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Income Tax Appellate Tribunal - Mumbai

Binayak Tex Processors Ltd, Mumbai vs Dcit Cen Cir 6(3), Mumbai on 5 February, 2020

1 ITA No.1184/Mum/2017 Binayak Tex Processors Ltd.

Assessment Year :2012-13 आयकर अपीलीय अिधकरण "बी" ायपीठ मुंबई म ।

IN THE INCOME TAX APPELLATE TRIBUNAL "B" BENCH, MUMBAI माननीय ी महावीर िसं ह, उपा एवं माननीय ी मनोज कुमार अ वाल ,ले खा सद के सम ।

BEFORE HON'BLE SHRI MAHAVIR SINGH, VP AND HON'BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकरअपील सं./ I.T.A. No 1184/Mum/2017 (िनधा रण वष / Assessment Year: 2012-13) Bina yak Tex Processors Ltd. DCIT Central Circle - 6(3) बनाम/ AIR Bldg, 19 Floor th C/o Shankarlal Jain & Associates LLP 12, Engineer Building, 265 Vs. Nariman Point Princess Street, Mumbai - 400 002 Mumbai - 400021. %थायीले खासं ./जीआइआरसं ./PAN/GIR No. AAACB-1554-D (अ पीलाथ(/Appellant) : ()*थ( / Respondent) Assessee by : Mr. Shankarlal Jain- Ld. AR Revenue by : Ms. Kavita P. Kaushik-Ld.DR सुनवाई की तारीख/ : 30/01/2020 Date of Hearing घोषणा की तारीख / : 05/02/2020 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'] 2012-13 contest the order of Ld. Commissioner of Income-Tax (Appeals)-54, Mumbai, [in short referred to as 'CIT(A)'], Appeal No. CIT(A)-54/DCCC-6(3)/IT-03/15-16 dated 19/12/2016 on following grounds of appeal: -

Binayak Tex Processors Ltd.

Assessment Year :2012-13

1. Ld. CIT(A) erred in confirming disallowance of Rs. 3,68,550/- made u/s 14A r.w.r.

8D(2)(iii) of the Income Tax Act, without properly appreciating the facts of the case and law applicable thereto.

2. The Ld. CIT(A) should have appreciated that appellant received dividend of Rs.2,000/- on investment of Rs.10,000/- made in shares in Saraswat Co-Op. Bank Ltd. such dividend received not being exempt u/s 10(34) of the Income Tax Act, the appellant has not earned any exempt income, hence provision of section 14A are inapplicable.

3. Ld. CIT(A) erred in not considering the facts that out of the total investment of Rs.7,37,10,000/- investment of Rs. 7,37,00,000/- are strategic investments made in earlier assessment years, without any variance and no dividend being received on the same and being made for business purposes, no disallowance under Rule 8D(2)(iii) is applicable on the same.

As evident, the sole subject matter of appeal before us is disallowance u/s 14A.

2.1 Facts on record would reveal that the assessee being resident corporate assessee stated to be engaged in textile manufacturing was assessed for year under consideration u/s 143(3) on 18/03/2015 wherein it was saddled with disallowance u/s 14A for Rs.28.07 Lacs. 2.2 During assessment proceedings, it transpired that the assessee had made share investments in group entities but did not offer any suo- moto disallowance u/s 14A while computing the total income. The assessee submitted that it received meagre dividend of Rs.2,000/- from a co-operative bank which was already offered to tax and since no expenditure was incurred to earn the dividend income, the provisions of Sec.14A were not applicable. However, rejecting the same, Ld. AO computed aggregate disallowance of Rs.28.07 Lacs which comprised-off of interest disallowance u/r 8D(2)(ii) for Rs.24.38 Lacs and expense disallowance u/r 8D(2)(iii) for Rs.3.68 Lacs.

3. Before Ld. CIT(A), the assessee reiterated the submissions that since no exempt income was earned during the year, no disallowance 3 ITA No.1184/Mum/2017 Binayak Tex Processors Ltd.

Assessment Year :2012-13 u/s 14A would be warranted. The Ld. CIT(A) relying upon its predecessor's order for AY 2011-12 deleted interest disallowance but confirmed the expenses disallowance of Rs.3.68 Lacs. Aggrieved, the assessee is under further appeal before us.

4. Upon due consideration of factual matrix as enumerated hereinabove, the undisputed position that emerges is the fact that the assessee has earned meagre dividend income of Rs.2,000/- only and that too has been offered to tax since the same was received from a co- operative bank and therefore, not an exempt income. In other words, the assessee did not earn any exempt income during the year. This being the case, no disallowance u/r 8D(2)(iii) would be justified. Therefore, by deleting the expense disallowance of Rs.3.68 Lacs as confirmed by Ld. CIT(A), we allow the appeal.

5. The appeal stands allowed.

Order pronounced in the open court on 05th February, 2020.

                Sd/-                               Sd/-
          (Mahavir Singh)                  (Manoj Kumar Aggarwal)
        उपा   / Vice President         लेखा सद  / Accountant Member

मुंबई Mumbai; िदनां क Dated : 05/02/2020 Sr.PS, Jaisy Varghese आदे शकी ितिलिपअ"ेिषत/Copy of the Order forwarded to :

1. अपीलाथ(/ The Appellant

2. )*थ(/ The Respondent 4 ITA No.1184/Mum/2017 Binayak Tex Processors Ltd.

Assessment Year :2012-13

3. आयकरआयु1(अपील) / The CIT(A)

4. आयकरआयु1/ CIT- concerned

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

6. गाड6 फाईल / Guard File आदे शानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकरअपीलीयअिधकरण, मुंबई / ITAT, Mumbai.