OM ENERGY P. LTD, MUMBAI V. ITO 9(2)(4), MUMBAI

ITA 1077/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75345 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 08-01-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 07-02-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PARMINDER
• Assessee Lawyers: N R AGARWAL
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

, LH LHLH LH IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL C CC C BENCH, BENCH, BENCH, BENCH, MUMBAI MUMBAI MUMBAI MUMBAI , . !' !' !' !' BEFORE BEFORE BEFORE BEFORE SHRI SHRI SHRI SHRI VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM & & & & SHRI SHRI SHRI SHRI RAJENDRA RAJENDRA RAJENDRA RAJENDRA, AM , AM , AM , AM ./ I.T.A. NO. I.T.A. NO. I.T.A. NO. I.T.A. NO.107 107 107 1077/MUM/2011 7/MUM/2011 7/MUM/2011 7/MUM/2011 ( #$ #$ #$ #$ % % % % / ASSESSMENT YEAR :2007-08) M/S OM ENERGY PRIVATE LTD. C/O- M/S N. R. AGRAWAL & COMPANYM, 305/C, CRYSTAL PLAZA, NEW LINK ROAD, OPP. TO INFINITY MALL, ANDHERI(W) MUMBAI-400053 $ $ $ $ / VS. CIT CITY 9 OR ITO 9(2)(4) AAYAKAR BHAVAN, MUMBAI '& ./ ' ./ PAN/GIR NO. :AAACM9436D ( &( / APPELLANT APPELLANT APPELLANT APPELLANT) .. ( )*&( / RESPONDENT RESPONDENT RESPONDENT RESPONDENT) #$ #$#$ #$ +, +, +, +, - . - . - . - . /ASSESSEE BY : SHRI N. R. AGARWAL ' ' ' ' - . - . - . - . / REVENUE BY : SMT. PARMINDER $ $ $ $ - -- - , , , , / DATE OF HEARING : 8 TH JANUARY 2014 /0% /0% /0% /0% - -- -, , , , /DATE OF PRONOUNCEMENT: 22 ND JANUARY 2014 !1 / O R D E R PER : , . . / VIJAY PAL RAO, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 20.9.2010 OF COMMISSIONER OF INCOME TAX(APPEALS) FO R THE ASSESSMENT YEAR 2007-08. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUND IN THIS APPEAL: THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITIO N U/S 14A OF ` 583,658/. 3. THE ASSESSEE RECEIVED DIVIDEND INCOME OF ` 2,31, 927/- WHICH IS EXEMPT FROM TAX. THE ASSESSING OFFICER HAS DISALLOW ED A SUM OF ` 5,83,658/- U/S 14A R.W. RULE 8D OF THE INCOME TAX A CT BEING EXPENSES ITA NO.1077/M/2011 OM ENERGY PRIVATE LTD. 2 ATTRIBUTABLE TO EARNING THE INCOME WHICH DOES NOT F ORM PART OF THE TOTAL INCOME. ON APPEAL, THE ASSESSEE HAS SUBMITTED BEFOR E THE CIT(A) THAT RULE 8D IS NOT APPLICABLE FOR THE ASSESSMENT YEAR U NDER CONSIDERATION IN VIEW OF THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN CASE OF GODREJ & BOYCE MANUFACTURING CO. LTD. VS DCIT 328 ITR 81. THE CIT(A) THOUGH ACCEPTED THE CONTENTION OF THE ASSESSEE THAT RULE 8 D IS NOT APPLICABLE FOR THE YEAR UNDER CONSIDERATION HOWEVER, IT WAS HELD T HAT THE ESTIMATION BASED ON THE METHOD PRESCRIBED UNDER RULE 8D DOES N OT REQUIRE ANY INTERVENTION AND ACCORDINGLY CONFIRM THE ADDITION M ADE BY THE A.O. 4. WE HAVE HEARD THE LD. A.R AS WELL AS LD. D.R AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. THERE IS NO DISPUTE TH AT IN VIEW OF THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT I N CASE OF GODREJ & BOYCE MANUFACTURING CO. LTD. VS DCIT (SUPRA) RULE 8D IS N OT APPLICABLE FOR THE YEAR UNDER CONSIDERATION. ACCORDINGLY, WE FIND NO J USTIFICATION IN COMPUTING THE DISALLOWANCE BY THE METHOD PROVIDE UN DER RULE 8D WHEN RULE 8D IS NOT APPLICABLE FOR THE ASSESSMENT YEAR U NDER CONSIDERATION. THE LD. A.R OF THE ASSESSEE HAS REFERRED VARIOUS DE CISION OF THIS TRIBUNAL WHEREIN THE REASONABLE DISALLOWANCE HAS BEEN ESTIMA TED RANGING FROM 1% TO 25% OF EXEMPT INCOME AND URGED THAT A REASONABLE ESTIMATE MAY BE MADE FOR DISALLOWANCE U/S 14A. IN THE FACTS AND CIR CUMSTANCES OF THE CASE AND IN THE INTEREST OF JUSTICE WE ESTIMATE A REASON ABLE DISALLOWANCE U/S 14A BEING 5% OF THE EXEMPT INCOME AS THIS VIEW HAS BEEN TAKEN BY THIS TRIBUNAL IN A NUMBER OF DECISION. ACCORDINGLY, WE D IRECT THE A.O TO DISALLOW THE EXPENSES U/S 14A AT 5% OF THE EXEMPT I NCOME. ITA NO.1077/M/2011 OM ENERGY PRIVATE LTD. 3 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 22 ND DAY OF JANUARY 2014 SD/- SD/- ( ) !' (RAJENDRA) ACCOUNTANT MEMBER ( ) # !' (VIJAY PAL RAO) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 22 ND JANUARY 2014 SUBODH COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI