GRAND SLAM INVESTMENT P. LTD, MUMBAI V. DCIT CEN CIR 46, MUMBAI

ITA 1548/MUM/2010

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 6241 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2002-2003
• Appeal Filed On: 26-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJIV DUTT
• Assessee Lawyers: MUKESH SHAH
• Keywords: Search and seizure
• Section: 14A

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH G, MUMBAI BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER I.T.A.NO. ASST. YEAR 1548/MUM/2010 2002-03 1549/MUM/2010 2005-06 1550/MUM/2010 2006-07 1551/MUM/2010 2007-08 1552/MUM/2010 2008-09 M/S. GRAND SLAM INVESTMENTS PVT. LTD., 1 ST FLOOR, MALKANI CHAMBERS, OFF. NEHRU ROAD, VILE PARLE (EAST), MUMBAI. PAN: AAACG 2868 F VS. THE DY. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE 46, MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MUKESH SHAH REVENUE BY : SHRI SANJIV DUTT O R D E R PER BENCH: THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE IMPUGNED COMMON ORDER DATED 3.12.2009 PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS)- XXXVIII, MUMBAI, FOR THE ASSESSMENT YEARS 2002-03, 2005-06 TO 2008-09. 2. THE EFFECTIVE GROUND OF APPEAL IN ALL THESE APPE ALS IS THAT THE LEARNED CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE MADE UN DER SECTION 14A OF THE INCOME- TAX ACT, 1961. THESE APPEALS ARE BEING CLUBBED INT O TWO DIFFERENT GROUPS. FIRST GROUP OF APPEALS ARE FOR THE ASSESSMENT YEARS 2002 -03, 2005-06, 2006-07, 2007-08 AND THE OTHER GROUP OF APPEAL IS FOR THE ASSESSMENT YEAR 2008-09. 3. FIRST WE TAKE UP THE APPEALS FOR THE ASSESSMENT YEARS 2002-03, 2005-06, 2006-07, 2007-08. BRIEF FACTS OF THE CASE ARE THAT THERE WAS A SEARCH AND SEIZURE ACTION UNDER SECTION 132(1) IN THE CASE OF COMMODIT IES EXCHANGE GROUP ON 19.6.2007. THE ASSESSING OFFICER NOTICED THAT THERE WAS INVESTMENT SHOWN IN THE ITA NOS.1548-52/M/10 GRAND SLAM INVESTMENTS P.LTD. 2 BALANCE SHEET BEING MADE IN SHARES AND SECURITIES T HE INCOME FROM WHICH WAS EXEMPT FROM TAX. HE OBSERVED THAT AS PER SECTION 1 4A NO EXPENDITURE COULD BE ALLOWED FOR EARNING INCOME WHICH IS EXEMPT FROM TAX . TO DETERMINE THE SAME, HE APPLIED RULE 8D OF THE INCOME-TAX RULES AND MADE DI SALLOWANCE ACCORDINGLY. LD. CIT(A) CONFIRMED THE A.OS ACTION. WE FIND THAT THE HONBLE BOMBAY HIGH COURT IN INCOME TAX APPEAL NO.626 OF 2010 IN THE CASE OF GODREJ & BOYCE MFG.CO.LTD. MUMBAI. VS. DY. COMMISSIONER OF INCOME TAX, RANGE 1 0(2), MUMBAI & ANR. AND W.P. 758/10 GODREJ & BOYCE MFG.CO.LTD. MUMBAI. VS.DY. COMMISSIO NER OF INCOME TAX RANGE 10(2), MUMBAI & ORS. BY JUDGMENT DATED 12 -8-2010 HAS HELD THAT RULE 8D INSERTED WITH EFFECT FROM 24TH MARCH, 2008 BY TH E INCOME-TAX FIFTH AMENDMENT) RULES, 2008 IS PROSPECTIVE IN OPERATION AND, THEREF ORE, FOR THE ASSESSMENT YEARS UNDER APPEAL THIS RULE COULD NOT BE APPLIED FOR MAK ING DISALLOWANCE. WE, THEREFORE, SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE T HIS ISSUE TO THE FILE OF THE ASSESSING OFFICER TO DECIDE AFRESH IN THE LIGHT OF THE DECISION OF THE HONBLE BOMBAY HIGH COURT CITED SUPRA. 4. NOW COMING TO ITA NO. 1552/MUM/2010, WHICH PERT AINS TO THE ASSESSMENT YEAR 2008-09 AND, THEREFORE RULE 8D WAS APPLICABLE. HOWEVER, IN THE STATEMENT OF FACTS FILED BEFORE THE CIT(A), THE ASSESSEE, INTER ALIA, CONTENDED THAT THE ASSESSEE HAD NOT PAID ANY INTEREST. THIS PLEA OF THE ASSESS EE NEEDS TO BE CONSIDERED AFRESH AFTER DUE VERIFICATION. IN THE CIRCUMSTANCES, WE DE EM IT FIT AND PROPER TO SET ASIDE THE ORDER OF THE CIT(A) AND REMAND THE ISSUE TO THE AO FOR FRESH CONSIDERATION. THIS IS BECAUSE, THE AO AND THE CIT(A) WHILE MAKING THE IMPUGNED DISALLOWANCE HAD APPLIED RULE-8D OF THE INCOME TAX RULES, 1962 WITHO UT CONSIDERING THE ASSESSEES PLEA NOTED ABOVE. WE, ACCORDINGLY, SET ASIDE THE O RDER OF CIT(A) AND REMAND THE ISSUE TO THE AO FOR FRESH CONSIDERATION AS ABOVE. ITA NOS.1548-52/M/10 GRAND SLAM INVESTMENTS P.LTD. 3 7. IN THE RESULT, THE APPEALS FILED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 3 0 TH DAY OF NOVEMBER, 2010. SD. SD. (ASHA VIJAYARAGHAVAN) (S.V. MEHROTRA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI DATED THE 30 TH NOVEMBER, 2010. KN COPY TO: 1. THE ASSESSEE 2. THE REVENUE 3. THE CIT, CENTRAL IV, MUMBAI 4. THE CIT(A)-XXXVIII, MUMBAI 5. THE DR G BENCH, MUMBAI BY ORDER /TRUE COPY/ ASST. REGISTRAR, ITAT, MUMBAI