TMI Blog2016 (8) TMI 1538X X X X Extracts X X X X X X X X Extracts X X X X ..... is of consent or acquiescence or waiver of any party or otherwise. It could be done only in accordance with the provisions of law. The circular has been taken note of by many courts in their judgments while deciding the identical issues wherein taxpayers have paid more tax than actually due as per law. In this regard, we shall also like to make a mention of Article 265 of Constitution of India which says that no tax can be collected except by the authority of law . Thus, in the given facts of the case before us and the aforesaid legal position and we find that the disallowance made by the AO u/s 14A on account of business portfolio deserves to be deleted in total and therefore, we direct the AO to give relief accordingly. Grounds raised by the assessee are allowed. - ITA No. 6383/Mum/2014 And ITA No. 6705/Mum/2014 - - - Dated:- 10-8-2016 - Shri Amit Shukla, Judicial Member And Shri Ashwani Taneja, Accountant Member For the Assessee : Shri Nitesh Joshi Rajiv Mehrotra (AR). For the Revenue : Shri Ravinder Sindhu (DR). ORDER Per Ashwani Taneja (Accountant Member): These are cross appeals filed by the assessee and department against order of Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,51,68,846/- on shares and interest from Relief Bonds of ₹ 3,62,55,993/- which was claimed exempt u/s 10(34) of the Act. Thus, AO asked the assessee for making disallowance u/s 14A r.w. rule 8D out of the corresponding expenses. In response, the assessee stated that it had already disallowed the voluntarily a sum of ₹ 25,11,095/- in its return u/s 14A of the Act. But, the AO observed that he was satisfied that the assessee's claim of only Rs . 25,11,095/- as expense incur r ed to e a rn income s o f ₹ 5,51,68,846/- on shares and interest from relief bonds of ₹ 3,62,55,993/- was incorrect. He further observed that the interlacing of activities clearly indicated proximate relationship between incidence of expenditure and consequential earning of exempt income, that live nexus was obvious given that assessee was having F O business and was investing in shares at a very high volume. It was also observed that the claim of the assessee that he had no expertise and time to do business in shares was erroneous and counterproductive as he derived income from shares in F O activity. Therefore the implicit notion of apportionment and attribution as provided in s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14A was deleted in total by the Tribunal. But, Ld. CIT(A) give part relief to the assessee by holding that assessee was maintaining two portfolios i.e. investment and business . It was held by the Ld. CIT(A) that with regard to investment portfolio the assessee had incurred a total expenses of ₹ 2,22,867/- towards rates and taxes and STT, which were already disallowed and therefore, no further disallowance was required to be made. But, with regard to the business portfolio the disallowance was required to be made the clauses (ii) and (iii) of Rule 8D(2) and directed the AO to work out the disallowance accordingly. 3.3. Being aggrieved with the said order, the assessee came up in appeal before the Tribunal for the disallowance sustained by Ld. CIT(A) on account of business portfolio and revenue came up in appeal before the Tribunal for the disallowance deleted by the Ld. CIT(A) on account of investment portfolio . During the course of hearing before us, it has been submitted by the Ld. Counsel that disallowance u/s 14A was deleted in total in view by the Tribunal in assessee s own case for A.Ys. 2008-09 2009-10 and also relied upon the judgments of Hon ble Jurisd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CIT(A). Therefore, the claim of the assessee that separate accounts including bank accounts and balance sheets had been maintained for the two activities have to be accepted. With regard to personal investment for which separate account has been maintained CIT(A) has given a clear finding that investments had been made from own funds. The investments in RBI relief bonds and LIC had been made in earlier years and since the assessee having vast experience in these matters was personally handling these investments, there were no expenses required. Similarly the shares which were of unlisted group companies held for the purpose of retaining control over these companies, did not require any day to day expenses. CIT(A), therefore, has given a clear finding that no expenses had been incurred in relation to personal investments and these factual findings have not been controverted before us by producing any material. Therefore, order of CIT(A) in relation to deleting disallowance of expenses in relation to personal investment is reasonable and upheld. 5.1 CIT(A) has however disallowed expenses relating to trading activity as per Rule 8D. No doubt, it is true that Rule 8D was app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n case for the assessment year 2008-09 in ITA No. 6332/Mum/2011 vide orders dated 11-01-2013 set aside the order of CIT(A) and deleted the disallowance upheld by the CIT(A) in relation to trading in share. We have also noted that in the recent judgment of Hon ble High Court of Bombay in the case of HDFC Bank Ltd. v. DCIT vide Writ Petition No. 1753 of 2016 dated February, 25, 2016 [2016] 67 taxmann.com 42 (Bombay) has approved the proposition that no disallowance of expenditure can be made u/s 14A of the Act with respect to the shares held by tax payers as stock-intrade whereby the decision of the Mumbai Tribunal in India Advantage Securities Limited (2013) TaxPub(DT)2301(Mum-Trib.) was confirmed by Hon ble Bombay High Court in ITA No. 1131/31 decided on 31-04- 2014 ((2016) 380 ITR 0471 (Bom.) ) whereby Hon ble Bombay High Court held that no substantial question of law arise from the decision of Mumbai Tribunal in the case of India Advantage Securities Private Limited. Respectfully following the above binding judicial precedents of Hon ble Bombay High Court in India Advantage Securities Private Limited and HDFC Bank Limited (supra) and decision of Hon ble Karnataka High Court in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Co. Ltd. 81 ITR 303 wherein it was held that merely because an assessee has returned a particular income for a particular year, the ITO does not get jurisdiction to assessee the same if in fact that income did not belong to the assessee in that assessment year. It was held in the said case that an assessee can subsequently resile from its return if it is found by the assessee that return filed was not in accordance with law. It is well accepted position that principle of estoppel has no application under the income tax proceedings. We also rely upon the judgment of Hon ble Bombay High Court in the case of Sanchit Software and Solutions Pvt. Ltd. v. CIT 25 taxmann.com 123 (Bom) wherein it was held that income tax department cannot take advantage of mistake of the assessee. We are also reminded of the circular issued by the Central Board of Revenue no.14 dated 11.04.1955 wherein it was instructed to the AOs that no undue advantage should be taken of the ignorance of the assessee and taxable income and tax payable thereon should be computed fairly and in accordance with law. The circular has been taken note of by many courts in their judgments while deciding the identical issues where ..... X X X X Extracts X X X X X X X X Extracts X X X X
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