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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
Before: HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM & HON’BLE SHRI RAVISH SOOD, JM
Assessee by : Shri Hiro Rai-Ld. AR Revenue by : Shri N. Padnabhan-Sr.AR सुनवाई की तारीख/ : 06/01/2020 Date of Hearing घोषणा की तारीख / : 06/01/2020 Date of Pronouncement M/s. Share Khan Ltd. Assessment Year :2015-16 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member)
1.1 Aforesaid cross appeals for Assessment Year [in short referred to as ‘AY’] 2015-16 contest the order of Ld. Commissioner of Income Tax (Appeals)-51, Mumbai, [CIT(A)], Appeal No. CIT(A)-51/IT-123/DCIT-CC 3(3)/2017-18 dated 19/07/2018. 1.2 The ground raised by assessee reads as under: -
1. Under the facts and in law, the Hon’ble CIT(A) has erred in disallowing Rs.32,18,938/- under Rule 8D(iii) r.w.s. 14A of the Income tax Act, 1961. 1.1 The Hon’ble CIT(A) failed to appreciate the submission made by the appellant. 1.2 The Hon’ble CIT(A) failed to appreciate the fact that considering its business operations, the appellant suo moto has disallowed Rs.7,50,000/- as administrative expense. 2.Under the facts and in law, the appeal order passed by the Hon’ble CIT(A)-51 is not in accordance with the law.”
1.3 The grounds raised by revenue reads as under: - “1.That on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance made by the Assessing Officer that the transactions are covered under section 43(5) read with Explanation to Section 73 of the Act and the finding was elaborated by the AO in his assessment order .”
2. That on the facts and circumstances of the case and in law, the Ld. CIT(A) was correct in law in deleting the disallowance made under Rule 8D(2)(ii) of Rs.33,84,594 as ld. CIT(A) has failed to appreciate the fact that the same is squarely covered under Rule 8D(2)(ii) of the Income tax Rules, 1962.”
1.4 The learned Authorized Representative for Assessee (AR), at the outset, submitted that the issues are recurring in nature and the same are covered by earlier orders of the Tribunal. The copies of the orders have been placed on record. The ld. DR relied upon the order of Ld.AO. M/s. Share Khan Ltd. Assessment Year :2015-16 In the above background, our adjudication to the issues raised in cross- appeals would be as given in succeeding paragraphs.
Facts on record would reveal that the assessee being resident corporate assessee stated to be engaged as Share Broker was assessed for year under consideration u/s. 143(3) on 29/09/2017 wherein the income of the assessee was determined at Rs.208.91 Crores after certain additions/disallowances as against returned income of Rs.207.08 Crores e-filed by the assessee on 28/11/2015. The disallowance of business loss and disallowance u/s 14A as made by Ld. AO form subject matter of cross-appeals before us. 3.1 Disallowance of business loss During assessment proceedings, it transpired that assessee claimed settlement loss of Rs.123.94 Lacs. The assessee explained that the assessee being broker for clients, was executing orders in bulk. While executing the deals, there were chances of errors and the loss arising therefrom was in the course of business and hence, allowable. Reliance was placed on the decision of Mumbai Tribunal in the case of M/s. IDFC SSKI Securities Pvt. Ltd. wherein similar disallowance was allowed and revenue’s appeal against the said order was dismissed by Hon'ble Bombay High Court. The attention was also drawn to the favorable decision given by Tribunal, on similar factual matrix, in AYs 2009-10 & 2010-11. However, rejecting the same, the loss was treated as speculation loss and added to the income of the assessee. The learned CIT(A), relying upon the decision of Tribunal for AYs 2009- 10 & 2010-11 and also on the appellate orders for AYs 2011-12 to 2014- M/s. Share Khan Ltd. Assessment Year :2015-16 15, deleted the disallowance. Aggrieved, the revenue is under appeal before us. We find that the issue is recurring in nature and Ld. CIT(A) has followed the order of the Tribunal for AYs 2009-10 & 2010-11, while granting relief to the assessee. This order has also been followed by Tribunal in AY 2014-15, order dated 26/04/2019. Respectfully following the consistent stand of Tribunal, we dismiss this ground of appeal
. 3.2 Disallowance u/s. 14A The assessee earned exempt income of Rs.11.38 crores and offered suo-moto disallowance of Rs.7.50 Lacs in the return of income. However not satisfied with assessee’s working, Ld.AO, invoking Rule 8D, computed aggregate disallowance of Rs.66.03 Lacs which comprised-off of interest disallowance u/r 8D(2)(ii) for Rs.33.84 Lacs and expense disallowance u/r 8D(2)(iii) for Rs.32.18 Lacs The learned CIT(A), relying upon Tribunal’s order for 2008-09, deleted interest disallowance in view of the fact that own funds available at the disposal of assessee were much higher than the amount of investments. The matter of expense disallowance was restored back to the file of Ld. AO for re-adjudication as per the directions of Tribunal in 2008-09. Aggrieved, the assessee as well as revenue are under appeal before us. Upon due consideration, we find that it is quite evident from assessee’s financial statements that own funds available at the disposal of assessee were much higher than the amount of investments and therefore, a presumption was drawn in assessee’s favor that investments were out of M/s. Share Khan Ltd. Assessment Year :2015-16 own funds. Therefore, in such an eventuality, no interest disallowance would be warranted. So far as the expense disallowance is concerned, Ld. AO has been directed to recompute the same as per Tribunal’s directions in AY 2008-09. Therefore, no fault could be found in the same. The ground raised by assessee as well as revenue stand dismissed.
4. In the result, the cross-appeals stands dismissed.