TRUSTED SHARES & INVESTMENTS LTD,MUMBAI vs. ITO 4(2)(2), MUMBAI

The parties have been heard, and the material on record perused. The issue decided by Hon'ble jurisdictional High Court in Kotak Securities Ltd. (supra) is a question of law. The same, thus, pertains to the year to which it relates (A.Y. 2005-06) or, in fact, being in relation to the interpretation of a provision of law, to the time when the provision was brought on the statute-book. The Hon’ble Court made an exception for A.Y. 2005-06 only, while the year under reference is A.Y. 2010-11. At the same time, however, the assessee has per its paper-book produced a certificate (dated 06.9.2013) from BSE stating that it had included the entire transaction charges of Rs.4.43 lacs in its income offered to tax for the year (PB pg.28). The apex court in Hindustan Coca Cola Beverage P. Ltd. vs. CIT [2007] 293 ITR 226 (SC) has clarified that tax could not be received by the Revenue twice; TDS

Ground # 2 of the appeal relates to an addition for Rs.1,61,681/- on account of brokerage income. The A.O. in assessment proceedings observed the assessee to have paid service tax in a sum higher than that which it was obliged to pay on the basis of (A.Y. 2010-11) Trusted Shares & Investments Ltd. vs. ITO the brokerage income as recorded in its books of account for the year. The assessee’s claim that the amount (of tax) to the extent of Rs.1,23,473/- was counted doubly while depositing the tax, did not find favour with him. Before the ld. CIT(A), who also called for a remand report, the assessee’s claim was that this amount was, as a measure of precaution, deposited ad hoc in excess, pending the audit of the accounts. The first appellate authority confirmed the addition as the assessee was not able to reconcile the difference, i.e., between the brokerage income as per books of account and that on which tax stood deposited. He, accordingly, confirmed the addition, so that, aggrieved, the assessee is in second appeal.

The parties were heard, and the material on record perused. The controversy, in my view, is much ado about nothing. The assessee claiming to have paid tax in a higher sum, the onus to exhibit so is on it. The assessee’s accounts having been since audited, the (service) tax return, as furnished subsequently, would only be in conformity with the audited accounts, reflecting the service tax as having been paid in excess – by whatever amount. That is, the validity of the assessee’s claim would get proved with reference to its audited accounts and tax return/s. The matter cannot be decided on the basis of bald/unsubstantiated claims. The Revenue authorities ought to have called for the said returns. Under the circumstances, it is considered only proper and in the interest of justice that the matter is restored back to the assessing authority to allow the assessee an opportunity to establish its claim/s. The A.O. shall decide the same by issuing definite findings of fact, and in accordance with the law. I decide accordingly.

The third ground of appeal relates to the disallowance u/s. 14A r/w rule 8D. The assessee having not disallowed any sum u/s.14A qua its tax-exempt incomes of dividend (Rs.3.37 lacs) and long-term capital gain (Rs.22.60 lacs), the A.O. invoked rule 8D and worked out the disallowance u/s.14A at Rs.58,283/-. The assessee’s case

The parties stand heard, and the material on record perused. Without doubt, the disallowance u/s. 14A is only of the expenditure incurred. However, when the assessee claims to have not incurred any expenditure, it is it on which the onus to exhibit the same lies. The law prescribes the said exhibition to be with reference to its accounts (section 14A(2) r/w s. 14A(3)), so that where not so done, the prescription of rule 8D shall apply. In the present case, the disallowance is not qua any direct expenditure or indirect interest expenditure, but qua indirect, administrative expenditure, covered under rule 8D(2)(iii). No material has been led even before the tribunal to show that no administrative expenditure, i.e., relating (directly or indirectly) to tax-exempt incomes, stands incurred by the assessee for the relevant year. The presumption in law would under the circumstances hold. The Revenue has in my view rightly invoked the decision by the Hon'ble jurisdictional High Court in Godrej & Boyce Mfg. Co. Ltd. (supra), which is explicit on the point (refer paras 81 to 85 of the Reports). I decide accordingly, and the Revenue succeeds.

Vide Ground 4, the assessee challenges the charge of interest u/s.234 (implying sections 234A, 234B and 234C in-as-much as there is no section 234) and initiation of penalty u/s.271(1)(c). The charge of interest is mandatory, while the initiation of penalty proceedings is not appealable. The ground is accordingly dismissed.

In the result, the assessee’s appeal is partly allowed. Order pronounced in the open court on November 27, 2015