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Income Tax Appellate Tribunal - Mumbai

Ajaya Jain Huf, Mumbai vs Acit Circle-12(3), Mumbai on 17 December, 2019

1 ITA No.4680/Mum/2018 M/s. Ajaya Jain HUF Assessment Year-2011-12 आयकर अपीलीय अिधकरण "ऐ" ायपीठ मुं बई म ।

IN THE INCOME TAX APPELLATE TRIBUNAL "A" BENCH, MUMBAI माननीय ी िवकास अव थी, ाियक सद एवं माननीय ी मनोज कुमार अ वाल ,लेखा सद के सम । BEFORE HON'BLE SHRI VIKAS AWASTHY, JM AND HON'BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकरअपील सं./ I.T.A. No.4680/Mum/2018 ( नधा रणवष / Assessment Year: 2011-12) M/s. Ajaya Jain HUF ACIT -12(3) बनाम/ 31, Maker Tower-A Aaykar Bhavan, M.K. Road Cuffe Parade, Mumbai-400 005. Vs. Mumbai-400 020. थायीले खासं . /जीआइआरसं . /PAN/GIR No. AAAH A-0026-L (अपीलाथ /Appellant) : ( यथ / Respondent) अपीलाथ क ओर से/ Appellant by : Shri Matrudev Vasudevan-Ld. AR यथ क ओरसे/Respondent by : Shri S. Michael Jerald- Ld. DR सन ु वाई क तार ख/ : 17/12/2019 Date of Hearing घोषणा क तार ख / : 17/12/2019 Date of Pronouncement आदे श / O R D E R Manoj Kumar Aggarwal (Accountant Member): -

1. Aforesaid appeal by assessee for Assessment Year [in short referred to as 'AY'] 2011-12 contest the order of Ld. Commissioner of Income-Tax (Appeals)-55, Mumbai [in short referred to as 'CIT(A)'], Appeal No. CIT(A)-

55/IT-141/17-18 dated 17/05/2018 on following grounds of appeal: -

M/s. Ajaya Jain HUF Assessment Year-2011-12 The Commissioner of Income Tax (Appeals)-55, Mumbai [hereinafter referred to as CIT (A) erred in holding that the Assistant Commissioner of Income Tax, Circle-12(3), Mumbai (hereinafter referred to as the ACIT) was right in disallowing a sum of Rs.2,93,929/- under section 14A of the Act as per Rule 8D(2)(iii) as expenses relatable to earning of exempt income and adding the same in computing the income for the above assessment year. The Appellant submits that:

a) no expenditure has been incurred for earning the exempt income,

b) the ACIT has not given any findings that he is not satisfied with the correctness of the Appellant's claim that no expenditure has been incurred in relation to earning of exempt income & accordingly no addition should have been made by resorting to the provisions of sub-section (2) of section 14A of the Act.

The appellant therefore prays that the addition of Rs.2,93,929/- made by the ACIT be deleted."

As evident from grounds of appeal, the sole subject matter of present appeal is disallowance u/s 14A.

2. We have heard and considered the rival submissions and perused relevant material on record and also deliberated on judicial pronouncements as cited before us. Our adjudication to the issue would be as given in succeeding paragraphs.

3. Facts on record would reveal that the assessee being resident HUF, stated to be engaged in the business of trading in derivatives contracts, was assessed for year under consideration u/s. 143(3) on 18/03/2014 wherein the assessee was saddled with disallowance u/s 14A for Rs.2.93 Lacs in view of the fact that it earned exempt dividend income of Rs.7.26 Lacs. The assessee submitted that no expenditure was incurred to earn the exempt income. However, disregarding the same, Ld. AO made impugned disallowance, in terms of Rule 8D, as submitted by the assessee during the course of assessment proceedings. The stand of Ld. AO, upon confirmation by learned first appellate authority, is under challenge before us.

M/s. Ajaya Jain HUF Assessment Year-2011-12

4. Upon careful consideration, we find that it was the submissions of the assessee that no expenditure was incurred by it to earn the exempt income. However, Ld. AO did not consider the same having regards to the accounts of the assessee. In our considered opinion, it was incumbent on the part of Ld. AO to arrive at judicious and objective satisfaction as to why the assessee's submissions were not acceptable. Non-recording of the said satisfaction would oust the jurisdiction of Ld. AO to compute the disallowance in terms of Sec. 14A r.w.r. 8D since statutory provisions mandate Ld. AO to record such satisfaction before proceeding to compute the disallowance in terms of Rule 8D. The perusal of Profit & Loss Account, as placed on record, would reveal that, besides statutory taxes and levies, the assessee has debited expenditure of Rs.8,273/- only on account of audit fees. Therefore, in the given factual matrix, the impugned disallowance could not be sustained under law. By deleting the same, we allow the appeal.

5. The appeal stands allowed.

Order pronounced in the open court on 17th December, 2019.

             Sd/-                                    Sd/-

       (Vikas Awasthy)                           (Manoj Kumar Aggarwal)
  ाियक सद  / Judicial Member                  लेखा सद  / Accountant Member

मुंबई Mumbai; िदनां कDated : 17/12/2019 Sr.PS:-Jaisy Varghese 4 ITA No.4680/Mum/2018 M/s. Ajaya Jain HUF Assessment Year-2011-12 आदे श की ितिलिप अ े िषत/Copy of the Order forwarded to :

1. अपीलाथ"/ The Appellant

2. #$थ"/ The Respondent

3. आयकरआयु%(अपील) / The CIT(A)

4. आयकरआयु%/ CIT- concerned

5. िवभागीय#ितिनिध, आयकरअपीलीयअिधकरण, मुंबई/ DR, ITAT, Mumbai

6. गाड, फाईल / Guard File आदे शानुसार/ BY ORDER, उप/सहायकपंजीकार (Dy./Asstt.Registrar) आयकरअपीलीयअिधकरण, मुंबई / ITAT, Mumbai.