Multimedia & Entertainment Ltd., New Delhi V. ITO, New Delhi

ITA 1775/DEL/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3811 (ITAT-DELHI)
• Duration Of Justice: 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 13-06-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 13-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K MONGA
• Assessee Lawyers: I D KANSAL MANAGING DIRE CTOR
• Keywords: Opportunity of being heard
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `E: NEW DELHI BEFORE SHRI C.L.SETHI, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER I.T. A. NO.1775/DEL/2011 ASSESSMENT YEAR : 2007-08 MULTIMEDIA & ENTERTAINMENT LTD., INCOME-TAX OFFICER , 72, REGAL BUILDING, 2 ND FLOOR, VS. WARD 5(4), NEW DELHI. BABA KHARAG SINGH MARG, CONNAUGHT PLACE, NEW DELHI. PAN: AAACB3424G (APPELLANT) (RESPONDENT ) APPELLANT BY: SHRI I.D. KANSAL, MANAGING DIRE CTOR. RESPONDENT BY: SHRI A.K. MONGA, SR. DR. O R D E R PER C.L. SETHI, JUDICIAL MEMBER: THE ASSESSEE IS IN APPEAL AGAINST THE ORDER DATED 2 8.02.2011 PASSED BY THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) IN THE MATTER OF AN ASSESSMENT MADE UNDER SEC. 143(3) OF THE INCOME-TAX ACT, 1961 (THE ACT), BY THE ASSESSING OFFICER FOR THE ASSESSMENT YEAR 20 07-08. 2. THE VARIOUS GROUNDS OF APPEAL RAISED BY THE ASSE SSEE REVOLVE AROUND THE FOLLOWING TWO ADDITIONS UPHELD BY THE LEARNED C IT(A):- 1. RS.1,00,000/- ON ACCOUNT OF EXPENSES UNDER SEC. 14A OF THE ACT. 2 2. RS.10,89,660/- ON ACCOUNT OF NOT ALLOWING SET OFF O F BUSINESS LOSS INCURRED IN TRADING OF SHARES AGAINST OTHER IN COME DURING THE YEAR UNDER CONSIDERATION. 3. WE HAVE HEARD BOTH THE PARTIES AND HAVE CAREFULL Y PERUSED THE ORDERS OF THE AUTHORITIES BELOW. 4. IN THE ASSESSMENT MADE UNDER SEC. 143(3) OF THE ACT, THE ASSESSING OFFICER HAS WORKED OUT THE SUM OF RS.7,60,856/- BEI NG EXPENSES DISALLOWABLE U/S 14A OF THE ACT READ WITH RULE 8D O F THE INCOME-TAX RULES. THE AO HAS WORKED OUT THE AFORESAID AMOUNT OF RS.7, 60,856/- BY APPLYING THE METHOD PROVIDED UNDER RULE 8D OF THE INCOME-TAX RULES. 5. ON AN APPEAL, THE LEARNED CIT(A) RESTRICTED THE DISALLOWANCE TO RS.1,00,000/- AS AGAINST RS.7,60,856/- MADE BY THE AO. THE LEARNED CIT(A) HAS RESTRICTED THE DISALLOWANCE TO RS.1 LAKH PURELY ON ESTIMATE. AT THE SAME TIME, THE LEARNED CIT(A) HAS OBSERVED THAT DISALLOW ANCE IN TERMS OF RULE 8D WOULD HAVE BEEN SOMETHING AROUND RS.46,000/-. IT I S NOT CLEAR AS TO HOW THE CIT(A) HAS WORKED OUT THE DISALLOWANCE TO RS.1 LAKH . THE LEARNED CIT(A) HAS NOT GIVEN ANY BASIS TO DISALLOW THE SUM OF RS.1 LAKH. IN THE CASE OF GODREJ BOYCE MANUFACTURING CO. LTD. VS. DCIT (2010) 328 ITR 81, THE HONBLE BOMBAY HIGH COURT HAS TAKEN A VIEW THAT RUL E 8D WILL HAVE APPLICATION WITH PROSPECTIVE EFFECT AND WOULD THUS APPLY FROM THE ASSESSMENT YEAR 2008-09. THE PRESENT CASE IS RELAT ED TO THE ASSESSMENT 3 YEAR 2007-08 AND THEREFORE, THE METHOD PROVIDED UND ER RULE 8D WOULD NOT BE APPLICABLE TO THE PRESENT CASE. THE LEARNED CIT (A) HAS UPHELD THE DISALLOWANCE TO THE EXTENT OF RS.1 LAKH IN RESPECT OF THE INVESTMENT MADE BY THE ASSESSEE IN QUOTED SHARES OF ANDHRA CEMENTS LTD . THE