K DAMANI SECURITIES, MUMBAI V. ACIT 4(3), MUMBAI

ITA 1308/MUM/2011

• Counselvise Citation: 130819914 RSA 2011
• Duration Of Justice: 2 year(s) 7 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2007-2008
• Appeal Filed On: 11-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHAVANA C YASHROX
• Keywords: Depreciation
• Section: 32; 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH I, MUMBAI , ! '# $## #% , & ! ' BEFORE SHRI RAJENDRA SINGH, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER . : 1308 / / 2011 A.YS. 2007-08 ITA NO. : 1308/MUM/2011 (ASSESSMENT YEAR: 2007-08) M/S. K. DAMANI SECURITIES PVT. LTD., 5, SURYA MAHAL, 1 ST FLOOR, BURJORJI BHARUCHA MARG, FORT, MUMBAI -400 023 .: PAN: AABCK 6800 C VS ACIT 4(3), AAYAKAR BHAVAN, MUMBAI -400 020 (APPELLANT) (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY : BHAVANA C. YASHROX /DATE OF HEARING : 03-10-2013 !' / DATE OF PRONOUNCEMENT : 09-10-2013 + O R D E R $## #% , : PER VIVEK VARMA, JM: THE APPEAL FILED BY THE ASSESSEE ARISES FROM THE OR DER OF CIT(A), 10, MUMBAI, DATED 08.12.2010, WHEREIN THE FOLLOWING GRO UNDS HAVE BEEN TAKEN: 1. THE LD. C.I.T. (APPEALS) ERRED IN CONFIRMING TH E ACTION OF LD. A.C.I.T. OF DISALLOWING DEPRECIATION ON MEMBERSHIP CARD OF THE STOCK EXCHANGE AND FURTHER ERRED IN NOT HOLDING THE SAME AS AN INT ANGIBLE ASSET WITHIN THE MEANING OF SECTION 32 OF THE INCOME TAX ACT, 19 61. 2. THE LD. C.I.T. (APPEALS) ERRED IN CONFIRMING THE ACTION OF LD. A.C.I.T. OF DISALLOWING RS. 3,02,071/- OUT OF EXPENSES ATTRIBUT ABLE THE SAME TOWARDS EARNING INCOME U/S 14A READ WITH RULE 8D. 2. AT THE TIME OF HEARING, THE CASE WAS CALLED BUT NEITHER ANYBODY ATTENDED NOR THERE WAS ANY PRAYER FOR ADJOURNMENT F ROM THE SIDE OF THE M/S. K. DAMANI SECURITIES PVT. LTD. ITA NO. 1308/MUM/2011 2 ASSESSEE. WE, THEREFORE, DECIDED TO PROCEED WITH TH E CASE EXPARTE, IN ABSENCE OF THE ASSESSEE. 3. GROUND NO. 1 PERTAINS TO DEPRECIATION ON THE MEM BERSHIP CARD OF THE STOCK EXCHANGE. 4. WE FIND THAT THE ISSUE IS COVERED BY THE DECISIO N OF HONBLE SUPREME COURT OF INDIA IN THE CASE OF CIT VS SMIFS SECURITI ES LTD., REPORTED IN 348 ITR 302 (SC), WHEREIN THE HONBLE SUPREME COURT HELD TH AT STOCK EXCHANGE MEMBERSHIP CARDS ARE ASSETS ELIGIBLE FOR DEPRECIATI ON U/S 32 . 5. THE DR, PLACING RELIANCE ON THE ORDERS OF THE RE VENUE AUTHORITIES ACCEPTED THAT THE ISSUE IS RESTED BY THE HONBLE SU PREME COURT OF INDIA. SINCE THE ISSUE IS NOW DECIDED BY THE HONBLE SUPRE ME COURT OF INDIA, RESPECTFULLY FOLLOWING THE SAME, WE SET ASIDE THE O RDER OF THE CIT(A) AND DIRECT THE AO TO ALLOW DEPRECIATION AS CLAIMED BY THE ASSE SSEE ON MEMBERSHIP CARD OF THE STOCK EXCHANGE. 