Income Tax Appellate Tribunal - Mumbai
Jindal Steel Aan Alloys Ltd, Mumbai vs Acit (Osd) 2(3), Mumbai on 23 August, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL " SMC" BENCH, MUMBAI
BEFORE SRI MAHAVIR SINGH, JM
ITA No.4496/Mum/2016
(A.Y:2005-06)
Jindal Steel and Alloys Ltd. Dy. Commissioner of
Jindal Manison, 5A, Dr. G. Income Tax - 5(2), Mumbai
Deshmukh Marg, Vs.
Mumbai-400 026
P AN No. AAACJ9083H
Appellant .. Respondent
Assessee by .. Shri Hiro Rai, AR
Revenue by .. Shri T.A. Khan, DR
Date of hearing .. 16-08-2017
Date of pronouncement .. 23-08-2017
ORDER
PER MAHAVIR SINGH, JM:
This appeal by the assessee is arising out of the order of CIT(A)-10, Mumbai, in appeal No. CIT(A)-10/DCIT-5(2)/202/2013-14 dated 22-03- 2016. The Assessment was framed by DCIT Circle 5(2), Mumbai for the A.Y. 2005-06 vide order dated 28-03-2013 under section 143(3) of the Income Tax Act, 1961 (hereinafter 'the Act').
2. The only issue in this appeal of assessee is against the order of CIT(A) confirming the addition made by the AO of expenses relatable to exempt income at Rs. 20 lakhs and also making adjustment to the computation of book profit under section 115JB of the Act. For this assessee has raised following grounds: -
"1. On the facts and the circumstances of the case and in law, the Learned Commissioner of Income Tax-(Appeals) (hereinafter referred to as "the CIT (A)") erred in upholding the addition amounting to Rs. 20,00,000 made by the Ld. Assessing Officer in respect of disallowance made under section 14A of the Act in respect of exempt dividend income.ITA No.4496/Mum/2016
Jindal Steel and Alloys Ltd. (A. Y:2005-06)
2. The CIT(A) erred in not appreciating the fact that the investments held by the Appellant were transferred to it pursuant to the Scheme of Demerger approved by the Hon'ble High Court of Punjab and Haryana and were not acquired by the Appellant and hence, the Appellant had not incurred any expenditure for earning the said exempt dividend income.
3. The CIT(A) erred in upholding the disallowance under section 14A without appreciating the fact that only one dividend cheque was received during the year and the Appellant had not incurred any expenditure to earn the said exempt dividend income.
4. The CIT(A) erred in not considering the order passed by the Ld. Assessing Officer for giving effect to directions provided by the Hon'ble Income Tax Appellate Tribunal, Mumbai (hereinafter "the ITAT) in Appellant's Own Case for A.Y. 2001-02 and A.Y. 2003-04 wherein the Ld. Assessing Officer himself had deleted the disallowance made under section 14A of the Act.
5. On the facts and the circumstances of the case and in law, the Learned CIT(A) further erred in importing the addition amounting to Rs. 20,00,000 made under section 14A of the Act for computation of book profit under section 1153B of the Act without appreciating the fact that the Appellant had incurred any expenditure in relation to the said exempt dividend income."Page 2 of 4 ITA No.4496/Mum/2016
Jindal Steel and Alloys Ltd. (A. Y:2005-06)
3. At the outset, the learned Counsel for the assessee stated that the issue is squarely covered in assessee's own case by Tribunal's decision for AY 2007-08 in ITA No. 8635/Mum/2010 vide order dated 30-04-2013, wherein exactly identical issues on disallowance of expenses relatable to exempt income was restricted at 2% of the exempt income. The learned Counsel for the assessee referred to following Para 5 of the order which reads as under: -
"5. on consideration of facts of the case, we are of the considered view that it would be reasonable to make a disallowance of 2% of the dividend income earned by the assessee towards expenses instead of restoring the matter to the file of AO. Hence, we restrict the disallowance to 2% of dividend income of Rs.3,39,63,539/- for assessment year under consideration57s5A7theAEE.Tus, ground of appeal taken by assessee is allowed in part by restricting the disallowance to 2% of the dividend income."
4. The learned Counsel for the assessee stated that the assessee has earned exempted income of Rs. 46,92,186/-. The learned Counsel for the assessee stated that relevant assessment year involved is 2005- 06 and same percentage is to be estimated and for this he relied on the Tribunals decision in assessee's own case, wherein estimated disallowance of 2% of the exempted income was considered. On query from the Bench the learned Sr. DR fairly considered the position.
5. I have heard the rival contentions and gone through the facts and circumstances of the case. I find from the facts that assessment is involved 2005-06 and disallowance made by AO of Rs. 20 lakh is very high. I restrict the disallowance at 2% of the exempt income and restore Page 3 of 4 ITA No.4496/Mum/2016 Jindal Steel and Alloys Ltd. (A. Y:2005-06) the matter back to the file of the AO for re-computation accordingly. The appeal of the assessee is partly allowed.
6. In the result, the appeal of assessee is partly allowed.
Order pronounced in the open court on 23-08-2017.
Sd/-
(MAHAVIR SINGH) JUDICIAL MEMBER Mumbai, Dated: 23-08-2017 Sudip Sarkar /Sr.PS Copy of the Order forwarded to:
1. The Appellant
2. The Respondent.
3. The CIT (A), Mumbai.
4. CIT
5. DR, ITAT, Mumbai
6. Guard file. //True Copy// BY ORDER, Assistant Registrar ITAT, MUMBAI Page 4 of 4