BHARAT KANTILAL DALAL, MUMBAI V. ACIT CIR 12(1), MUMBAI

ITA 1587/MUM/2012

• Counselvise Citation: 158719914 RSA 2012
• Duration Of Justice: 1 year(s) 11 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 04-02-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 06-03-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SU RENDRA KUMAR
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

, CH CHCH CH INCOME TAX APPELLATE TRIBUNAL MUMBAI - B BENCH MUMBAI . . , / ! ! ! ! , BEFORE S/SH.B.R.MITTAL,JUDICIAL MEMBE R & RAJENDRA,ACCOUNTANT MEMBER /. ITA NO. 1587/MUM/2012, ' ' ' ' # # # # / ASSESSMENT YEAR 2008-09 BHARAT KANTILAL DALAL C/O KANTILAL & CO. 11-17, JANMABHOOMI BHAVAN, JANMABHOOMI MARG, FORT, MUMBAI-400001 VS. ACIT CIRCLE 12(1) MUMBAI. PAN: ACOPD8896P ( $% / APPELLANT ) ( &'$% / RESPONDENT) $% $% $% $% ( (( ( ) ) ) ) / ASSESSEE BY : NONE &'$% ( ) / REVENUE BY : SHRI SURENDRA KUMAR ' ' ' ' ( (( ( *+ *+ *+ *+ / DATE OF HEARING : 04 . 02 .201 4 ,-# ( *+ / DATE OF PRONOUNCEMENT : 12.02 .201 4 ' ' ' ' , 1961 ( (( ( 254 )1( *.* *.* *.* *.* / / / / ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA,A.M: CHALLENGING THE ORDER DATED 12.01.2011 OF THE CIT(A )-23,MUMBAI,ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL 1.ON THE FACTS, AND IN THE CIRCUMSTANCES OF THE CA SE, AND IN LAW,LEARNED COMMISSIONER OF INCOME-TAX (APPEAL) ERRED IN UPHOLDING ORDER OF THE ASSESSING OFFICER IN INVOKING DISALLOWANCE UNDER SECTION 14A READ WITH RULE 8D AMOUNTING TO RS . 16,26,155 MECHANICALLY AND WITHOUT APPRECIATING THAT THE APPELLANT DID NOT EVEN INCUR EXPENDITURE TO THIS MAGNITUDE, AND IGNORING THE FACT THAT, THERE WERE NO CORRESPONDING EXPENSES INC URRED OR CLAIMED AGAINST EXEMPT INCOME BY THE APPELLANT TO SUSTAIN THE DISALLOWANCE. 2.YOUR APPELLANT CRAVES LEAVE TO ADD TO, AMEND, ALT ER, MODIFY, AND / OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL AT OR BEFORE FINAL DISPOSAL OF AP PEAL. 2. ASSESSEE IS AN INDIVIDUAL.RETURN OF INCOME,DECLARIN G TOTAL INCOME OF RS.2,08,74,820/- WAS FILED BY HIM ON 27/09/2008 AND SAME WAS PROCESSED U/S.143 (1) OF THE ACT.SUBSEQUENTLY,THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS.ASSESSING OFFICER (AO)FINALISED THE ASSESSMENT U/S. 143 (3)OF THE ACT ON 14.12.2010 DETERMINING THE INCOME OF THE ASSESSEE AT RS.2.25 CRORES. DURING THE ASSESSMENT PROCEEDINGS,AO FOUND THAT THE ASSESSEE H AD RECEIVED DIVIDEND INCOME FROM MUTUAL FUNDS AND EQUITY SHARES,THAT THE ENTIRE AMOUNT WAS CLAIMED AS EXEMPT U/S. 10(35) OF THE ACT.HE HELD THAT FOR EARNING EXEMPT INCOME,THE ASSESSEE MU ST HAVE INCURRED SOME EXPENDITURE. HE ASKED THE ASSESSEE