JSW STEEL EMPLOYEES WELFARE TRUST,MUMBAI vs. THE DEPUTY COMMISSIONER OF INCOME TAX , MUMBAI

ORDER \nPER NARENDRA KUMAR BILLAIYA, AM:\nThis appeal by the assessee is preferred against the order\ndated 04/03/2025 by NFAC, Delhi [hereinafter “the ld. CIT(A)"]\npertaining to AY 2018-19.\n2.\nThe sum and substance of the grievance of the assessee is that the\nld. CIT(A) erred in confirming the disallowance of Rs.10,00,000/- made\nu/s 14A r.w.r. 8D.\n3. Briefly stated the facts of the case are that the assessee filed its\nreturn of income on 31/07/2018 declaring total income of Rs.\n3,17,44,860/-. The return was revised on 28/03/2019 declaring total\nincome of Rs.3,17,44,860/-. The return was selected for scrutiny\nassessment and accordingly statutory notices were issued and served\nupon the assessee.\n4. During the course of scrutiny assessment proceedings, the AO\nnoticed that the assessee has claimed exempt income from investments\nand furnished that the assessee has made suo moto disallowance and\nfurther claimed that it has not incurred any expenses for earning this\nexempt income. The AO was of the firm belief that provisions of Section\n14A of the Act squarely apply with Rule 8D and went on to compute\nthe disallowance at Rs.10,00,000/-. Surprisingly, the AO also computed\nthe expenditure as per Rule 8D when the assessee has not incurred any\nexpenditure.\n4.

1. Assessee carried the matter before the ld. CIT(A) but without any\nsuccess.\n5. Before us, the ld. Counsel for the assessee drew our attention to\nthe computation of income and pointed out that the assessee has not\nclaimed any exemption insofar as dividend is concerned and the only\nexempt income is the claim u/s 10(34) r.w.s.115BBDA of the Act.\nPer contra, the ld. D/R strongly supported the findings of the AO.\nWe have carefully considered the orders of the authorities below.\n6. It would be pertinent to refer to the computation of total income which\nis as under:-\nJSW STEEL EMPLOYEES WELFARE TRUST\nPREVIOUS YEAR ENDED: 31ST MARCH, 2018\n ASSESSMENT YEAR: 2018-19\nCOMPUTATION OF TOTAL INCOME\n1. PROFITS & GAINS OF BUSINESS OR PROFESSION:\nIncome as per Income and Expenditure Account\nAdd: Items inadmissible/considered separately\nLoss on sale of investments\nLess: Items inadmissible/considered separately:\nDividend received\nLoss of Business or Profession:\nII. INCOME FROM CAPITAL GAINS\nFor Shares sold to Employees:\nFull Value of Consideration\nLess: Indexed cost of acquisition\nLong Term Capital Loss to be carried forward\nIII. INCOME FROM OTHER SOURCES\nDividend\nLess: Exempt u/s 10(34) r.w.s.115BBDA\nTaxable Dividend\nIncome from Other Sources\nGross Total Income:\nTotal Income:\nTotal Income Round off:\nNotes: 1. Long Term capital Gains to be Carry Forward\n Assessment Year Amount\n2014-15\n61,62,64,425\n2015-16\n42,22,36,660\n2016-17\n8,67,85,290\n2017-18\n18,88,09,017\n2018-19\n20,50,20,565\n(Rs.)\n58,31,396\n2,65,32,675\n3,23,64,071\n3,27,44,858\n(3,80,787)\n46,64,72,300\n67,14,92,865\n(20,50,20,565)\n3,27,44,858\n10,00,000\n3,17,44,858\n3,17,44,858\n3,17,44,858\n3,17,44,858\n3,17,44,860\n1,51,91,15,957\n(Rs.)\nJSW STEEL EMPLOYEES WELFARE TRUST\nPREVIOUS YEAR ENDED: 31ST MARCH, 2018\n ASSESSMENT YEAR: 2018-19\nCOMPUTATION OF TAX PAYABLE\n[A] TAX PAYABLE ON NORMAL TOTAL INCOME:\nTax Payable on Dividend Income @ 10%\nTax Payable on Other Income @ 30%\nAdd:\nSurcharge @ 15%\nTax Payable (including Surcharge)\nAdd: Education Cess @ 3%\nTax Payable (including Education Cess)\n[B] TAX PAYABLE ON ADJUSTED TOTAL INCOME AS PER SECTION 115JC:\nTax Payable on Adjusted Total Income\nAdd:\nSurcharge @ 15%\nTax Payable (including Surcharge)\nAdd:\nEducation Cess @ 3%\nTax Payable (including Education Cess)\nTax Payable [Higher of (A) or (B)] i.e.\nAdd: Interest\nTotal Tax Payable (including Interest)\nLess:\nPrepaid taxes:\n(1) Advance tax paid:\n(a) 14.06.2017\n(b) 14.09.2017\n(c) 14.12.2017\n(d) 14.03.2018\nTotal Advance tax\n(2) Self assessment tax paid on\nBalance Payable/(Refundable):\n10.00%\n30.00%\n(Rs.)\n3,17,44,860\n31,74,486\n31,74,486\n4,76,173\n34.50%\n36,50,659\n1,09,520\n35.54%\n37,60,179\n18.50%\n21.275%\n21.91%\n3,17,44,860\nU/s 234B\nU/s 234C\n1,502\n37,60,179\n1,502\n37,61,681\n6,00,000\n12,00,000\n13,00,000\n5,10,000\n36,10,000\n36,10,000\n1,51,681\n7. It can be seen from the above that the assessee has loss of Rs.\n3,80,787/- which it did not set off from any other income. In fact, the\ndividend of Rs.3,27,44,858/- is offered for taxation and only\nRs.10,00,000/- has been claimed as exempt u/s 10(34) r.w.s.115BBDA\nof the Act. The income and expenditure account of the assessee is as\nunder:-\nJSW STEEL EMPLOYEES WELFARE TRUST\nINCOME AND EXPENDITURE ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2018\n5\nA. INCOME:\nDividend (Gross)\nB. EXPENDITURE:\nLoss on sale of investments\nAudit fees\nDemat charges\nProfessional fees\nOther expenses\nTOTAL:\nTOTAL:\nSurplus/ (Deficit) for the year before tax\nLess (Add): Tax expense\nSurplus/(Deficit) for the year after tax\nAdd (Less): Credit balance as per last balance sheet\nBALANCE CARRIED TO BALANCE SHEET\nSignificant accounting policies and notes forming part of the account - Schedule 'B'\nExamined and found to be in agreement with books of account produced before us.\nFor and on behalf of\nAMJ & CO.\nFRN 128550W\nChartered Accountants\n(M. A. GOHEL)\nPartner\nMembership No.: 038487\nMUMBAI,\nDATED: 30 JUL 2018\nRupees\n3,27,44,858\n3,27,44,858\n2,65,32,675\n12,100\n3,55,645\n11,800\n1,242\n2,69,13,462\nPrevious\nYear\nRupees\n99,85,613\n99,85,613\n3,05,00,421\n11,500\n2,00,047\n11,500\n2,375\n3,07,25,843\n58,31,396\n(2,07,40,230)\n37,70,000\n35,335\n20,61,396\n(2,07,75,565)\n7,83,15,192\n9,90,90,757\n8,03,76,588\n7,83,15,192\nCERTIFIED TRUE\nCA VINITA S. SA\nM. No. 129661\nTRUSTEES\nMUMBAI,\nDATED:\n30 JUL 2018\n7.