DISH TV INDIA LIMITED (FORMERLY KNOWN AS ASC ENTERPRISES LTD.), MUMBAI V. A.C.I.T. CIRCLE -6(1), MUMBAI

ITA 1848/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75901 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2014
• Appeal Filed By: Assessee
• Bench Allotted: J
• Next Hearing Date: 11-03-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 04-03-2011
• Court: TRIBUNAL
• Assessee Lawyers: RAJESH DHAMANIA
• Section: 14A

Judgement Text

DISH TV INDIA LTD 1 IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUM BAI BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI NARENDRA KUMAR BILLAIYA, ACCOUNTANT MEMBER ITA NO. 1848/MUM/2011 ASSESSMENT YEAR. 2006-07 DISH TV INDIA LTD. 135, CONTINENTAL BUILDING DR. A.B. ROAD WORLI MUMBAI 400018. VS. ASST. COMMISSIONER OF INCOME TAX, CIRCLE -6(1) ASAYAKAR BHAVAN, MUMBAI 400 020. PAN: AAACA5478M APPELLANT RESPONDENT ITA NO. 1755/MUM/2011 ASSESSMENT YEAR. 2006-07 ASST. COMMISSIONER OF INCOME TAX, CIRCLE -6(1) ASAYAKAR BHAVAN, MUMBAI 400 020. VS. DISH TV INDIA LTD. 135, CONTINENTAL BUILDING DR. A.B. ROAD WORLI MUMBAI 400018. PAN: AAACA5478M APPELLANT RESPONDENT A SSESSEE BY SHRI RAJESH DHAMANIA RE VENUE BY SHRI MAURYA PRATAP ORDER PER VIJAY PAL RAO, JM THESE CROSS APPEALS ARE DIRECTED AGAINST THE ORDER DATED 2.12.2010 OF CIT(A) FOR ASSESSMENT YEAR 2006-07. BOTH, ASSESS EE AS WELL AS REVENUE HAS RAISED COMMON GROUNDS IN THEIR APPEAL. THE ASSE SSEE HAS RAISED FOLLOWING GROUNDS AS UNDER:- DATE OF HEARING 11.03.2014 DATE OF PRONOUNCEMENT 14 - 03 - 2014 DISH TV INDIA LTD 2 1 . DISALLOWANCE U/S 14 A (A) THE LD. CIT (A) ERRED IN LAW AND FACTS IN UPHO LDING DISALLOWANCE OF RS. 11,74,876/- OUT OF INTEREST AND RS. 58,49,454/- OUT OF EXPENSES U/S 14A OF THE ACT. THE REASONS GIVEN BY HIM FOR DOING SO ARE WRONG, CONTRARY TO TH E FACTS OF THE CASE AND AGAINST THE PROVISIONS OF LAW. (B) THE LD. CIT (A) ERRED IN LAW AND FACTS IN UPHO LDING DISALLOWANCE OF INTEREST U/S 14A OF THE ACT WITH RE FERENCE TO INVESTMENT MADE IN EARLIER YEARS IN SUBSIDIARY COMP ANIES OUT OF INTEREST FREE FUNDS AND INTERNAL ACCRUALS AND AC CEPTED SO BY PRECEDING AO IN ASSESSMENT YEAR 2004-05 AND CALCULA TED DISALLOWANCE U/S14A OUT OF NET INTEREST I.E. AFTER REDUCING INTEREST PAYMENT ATTRIBUTABLE TO INTEREST RECEIPTS. (C) THE LD. CIT (A) ERRED IN LAW AND FACTS IN UPHO LDING DISALLOWANCE OF RS. 58,49,454/- OUT OF EXPENSES U/S 14A WITH REFERENCE TO INVESTMENTS MADE IN SUBSIDIARIES IN EA RLIER YEARS WITHOUT PROVING ANY EXPENSE HAVE BEEN INCURRED OR R EQUIRED TO BE INCURRED FOR THESE INVESTMENTS NOR ANY EXPENSES DEBITED TO PROFIT & LOSS ACCOUNT ARE HELD TO BE INCURRED FOR N ON-BUSINESS PURPOSES. AND REVENUE HAS RAISED FOLLOWING GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) ERRED IN DIRECTING THE ASSESSING OFF ICER TO RE- COMPUTE THE DISALLOWANCE U/S 14A ON A REASONABLE B ASIS RELYING ON THE JUDGMENT OF BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG. LTD. WITHOUT APPRECIATING THE FACT THAT THE JUDGMENT OF BOMBAY HIGH COURT HAS NOT BEEN ACCEPTED BY THE REVE NUE AND SLP HAS BEEN PROPOSED. 