Income Tax Appellate Tribunal - Mumbai
Mukta Arts Limited, Mumbai vs Acit., 11(1), Mumbai on 7 March, 2017
आयकर अपीऱीय अधिकरण, मुंबई न्यायपीठ "बी" मुंबई IN THE INCOME TAX APPELLATE TRIBUNAL "B" BENCH, MUMBAI BEFORE SHRI MAHAVIR SINGH, JM AND SHRI RAJESH KUMAR, AM श्री महाविर स ग िं , न्याययक दस्य एििं श्री राजेश कुमार, ऱेखा दस्य के मक्ष ITA NO.6048/Mum/2011 (ननधधायण वषा / Assessment Year: 2008-09) M/s Mukta Arts Limited Asstt.Commissionr of Income 3rd floor, Filmcity Complex, फनधभ/ Tax 11(1), Goregaon(E), Vs. Aayakar Bhavan, Mumbai-400065 M K Road, Mumbai-400020 (अऩीरधथी /Appellant) (प्रत्मथी / Respondent) स्थधमी रेखध सं ./ PAN : AAACM9513F (अऩीरधथी /Appellant) : (प्रत्मथी / Respondent) अऩीरधथी की ओय से /Assessee by : Shri Rahul K Hakani प्रत्मथी की ओय से/Revenue by : Shri Suman Kumar सुनवधई की तधयीख /Da te o f Hea r in g : 16.1.2017 घोषणध की तधयीख /Da te o f : 7.3.2017 Pro n ou n ce me nt आदे श / O R D E R PER RAJESH KUMAR, A. M:
This is an appeal filed by the assessee against the order dated 22.6.2011 passed by the ld. CIT(A)-3, Mumbai for the assessment year 2008- 09 wherein the assessee has challenged the confirmation of disallowance of Rs.35,07,280/- as made by the AO under section 14A of the Income Tax Act, 1961 read with Rule 8D of the Income Tax Rules, 1962.2 ITA No.6048/Mum/2011
2. Earlier, the appeal was dismissed in limine for non-prosecution by the Tribunal on 26.11.2012. Thereafter, vide MA No.142/Mum/2013 the assessee prayed for restoration of original appeal and the Tribunal vide order dated 11.10.2013 passed in Miscellaneous Application restored the appeal for fresh hearing. Hence, this is a second inning of the litigant before the tribunal.
3. Brief facts of the case are that the assessee filed its original return of income on 29.9.2008 declaring a total income of Rs.3,67,88,592/- and revised return of income on 23.3.2009 declaring the same income revising the TDS claim only. The return was processed under section 143(1) and thereafter the case was selected for scrutiny wherein the statutory notices under section 143(2) and 142(1) were issued and served to the assessee. The assessee company is engaged in the business of production, distribution, and exhibition and also derives income from hiring of studio facilities for production of film, TV serials and advertisements etc.
4. The issue raised in ground no.1 is against the confirmation of disallowance of Rs.35,07,280/- by ld.CIT(A) as made by the AO u/s 14A of the Income Tax Act, 1961 read with Rule 8D of the Income Tax Rules, 1962. During the course of assessment proceedings, the AO observed that the assessee has earned exempt income on which it did not show any direct expenditure incurred but definitely has incurred some indirect expenses as 3 ITA No.6048/Mum/2011 without incurring any expenditure, investments in shares could not have been made and as a result the same was claimed against the taxable income of the assessee. The AO calculated disallowance u/s 14A r.w.r.8D by applying 0.5% of the average investment which came to Rs.35,07,280/.
5. The First Appellate Authority dismissed the appeal of the assessee by holding that the AO has correctly applied rule 8D to work out the disallowance u/s 14A. Now, the assessee is in appeal before us.
6. We have carefully considered the rival contentions, perused the material placed before us including the orders of authorities below and case law relied upon by the assessee. We find that the assessee has earned exempt income of Rs.53,60,035/- by way of dividend and Rs.4,43,009/- as Long Term Capital Gains which were claimed as exempt. The assessee has not attributed any expenses towards earning of this exempt income and hence the AO applied rule 8D after observing that the assessee might have incurred some expenditure in relation to this income which were claimed against the taxable income.
7. The ld. AR vehemently, submitted before us if at all rule 8D is applied then the investments yielding exempt income have to be considered only to calculate the disallowance and not the entire investments as appearing in the balance sheet at beginning and the end of the year whereas in the present case, we find that the AO calculated the disallowance by taking all the 4 ITA No.6048/Mum/2011 investments including the ones income from which is taxable income. We, therefore, find merit in the arguments of the ld.AR that only investments yielding exempt income have to be considered. Since the issue requires verification and ascertainment of investments yielding exempt income, we deem it fit and proper to restore this issue back to the file of the AO to recalculate the disallowance by taking those investments into consideration which yielded exempt income after providing fair and reasonable opportunity of being heard to the assessee. The assessee is also directed to co-operate with the AO for speedy disposal of the matter.
8. In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced on 7th March, 2017
Sd sd
(महाविर स ग
िं /Mahavir Singh) (राजेश कुमार /Rajesh Kumar)
न्याययक दस्य / Judicial Member ऱेखा दस्य / Accountant Member
भुंफई Mumbai; ददनधंक Dated : 07.3.2017
SRL,Sr.PS
आदे श की प्रनतलरपऩ अग्रेपषत/Copy of the Order forwarded to :
1. अऩीरधथी / The Appellant
2. प्रत्मथी / The Respondent
3. आमकय आमक् ु त(अऩीर) / The CIT(A)
4. आमकय आमुक्त / CIT - concerned
5. पवबधगीम प्रनतननधध, आमकय अऩीरीम अधधकयण, भुंफई / DR, ITAT, Mumbai
6. गधर्ा पधईर / Guard File आदे शधनुसधय/ BY ORDER, True copy उऩ/सहधमक ऩंजीकधय (Dy./Asstt. Registrar) आमकय अऩीरीम अधधकयण, भुंफई / ITAT, Mumbai