TO FURNISH THE DETAILS OF EXPENDITURE INCURRED FOR EARNING THE SAID DIVIDEND INCOME.IN RESPONSE,THE ASSESSEE FURNISHED DETAILED REPLY AND AFTER CONSIDERING THE SAME,AO WORKED OUT THE DISALLOWANCE IN ACCORDANCE WITH THE MANNER LAID DOW N IN RULE 8D OF INCOME- TAXRULES,1962(RULES).HE DID NOT MAKE AND DISALLOWAN CE U/R.8D(I)AND (II),BUT UNDER RULE 8D(III) HE MADE A DISALLOWANCE OF RS. 16,26,155/-. 2 ITA NO. 1587/MUM/2012 BHARAT KANTILAL DALAL 2.1. AGAINST THE ORDER OF THE AO ASSESSEE PREFERRED AN A PPEAL BEFORE THE FIRST APPEAL AUTHORITY (FAA).AFTER CONSIDERING THE SUBMISSIONS OF THE ASSE SSEE AND THE ASSESSMENT ORDER HE HELD THAT THE DISALLOWANCE MADE BY THE AO WAS AS PER LAW ESPECIAL LY IN VIEW OF THE ORDER OF THE HONBLE HIGH COURT OF BOMBAY DELIVERED IN THE MATTER OF GODREJ B OYCE & COMPANY. 2.2. BEFORE US,NO ONE APPEARED ON BEHALF OF THE ASSESSEE .DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDERS OF THE AO AND THE FAA.WE HAVE PERUSED TH E MATERIAL BEFORE US.WE FIND THAT WHILE MAKING DISALLOWANCE AS PER SECTION 14A R.W.RULE 8D( III),AO HAS NOT GIVEN ANY DETAILS.WE FURTHER FIND THAT HE HAS NOT RECORDED HIS SATISFACTION FOR INVOKING RULE 8D(III).IN OUR OPINION, FOR MAKING A DISALLOWANCE U/S.14A OF THE ACT,AO HAS TO FOLLOW A CERTAIN PROCEDURE.IN THE CASE UNDER CONSIDERATION,THE BASIC FACTS FOR MAKING THE DISALL OWANCE ARE MISSING. IN THE APPELLATE PROCEEDINGS,FAA HAS REFERRED TO THE JUDGMENT DELIVE RED BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF GODREJ & BOYCE CO. LTD.,BUT HAS NOT DEALT WITH THE OBJECTIONS RAISED BY THE ASSESSEE BEFORE HER. IN THESE CIRCUMSTANCES,WE ARE OF THE OPINION THAT I N THE INTEREST OF JUSTICE MATTER SHOULD BE RESTORED BACK TO THE FILE OF THE AO FOR FRESH ADJUD ICATION. HE IS DIRECTED TO AFFORD A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. EFFECTIVE GROUND OF APPEAL FILED BY THE ASSESSEE IS ALLOWED IN ITS FAVOUR, IN PART AS A RESULT, APPEAL FILED BY THE ASSESSEE STANDS PARTLY ALLOWED. 0 1 '0* 2 3 VAKR% VAKR% VAKR% VAKR% 4* ( * 56 . ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH FEBRUARY, 2014. / ( ,-# 7 12 QJOJH QJOJH QJOJH QJOJH , 2014 - ( . . SD/- SD/- ( . . . B.R.MITTAL) ( ! ! ! ! / RAJENDRA) / JUDICIAL MEMBER /ACCOUNTANT MEMBER / MUMBAI, 8' /DATE: 12.02.2014 SK / / / / ( (( ( &*9 &*9 &*9 &*9 : 9#* : 9#* : 9#* : 9#* / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / $% 2. RESPONDENT / &'$% 3. THE CONCERNED CIT(A)/ ; < , 4. THE CONCERNED CIT / ; < 5. DR B BENCH, ITAT, MUMBAI / 9=. &*' CH CHCH CH , . . . 6. GUARD FILE/ . > . '9* &* //TRUE COPY// /' / BY ORDER, ? / 5 DY./ASST. REGISTRAR , /ITAT, MUMBAI.