ACIT 10(1), MUMBAI v. HSBC INVEST DIRECT SECURITIES (I) LTD (FORMELRY KNWON AS M.S, IL & FS INVESTMENT SECURITIES LTD), MUMBAI

ITA 7845/MUM/2011 | 2008-2009
Pronouncement Date: 19-07-2013 | Result: Dismissed

Appeal Details

RSA Number 784519914 RSA 2011
Assessee PAN AABCI4793G
Bench Mumbai
Appeal Number ITA 7845/MUM/2011
Duration Of Justice 1 year(s) 7 month(s) 28 day(s)
Appellant ACIT 10(1), MUMBAI
Respondent HSBC INVEST DIRECT SECURITIES (I) LTD (FORMELRY KNWON AS M.S, IL & FS INVESTMENT SECURITIES LTD), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 19-07-2013
Appeal Filed By Department
Order Result Dismissed
Bench Allotted H
Tribunal Order Date 19-07-2013
Date Of Final Hearing 27-06-2013
Next Hearing Date 27-06-2013
Assessment Year 2008-2009
Appeal Filed On 21-11-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH H MUMBAI BEFORE SHRI P.M. JAGTAP ACCOUNTANT MEMBER AND DR. S.T.M. PAVALAN JUDICIAL MEMBER ITA NO. 7845/MUM/2011 ASSESSMENT YEAR: 2008-09 ACIT 10(1) 455 AAYAKAR BHAVAN 4 TH FLOOR. M.K. ROAD MUMBAI VS. M/S HSBC INVEST DIRECT SECURITIES (INDIA) LTD. (FORMERLY KNOWN AS M/S IL&FS INVESTMENT SECURITIES LTD.) DHANA SINGH PROCESSOR PREMISES J.B. NAGAR ANDHERI KURLA ROAD ANDHERI (E) MUMBAI 400 059 PAN: AABCI 4793 G (APPELLANT) (RESPONDENT) REVENUE BY : SHRI S.K. MAHAPATRA ASSESSEE BY : SHRI D.V. LAKHANI DATE OF HEARING : 27.06.2013 DATE OF PRONOUNCEMENT : 19.07.2013 O R D E R PER DR. S.T.M. PAVALAN JM: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF THE LD.CIT(A) -21 MUMBAI DATED 03.08.2011 FOR THE ASSE SSMENT YEAR 2008-09. 2. THE SOLITARY ISSUE ARISING OUT OF THE GROUNDS OF APPEAL RELATES TO THE DISALLOWANCE OF RS.72 58 000/- MADE BY THE AO BY I NVOKING SECTION 14A OF THE I.T. ACT READ WITH RULE 8D OF THE I.T. RULES AND THE SAM E RESTRICTED BY THE LD.CIT(A) TO RS.13 88 555/-. 3. THE RELEVANT FACTS ARE THAT THE ASSESSEE A COMP ANY ENGAGED IN THE BUSINESS OF BROKING AND DISTRIBUTION OF FINANCIAL PRODUCTS DURING THE YEAR UNDER CONSIDERATION HAD CLAIMED A DIVIDEND INCOME OF RS.81 44 981/- AS EXEMPT INCOME. IN THIS REGARD THE ASSESSEE HAD MADE A SELF DISALLOWANCE OF RS.48 76 737/- IN THE RETURN/ ITA NO. 7845/MUM/2011 M/S HSBC INVEST DIRECT SECURITIES (INDIA) LTD ASSESSMENT YEAR: 2008-09 2 COMPUTATION OF INCOME. HOWEVER IN THE ASSESSMENT F RAMED U/S 143(3) THE AO HAVING NOT SATISFIED WITH THE WORKING OF THE ASSESS EE COMPUTED THE DISALLOWANCE AT RS.72 58 000/-. THE AO CONSIDERED THE OPENING BALAN CE OF INVESTMENT AT RS.29 00 22 835/- & CLOSING BALANCE AT RS.1 91 20 5 39/- THEREBY HAD TAKEN THE AVERAGE VALUE OF INVESTMENT AT RS.15 45 71 687/- AN D CONSEQUENTLY ARRIVED AT THE SAID DISALLOWANCE. 3.1 ON APPEAL THE LD.CIT(A) DIRECTED THE AO TO CON SIDER AND REDUCE THE DISALLOWANCE U/S 14A R.W.S. 8D AT RS.13 88 555/-. A CCORDING TO THE LD.CIT(A) THE INVESTMENT OF RS.25 CRORES IN UTI MONEY MARKET FUND GROWTH PLAN APPEARING IN OPENING BALANCE OF INVESTMENT WAS NOT REQUIRED TO B E CONSIDERED UNDER RULE 8D FOR THE PURPOSE OF COMPUTING THE AVERAGE VALUE OF INVES TMENTS AS THE SAME WAS YIELDING TAXABLE INCOME. AGGRIEVED BY THE IMPUGNED ORDER THE REVENUE IS IN APPEAL BEFORE US. 4. HAVING HEARD BOTH THE