2. WE HAVE HEARD LD. AR AS WELL AS LD. DR AND CONSI DERED THE RELEVANT MATERIAL ON RECORD. AT THE OUTSET WE NOTE THAT AN I DENTICAL ISSUE HAS BEEN CONSIDERED AND DECIDED BY THIS TRIBUNAL IN ASSESSEE S OWN CASE FOR ASSESSMENT YEAR 2005-06 IN ITA NO. 1428/MUM/2009 VI DE ORDER DATED 28 TH JANUARY 2011 IN PARA 4 AND 5 AS UNDER:- 4. GROUND NO.2 IS AGAINST UPHOLDING DISALLOWANCE O F INTEREST OF RS. 62,49,925/- U/S. 14A OF THE ACT. 5. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD, WE FIND THAT THE ISSUE RAISED IN THIS AP PEAL IS NO MORE RES INTEGRA IN VIEW OF THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN GODREJ & BOYCE MFG. LTD. VS. DCIT(2010) 328 ITR 81 (BOM) IN WHICH IT HAS BEEN HELD THAT DISALLOWANCE IS CALLED FOR U/S 14A IN SUCH CIRCUMST ANCES. HOWEVER, THE MANNER OF COMPUTATION OF SUCH DISALLOWANCE HAS BEEN RESTORED TO THE FILE OF AO FOR MAKING ON SOME REASONABLE BASIS. IT HAS FURTHER BEEN HELD IN THIS CASE THE PROVISIONS OF DISH TV INDIA LTD 3 RULE 8D ARE NOT APPLICABLE AS THESE ARE PROSPECTIVE . RESPECTFULLY FOLLOWING THE PRECEDENT, WE SET ASIDE THE IMPUGNED ORDER AND DIRE CT THE AO TO COMPUTE DISALLOWANCE U/S 144A IF ANY, IN ACCORDANCE WITH TH E RATIO LAID DOWN BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE AFORENOTED CASE OF GODREJ & BOYCE LTD. 3. FOR THE YEAR UNDER CONSIDERATION THE CIT(A) HAS DECIDED THE ISSUE IN PARA 6 AS UNDER:- 6. I HAVE GONE 'THROUGH THE ABOVE SUBMISSIONS VERY CAREFULLY AND FACTS OF THE CASE. THE APPELLANT COMPANY SUBMITTED THAT THE PROV ISIONS OF SEC. 14A IS NOT APPLICABLE IN ITS CASE AS NO EXPENDITURE WAS INCURR ED BY THEM DURING THE YEAR FOR EARNING TAX FREE INCOME. IT IS SUBMITTED THAT N O BORROWED FUNDS HAD BEEN USED FOR INVESTMENT. IT HAS ALSO BEEN ARGUED THAT T HE PROVISIONS OF RULE 8D IS TO BE APPLIED ON THE AY. 2008-09 IN VIEW OF THE REC ENT DECISION OF HON'BLE BOMBAY HIGH COURT. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG. CO. LTD. VS. DY. C.I.T. RG. 10(2), MUMBAI AND ANR. HAS HELD THAT EVEN PRIOR TO AY. 2008-09, THE RULE 8D WAS NOT APPLICABLE, THE ASSESS ING OFFICER HAS TO ENFORCE THE PROVISIONS OF SUB-SECTION (1) OF SEC. 14A FOR T HAT PURPOSE, THE ASSESSING OFFICER IS DUTY BOUND TO DETERMINE THE EXPENDITURE WHICH HAS BEEN INCURRED IN RELATION TO INCOME WHICH DOES NOT FORM PART OF. THE TOTAL INCOME UNDER THE ACT. THE ASSESSING OFFICER MUST ADOPT A REASONABLE BASIS 011 METHOD CONSISTENT WITH ALL THE RELEVANT FACTS AND CIRCUMSTANCES AFTER FURNISHING A REASONABLE OPPORTUNITY TO THE ASSESSEE TO PLACE ALL THE GERMAN E MATERIAL ON THE RECORD. FOLLOWING THE ABOVE DECISION, THE ASSESSING OFFICER IS DIRECTED TO DETERMINE THE REASONABLE AMOUNT OF DISALLOWANCE ULS . 14A. THIS GROUND OF APPEAL IS DISPOSED OFF ACCORDINGLY. 4. AS IT IS CLEAR FORM THE FINDING OF THE CIT(A) TH AT THE ISSUE HAS BEEN ADJUDICATED BY FOLLOWING THE DECISION OF HONBEL JU RISDICTIONAL HIGH COURT IN CASE OF GODREJ & BOYCE MFG. CO. LTD. 328 ITR 81 (BOM). ACCORDINGLY WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE IMPUG NED ORDER OF CIT(A) AND THE SAME IS UPHELD. CONSEQUENTLY BOTH ASSESSEES AS WELL AS REVENUES APPEALS FAIL . DISH TV INDIA LTD 4 7. IN THE RESULT CROSS APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 /03/ 2014 SD/- SD/- (N.K.BILLAIYA) (VIJAY PAL RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED 14 /03/2014 SKS SR. P.S COPY TO: THE APPELLANT THE RESPONDENT THE CONCERNED CIT(A) THE CONCERNED CIT THE DR, J BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI