Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2019 (12) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (12) TMI 1178 - ITAT MUMBAIDisallowance u/s 14A - investments which yielded exempt income - HELD THAT:- Considering the fact that the lower authority has considered all investments made by assessee for calculating average investment for disallowance u/r 8D(2)(iii), the Special Bench of Delhi Tribunal in Vireet Investments P Ltd [2017 (6) TMI 1124 - ITAT DELHI] held that only those investments which yielded exempt income should be considered for disallowance u/r 8D(2)(iii), we restore this part of ground to the file of AO to make fresh computation of average investments by taking into consideration only those investments which yielded the exempt income. Disallowance u/r 8D(2)(ii) - assessee vehemently argued that the disallowance in respect of net interest has to be made by taking into consideration only 3 investments which yielded dividend income during the year. We have noted that the assessee has raised this plea, for the first time before us and has strongly relied upon the decision of Mumbai Tribunal in Sajjan India Ltd vs ACIT [2017 (12) TMI 47 - ITAT MUMBAI] wherein it was held that mandate of Act is to tax real income and tax can only be levied under authority of law. Even if disallowance fall below disallowance u/s 14A offered by assessee in the return of income, revenue cannot charge tax on income, which never was income of assessee chargeable to tax. Therefore, we deem it appropriate to restore this part of disallowance u/r 8D(2)(ii) to the file of the AO to examine the issue afresh in the light of above referred decision and pass the order afresh in accordance with law. Disallowance u/s 56(2)(viia) - AO treated the investment in shares as income under section 56(2) (viia) - HELD THAT:- We have noted that the assessing officer during the assessment not provided the valuation (FMV) arrived by him to the assessee. During the first appellate stage the assessee furnished the working of the FMV of the shares of these two entities, however, the AO despite granting opportunity to file his remand report, not controverted the said valuation. The valuation furnished by the assessee is in accordance with Rule 11UA is also not disputed by AO. The values of shares as per valuation furnished by assessee are less than the consideration paid by the assessee for acquisition of shares. The ld. DR for the revenue failed to bring any fact or evidence to our notice to take other view. Thus, we do not find any infirmity in the order passed by ld. CIT (A) in deleting the addition qua the acquisition of shares of Shivalik Solid Waste management and Coimbatore Integrated Waste Management Pvt Ltd., which we affirm. In the result ground No.2 in revenue’s appeal is dismissed. Addition in respect of purchase of shares of ETL - CIT(A) sustained the addition of difference of FMV as per Rule 11UA. The ld. AR for the assessee vehemently argued that ETL is a closely held company and its shares are not readily available in the market for sale or trading and that the sale by Sidhi Samrat Dychem Pvt Ltd was a mode of exit from the agreement due to certain financial difficulties faced by Sidhi Samrat Dychem Pvt Ltd. No such evidence in the form of correspondence or any communication is brought on record by the assessee that Sidhi Samrat Dychem Pvt Ltd was facing financial difficulties, which may justify the action/ transaction with assessee. Hence, we do not find merit in the submissions of the ld. AR for the assessee. Alternative submission of the ld AR for the assessee that provisions of section 56(viia) are anti abuse and intended to prevent the practice or receiving property without consideration or for inadequate consideration, are concerned, the ld AR has strongly relied on the Circular No. 01/2011 dated 6th April 2011 issued by Central Board of Direct Tax (CBDT) and the decision of Tribunal in ACIT Vs Subhodh Menon (supra). The throughout the proceedings took the stand that the assessee that the transaction with ETL is bonafide transaction. We are also of the view that in absence of any imputation of any consideration over and above consideration was passed, the addition is not justified. As we have already noted that in absence of any imputation of any consideration over and above consideration was passed, the addition is not justified. The assessing officer has not made any investigation from ETL nor brought any adverse material on record against the assessee. Hence, we accept this submission of the ld. AR for the assessee and allow the ground of appeal raised by the assessee.
|