NATURE OF EXPENDITURE, IF ANY INCURRED BY THE ASSESSEE IN RES PECT OF THE INVESTMENT IN QUOTED SHARES OF ANDHRA CEMENTS LTD. HAS NOT BEEN E XAMINED AND BROUGHT ON RECORD BY THE LEARNED CIT(A). WE, THEREFORE, R ESTORE THIS MATTER OF DISALLOWANCE TO THE EXTENT OF RS.1 LAKH TO THE FILE OF THE AO FOR HIS FRESH CONSIDERATION AND DECISION WITH A DIRECTION TO DETE RMINE THE EXPENSES INCURRED BY THE ASSESSEE IN EARNING EXEMPTED INCOME ON SOME REASONABLE BASIS AS SO OBSERVED BY THE HONBLE BOMBAY HIGH COU RT IN THE CASE OF GODREJ BOYCE MANUFACTURING CO. LTD. (SUPRA). THE ASSESSING OFFICER SHALL PROVIDE REASONABLE OPPORTUNITY OF BEING HEARD TO TH E ASSESSEE. THE ASSESSEE SHALL BE AT LIBERTY TO FURNISH DETAILS OF EXPENSES, IF ANY, INCURRED BY IT FOR EARNING THE EXEMPTED INCOME DURING THE YEAR UNDER C ONSIDERATION. THE ASSESSEE SHALL BE ENTITLED TO TAKE ANY OTHER POINT OR SUBMISSION BEFORE THE ASSESSING OFFICER AGAINST THE DISALLOWANCE OF EXPEN SES U/S 14A OF THE ACT. THE MATTER SHALL BE REMAINED WIDE OPEN BEFORE THE A SSESSING OFFICER FOR HIS FRESH CONSIDERATION. HOWEVER, THE SAME SHALL BE RE STRICTED TO THE 4 DISALLOWANCE OF THE AMOUNT TO THE EXTENT OF RS.1 LA KH ONLY WHICH IS THE SUBJECT MATTER OF THIS APPEAL. WE ORDER ACCORDINGL Y. 7. NEXT ADDITION CHALLENGED BY THE ASSESSEE IS REGA RDING DISALLOWANCE OF SET OFF LOSS OF RS.10,89,660/- INCURRED BY THE ASSE SSEE ON ACCOUNT OF TRADING OF SHARES AGAINST OTHER INCOME WHICH HAS BEEN DISAL LOWED BY THE LEARNED CIT(A) BY ENHANCING THE ASSESSMENT. 8. AFTER HEARING BOTH THE PARTIES, WE FIND THAT THI S MATTER SHOULD GO BACK TO THE FILE OF THE ASSESSING OFFICER TO EXAMINE THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE SO AS TO DECIDE AS TO WHETHER PROV ISION OF SEC. 73 READ WITH EXPLANATION IS APPLICABLE TO THE PRESENT CASE. BE IT MENTION HERE THAT IN THE ASSESSMENT NO SUCH DISALLOWANCE OF SET OFF OF LOSS WAS MADE BY THE AO BUT THE SAME HAS BEEN DISALLOWED BY THE LEARNED CIT(A) WHILE PASSING THE APPELLATE ORDER. WE, THEREFORE, FIND IT FIT THAT L ET THIS ISSUE BE DECIDED AFRESH BY THE ASSESSING OFFICER AFTER EXAMINING ALL THE FA CTS AND CIRCUMSTANCES OF THE CASE VIS--VIS THE PROVISIONS OF LAW CONTAINED IN THAT BEHALF. THE ASSESSEE SHALL BE AT LIBERTY TO PLACE BEFORE THE AS SESSING OFFICER ANY OTHER EVIDENCES OR MATERIALS TO SUPPORT HIS CASE AND SHAL L BE AT LIBERTY TO RAISE SUCH OTHER CONTENTIONS OR SUBMISSIONS AS MAY BE ADVISED. THE AO SHALL PROVIDE REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. WE DIRECT THE ASSESSEE TO COOPERATE WITH THE ASSESSING OFFICER TO DECIDE THE ISSUE IN A RIGHT 5 AND CORRECT PERSPECTIVE UNDER THE PROVISIONS OF LAW AND IN THE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. WE ORDER ACCO RDINGLY. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED TO BE ALLOWED FOR A STATISTICAL PURPOSE. 10. THIS DECISION WAS PRONOUNCED IN THE OPEN COURT IMMEDIATELY AFTER THE HEARING WAS OVER ON 13 TH JUNE, 2011. SD/- SD/- (B.C. MEENA) (C.L. SETHI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 13 TH JUNE, 2011. COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER *MG DEPUTY REGISTRAR, ITAT.