JYOTI PRAKASH DUTTA, MUMBAI V. ACIT 11(1), MUMBAI

CO 160/MUM/2010

• Counselvise Citation: [2011] 122 COUNSELVISE.COM (IT) 6792 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 4 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 28-12-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 21-12-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 23-08-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: O A MAO
• Assessee Lawyers: SANJIV M SHAH
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH I,MUMBAI BEFORE SHRI T.R. SOOD (AM) & SHRI VIJAY PAL RA O ( JM ) I.T.A. NO.634/MUM/2010 (A.Y. : 2006-07) ASSTT. COMMR. OF INCOME-TAX-11(1), R.NO. 439, AAYKAR BHAVAN, M.K. ROAD, MUMBAI-400 020. VS. SHRI JYOTI PRAKASH DUTTA, 101-102, SAIBABA TOWERS, N. DUTTA MARG, FOUR BUNGALOWS, ANDHERI (W), MUMBAI-400 058. PAN: AABPD2975L APPELLANT RESPONDENT C.O. NO.160/MUM/2010 (ARISING OUT OF I.T.A. NO.364/MUM/2010) (A.Y. : 2006-07) SHRI JYOTI PRAKASH DUTTA, 101-102, SAIBABA TOWERS, N. DUTTA MARG, FOUR BUNGALOWS, ANDHERI (W), MUMBAI-400 058. PAN: AABPD2975L VS. ASSTT. COMMR. OF INCOME-TAX-11(1), R.NO. 439, AAYKAR BHAVAN, M.K. ROAD, MUMBAI-400 020. CROSS OBJECTOR RESPONDENT DEPARTMENT BY SHRI O.A. MAO. ASSESSEE BY SHRI SAN JIV M. SHAH. DATE OF HEARING 21-12-2011 DATE OF PRONOUNCEMENT 28-12-2011 O R D E R PER T.R. SOOD, AM : ITA NO. 634/MUM/2010: IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLLOWIN G GROUND : ITA NO.634 & CO NO.160/MUM/2010 JYOTI P. DUTTA 2 1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN DIRECTING TO ALLOW THE CLAIM OF DEDUCTION U/S.80IB OF THE I.T. ACT, IGNORING THE FACT THAT THE ASSESSE E HAS NOT SATISFIED THE CONDITIONS PRESCRIBED U/S.80IB. 2. AFTER HEARING BOTH THE PARTIES, WE FIND THAT DUR ING THE ASSESSMENT PROCEEDINGS THE AO NOTICED THAT THE ASSESSEE CLAIMED DEDUCTION U/S.80I B. AGAINST THE QUERY, IT WAS SUBMITTED BY THE ASSESSEE AS UNDER : NOTE ON ALLOWANCE OF DEDUCTION U/S.80-IB OF THE AC T 1. DEDUCTION U/S. 80IA HAS BEEN CLAIMED IN RESPECT OF INCOME FROM THE FILMS BORDER AND LOC WHICH WERE RELEASED IN ASSTT. YEARS 1998-99 AND 2003-04 RESPECTIVELY. THE HONBLE I B ENCH ITAT, MUMBAI, HAS ALLOWED ASSESSEES CLAIM IN RESPECT OF DEDUCTION U/S.80-IA/IB FOR THE A.Y. 2001-02. COPY OF THE ORDE R ENCLOSED. 2. THEIR LORDSHIPS OF BOMBAY HIGH COURT IN THE CASE OF DADA KONDAKE, 192 ITR 128 HAD HELD THAT PRODUCTION OF FI LMS AMOUNT TO MANUFACTURE OF GOODS FOR THE PURPOSE OF SECTION 80J OF THE INCOME-TAX ACT. THEIR LORDSHIPS OF BOMBAY HIGH COUR T IN A RECENT JUDGEMENT DELIVERED IN THE CASE OF CIT VS. M /S. UTTAM CHITRA (INCOME TAX REF. NO. 404 OF 1987) HAS REAFFI RMED THE DECISION IN THE CASE OF DADA KODAKE. 3. FURTHER AS STIPULATED IN THE REPORT FILED IN FORM 1 0CCB ALONG WITH THE RETURN THE ASSESSEE HAS COMPLIED WITH ALL THE B ASIC CONDITIONS AS MENTIONED IN SUB-SECTION (2) AND (3) OF THE SECT ION 80-IB OF THE ACT. AFTER CONSIDERING THE ABOVE SUBMISSIONS, THE AO OBS ERVED THAT THE DEPARTMENT HAS NOT ACCEPTED THE DECISION THAT PRODUCTION OF FILM IS AN INDUSTRI AL UNDERTAKING. HE FURTHER OBSERVED THAT THE ASSESSEE WAS NOT THE OWNER OF MACHINERY. THEREFORE, THIS DEDUCTION WAS NOT ALLOWED. 3. ON APPEAL, THE LD. CIT(A) ALLOWED THE DEDUCTION FOLLOWING THE ORDER OF TRIBUNAL IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2001-02. 4. BEFORE US, THE LD. D.R. RELIED ON THE ORDER OF A O. 5. ON THE OTHER HAND, THE LD. COUNSEL OF THE ASSESS EE SUBMITTED THAT DEDUCTION HAS BEEN ALLOWED BY THE TRIBUNAL IN ASSESSEES OWN CASE IN A SSESSMENT YEARS 1998-99 TO 2004-05. HE POINTED OUT THAT THE TRIBUNAL ORDER HAS BEEN ENCLOS ED IN THE PAPER BOOK FROM PAGES 3 TO 19. ITA NO.634 & CO NO.160/MUM/2010 JYOTI P. DUTTA 3 6. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE FIND THAT IN ASSTT. YEARS 1998-99 TO 2004-05 THE TRIBUNAL HAS ALREADY ALLOWED DEDUCTION IN THE A SSESSEES OWN CASE AND THOSE ORDERS ARE ON RECORD IN THE PAPER BOOK. THE LD. CIT(A) HAS SIMPLY FOLLOWED THE ORDER OF TRIBUNAL AND, THEREFORE, NO FAULT CAN BE FOUND WITH HIS ORDER. AC CORDINGLY, WE CONFIRM THE ORDER OF LD. CIT(A). 7. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED . C.O.NO.160/M/2010: 8. IN THIS CROSS OBJECTION, THE ASSESSEE HAS RAISED THE FOLLOWING GROUND : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN UPHOL DING THE DISALLOWANCE OF RS.4,50,450/- U/S.14A OF INCOME-TAX ACT. 9. AFTER HEARING BOTH THE PARTIES, WE FIND THAT DUR ING ASSESSMENT PROCEEDINGS THE AO NOTICED THAT THE ASSESSEE HAD CLAIMED CERTAIN INVES TMENTS, INCOME FROM WHICH WAS EXEMPT. THEREFORE, HE INVOKED SEC. 14A READ WITH RULE 8D AN D DISALLOWED A SUM OF RS.4,50,450/-. ON APPEAL, THE DECISION OF AO WAS CONFIRMED BY THE LD. CIT(A) BY FOLLOWING THE DECISION OF SPECIAL BENCH IN THE CASE OF DAGA CAPITAL MANAGEMENT P. LTD . (2005) 17 ITD 169 (MUM) (SB). 10. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE SUB MITTED THAT NOW THE ISSUE IS COVERED BY THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE O F GODREJ AND BOYCE MFG. CO. LTD. VS. DCIT (2010) 328 ITR 81 (BOM) WHEREIN IT WAS HELD THAT RU LE 8D HAS NO RETROSPECTIVE APPLICATION. 11. ON THE OTHER HAND, THE LD. D.R. SUBMITTED THAT IN THE CASE OF GODREJ AND BOYCE MFG. CO. LTD. (SUPRA), THE COURT HAS FURTHER HELD THAT THE A O HAS THE RIGHT TO MAKE REASONABLE DISALLOWANCE. 12. