FOUR DIMENSIONS CAPITAL MARKETS P. LTD, MUMBAI V. DCIT 4(1), MUMBAI

ITA 1502/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75254 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 31-12-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 21-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Principle of natural justice; Earning of tax free income
• Section: 14A

Judgement Text

F IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI . . , . , BEFORE SHRI I.P. BANSAL, JM AND SHRI KARUNAKARA RAO, AM ./I.T.A. NO.1502/M/2011 ( / ASSESSMENT YEAR: 2007 - 2008) FOUR DIMENSIONS CAPITAL MARKETS PVT.LTD., 209 - 210, ARCADIA BUILDING, 195, NARIMAN POINT, MUMBAI 400 021. / VS. THE DEPUTY COMMISSIONER OF INCOME TAX - 4(1), AAYAKAR BHAVAN, MUMBAI 400020. ./ PAN : AAACF 069 D ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI VIJAY MEHTA / RESPONDENT BY : SHRI RAVI PRAKASH / DATE OF HEARING : 31.12.2013 / DATE OF PRONOUNCEMENT : 08 .01.2014 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 21.2.2011 IS AGAINST THE ORDER OF THE CIT (A) - 10, MUMBAI DATED 14.12.2010 FOR THE ASSESSMENT YEAR 2007 - 2008. 2. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUND WHICH READS AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN CONFIRMING THE DISALLOWANCE U/S 14A TO THE EXTENT OF RS. 8,92,933/ - . THE APPELLANT COMPANY PRAYS THAT THE SAID DISALLOWANCE MAY PLEASE BE DELETED. 3. AT THE OUTSET, SHRI VIJAY MEHTA, LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE FACT THAT THE AO MADE DISALLOWANCE OF RS. 8,92,9 33/ - INVOKING THE PROVISIONS OF SECTION 14A OF THE ACT. FURTHER, BRINGING OUR ATTENTION TO PARA 4.2 OF THE ASSESSMENT ORDER, LD COUNSEL MENTIONED THAT AO DISALLOWED RS. 4,78,334/ - UNDER CLAUSE (I I) OF RULE - 8D(2) OF THE IT RULES, 1962. IN THIS REGARD, IT WAS CONTENDED THAT THE SAID DISALLOWANCE IS UNCALLED FOR NOT ONLY BY THE REASON THAT THE SAID PROVISIONS OF RULE - 8D ARE NOT APPLIED TO THE AY 2007 - 2008 UNDER CONSIDERATION 2 BUT ALSO FOR THE REASON THAT THE ASSESSEE IS HAVING INTEREST FREE FUNDS ADEQUATE ENO UGH TO MEET THE INVESTMENTS, WHICH YIELDED EXEMPT INCOME. FURTHER, LD COUNSEL ARGUED STATING THAT CONSIDERING THE JURISDICTIONAL HIGH COURT JUDGMENT IN THE CASE OF CIT VS. RELIANCE UTILITIES POWER LTD. [2009] 313 ITR 340 (BOM) , THE BENEFIT SHOULD BE GIVEN TO THE ASSESSEE CONSIDERING THE EXISTENCE OF EXCESS INTEREST - FREE FUNDS. 4. ON THE OTHER HAND, LD DR RELIED ON THE ORDERS OF THE REVENUE AUTHORITIES. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE RELEV ANT MATERIAL PLACED BEFORE US. ON HEARING BOTH THE PARTIES, WE FIND MERIT IN THE ARGUMENT OF THE LD COUNSEL. CONSIDERING THE SAME, WE SET ASIDE THE ISSUE TO THE FILES OF THE AO TO ADJUDICATE THE MATTER AFRESH AFTER CONSIDERING THE BINDING JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF RELIANCE UTILITIES POWER LTD (SUPRA). AO SHALL GRANT A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AS PER THE PRINCIPLES OF NATURAL JUSTICE. 6. REFERRING TO THE SECOND SEGMENT OF THE DISALLOWANCE, LD C OUNSEL MENTIONED THAT AO DISALLOWED AN AMOUNT OF RS. 4,14,599/ - UNDER CLAUSE (III) OF RULE 8D(2) OF IT RULES, 1962. IN THIS REGARD, IT IS THE PRAYER OF THE LD COUNSEL THAT THIS ISSUE MAY ALSO BE SET ASIDE TO THE FILES OF THE AO FOR DECIDING THE ISSUE AFRES H BY KEEPING IN VIEW THE DISALLOWANCES MADE BY THE AO IN THE EARLIER ASSESSMENT YEARS. 7. ON THE OTHER HAND, LD DR RELIED ON THE ORDER OF THE AO DUTIFULLY. 8. ON HEARING BOTH THE PARTIES AND ON PERUSAL OF THE RELEVANT PAPERS FILED BEFORE US, WE ARE OF THE OPINION THAT THE PRAYER OF THE LD COUNSEL MERITS CONSIDERATION AND WE SET ASIDE THIS ISSUE ALSO TO THE FILES OF THE AO FOR FRESH ADJUDICATION AFTER CONSIDERING THE CONCLUSIONS DRAWN BY HIM IN THE PAST AS WELL AS THE FOLLOWING THE JURISDICTIONAL HIGH COURT JUDGMENT IN THE CASE OF GODREJ & BOYCE MFG. LTD. VS. DCIT, 328 ITR 81 . ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN THE OPEN COURT ON 0 8 . 0 1 . 2 0 1 4 . S D / - S D / - ( I.P. BANSAL) (D. KARUNAKARA RAO ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; 0 8 . 0 1 . 2 0 1 4 . 3 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI