BHARAT J. DATTANI, MUMBAI V. ACIT 12(1), MUMBAI

CO 5/MUM/2013

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 1779 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 23 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 01-12-2015
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 14-05-2015
• Assessment Year: 1998-1999
• Appeal Filed On: 08-01-2013
• Court: TRIBUNAL
• Department Lawyers: PEEYUSH SONKAR
• Keywords: Reasonable cause

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI RAM LAL NEGI , JM ./ ITA NO. 8422 / MUM/20 1 0 ( / ASSESSMENT YEAR : 1998 - 99 ) ACIT - 12(1), MUMBAI - 20 VS. SHRI BHARAT J. DATTANI, 101, VEENA CHAMBERS, 1 ST FLOOR, 21 DALAL STREET, FORT, MUMBAI - 400001 ./ ./ PAN/GIR NO. : A A BPD 6008 J ( / APPELLANT ) .. ( / RESPONDENT ) AND CROSS OBJECTION NO. 5 / MUM/20 1 3 (ARI SING OUT OF ITA NO.8422/MUM/2010) ( / ASSESSMENT YEAR :1998 - 99 ) SHRI BHARAT J. DATTANI, 101, VEENA CHAMBERS, 1 ST FLOOR, 21 DALAL STREET, FORT, MUMBAI - 400001 VS. ACIT - 12(1), MUMBAI - 20 ./ ./ PAN/GIR NO. : A ABPD 6008 J ( / APPELLANT ) .. ( / RESPONDENT ) /REVENUE BY : SHRI PEEYUSH SONKAR /ASSESSEE BY : SHRI NITESH JOSHI / DATE OF HEARING : 01 / 1 2 /2015 / DATE OF PRONOUNCEMENT 01 / 12 /2015 / O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEAL FILED BY THE REVENUE AND CROSS OBJECTION FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - MUMBAI, DATED 1 - 9 - 2010 , FOR THE ASSESSMENT YEAR 1998 - 99 , IN THE MATTER OF ORDER PASSED U/S.14 3(3) R.W.S.254 OF THE I.T.ACT. ITA NO. 8422 / 2010 CO NO.5/13 2 2. IN THE APPEAL OF THE REVENUE, THE REVENUE IS AGGRIEVED BY THE ACTION OF THE CIT(A) FOR DIRECTING THE AO TO COMPUTE REASONABLE DISALLOWANCE U/S.14A FOLLOWING THE DECISION OF HON BLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG.CO.LTD. 328 ITR 81 . WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A), INSOFAR AS RELEVANT ASSESSMENT YEAR UNDER CONSIDERATION IS 1998 - 99, WHEN THE RULE 8D WAS NOT APPLICABLE, THEREFORE, THE CIT(A) HAS CORRECTLY DIRECTED THE AO TO MAKE REASONA BLE DISALLOWANCE U/S.14A AS PER THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG. CO. LTD. (SUPRA) . ACCORDINGLY, WE DISMISS THE APPEAL OF THE REVENUE. 3. THE CROSS OBJECTION OF THE ASSESSEE IS BARRED BY 158 DAYS, AFTER GO ING THROUGH THE REASONS FOR DELAY IN FILING THE CROSS OBJECTION, WE ARE SATISFIED THAT THERE WAS REASONABLE CAUSE FOR THE DELAY, ACCORDINGLY, WE CONDONE THE DELAY AND CROSS OBJECTION OF THE ASSESSEE IS HEARD ON MERIT. 4. IN THE CROSS OBJECTION THE ASSESSEE IS AGGRIEVED BY THE DISALLOWANCE MADE U/S.14A. AS PER LD. AR NO DISALLOWANCE OF INTEREST SHOULD BE MADE BECAUSE THERE WAS SUFFICIENT NON - INTEREST BEARING FUNDS AVAILABLE WITH THE ASSESSEE. 5. LD. AR DREW OUR ATTENTION TO THE CAPITAL AND NON - INTEREST BEARI NG FUNDS AVAILABLE WITH THE ASSESSEE AMOUNTING TO RS.5.36 CRORES, AGAINST WHICH ASSESSEE HAS INVESTED IN SECURITIES AS ON 31 - 3 - 1998 AGGREGATING TO RS.5.39 CRORES. 6. WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT THE AO HAS DISALLOWED INTEREST EXPEND ITURE AND ADDED BACK THE SAME TO THE TOTAL ITA NO. 8422 / 2010 CO NO.5/13 3 INCOME OF THE ASSESSEE AS PER PROVISIONS OF SECTION 14A. THE AO TREATED THE ENTIRE INTEREST OUTGO AS AN EXPENDITURE TO EARN EXEMPT DIVIDEND INCOME. AS PER DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF RELIANCE UTILITIES & POWER LTD. 313 ITR 340, DISALLOWANCE OF INTEREST IS NOT WARRANTED , IF SUFFICIENT INTEREST F R EE FUNDS ARE AVAILABLE WITH THE ASSESSEE SO AS TO INVEST FOR EARNING TAX FREE INCOME. IN THE INTEREST OF JUSTICE, WE RESTORE THIS ISSUE BACK TO THE FILE OF AO TO VERIFY THE FACTUAL POSITION OF INTEREST FREE FUNDS AVAILABLE WITH THE ASSESSEE. IF THE AO FINDS THAT INTEREST FREE FUNDS ARE MORE THAN INVESTMENT MADE IN THE TAX FREE SECURITIES, PRESUMPTION SHOULD BE DRAWN THAT ASSESSEE HAS USED THE INTEREST FREE FUNDS IN TERMS OF DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF RELIANCE UTILITIES & POWER LTD. (SUPRA) . THE AO IS DIRECTED TO DECIDE THE SAME AFRESH IN TERMS OF PROPOSITION LAID DOWN IN THE CASE OF RELIANCE UTILITIES & POWER LTD. (SU PRA). 7 . IN THE RESULT, APPEAL OF REVENUE IS DISMISSED, WHEREAS CROSS OBJECTION OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 01 /1 2 / 201 5 . SD/ - ( R AM LAL NEGI ) SD/ - ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 01 /1 2 /2015 . . /PKM , . / PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RE SPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. ITA NO. 8422 / 2010 CO NO.5/13 4 / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI //TRUE COPY//