALLOWANCE WAS CALLED F OR U/S 14A R.W. RULE 8D(2)(III). THE LD. AR OF THE ASSESSEE FURTHER ARG UED THAT THE DISALLOWANCE MADE BY AO ON ADMINISTRATIVE EXPENSES IS TOO EXCESS IVE. THE AO DISALLOWED RS. 4 39 777/- WHICH IS 19.55% OF THE DIVIDEND INCO ME OF RS. 8 30 613/-. IT WAS FURTHER ARGUED THAT THE AO HAS NOT RECORDED ANY DIS SATISFACTION BEFORE CALCULATING THE DISALLOWANCE. ON THE OTHER HAND LD . DR FOR REVENUE ARGUED THAT ASSESSEE HAS NOT ATTRIBUTED ANY EXPENSES TOWARD EAR NING OF EXEMPT INCOME. IT WAS FURTHER ARGUED THAT ADMINISTRATIVE EXPENSES AS WELL AS OTHER RELATED EXPENSES RELATING TO EARNING THE DIVIDEND INCOME AS WELL AS PROPORTIONATE PART OF OTHER EXPENDITURE SHOULD BE DISALLOWED. THE LD. DR FOR RE VENUE SUBMITTED THAT LD. CIT(A) HAS ALREADY GIVEN THE RELIEF OF RULE 8D(2)(I I) TO THE ASSESSEE. THE LD. DR FOR REVENUE VEHEMENTLY SUPPORTED THE ORDER OF AU THORITIES BELOW. 4. WE HAVE CONSIDERED THE RIVAL CONTENTIONS OF THE LD. REPRESENTATIVES THE ASSESSEE HAS CLAIMED TO HAVE EARNED EXEMPT INCOME O F RS. 8 30 613/- DURING THE YEAR UNDER CONSIDERATION. THE ASSESSEE DISALLOWED A SUM OF RS. 1 24 349/-. THE AO HAS NOT RECORDED HIS DISSATISFACTION ABOUT THE V OLUNTARY DISALLOWANCE MADE BY ASSESSEE BEFORE INVOKING RULE 8D THE ASSESSEE F URTHER CONTENDED BEFORE THE REVENUE AUTHORITIES THAT THE ASSESSEE HAS SUFFICIEN T INTEREST FREE FUNDS AVAILABLE WITH THEM TO MAKE INVESTMENT IN SECURITIES. THE ASS ESSEE MADE THE INVESTMENT IN SUBSIDIARY AND GROUP COMPANIES THE DETAILS AND BRE AK UPS OF INVESTMENT WERE 3 ITA NO. 7639/M/2014 M/S WINDIA INFRASTRUCTURE FINAN CE LTD. PROVIDED DURING THE ASSESSMENT PROCEEDING AS WELL A S AT THE FIRST APPELLATE STAGE. THE AO INSTEAD OF CONSIDERING THE SUBMISSION AND MA TERIAL SUPPLIED INVOKED THE PROVISION OF RULE 8D THE ASSESSEE HAS OWN FUND AT RS. 46.61 CRORE WHICH WERE SUFFICIENT TO TAKE CARE OF THE INVESTMENT ACTIVITIE S OF THE ASSESSEE. THE CONTENTION OF THE ASSESSEE THAT HE HAS NOT INCURRED ANY EXPEND ITURE FOR EARNING THE DIVIDEND INCOME IS NOT ACCEPTABLE BLINDLY. HENCE WE ARE OF THE VIEW THAT IT WOULD BE PROPER TO MAKE THE DISALLOWANCE OF ADMINISTRATIVE E XPENSES OF RS. 50 000/- FOR EARNING THE DIVIDEND INCOME WHICH WOULD MEET THE E ND OF JUSTICE. THUS THE TOTAL DISALLOWANCE WOULD BE RS. 1 24 349/- PLUS RS. 50 000/- U/S 14A OF THE ACT. THE AO IS DIRECTED ACCORDINGLY. WITH THIS OBSERVATI ON THE APPEAL OF THE ASSESSEE IS ALLOWED IN THE ABOVE TERMS. 5. IN THE RESULT APPEAL FILED BY ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH SEPTEMBER 2016. SD/- SD/- ( B.R.BASKARAN ) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 30/09/2016 S.K.PS COPY OF THE ORDER FORWARDED TO : BY ORDER (ASSTT.REGISTRAR) ITAT MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) MUMBAI. 4. CIT 5. DR ITAT MUMBAI 6. GUARD FILE. //TRUE COPY/