Baroda Industries P. Ltd, Mumbai vs Assessee

Baroda Industries Private बनाम/ Income Tax Officer - 3(1)(2), Limited, Aayakar Bhavan, Vs. 2nd Floor, Bajaj Bhavan. M K Road, 226, Jamnalal Bajaj Marg, Mumbai-400020. Nariman Point, Mumbai-400021 (अपीलाथ /Appellant) .. ( यथ / Respondent)

थायी ले ख ा सं . /जीआइआर सं . /PAN/GIR No. :AAACB2428A

अपीलाथ ओर से / Assessee by: Shri M A Gohel

यथ क ओर से/ Revenue by:: Shri Premanand J

सन ु वाई क तार ख / Date of Hearing : 8.1.2015 घोषणा क तार ख /Date of Pronouncement : 8.1.2015

आदे श / O R D E R

Per B.R.BASKARAN, Accountant Member:

The appeal filed by the assessee is directed against the order dated 20.12.2011 passed by the ld. CIT(A)-5, Mumbai and it relates to the assessment year 2008-09.

2. The appeal filed by the assessee is barred by limitation by 81 days. The assessee has moved a petition requesting the Bench to condone the delay. We have also heard the ld. DR on this preliminary issue. Having regard to the submissions made in the affidavit, we condone the delay and admit the appeal for hearing.

3. The only issue consisted in the appeal relates to disallowance made u/s 14A of the Act.

ITA No.4213/M/2012 2 4. We have heard the parties and perused the record. The impugned disallowance made by the AO relates to disallowance of 0.05% of the administrative expenses as per the provisions of Rule 8D r.w. section 14A of the Act. While filing the return of income, the assessee did not make any disallowance u/s 14A of the Act even though it had received Rs.8.32 crores ad dividend income from shares and mutual funds. During the course of assessment proceedings, the assessee worked out the disallowance out of general and administrative expenses at Rs.3,15,118/- and requested the AO to make disallowance on the above said amount u/s 14A. However, computation made by the assessee was not in accordance with Rule 8D of the Income Tax Rules, 1962. Accordingly, the AO computed the disallowance as per provisions of Rule 8D at Rs.8,53,822/-. The ld. CIT(A) also confirmed the said disallowance. Aggrieved, the assessee filed the appeal before us..

5. At the time of hearing, the ld. counsel invited our attention to the Schedule-IV of the Annual Report and submitted that the assessee has invested mostly in the shares of subsidiary and group companies and they are all passive investments made with the strategic business purpose of holding controlling interest. Accordingly he submitted that the impugned investments have not been made for the purposes of earning dividend income. The ld. counsel submitted that out of the investment of Rs.20.01 crores, the investment in mutual funds units was only Rs.58 lakhs and remaining investment have been made in the shares/debentures of subsidiary and group companies. The ld. Counsel submitted that the assessee belong to a well known group of "Bajaj Group". The ld. counsel placed reliance on the following case laws to submit that the disallowance u/s 14A was not required to be made if the preliminary objective of investment was holding controlling stake in group concern and not for earning dividend from investment.

a) M/s JM Financial Limited V/s ADCIT in ITA No.4521/Mum/2012 (AY-2009-10) order dated 26.3.2014;

b) Garware Wall Ropes Ltd V/s Addl. CIT (2014) 65 SOT 86

6. The ld. DR, on the contrary, placed reliance on the decision of ld. CIT(A).

7. We notice that the assessee has raised the issue of strategic investment in subsidiary and group companies for the first time before us. We also notice ITA No.4213/M/2012 3

that the contention of the assessee is supported by the two Tribunal decisions referred (supra). The claim of the assessee is that the companies in which the investment have been made are subsidiary and Group companies. However, we are of the view that the said claim requires verification at the end of the AO. Further, we are of the view that the fresh contention put forth by the Ld A.R also needs to be examined at the end of the assessing officer. Accordingly, we set aside the order of ld. CIT(A) on this issue and restore the matter to the file of the AO with a direction to examine the claim of the assessee afresh and take appropriate decision in accordance with law.

8. In the result, the appeal filed by the assessee is allowed for statistical purposes.

The above order was pronounced in the open court on 8th Jan, 2015.

घोषणा खल ु े यायालय म दनांकः 8th Jan, 2015 को क गई ।

sd sd

(आय.पी. बंसल/I.P. BANSAL) (बी.आर. बा करन,/ B.R. BASKARAN) या यक सद य / Judicial Member लेखा सद य/Accountant Member

मुंबई Mumbai: 8th Jan,2015.

व. न.स./ SRL , Sr. PS

आदे श क त ल प अ े षत/Copy of the Order forwarded to :

1. अपीलाथ / The Appellant

2. यथ / The Respondent.

3. आयकर आयु त(अपील) / The CIT(A)- concerned

4. आयकर आयु त / CIT concerned

5. वभागीय त न ध, आयकर अपील य अ धकरण, मुंबई / DR, ITAT, Mumbai concerned

6. गाड फाईल / Guard file.

आदे शानुसार/ BY ORDER, true copy सहायक पंजीकार (Asstt. Registrar) आयकर अपील य अ धकरण, मुंबई /ITAT, Mumbai