GEOJIT FINANCIAL SERVICES LTD(FORMERLY GEOJIT BNP PARIBAS FINANCIAL SERVICES LTD,KOCHI vs. THE ACIT, KOCHI

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI. CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER ITA Nos. 374 to 376/Coch/2020 Assessment Year : 2007-08 to 2009-10 M/s. Geojit Financial Services Ltd., (Formerly Geojit BNP The Assistant Paribas Financial Commissioner of Services Ltd.) Income Tax, 34/659-P, Civil Line Circle 1 (2), Road, Vs. Kochi. Padivattom, Kochi – 682 024. PAN: AABCG1935E APPELLANT RESPONDENT Assessee by : Shri Vivek, CA : Smt. J M Jamuna Devi, Sr Revenue by AR Date of Hearing : 14-09-2022 Date of Pronouncement : 14-09-2022 ORDER PER BEENA PILLAI, JUDICIAL MEMBER Present appeals are filed by assessee against separate orders all dated 01/09/2020 passed by Ld.CIT(A)-1, Kochi for A.Ys. 2007- 08 to 2009-10. 2. The Ld.AR at the outset submitted that common issue in respect of 14A disallowance has been raised in all the appeals

Page 2 ITA Nos. 374 to 376/Coch/2020 under consideration and the grounds raised are identical for the years under consideration. 3. For the sake of convenience, we are therefore reproducing the grounds raised for A.Y. 2007-08 as under: “1. a) Whether on the facts and circumstances of the case, the learned Commissioner of Income Tax (Appeals) erred in confirming the disallowance made by the assessing officer u/s 14A of the Income Tax Act 1961 to the extent of Rs 5,00,000/-. b) The learned Commissioner of Income Tax (Appeals) erred in rejecting the computation of expenditure without assigning any specific reasons on a general reasoning without examining the facts. The learned Commissioner of Income Tax (Appeals) ought to have satisfied that the claim of the appellant in respect of expenditure is not correct having regard to the facts and accounts of the appellant and cannot proceed on the basis of a general presumption. c) The Learned Commissioner of Income Tax (Appeals) ought to have also noted that the appellant has sufficient surplus funds available and hence no disallowance under section 14A is warranted. 2. Whether on the facts and circumstances of the case, the learned Commissioner of Income Tax (Appeals) erred in not considering the additional ground filed by the appellant to claim deduction towards the amount of Education cess paid on the Income Tax liability for the assessment year. The learned Commissioner of Income Tax (Appeals) ought to have noted that the amount of education cess paid is not any sum paid on account of any rate or tax levied on the profit or gain of any business or profession or assessed at a proportion of, or otherwise on the basis of, any such profit or gains and hence is not an item to be disallowed u/s 40(a)(ii) of the IT Act. The Learned CIT(A) ought to have noted that the additional ground was filed by the appellant placing reliance on legal decisions rendered after the completion of the assessment and the figure of education cess is already available on record. 3. For these and other grounds that may be further adduced at the time of hearing the order of the learned CIT(Appeals) requires to be modified suitably.” 4. Brief facts of the case are as under: 4.1 Assessee is a company wherein public is substantially interested, is engaged in the business of stock and share broking,

Page 3 ITA Nos. 374 to 376/Coch/2020 depository services, port folio management services and financial products distribution. The Ld.AO completed scrutiny assessment in all the years under consideration and has made following disallowance: Disallowance made u/s. A.Y. 14A 2007-08 14,06,799/- 2008-09 32,86,822/- 2009-10 47,31,194/- 4.2 It is submitted by the Ld.AR that originally the disallowance made in the original scrutiny assessment was higher than the said amounts and on a remand from this Tribunal, all the above disallowances referred to hereinabove were upheld. 5. The Ld.AR submitted that there is no exempt income for the year under consideration and the entire investment made by assessee is in liquid mutual funds from which dividend is not earned at all. He referred to the decision of Hon’ble Supreme Court in case of CIT vs. Reliance Industries Ltd. reported in (2019) 102 taxmann.com 52. 6. The Ld.AR submitted that assessee has sufficient own funds and borrowed funds has not been utilised towards these investments. He thus prayed for the disallowance to be deleted. On the contrary, the Ld.DR relied on orders passed by authorities below. We have perused the submissions advanced by both sides in the light of records placed before us. 7. We note that in the remand proceedings, the Ld.AO has failed to verify whether assessee has earned any exempt income during the relevant period. In the event, no exempt income is earned,

Page 4 ITA Nos. 374 to 376/Coch/2020 disallowance cannot be made as the assessment years under consideration are prior to the amendment made by Finance Act, 2022. If at all there are exempt income earned, then the Ld.AO has to consider assessee’s own funds and to restrict the disallowance only to the extent of investments made during the year under consideration to compute the disallowance under Rule 8D(iii). The computation shall then be in accordance with the principles laid down by Hon’ble Supreme Court in case of Reliance Industries Ltd. (supra). Accordingly, the grounds raised by the assessee for the years under consideration stands allowed for statistical purposes. In the result, all the three appeals field by assessee stands allowed for statistical purposes. Order pronounced in open court on 14th September, 2022.

Sd/- Sd/- (CHANDRA POOJARI) (BEENA PILLAI) Accountant Member Judicial Member Cochin, Dated, the 14th September, 2022. /MS / Copy to: 1. Appellant 4. CIT(A) 2. Respondent 5. DR, ITAT, Cochin 3. CIT 6. Guard file By order

Assistant Registrar, ITAT, Cochin