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE FIN D THAT THE HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ AND BOYCE MFG. CO. LTD. HAS HE LD AS UNDER : ITA NO.634 & CO NO.160/MUM/2010 JYOTI P. DUTTA 4 HELD, THAT THE PROVISIONS OF RULE 8D OF THE RULES WHICH HAVE BEEN NOTIFIED WITH EFFECT FROM MARCH 24, 2008, WOULD APP LY WITH EFFECT FROM ASSESSMENT YEAR 2008-09. EVEN PRIOR TO ASSESSMENT Y EAR 2008-09, WHEN RULE 8D WAS NOT APPLICABLE, THE ASSESSING OFFICER H AD TO ENFORCE THE PROVISIONS OF SUB-SECTION (1) OF SECTION 14A. FOR T HAT PURPOSE, THE ASSESSING OFFICER IS DUTY BOUND TO DETERMINE THE EX PENDITURE WHICH HAS BEEN INCURRED IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THE ACT. THE ASSESSING OFFICER M UST ADOPT A REASONABLE BASIS OR METHOD CONSISTENT WITH ALL THE RELEVANT FACTS AND CIRCUMSTANCES AFTER FURNISHING A REASONABLE OPPORTU NITY TO THE ASSESSEE TO PLACE ALL GERMANE MATERIAL ON THE RECORD. THE PR OCEEDINGS FOR ASSESSMENT YEAR 2002-03 WOULD STAND REMANDED TO THE ASSESSING OFFICER. THE ASSESSING OFFICER SHOULD DETERMINE AS TO WHETHER THE ASSESSEE HAD INCURRED ANY EXPENDITURE (DIRECT OR IN DIRECT) IN RELATION TO DIVIDEND INCOME/INCOME FROM MUTUAL FUNDS WHICH DOES NOT FORM PART OF THE TOTAL INCOME AS CONTEMPLATED UNDER SECTION 1 4A. THE ASSESSING OFFICER CAN ADOPT A REASONABLE BASIS FOR EFFECTING THE APPORTIONMENT. WHILE MAKING THAT DETERMINATION, THE ASSESSING OFFI CER SHOULD PROVIDE A REASONABLE OPPORTUNITY TO THE ASSESSEE OF PRODUCI NG ITS ACCOUNTS AND RELEVANT OR GERMANE MATERIAL HAVING A BEARING ON TH E FACTS AND CIRCUMSTANCES OF THE CASE. FROM THE ABOVE, IT IS CLEAR THAT RULE 8D IS NOT APP LICABLE FOR THE YEAR BEFORE US I.E. ASSESSMENT YEAR 2006-07. HOWEVER, REASONABLE DISALLOWANCE CAN STILL BE MADE BY THE AO. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD. CIT(A) AND REMAND THE MA TTER BACK TO THE FILE OF AO TO DECIDE THE SAME IN THE LIGHT OF THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ AND BOYCE MFG. CO. LTD. (SUPRA). 13. IN THE RESULT, THE CROSS OBJECTION IS ALLOWED F OR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THE 28TH DAY OF DECEMBER, 2 011. SD/- SD/- (VIJAY PAL RAO) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 28TH DECEMBER , 2011. NG: COPY TO : ITA NO.634 & CO NO.160/MUM/2010 JYOTI P. DUTTA 5 1. DEPARTMENT. 2.ASSESSEE. 3 CIT(A)-3,MUMBAI. 4 CIT-11,MUMBAI. 5.DR,I BENCH,MUMBAI. 6.MASTER FILE. (TRUE COPY) BY ORDER, ASST.REGISTRAR, ITAT, MUMBAI. ITA NO.634 & CO NO.160/MUM/2010 JYOTI P. DUTTA 6 DETAILS DATE INITIALS DESIGNATI ON 1. DRAFT DICTATED ON 21-12-2011 SR.PS/ 2. DRAFT PLACED BEFORE AUTHOR 22-12-2011 SR.PS/ 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/A M 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/ 6. KEPT FOR PRONOUNCEMENT ON SR.PS/ 7. FILE SENT TO THE BENCH CLERK SR.PS/ 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9. DATE ON WHICH FILE GOES TO THE AR 10. DATE OF DISPATCH OF ORDER