Income Tax Appellate Tribunal - Mumbai
Clique Consultants Pvt. Ltd., Mumbai vs Ito - 9(1)(2), Mumbai on 12 September, 2017
THE INCOME TAX APPELLATE TRIBUNAL
"SMC" Bench, Mumbai
Before Shri B.R. Baskaran (AM)
I.T.A. No. 861/Mum/2017 (Assessment Year 2012-13)
Clique Consultants Pvt. Ltd. ITO 9(1)(2)
602, Shreenath Apartment Vs. 5 t h Floor
Liberty Garden, Cross Road Earnest House
No. 3, Adjacent to Mehta NCPA Marg
Industrial Estate, Malad(W) Nariman Point
Mumbai-400 064. Mumbai-400021.
PAN No. AAACC2971P
(Appellant) (Respondent)
Assessee by Shri Deepak Tikekar
Department by Ms. N. Hemlatha
Date of Hearing 24.8.2017
Date of Pronouncement 12.9.2017
ORDER
The appeal filed by the assessee is directed against the order dated 28.10.2016 passed by the learned CIT(A)-20, Mumbai and it relates to A.Y. 2012-13. The assessee is aggrieved by the decision rendered by the learned CIT(A) on following additions :
(a) Addition made u/s. 14A of the Act.
(b) Addition of ` 60,000/- relating to discrepancy of professional receipts.
2. I have heard the parties and perused the record. The assessee is engaged in engineering consultancy services. The first issue relates to disallowance made u/s. 14A of the Act. The Assessing Officer noticed that the assessee has received dividend income of ` 30,000/- but did not make any disallowance u/s. 14A of the Act. Accordingly, the Assessing Officer computed disallowance as per Rule 8D of the I.T. Rules at ` 9,38,949/- and added the same to the total income of the assessee. The learned CIT(A) also confirmed the same.
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3. The Learned AR submitted that the assessee had made investment in equity shares of NKGS Bank and M/s. Clique Development Pvt. Ltd. He submitted that the dividend income receivable from NKGS Bank is not exempt from taxation. He further submitted that the investment in Clique Development Pvt. Ltd. is a strategic investment and hence the same is required to be excluded from the average value of investment. Accordingly he submitted that there is no requirement to make any disallowance u/s 14A of the Act.
4. On the contrary, learned Departmental Representative supported the order passed by the learned CIT(A) on this issue.
5. Having heard the rival submissions, I am of the view that this issue requires fresh examination at the end of the Assessing Officer. The Strategic investments are required to be excluded from the average value of investment as per the decision rendered by the Coordinate Bench in the case of Garware Wall Ropes Ltd. Vs. Add.CIT (46 Taxmann.com 18). The assessee claims that the dividend income receivable from NKGS Bank is not exempt. I notice that the dividend income of Rs.30,000/- was received from NKGS Bank and it is not clear as to whether the assessee has offered the same for taxation. If it had been offered for taxation, the question of applying provisions of sec. 14A would not arise. Since this fact requires verification and since the claim of strategic investment also requires examination, I set aside the order passed by the learned CIT(A) and restore the matter back to the file of the Assessing Officer with the direction to examine this issue afresh in the light of the discussion made (supra).
6. Next issue relates to disallowance of ` 60,000/- relating to surplus income. The Assessing Officer noticed that the assessee has reported receipt from M/s. Posco Engineering & Construction Co. Ltd. at ` 32.16 lakhs whereas, in its ITS details, it was shown that the assessee has received a sum of ` 32.72 lakhs from M/s. Posco Engineering & Construction Co. Ltd. Hence, the Assessing Officer added a sum of ` 60,000/- to the total income of the 3 C l iq u e C o ns u l t a n ts P v t . L td .
assessee, being the difference between the income from M/s Posco reported by the assessee and shown in ITS details. Before the learned CIT(A) the assessee submitted that M/s. Posco Engineering & Construction Co. Ltd. has reported income at ` 32.72 lakhs erroneously and the assessee did not raise any such bills on them for the difference amount. It also submitted that TDS deducted by M/s. Posco Engineering & Construction Co. Ltd. tallies with the income reported by the assessee. However, the learned CIT(A) was not convinced with the explanations of the assessee and accordingly confirmed the addition.
7. Before me, learned AR furnished a copy of Form No. 26AS (ITS details) and submitted that on 2nd May 2011, M/s. Posco Engineering & Construction Co. Ltd., has shown in ITS details that it has deducted a sum of ` 25,037/- as TDS from the amount of ` 3,07,122/-. He submitted that M/s. Posco Engineering & Construction Co. Ltd. should have deducted tax of ` 30,712/- on the payment of ` 3,07,122/-, where as the TDS amount was shown as Rs.25,037/- only. The Ld A.R submitted that the assessee had actually raised a bill of ` 2,50,374/- only and hence M/s. Posco Engineering & Construction Co. Ltd. had deducted tax of ` 25,037/-. Accordingly, learned AR submitted that M/s. Posco Engineering & Construction Co. Ltd. had committed a mistake in reporting figure of ` 3,07,122/-.
8. On the contrary, learned Departmental Representative supported the order passed by the learned CIT(A) on this issue.
9. Having heard the rival submissions, I am of the view that there is merit in the contentions of the assessee. As per reconciliation statement furnished by the assessee in page No. 9 of the paper book, I notice that the assessee has raised a bill of ` 2,50,374/-, on which M/s. Posco Engineering & Construction Co. Ltd., has deducted tax at source @ 10% at ` 25,037/-. If the bill amount had been Rs.3,07,122/-, M/s Posco would have deducted a tax of Rs.30,712/-. I notice that M/s Posco has reported the TDS amount correctly and as per the assessee, it has committed a mistake in reporting the income in ITS details.
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According to Ld A.R, the assessee has raised bill only for Rs.2,50,374/-. I notice that this contention of the assessee has not been disproved by the revenue. I notice that the income amount was reported by M/s. Posco Engineering & Construction Co. Ltd. at ` 3,07,122/- does not appear to be correct amount vis-à-vis TDS deduction made thereon. Accordingly, I am of the view that there is merit in the submissions of the assessee and accordingly the addition of ` 60,000/- made by the Assessing Officer is not justified in the facts and circumstances of the case. Accordingly, I set aside the order passed by the learned CIT(A) on this issue and direct the Assessing Officer to delete the addition of ` 60,000/-.
10. In the result, appeal filed by the assessee is allowed for statistical purposes.
Order has been pronounced in the Court on 12.9.2017.
Sd/-
(B.R.BASKARAN) ACCOUNTANT MEMBER Mumbai; Dated : 12/9/2017 Copy of the Order forwarded to :
1. The Appellant
2. The Respondent
3. The CIT(A)
4. CIT
5. DR, ITAT, Mumbai
6. Guard File.
BY ORDER, //True Copy// (Dy./Asstt. Registrar) PS ITAT, Mumbai