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2015 (3) TMI 1122 - ITAT MUMBAI

2015 (3) TMI 1122 - ITAT MUMBAI - TMI - Addition 14A - Held that:- Without highlighting the facts of that case no addition should be made on the basis of general presumption. The FAA, in the present case, had held that the every assessee would keep watch over the market to maximise its profit but he had missed one important aspect that the assessee was holding the shares of group concerns for strategic purposes and for selling and buying and selling them frequently. In absence of the finding as .....

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t the principle of consistency can be ignored only in certain conditions and without pinpointing the difference of facts for a particular year with the facts of earlier year/s consistency should be maintained. Considering the peculiar facts and circumstances of the case, we are reversing the order of the FAA. Effective ground of appeal raised by the assessee for the year under consideration, is allowed in its favour. - Decided in favour of assessee. - ITA No. 240/Mum/2012, ITA No. 241/Mum/2012, .....

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irming the action of the Assessing Officer of making disallowance of ₹ 6,55,913 under Section 14A of the Income tax Act, 1961 (the Act') . 2. The Appellant Company craves leave to add, alter, amend and / or withdraw all or any of the Grounds of Appeal as may be considered necessary either at or before the appeal hearing. ITA/241/Mum/2012-AY. 2007-08: Grounds of appeal for the AY. 2007-08 read as under: 1. On the facts and circumstances of the case, the learned Commissioner of Income-ta .....

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acts and circumstances of the case, the learned Commissioner of Income-tax (Appeals) - IV, Mumbai [ CIT (A) "] has legally erred in confirming the action of the Assessing Officer of making disallowance of ₹ 5,99,500 under Section 14A of the Income tax Act, 1961 (the Act') . 2. The Appellant Company craves leave to add, alter, amend and / or withdraw all or any of the Grounds of Appeal as may be considered necessary either at or before the appeal hearing. ITA/240/Mum/2012-AY. 2006- .....

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of ₹ 69,53,984/-which was claimed exempt u/s. 10 (33) of the Act, that no disallowance was offered u/s. 14A by the assessee Therefore, he applied Rule 8D and disallowed ₹ 6, 55,913/- u/s. 14A of the Act. 3. Aggrieved by the order of the AO, the assessee preferred an appeal before the First Appellate Authority (FAA) .Before him, it was claimed that no expenditure was attributable to dividend income, that no new investment has been made and no expenditure was required for earning of di .....

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d certain administrative efforts, that every investor always liked to keep in touch with the market and try to maximise its gain at the right opportunity, that it was not correct to say that no administrative efforts were required in maintaining the investment, that realization of dividend also involved certain efforts in whatever form, that amount of expenditure relating to dividend income could be more or less but it had to be allocated out of the total administrative expenses. He further held .....

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-06,that there was no difference in the facts for the year under appeal and facts of the earlier two AY. s. ,that the assessee had made strategic investment only during the year under consideration, that following the principle of consistency the AO should not have made any addition, that opening balances and the closing balances of the investment were same as per the balance-sheets containing the details of investments, that no satisfaction was recorded by the AO, that AO had not been pointed t .....

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rmed by the FAA was not sustainable. He further relied on the case of Reliance Industries Ltd. (339 ITR 632) delivered by the Hon ble Bombay High Court. It was also argued that in case of strategic investment no disallowance u/s 14A of the Act could be made. In this regard the AR relied upon the case of J. M. Financial Ltd. (ITA/4251/Mum/2012) and Garware Wall Ropes Ltd. (46 Taxmann.com 2014) He referred to page nos. 16 and 17 of the Paper Book. Alternatively and without prejudice it was stated .....

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rd the rival submission and perused the material before us. We find that while deciding the appeal for the AY. 2005-06 the FAA had deleted the addition made by the AO following his order for the AY. 2004-05,that the then FAA had held that assessee was holding strategic investment, that same was inherent part of overall planning, that there was no change in facts of the case that year as compared to the facts of AY. 2004-05. It is found that assessee had made investment in Taj group of companies .....

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ssee should not claim or get two deductions-.i. e. offering no tax exempt income on one hand and claiming expenditure on other hand. Incurring of expenditure for earning exempt income has to be proved as a matter of fact. There cannot be any guess work or presumption about incurring of expenditure. If the assessee claims interest expenditure or other expenditure (administrative) for earning exempt income, definitely a disallowance can be made. But, if no claim is made then the AO should not invo .....

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be made on the basis of general presumption. The FAA, in the present case, had held that the every assessee would keep watch over the market to maximise its profit but he had missed one important aspect that the assessee was holding the shares of group concerns for strategic purposes and for selling and buying and selling them frequently. In absence of the finding as to how much was the sum incurred by the assessee under the head administrative expenses, it is not possible for us to uphold the o .....

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nd in treatment. Hon ble jurisdictional High Court in the case of Gopal Purohit (336 ITR 287) has held that that there should be uniformity in treatment and when facts and circumstances for different years were identical particularly in the case of the same assessee. Analysis of the above two judgments lay down that the principle of consistency can be ignored only in certain conditions and without pinpointing the difference of facts for a particular year with the facts of earlier year/s consiste .....

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