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Income Tax Appellate Tribunal, MUMBAI BENCHES “D”, MUMBAI
Before: Shri Joginder Singh, & Shri Ashwani Taneja
आदेश / O R D E R
Per Joginder Singh (Judicial Member) The assessee as well as Revenue is in cross appeals against the impugned orders all dated 06/12/2013 for the Assessment year 2009-10 and 2010-11, of the Ld. First Appellate Authority, Mumbai.
First, we shall take up the appeals for Assessment year 2009-10. In the appeal of the assessee ( 14A of the Income Tax Act, 1961 (hereinafter the Act). The argument on behalf of the assessee is that the disallowance was confirmed with respect to interest paid on borrowed funds is without appreciating the fact that the entire investment was made out of own funds and no borrowed funds were utilized while making the investment in the shares. On the other hand, the ld. DR, defended the disallowance.
2.1. We have considered the rival submissions and perused the material available on record. Before coming to any conclusion, we are reproducing hereunder the relevant , 312, 1470 & 1471/Mum/2014 3 M/s Darashaw & Co. Pvt. Ltd portion from the order of the Tribunal (para 22) (ITA No.225/Mum/2011, 458/Mum/2012, 229/Mum/2011 and 660/Mum/2012) (Assessment year 2007-08 and 2008-09) for ready reference:-
“22. We have considered the rival submissions and perused the orders of the lower authorities and the material evidences brought on record. A perusal of the balance sheet of the assessee as exhibited at page-1 of the paper Book supports the contention of the Counsel that assessee has sufficient own funds to cover up the investments. The Hon’ble Jurisdictional High Court in the case of CIT Vs Reliance Utilities & Power ltd., 313 ITR 340 has held that where both own funds and loan funds are available with the assessee, the presumption is that the investment is made out of own funds. Respectfully following the decision of the Hon’ble Jurisdictional High Court, in our considerate view, the disallowance as computed by the assessee under Rule 8D at Rs. 39,19,175/- should meet the ends of justice. We, accordingly direct the AO to recomputed the disallowance as done by the assessee after giving a rebate of Rs. 1,75,883/- which has already been disallowed by the assessee in its computation of income.” We find that the assessee company is engaged in the business as share and stock broker and makes investment. The assessee earned exempt income of Rs.38,02,033/- and disallowed Rs.75,340/- u/s 14A of the Act. Without going into much deliberation, we find that the Ld. Commissioner of Income Tax (Appeal) has followed the order of the Tribunal for Assessment year 2008-09 (para 22 of the order of the Tribunal) by holding that the facts are identical and the Assessing Officer was directed to re-compute the disallowance u/s 14A of the Act, in the light of the observation made by the Tribunal. Thus, we find no infirmity in the direction of the Ld. Commissioner of Income Tax , 312, 1470 & 1471/Mum/2014 4 M/s Darashaw & Co. Pvt. Ltd (Appeal), which was on the basis of the order of the Tribunal for Assessment year 2008-09.
2.2. So far as, the cross appeal of the Revenue (ITA No.1470/Mum/2014) is concerned, this is also with respect to disallowance u/s 14A of the Act. Considering the totality of fact, the appeal of the assessee as well as of the Revenue are dismissed as the order of the Tribunal being on identical fact has to be followed.
Now, we shall take up the appeal of the assessee for Assessment year 2010-11 (ITA No.312/Mum/2014), wherein, ground no. 1 & 2 is identical to Assessment year 2008-09, therefore, on the same reasoning both these grounds are dismissed.
So far as, ground number 3 for not allowing set off of short term capital loss on listed securities (STT paid) against short term capital gain on mutual funds with (non STT Paid) of Rs.17,05,720/- is concerned, this ground is covered in favour of the assessee by the decision of the Mumbai Bench of the Tribunal in the case of ADIT vs Legg Mason Sia (Ex Japan) Analyst Fund (2014) 61 SOT 277 and Capital International Emerging Markets Funs vs DIT (2013) 145 ITD 491 (Mum.) (ITAT) (Para 3.2). Thus, this ground of the assessee is allowed.
The next ground i.e. ground no. 4 was not pressed by the assessee, therefore, it is dismissed as not pressed. The appeal of the assessee is partly allowed. , 312, 1470 & 1471/Mum/2014 5 M/s Darashaw & Co. Pvt. Ltd
In the appeal of the Revenue (ITA No.1471/Mum/2014), the only ground raised is with respect to addition made on account of disallowance u/s 14A of the Act. We find that the ld. Assessing Officer disallowed Rs.24,90,868/- u/s 14A of the Act. With the insertion of Rule-8D, disallowance u/s 14A has to be computed as per this Rule and the procedure laid down for determining the expenditure, which has to be disallowed. The decision in Godrej & Boyce Mfg. Co. Ltd. (328 ITR 81) (Bom.) can be quoted. Similarly, in M/s Daga Capital Management Pvt. Ltd. (ITA No.8057/Mum/2003), an elaborate discussion has been made by the Tribunal. The assessee has maintained separate books of account for investment. The assessee invested Rs.90,54,68,411/- as against the net worth of Rs.102,74,40,180/- meaning thereby, the assessee was having substantial own funds to make investment. Considering the totality of facts, we find no infirmity in the conclusion of the Ld. Commissioner of Income Tax (Appeal) as the facts are identical to Assessment year 2008-09, which has already been decided by the Tribunal. The appeal of the Revenue is dismissed.
Finally, i. For Assessment year 2009-10 the appeal of the assessee as well as of the Revenue are dismissed.
, 312, 1470 & 1471/Mum/2014 6 M/s Darashaw & Co. Pvt. Ltd ii. For Assessment year 20010-11, the appeal of the assessee is partly allowed, whereas of the Revenue is dismissed.
This order was pronounced in the open court in the presence of Ld. representatives from both sides at the conclusion of the hearing on 14/06/2016.
Sd/- Sd/- (Ashwani Taneja) (Joginder Singh) लेखा सद�य / ACCOUNTANT MEMBER �या�यक सद�य / JUDICIAL MEMBER मुंबई Mumbai; �दनांक Dated : 14/06/2016 f{x~{tÜ? P.S/.�न.स. आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. आयकर आयु�त(अपील) / The CIT, Mumbai. 4. आयकर आयु�त / CIT(A)- , Mumbai 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, मुंबई / DR, ITAT, Mumbai 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER, स�या�पत ��त //True Copy//