RAHEJA STOCK BROKERS P. LTD, MUMBAI V. ITO CIR 4(2)(3), MUMBAI

ITA 1867/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 48901 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2005-2006
• Appeal Filed On: 10-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ALEXANDER CHANDY
• Assessee Lawyers: MRS CHANDNI J AHUJA
• Keywords: Depreciation; Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D : MUMBAI BEFORE SHRI D.MANMOHAN, VICE PRESIDENT AND SHRI T.R.SOOD, ACCOUNTANT MEMBER ITA. NO. 1867/MUM/2010 ASSESSMENT YEAR 2005-2006 M/S. RAHEJA STOCK BROKERS P. LTD. MUMBAI 400 001. PAN AAACR7390F VS. ITO, CIRCLE 4 (2) (3) MUMBAI. (APPELLANT) (RESPONDENT) FOR APPELLANT : MRS. CHANDNI J. AHUJA FOR RESPONDENT : SHRI ALEXANDER CHANDY (SR. D.R. ) ORDER PER D. MANMOHAN, V.P. 1. THIS APPEAL BY THE ASSESSEE-COMPANY IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A)-VIII, MUMBAI AND IT PERTAINS TO THE ASSESSMENT YEAR 2005-2006. FOLLOWING GROUNDS WERE U RGED BEFORE US. 1. THE LEARNED CIT(A)-8 HAS ERRED IN CONFIRMING IN MAKING ADDITION U/S. 14A OF RS.1,19,967/- THOUGH DIVIDEND INCOME OF THE YEAR IS ONLY RS.30,203/- AND OTHER EXEMPT INCOME BEING INTEREST WERE EARNED ON INVESTMENT MADE BY ASSESSEE OUT OF ITS OWN CAPITAL AND NOT FROM BORROWED CAPITAL. 2. THE LEARNED CIT(A)-8 HAS ERRED IN CONFIRMING IN APPLYING RULE 8D READ WITH SUB-SECTION (2) AND (3) OF SECTION 14A WHICH WAS INTRODUCED IN THE ACT FROM 1- 4- 2007, HENCE NOT APPLICABLE TO ASSESSMENT YEAR 2005- 06. 3. APPELLANT PLEAD BEFORE YOUR HONOUR : A) TO ALLOW THE CLAIM OF THE APPELLANT THAT PROVISI ON OF SECTION 14A(2) AND (3) ARE APPLICABLE FROM ASSESSME NT YEAR 2007-2008. 2 2. IN ADDITION THERETO, ASSESSEE HAS RAISED AN ADD ITIONAL GROUND CONTENDING, INTERALIA, THAT THE ASSESSEE IS ENTITLED TO DEPRECIATION ON BSE CARD. AT THE TIME OF HEARING BO TH THE PARTIES ADMITTED THAT THE ISSUE ARISING OUT OF THE MAIN GRO UND OF APPEAL IS COVERED AGAINST THE REVENUE AND IN FAVOUR OF THE AS SESSEE BY VIRTUE OF DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE O F GODREJ & BOYCE MFG. CO. LTD. VS. DCIT AND ANOTHER (2010) 328 ITR 8 1 (BOM.) WHEREIN THE COURT HELD THAT RULE 8D CANNOT BE APPLIED RETRO SPECTIVELY. IT MAY BE NOTICED THAT THE DIVIDEND INCOME EARNED BY THE A SSESSEE IN THIS YEAR IS ONLY RS.30,203/-, PERTAINING TO THE SHARES HELD BY THE ASSESSEE AND, IN ADDITION THERETO, ASSESSEE HAS EARNED INTER EST ON HUDCO BONDS. ASSESSING OFFICER DISALLOWED RS.10,000/- FOR EARNING TAX FREE INTEREST/DIVIDEND INCOME WHEREAS THE CIT(A) HAS WRO NGLY APPLIED RULE 8D FOR THE PURPOSE OF WORKING OUT THE COMPUTATION O F DISALLOWANCE. IN THE LIGHT OF DECISION OF THE HONBLE BOMBAY HIGH CO URT WE SET ASIDE THE ORDER OF THE LEARNED CIT(A) AND UPHOLD THE DISA LLOWANCE MADE BY THE ASSESSING OFFICER. 3. AS REGARDS THE ADDITIONAL GROUND, IT IS ADMITTE D BY BOTH THE PARTIES THAT FACTS ARE ALREADY ON RECORD AND TH E LEGAL ISSUE AS TO WHETHER ASSESSEE IS ENTITLED TO CLAIM DEPRECIATION ON BSE CARD IS NOW SETTLED BY THE DECISION OF THE HONBLE APEX COURT I N THE CASE OF TECHNO SHARES & STOCK BROKERS (2010) 327 ITR 323 (SC). IT MAY BE NOTICED THAT THE LEARNED CIT(A) DECIDED THE ISSUE AGAINST T HE ASSESSEE BY FOLLOWING THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF TECHNO SHARES & STOCK BROKERS WHICH IS NOW REVERSED BY THE APEX COURT (SUPRA). UNDER THE CIRCUMSTANCES, WE ADMIT TH E ADDITIONAL GROUND AND DIRECT THE ASSESSING OFFICER TO ALLOW DE PRECIATION OF BSE CARD IN THE LIGHT OF DECISION OF THE APEX COURT (SU PRA). 4. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. 3 ITA. NO. 1867/MUM/2010 M/S. RAHEJA STOCK BROKERS P. LTD. ORDER PRONOUNCED ACCORDINGLY IN THE OPEN COURT ON THIS THE 1 ST DAY OF JUNE, 2011. SD/- SD/- (T.R. SOOD) (D.MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI, DATE 01 ST JUNE, 2011 VBP/- COPY TO 1. ACIT 12 (3), ROOM NO. 121, AAYAKAR BHAVAN, M.K. ROA D, MUMBAI 400 020. 2. M/S. RAMA EXPORTS, 404, TULSIANI CHAMBERS, 212, NAR IMAN POINT, MUMBAI 400 021 PAN AAAFR4632F 3. COMMISSIONER OF INCOME TAX (APPEALS)-23, MUMBAI 4. CIT-12, MUMBAI 5. DR D BENCH 6. GUARD FILE. (TRUE COPY) BY ORDER ASST. REGISTRAR, ITAT, MUMBAI BENCHES MUMBAI.