M/s Indian Farmers Fertiliser Cooperative Ltd., New Delhi V. ACIT, New Delhi

ITA 1087/DEL/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 52637 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 05-09-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 01-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KRISHNA
• Assessee Lawyers: HARBHAJAN SINGH
• Section: 14A

Judgement Text

ITA NO. 1087/DEL/2011 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 1087/DEL/2011 A.Y. : 2006-07 M/S INDIAN FARMERS FERTILIZERS COOPERATIVE LTD. IFFCO SADAN, C-1, DISTRICT CENTRE, SAKET PLACE, NEW DELHI 110 017 (PAN/GIR NO. : AAAAI0050M) VS. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 23(1), ROOM NO. 190, CR BUILDING, IP ESTATE, NEW DELHI (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSEESSEE BY : SH. HARBHAJAN SINGH, A.R. DEPARTMENT BY : S H. KRISHNA, C.I.T.(D.R.) ORDER ORDER ORDER ORDER PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 24.11. 2010 PERTAINING TO ASSESSMENT YEAR 2006-07. 2. THE ISSUE RAISED IS THAT LD. COMMISSIONER OF INC OME TAX (APPEALS) ERRED IN UPHOLDING THE DISALLOWANCE OF ` 11,42,32,000/- AND ` 3,66,72,225/- MADE BY THE ASSESSING OFFICER U/S. 14 A OF THE IT ACT BY WRONGLY APPLYING RULE 8D OF THE IT RULES, 1962. 3. IN THIS CASE ASSESSING OFFICER MADE DISALLOWANCE OF ` 11,42,32,000/- AND ` 3,66,72,225/-0 U/S. 14A READ W ITH RULE 8D OF THE IT RULES. ITA NO. 1087/DEL/2011 2 4. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE ADDITION. 5. AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPEA L BEFORE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF THE MATERIAL PRODUCED AND PRECEDENT RELIED UPON. WE FIND THAT HONBLE MUMBAI HIGH COURT IN THE CASE OF GODREJ BOYCE MFG. CO. LTD . VS. DCIT IN ITA NO. 626 OF 2010 234 CTR 1 HAS OVERRULED THE ITAT DE CISION OF DAGA CAPITAL MANAGEMENT (SUPRA) AND HELD THAT RULE 8D HA S BEEN NOTIFIED ON 24.3.2008 AND WILL BE APPLICABLE ONLY FROM ASSESS MENT YEAR 2008- 09. HENCE, THE PRESENT YEAR IS A.Y. 2006-07 AND RUL E 8D IS CLEARLY NOT APPLICABLE. 6.1 IT WAS FURTHER HELD THAT EVEN PRIOR TO A.Y. 2008-09, WHEN RULE 8D WAS NOT APPLICABLE, THE ASSESSING OFFICER HAS 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 N OT FORM PART OF THE TOTAL INCOME UNDER THE ACT. THE ASSESSING OFFICER MUST ADOPT A REASONABLE BASIS OR METHOD CONSISTENT WITH ALL THE R ELEVANT FACTS AND CIRCUMSTANCES AFTER FURNISHING A REASONABLE OPPORTUN ITY TO THE ASSESSEE TO PLACE ALL GERMANE MATERIAL ON THE RECORD . ITA NO. 1087/DEL/2011 3 6.2 RESPECTFULLY FOLLOWING THE ABOVE PRECEDENT, WE SET ASIDE THE ISSUE TO THE FILES OF THE ASSESSING OFFICER TO CON SIDER THE SAME AFRESH, IN LIGHT OF THE HONBLE HIGH COURT DECISION CITED A BOVE. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 05/9/2011, UP ON CONCLUSION OF HEARING. SD/ SD/ SD/ SD/- -- - SD/ SD/ SD/ SD/- -- - [ [[ [I.P. BANSAL I.P. BANSAL I.P. BANSAL I.P. BANSAL] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 05/9/2011 SRB COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES