SUNBEAM MONOCHEM P.LTD, MUMBAI V. DCIT 7(2), MUMBAI

ITA 1094/MUM/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 3755 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-11-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2006-2007
• Appeal Filed On: 10-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATBIR SINGH
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

1 ITA 1094/M/10, M/S SUNBEAM MONOCHEM P. LTD. IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E BEFORE SHRI P.M. JAGTAP, A.M. AND SHRI V. DURGA RAO , JM ITA NO. 1094/MUM/10 ASSESSMENT YEAR 2006-07 M/S SUNBEAM MONOCHEM P. LTD., NO. 5, MEGHDOOT BUILDING, 283, FLANK ROAD, SION (W), MUMBAI 400 002. PAN AABCS8172P VS. DCIT CIR. 7(2), AAYAKAR BHAWAN, M.K. ROAD, MUMBAI . 20 APPELLANT RESPONDENT APPELLANT BY SHRI SATISH MODY RESPONDENT BY SHRI SATBIR SINGH ORDER PER P.M. JAGTAP, A.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A) 13, MUMBAI DATED 4.11.2009 AND THE SOLITARY ISSUE ARISI NG OUT OF THE SAME RELATES TO THE DISALLOWANCE OF ` 3,42,142/- MADE BY THE A.O. AND CONFIRMED BY THE L D. CIT(A) ON ACCOUNT OF EXPENSES INCURRED BY THE ASSESSEE FOR EA RNING EXEMPT INCOME BY INVOKING THE PROVISIONS OF SECTION 14A. 2. DURING THE YEAR UNDER CONSIDERATION, THE AS SESSEE HAD EARNED INCOME BY WAY OF DIVIDEND WHICH WAS CLAIMED TO BE EXEMPT U/S 10(33). ACCORDING TO THE A.O., THE EXPENSES INCURRED BY THE ASSESSEE WERE PARTLY ATTRI BUTABLE TO EARNING OF THE SAID EXEMPT INCOME AND BY ESTIMATING THE QUANTUM OF SUCH EXPENS ES ATTRIBUTABLE TO EARNING OF EXEMPT INCOME AT ` 3,42,142/- BY APPLYING RULE 8-D, HE MADE THE DISAL LOWANCE TO THAT EXTENT BY INVOKING THE PROVISIONS OF SECTION 14A. ON APPEAL, THE LD. CIT(A) CONFIRMED THE 2 ITA 1094/M/10, M/S SUNBEAM MONOCHEM P. LTD. DISALLOWANCE MADE BY THE A.O. AND AGGRIEVED BY THE SAME, THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 3. WE HAVE HEARD THE ARGUMENTS OF BOTH SIDES AND AL SO PERUSED THE RELEVANT MATERIAL ON RECORD. IN ITS RECENT JUDGMENT DELIVERED IN THE CASE OF GODREJ BOYCE MFG. CO. LTD. (ITA NO. 626 OF 2010 DTD. 12.08.2010), THE HONBLE BOMBAY HIGH COURT HAS HELD THAT RULE 8D OF THE INCOME TAX RULES 1962 IS APPLICABLE ONLY PROSPECTIVELY I.E. FROM A.Y. 2008-09. IT HAS ALSO BEEN HELD THAT THE QUANTUM OF DISALLOWANCE U/S 14A FOR THE YEARS EARLIER TO A.Y. 2008-09 HAS TO BE WORKED OUT BY ADO PTING SOME REASONABLE METHOD. KEEPING IN VIEW THE SAID DECISION OF THE HONBLE JU RISDICTIONAL HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG. CO. LTD. (SUPRA), WE SET ASIDE THE IMPUGNED ORDER OF THE LD. CIT(A) CONFIRMING THE DISALLOWANCE MADE BY THE A.O. U/S 14 A BY APPLYING RULE 8-D AND RESTORE THE MATTER TO THE FILE OF THE A.O. FOR DETERMINING THE QUANTUM OF DISALLOWANCE OF EXPENSES WHICH IS LIABLE TO BE MADE U/S 14A BY ADOP TING SOME REASONABLE METHOD. NEEDLESS TO SAY THAT THE A.O. SHALL AFFORD SUFFICIE NT OPPORTUNITY TO THE ASSESSEE OF BEING HEARD. 4. IN THE RESULT, APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON 10 TH NOVEMBER, 2010. SD/- SD/- (V. DURGA RAO) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTAN T MEMBER MUMBAI, DATED 10 TH NOVEMBER , 2010. RK 3 ITA 1094/M/10, M/S SUNBEAM MONOCHEM P. LTD. COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 13 - MUMBAI 4. THE CIT- 7 MUMBAI 5. THE DR BENCH, E 6. MASTER FILE // TUE COPY// BY ORDER DY/ASSTT. REGISTRAR ITAT, MUMBAI 4 ITA 1094/M/10, M/S SUNBEAM MONOCHEM P. LTD. ` DATE INITIALS 1. DRAFT DICTATED 24.11.10 SR.P.S./P.S. 2. DRAFT PLACED BEFORE AUTHOR 25.11.10 SR.P.S./P.S. 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER. - J.M./A.M. 4.DRAFT DISCUSSED/ APPROVED BY SECOND MEMBER. J.M./A.M. 5. APPROVED DRAFT COMES TO THE SR.P.S./P.S. SR.P.S./P.S. 6. KEPT FOR PRONOUNCEMENT ON SR.P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S. 8. DATE OF WHICH FILE GOES TO THE HEAD CLERK. 9. DATE OF DISPATCH OF ORDER.