Shri Chandrashekhar J. Mehta, V. DCIT, Malegaon

ITA 110/PUN/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 7701 (ITAT-PUNE)
• Duration Of Justice: 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-01-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 20-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHAY DAMLE

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE BEFORE SHRI SHAILENDRAKUMAR YADAV AND SHRI D. KARUNAKARA RAO ITA NO. 110/PN/10 (ASSTT. YEAR 2005-06) SHRI CHANDRASHEKHAR J. MEHTA PARAS, NEHRU ROAD, SATANA DIST. NASHIK PAN NO. ABFPM6607E .... APPELLANT VS. DCIT CIRCLE-3, MALEGAON . RESPONDENT APPELLANT BY : SHRI NIKHIL PATHAK RESPONDENT BY : SHRI ABHAY DAMLE ORDER PER D. KARUNAKARA RAO AM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A)-II, NASHIK DATED 12-11-2009 FOR THE A.Y 2005-06 . GROUNDS RAISED IN THE APPEAL ARE AS UNDER:- 1) ON THE FACTS AND IN LAW THE LD. CIT(A) HAS ERRE D IN MAKING ADDITION OF RS. 1,70,461/- ON ACCOUNT OF DISALLOWANCE OF INT EREST EXPENDITURE. 2) ON THE FACTS AND IN LAW THE LD. CIT(A) HAS ERRE D IN APPLYING RULE 8D , WHICH WAS MADE APPLICABLE W.E.F. 24/3/2008 AND WA S NOT THERE ON THE STATUTE IN F.Y. 2006-07 TO ENABLE THE ASSESSEE TO COMPUTE THE DISALLOWANCE AS PER THE SAID RULE. 3) ON THE FACTS AND IN LAW THE LD. CIT(A) HAS ERRE D IN NO APPRECIATING THE FACT THAT THE SAID EXPENDITURE ON ACCOUNT OF IN TEREST RESULTED IN TO DIVIDEND INCOME, LONG TERM CAPITAL GAIN EXEMPT F ROM TAX AND ALSO SHORT TERM CAPITAL GAIN WHICH IS LIABLE TO TAX . 2. AT THE VERY OUTSET BOTH THE PARTIES HAVE CONCURRED I N MENTIONING THAT THE ISSUE IN THE APPEAL RELATES TO THE DISALLOWANCE OF I NTEREST EXPENDITURE RELATABLE TO THE EXEMPT DIVIDEND INCOME AND THE APPLICABILITY OF THE RULE 8D OF THE INCOME TAX RULES 1962. ITA NO. 110/PN/10 A.Y: 2005-06 PAGE 2 OF 2 3. FURTHER, THE PARTIES MENTIONED THAT THE ISSUE HAS TO REFERRED TO THE FILES OF THE A.O FOR DECIDING THE ISSUE AFRESH IN THE LIGHT OF THE BOMBAY HIGH COURT JUDGMENT IN THE CASE OF GODREJ & BOYCE MANUFACTURING CO. LTD. VS. DCIT ITXA NO. 626/10 AND WRIT PETITION NO. 758/10 REPORTED IN 3 28 ITR 81 (MUM). FURTHER, THEY MENTIONED THAT SAID BINDING HIGH COURT JUDGMEN T CONSIDERED THE SPECIAL BENCH DECISIONS IN THE CASE OF DAGA CAPITAL MANAGEM ENT PVT. LTD. [2009] 117 ITD 169 (MUM)(SB). THEY ALSO MADE A MENTION OF THE MANNER IN WHICH THE RULE 8D IS REQUIRED TO BE IMPLEMENTED TO THE AY PRIOR TO TH E AMENDMENT. CONSIDERING THE ABOVE SUBMISSIONS OF THE PARTIES, WE ARE OF THE OPINION; THE MATTER SHOULD BE SET ASIDE FOR REEXAMINING THE ISSUE AFRESH IN THE L IGHT OF THE ABOVE REFERRED DECISIONS AFTER GIVING REASONABLE OPPORTUNITY OF BEIN G HEARD. ACCORDINGLY, THE GROUNDS ARE SET ASIDE. 4. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON 12 TH JANUARY, 2011. SD/- SD/- (SHAILENDRAKUMAR YADAV) (D.KARUNAKARA RA O) JUDICIAL MEMBER ACCOUNTANT MEMBE R PUNE DATED THE 12 TH JANUARY, 2011 R COPY OF THE ORDER IS FORWARDED TO : 1. ASSESSEE 2. DCIT, CIRCLE-3, MALEGAON 3. CIT(A)-II, NASHIK 4. CIT-II, NASHIK 5. D.R. ITAT A BENCH BY ORDER ASSISTANT REGISTRAR I.T.A.T PUNE