6. GROUND NO. 1 IS THEREFORE, ALLOWED. 7. GROUND NO. 2 PERTAINS TO DISALLOWANCE OF RS. 3,0 2,071/-, COMPUTED U/S 14A. 8. THE FACTS ARE THAT THE ASSESSEE HAS DECLARED DIV IDEND INCOME OF RS. 13,35,138/- AND CLAIMED THE SAME TO BE EXEMPT U/S 1 0(34). THE AO, APPLYING THE RATIO LAID DOWN IN DAGA CAPITAL MANAGE MENT PVT. LTD., APPLIED RULE 8D, COMPUTED THE DISALLOWANCE OF RS. 3,02,071/ -. AGGRIEVED, THE ASSESSEE APPROACHED THE CIT(A). 9. BEFORE THE CIT(A), THE ASSESSEE REITERATED ITS S UBMISSIONS MADE BEFORE THE AO THAT NO SPECIFIC EXPENSES WERE INCURRED ON E ARNING THE DIVIDEND INCOME. THE ASSESSEE ALSO CITED THE CASE OF GODREJ & BOYCE MANUFACTURING CO LTD VS DCIT REPORTED IN 321 ITR 81, AND SUBMITTED T HAT APPLICATION OF RULE 8D IS FROM ASSESSMENT YEAR 2008-09 AND ONWARDS, SIN CE THE CASE OF THE ASSESSEE PERTAINED TO ASSESSMENT YEAR 2007-08, RULE 8D COULD NOT BE APPLIED. M/S. K. DAMANI SECURITIES PVT. LTD. ITA NO. 1308/MUM/2011 3 10. THE CIT(A), AFTER CONSIDERING THE SUBMISSIONS O F THE ASSESSEE, DID NOT RELY ON RULE 8D BUT SUSTAINED THE QUANTUM OF DISALL OWANCE COMPUTED BY THE AO. 11. AGGRIEVED, THE ASSESSEE IS NOW BEFORE THE ITAT. 12. SINCE WE ARE PROCEEDING EXPARTE , WE FIND FROM THE ORDERS OF THE REVENUE AUTHORITIES THAT THE AO HAS APPLIED RULE 8D AND ARRIVED AT THE FIGURE OF DISALLOWANCE AND THE CIT(A) ALSO SUSTAINED THE Q UANTUM ARRIVED AT BY THE AO. 13. WE ARE AWARE THAT THE INSTANT CASE PERTAINS TO ASSESSMENT YEAR 2007- 08, WHICH, BY VIRTUE OF THE HONBLE BOMBAY HIGH COU RT DECISION IN GODREJ & BOYCE MFG. CO. LTD. ( SUPRA ) REMAINS OUTSIDE THE PURVIEW OF RULE 8D & ITS COMPUTATION. HOWEVER, CERTAIN DISALLOWANCE IS CALLE D FOR. IN THESE CIRCUMSTANCES, WE SET ASIDE THE ORDER OF THE CIT(A) ON THIS ISSUE AND DIRECT THE AO TO COMPUTE THE DISALLOWANCE AS PER LAW ON SO ME REASONABLE BASIS. 14. GROUND NO. 2 IS THEREFORE, ALLOWED FOR STATISTI CAL PURPOSES. 15. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH OCTOBER, 2013. SD/- SD/- ( ) ( $## #% ) ! ! (RAJENDRA SINGH) (VIVEK VARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 9 TH OCTOBER, 2013 / COPY TO:- 1) / THE APPELLANT. 2) / THE RESPONDENT. 3) & & ' ( ) - 10, MUMBAI / THE CIT (A)-10, MUMBAI. 4) & & ' CITY -4, MUMBAI / THE CIT, CITY -4, MUMBAI, 5) )*+ , & , & , , -. / M/S. K. DAMANI SECURITIES PVT. LTD. ITA NO. 1308/MUM/2011 4 THE D.R. I BENCH, MUMBAI. 6) +/ 0 COPY TO GUARD FILE. &12 / BY ORDER / / TRUE COPY / / [ 3 / 4 5 & , , -. DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI *784 . . * CHAVAN, SR. PS