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Income Tax Appellate Tribunal, “I” BENCH, MUMBAI
Before: SHRI C.N.PRASAD, JM & SHRI RAJESH KUMAR, AM
आयकर अपीलीय अिधकरण, मुंबई "ायपीठ ‘आय’ मुंबई IN THE INCOME TAX APPELLATE TRIBUNAL “I” BENCH, MUMBAI "ी सी. एन. "साद, "ाियक सद", एवं "ी राजेश कुमार, लेखा सद", के सम" BEFORE SHRI C.N.PRASAD, JM AND SHRI RAJESH KUMAR, AM आयकर अपील सं/ (िनधा"रण वष" / Assessment Year: 2007-08) बनाम/ M/s. Welspun Syntex DCIT, Central Circle – 22 R.No.465, 4th Floor, Limited Vs. Trade World, “B” Wing, Aayakar Bhavan, 9th Floor, Mumbai – 400 020 Kamala Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai – 400 013 "थायी लेखा सं./जीआइआर सं./PAN/GIR No. : AAACW0489L (अपीलाथ" /Appellant) (""थ" / Respondent) .. Assessee by: None Revenue by: Shri Saurabhkumar Rai सुनवाई की तारीख / Date of Hearing: 05.01.2017 घोषणा की तारीख /Date of Pronouncement: 04.04.2017 आदेश / O R D E R PER C.N.PRASAD, JM:
This appeal is filed by the assessee against the order dated 15.01.2015 passed by the Commissioner of Income Tax (Appeals)-51, Mumbai [hereinafter referred to as the “CIT(A)”] for the A.Y. 2007-08.
Inspite of issue of notice none appeared on behalf of the assessee nor any adjournment was sought. The records show that notice was served on A.Y.2007-08 the assessee on 09.12.2016 fixing the date of hearing as 05.01.2017 and the copy of the acknowledge is also on record. Since the assessee is not coming forward to prosecute the case we are disposing off this appeal after hearing the learned DR.
The assessee in its appeal has raised the following grounds:-
“1.a) On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in not appreciating that:- (i) the order passed u/s.143(3) r.w.s. 153A by the AO is without jurisdiction and bad in law as the jurisdiction u/s.153A is vitiated; and (ii) the additions made by the AO are beyond the scope of provisions of section 153A. 2.a) On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in confirming the additions of Rs.99,25,101/- (subject to certain relief allowed in respect of apparent mistakes) made by the AO to the income of the appellant by way of disallowing certain expenditure claimed to have been incurred relating to exempt income invoking the provisions of section 14A. b. The ld. CIT(A) failed to appreciate that:- (i) having regard to the accounts there is no reason and basis in reaching to dis-satisfaction with the correctness of the claim of the appellant that no expenditure was incurred in relation to dividend income which does not form part of the total income; (ii) the investment in shares was made out of surplus funds available with the appellant; (iii) there was shareholders funds of Rs.10,885.41 lakhs on which no interest was paid as against investment in share of Rs.2,254.01 lakhs and as such investment in shares is covered by the shareholders funds; and 2 A.Y.2007-08
(iv) the investment in shares was made out of business strategy and there was no major change in such investment. c. In reaching to the conclusion and confirming such addition the ld. CIT(A) omitted to consider relevant factors, considerations, principles and evidences while he was overwhelmed, influenced and prejudiced by irrelevant considerations and factors. 3.a) On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in confirming the addition of Rs.99,25,101/- (subject to certain relief allowed in respect of apparent mistakes) made by the AO to the book profit of the appellant by way of adding back disallowance made u/s.14A r.w.R 8D and thereby erred in enhancing the book profit artificially. b) The ld. CIT(A) failed to appreciate that the book profit means net profit as shown in the profit & loss account laid before the annual general meeting of a company in accordance with the provisions of section 210 of the Companies Act, 1956 as adjusted by certain adjustment specified in the Explanation 1 to section 115JB(2) and there is no scope for the AO to make any further adjustment.”
The learned counsel for the assessee vehemently supported the orders of the authorities below and submits that the Assessing Officer very much has jurisdiction in passing the order u/s.143(3) r.w.s.153A of the Income Tax Act, 1961 ( in short “the Act”). The learned DR vehemently submits that the Assessing Officer has properly invoked the provision of section 14A of the Act in respect of the exempt income and made disallowance of Rs.99,25,101/-.
3 A.Y.2007-08
We have heard the learned DR and perused the orders of the authorities below. The Assessing Officer completed the assessment and disallowed Rs.99,25,101/- u/s.14A of the Act, while computing the income under normal provisions of Act as well as book profits u/s.115JB of the Act. We find that the assessment year in question is 2007-08 and the provisions of Rule 8D have no application as held by the jurisdictional High Court in the case of Godrej and Boyce Mfg. Co. Ltd. (2010) 328 ITR 81 (Bom). It was held that the provisions of Rule 8D are prospective and are applicable only from the assessment year 2008-09. However, a reasonable disallowance should be made u/s.14A of the Act. In this case admittedly, the dividend income received by the assessee is Rs.87,282/- and therefore assuming for a moment that the assessee had incurred certain expenditure for earning the dividend income in any case such expenditure should not exceed the dividend income earned by the assessee. In the circumstances, we hold that the expenditure attributable for earning dividend income should not exceed Rs.87,282/- therefore a reasonable expenditure of Rs.25,000/- can be attributable for earning the exempt income. Thus we direct the Assessing Officer to restrict the disallowance u/s.14A to Rs.25,000/- only as against Rs.99,25,101/- made in the assessment order.
In the result, the appeal filed by the assessee is hereby Partly Allowed.
4 A.Y.2007-08
Order pronounced in the open court on 4th April, 2017. (RAJESH KUMAR) (C.N.PRASAD) लेखा सद" / ACCOUNTANT MEMBER "ाियक सद"/JUDICIAL MEMBER मुंबई Mumbai; िदनांक Dated : 4th एि"ल, 2017 MP