M/s. Promed Exports Pvt. Ltd, New Delhi V. ACIT, New Delhi

ITA 1782/DEL/2009

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0030 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 30-03-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 01-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H K LAL
• Assessee Lawyers: MANU K GIRI
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F DELHI BEFORE SHRI I.P. BANSAL AND SHRI K.G. BANSAL ITA NO. 1782(DEL)/2009 ASSESSMENT YEAR: 2006-07 M/S PROMED EXPORTS PVT. LTD., ADDITIONAL COMMISSIONER OF 208, ASHIRWAD COMMERCIAL COMPLEX, VS. INCOM E TAX, RANGE-14, D-1, GREEN PARK, NEW DELHI. NEW DELHI. PAN-AAACP1612Q (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MANU K. GIRI, ADVOCATE RESPONDENT BY : SHRI H.K. LAL, SR. DR ORDER PER K.G. BANSAL : AM THE ASSESSEE HAS TAKEN UP FIVE GROUNDS IN THIS APPEAL FILED AGAINST THE ORDER OF THE CIT(APPEALS)-XVII, NEW D ELHI IN APPEAL NO. 66/08-09 DATED 13.3.2009, THE SUM AND SUBSTAN CE OF WHICH IS THAT THE LD. CIT(APPEALS) ERRED IN SUSTAINING DISALLOWAN CE OF RS. 5,83,765/- BY INVOKING THE PROVISIONS CONTAINED IN SECTION 14A O F THE INCOME-TAX ACT, 1961 (THE ACT) AND RULE 8D OF THE INCOME-TAX RULES , 1962 ( THE RULES) . ITA NO. 1782(DEL)/2009 2 2. IT IS THE COMMON CONTENTION OF BOTH THE PART IES THAT THE GROUNDS STAND COVERED BY THE DECISION OF HONBLE BOMBA Y HIGH COURT IN THE CASE OF GODREJ & BOYCE MANUFACTURING CO. LTD. VS. DCIT, (2010) 194 TAXMAN 203. IN THIS JUDGMENT, THE HONBLE C OURT HAS HELD THAT THE PROVISIONS CONTAINED IN SECTION 14A AND RULE 8D ARE NOT ULTRA-VIRES. IT HAS BEEN FURTHER HELD THAT RULE 8D IS OPERATIV E PROSPECTIVELY FROM ASSESSMENT YEAR 2008-09. IT HAS ALSO BEEN HELD T HAT IN ASSESSMENTS OF EARLIER YEARS, THE AO CAN CONSIDER ALL THE FACTS AND THEREAFTER MAKE A REASONABLE DISALLOWANCE OUT OF THE EXPENDITURE RE LATABLE TO EARNING OF THE INCOME WHICH IS NOT INCLUDIBLE IN THE TOTAL INCOME OF THE ASSESSEE. IT IS ALSO THE COMMON CASE THAT IN VIEW OF THIS JUDGMENT, TH E MATTER MAY BE RESTORED TO THE FILE OF THE AO FOR CONSIDERING DISALLOWANC E OF A REASONABLE PART OF THE EXPENSES RELATABLE TO THE DIVIDEND INCOME, WHICH IS NOT INCLUDIBLE IN THE TOTAL INCOME OF THE ASSESSEE. 3. WE HAVE CONSIDERED THE FACTS OF THE CASE AND THE AFORESAID SUBMISSIONS. THE ASSESSMENT PERTAINS TO ASSESSMEN T YEAR 2006-07. THEREFORE, THE PROVISIONS OF RULE 8D ARE NOT APPL ICABLE TO THIS YEAR. IN VIEW THEREOF, THE MATTER IS RESTORED TO THE FI LE OF THE AO TO CONSIDER THE NATURE OF EXPENSES, RELATION THEREOF WITH THE EA RNING OF THE DIVIDEND ITA NO. 1782(DEL)/2009 3 INCOME AND DISALLOW A REASONABLE AMOUNT FROM TH E EXPENSES IF FOUND DIRECTLY OR INDIRECTLY RELATED TO THE EARNING OF DIVIDEND INCOME. 4. IN THE RESULT, THE APPEAL IS TREATED AS ALLOW ED FOR STATISTICAL PURPOSES. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT ON 3 0TH MARCH, 2011. SD/- SD/- (I.P. BANSAL) (K.G.BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE OF ORDER: 30TH MARCH, 2011. SP SATIA COPY OF THE ORDER FORWARDED TO: M/S PROMED EXPORTS PVT. LTD., NEW DELHI. ADDITIONAL CIT, RANGE-14, NEW DELHI. CIT(A) CIT THE DR, ITAT, NEW DELHI. ASSISTANT REG ISTRAR.