PARTIES AND PERUSED THE MA TERIAL ON RECORD IT IS RELEVANT TO MENTION THAT THE ISSUES BEFORE US ARE T WO FOLD NAMELY (I) THE CORRECTNESS OF THE FIGURES AS REGARDS THE OPENING BALANCE AND C LOSING BALANCES TAKEN INTO ACCOUNT FOR THE PURPOSE OF COMPUTING THE DISALLOWAN CE AND (II) WHETHER THE ASSESSEES CLAIM FOR A FURTHER REDUCTION OF THE SEL F DISALLOWANCE ALREADY MADE BY IT IN THE RETURN OF INCOME CAN BE MADE AT THE FIRST APPEL LATE PROCEEDINGS WITHOUT HAVING THE RECOURSE TO FILE THE REVISED RETURN. 4.1 AS REGARDS THE CORRECTNESS OF THE FIGURES THE ASSESSEES INVESTMENTS IN SHARES ARE REFLECTED IN BALANCE SHEET UNDER THE HEA D CURRENT ASSETS AS STOCK IN TRADE. FURTHER DETAILS ARE APPEARING IN SCHEDULE E UNDER THE HEAD STOCK IN TRADE (NOTE-15) A. THE NOTE NO. 15 TO THE BALANCE SHEET I S SHOWING INVESTMENT IN UTI MONEY MARKET FUND-GROWTH PLAN AT RS.25 CRORES. IN THE P & L ACCOUNT THE ASSESSEE HAS OFFERED INCOME FROM OPERATIONS THE DE TAILS OF WHICH ARE GIVEN IN SCHEDULE G. AS PER SCHEDULE G PART-II INCOME FROM SECURITIES IS OFFERED AT RS.7 05 47 419/-. THE FURTHER DETAILS IN SCHEDULE G OF TAXABLE INCOME SHOWS THE OPENING BALANCE OF RS.25 CRORES AND PURCHASES DURIN G THE YEAR AT RS.10 CRORES MAKING TOTAL OF RS.35 CRORES AND THE SALE AT RS.35 11 49 544/-. THUS THE INCOME OF ITA NO. 7845/MUM/2011 M/S HSBC INVEST DIRECT SECURITIES (INDIA) LTD ASSESSMENT YEAR: 2008-09 3 RS.11 49 544/- HAS BEEN OFFERED BY THE ASSESSEE ON THIS INVESTMENT IN UTI MONEY MARKET FUND- GROWTH PLAN. IN THE FACTS AND CIRCUMST ANCES THIS INVESTMENT OF RS.25 CRORES APPEARING IN OPENING BALANCE OF INVESTMENT I S NOT REQUIRED TO BE CONSIDERED UNDER RULE 8D FOR THE PURPOSE OF COMPUTING THE AVER AGE VALUE OF INVESTMENTS AS THE SAME HAS YIELDED TAXABLE INCOME. AS REGARDS THE SECOND ISSUE IT IS PERTINENT TO NOTE THAT THERE ARE NUMBER OF DECISIONS TO THE EFFE CT THAT THE AO AND ALSO THE CIT(A) COULD ENTERTAIN A FRESH CLAIM DURING ASSESSM ENT/APPELLATE PROCEEDINGS IF THE ASSESSEE IS LEGALLY ENTITLED FOR SUCH DEDUCTIONS. T HE CBDT IN CIRCULAR NO.669 ALSO HAS CLARIFIED THAT IF EVIDENCES SUBSEQUENTLY FURNIS HED RECTIFICATION SHOULD BE CARRIED OUT. IN OUR VIEW THE LD.CIT(A) HAS CORRECTLY REL IED ON THE DECISIONS OF THE BOMBAY HIGH COURT IN THE CASE OF CHICAGO PNEUMATIC INDIA L TD (15 SOT 252) DELHI HIGH COURT IN THE CASE OF CIT VS. JAL PARABOLIC SPRINGS LTD ALLAHABAD HIGH COURT IN THE CASE OF UNIVERSAL SUBSCRIPTION AGENCIES PVT. LTD. ( 293 ITR 244) AND THE ITAT IN THE CASE OF EMERSON NETWORK (2009) 19 DTR 441 FOR ADMIT TING THE CLAIM OF THE ASSESEE. IN VIEW OF THAT MATTER WE DO NOT FIND ANY INFIRMIT Y IN THE ORDER OF THE LD.CIT(A) DIRECTING THE AO TO CONSIDER AND REDUCE THE DISALLO WANCE U/S 14A R.W.S. 8D AT RS.13 88 555/- AND THE SAME IS UPHELD. 5. IN THE RESULT THE APPEAL FILED BY THE REVENUE I S DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 19 TH DAY OF JULY 2013. SD/- SD/- (P.M. JAGTAP) (DR. S.T.M. PAVALAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED: 19.07.2013. *SRIVASTAVA COPY TO: THE APPELLANT THE RESPONDENT THE CIT CONCERNED MUMBAI THE CIT (A) CONCERNED MUMBAI THE DR H BENCH //TRUE COPY// [ BY ORDER DY/ASSTT. REGISTRAR ITAT MUMBAI.