Pudumjee Industries Ltd, Mumbai vs Assessee

BEFORE HON'BLE S/SHRI H.L. KARWA, PRESIDENT AND B.R.BASKARAN (AM) सव ी एच.एल. कावा, अ य एवं बी.आर.बा करन, लेखा सद य आयकर अपील सं./I.T.A. No.3603/Mum/2012 ( नधारण वष / Assessment Year :2009-10)

Pudumjee Industries Ltd, बनाम/ Asstt. Commissioner of Income 60, Dr.A.V.B.Gandhi Marg, Vs. Tax -Circle 2(2) (OSD), Mumbai. Mumbai. (अपीलाथ /Appellant) .. ( यथ / Respondent)

थायी ले ख ा सं . /जीआइआर सं . /PAN/GIRNo. :AAACPO487B

अपीलाथ ओर से / Appellant by : Shri Vijay Mehta यथ क ओर से/Respondent by Shri Neil Philip

सन ु वाई क तार ख / Date of Hearing :31.12.2014 घोषणा क तार ख /Date of Pronouncement : 16.01.2015

आदे श / O R D E R

Per B.R.BASKARAN, Accountant Member:

The assessee has filed this appeal challenging the order dated 09- 03-2012 passed by Ld CIT(A)-5, Mumbai and it relates to the assessment year 2009-10. The assessee is aggrieved by the decision of Ld CIT(A) in confirming the addition made by the AO u/s 14A of the Act. At the time of hearing, the Ld A.R did not press ground no.3 relating to advance tax payment. Accordingly the said ground is dismissed as not pressed.

2. We heard the parties and perused the record. We notice that the assessee has earned dividend income of Rs.8,19,084/- on long term investment made in the shares of M/s Pudumjee Pulp & Paper Mills Ltd to the tune of Rs.2.67 crores. The assessee did not make any disallowance u/s 14A of the Act, since it claimed that the above said investment was 3603Mum/2012 2

made from time to time out of own funds. The said claim did not find favour both with the AO and Ld CIT(A).

3. At the time of hearing, the Ld A.R invited our attention to pages 2 & 3 of the assessment order, wherein the assessing officer has extracted the submissions of the assessee. The Ld A.R submitted that the assessee had submitted the details of year-wise investment made in the above said company. He further invited our attention to the Balance Sheet placed in the paper book filed by it and submitted that the own funds available with the assessee are in excess of of the loan funds. Accordingly, by placing reliance on the decision of Hon'ble jurisdictional Bombay High Court in the case of CIT Vs. HDFC Bank (2014)(366 ITR 505), the Ld A.R submitted that the disallowance u/s 14A is not called for.

4. On the contrary, the Ld D.R placed reliance on the orders of Ld CIT(A).

5. From the Balance sheet filed by the assessee, we notice that the assessee was having own funds of 3888.89 lakhs as on 31.3.2008 and loan funds of Rs.2968.09 lakhs. The loan funds consisted of Secured Loans of 1270.40 lakhs and Unsecured loans of Rs.1697.69 lakhs. The secured loans should have been used for specific purposes. The investment made by the assessee is 1268.16 lakhs (net of Provision for diminution in value). The Balance sheet is also showing positive balance of Net current assets. Thus, we notice that the own funds are more than the loan funds and hence the decision rendered by the jurisdictional High Court in the case of HDFC Bank applies to the fact of the assessee.

6. Accordingly, we agree with the contentions of the assessee that the disallowance u/s 14A in respect of interest expenditure is not called for. With regard to the disallowance of administrative expenses under Rule 8D(2)(iii), the Ld A.R did not press the same in view of the smallness of 3603Mum/2012 3

the amount involved. Accordingly, we sustain the disallowance made towards administrative expenses. Accordingly we modify the order of Ld CIT(A) in the lines discussed above and direct the assessing officer to sustain the addition relating to administrative expenses only.

7. The assessee has also raised an additional ground relating to the computation of book profit u/s 115JB of the Act. The Ld A.R submitted that the said ground is consequential in nature. Accordingly the same does not require any adjudication.

8. In the result, the appeal filed by the assessee is partly allowed.

The above order was pronounced in the open court on 16th Jan,2015.

घोषणा खुले यायालय म दनांकः 16th Jan 2015 को क गई ।

sd sd

(एच.एल. कावा/ H.L. KARWA) (बी.आर. बा करन,/ B.R. BASKARAN) अ य / PRESIDENT लेखा सद य/Accountant Member मब ुं ई Mumbai: 16th 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, मब ंु ई / DR, ITAT, Mumbai concerned

6. गाड फाईल / Guard file.

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