TECHNOSOFT INFORMATION TECHNOLOGIES (INDIA) LTD, MUMBAI V. DCIT 6(3), MUMBAI

ITA 2128/MUM/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 8961 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-01-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2006-2007
• Appeal Filed On: 17-03-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUM EET KUMAR
• Assessee Lawyers: PANKAJ TOPRANI
• Keywords: Opportunity of being heard
• Section: 143(3); 14A; 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI. BEFORE SHRI R.V.EASWAR, PRESIDENT AND SHRI P.M. JAGTAP, AM I.T.A. NO.2128/MUM/2010 (ASSESSMENT YEAR: 2006-07) M/S. TECHNOSOFT INFORMATION TECHNOLOGIES (INDIA) LTD., A-25, MIDC, MAROL INDUSTRIAL AREA ROD NO.3, OPP. ESIS HOSPITAL, ANDHERI(E), MUMBAI-400 093. PAN:AABCT0886H VS. THE DEPUTY COMMISSIONER OF INCOME TAX 8(3), AAYAKAR BHAVAN, 2 ND FLOOR, M.K.ROAD, MUMBAI-400 020. (APPELLANT) (RESPONDENT) APPELLANT BY : MR. PANKAJ TOPRANI RESPONDENT BY : MR. SUMEET KUMAR, DR O R D E R PER R.V.EASWAR, PRESIDENT: THIS APPEAL BY THE ASSESSEE RELATES TO THE ASSESSMENT YEAR 2006-07 AND ARISES OUT OF TH E ASSESSMENT ORDER PASSED ON 22.12.2008 UNDER SECTION 143(3) OF THE INCOME TAX ACT. THE ASSESSEE IS A COMPANY ENGAG ED IN THE EXPORT OF COMPUTER SOFTWARE AND IT IS A 100% EXPORT ORIENTED UNIT. 2. THE FIRST TWO GROUNDS ARE DIRECTED AGAINST THE DISALLOWANCE OF RS.92,981/- UNDER SECTION 14A READ WITH RULE 8D AND RS.66,794/- UNDER SECTION 14A, BEING PROPORT IONATE PORTFOLIO MANAGEMENT CHARGES PAID BY THE ASSESSEE. IN THE RECENT JUDGEMENT OF THE HONBLE BOMBAY HIGH COURT I N THE CASE OF GODREJ & BOYCE MANUFACTURING CO. LTD. VS. DCIT. , (2010) 328 ITR 81 IT HAS BEEN HELD THAT RULE 8D APP LIES ONLY FROM THE ASSESSMENT YEAR 2008-09 AND HAS NO RETROSP ECTIVE ITA NO.2128/MUM/10 2 EFFECT. THEREFORE THE ASSESSING AUTHORITIES WERE NO T JUSTIFIED IN INVOKING THE SAID RULE IN THE PRESENT CASE WHICH RE LATES TO THE ASSESSMENT YEAR 2006-07. AS REGARDS THE MERITS OF T HE DISALLOWANCE UNDER SECTION 14A, THE HONBLE HIGH CO URT HAS LAID DOWN GUIDELINES AS TO HOW THE SECTION SHOULD B E APPLIED AND THE DISALLOWANCE MADE. RESPECTFULLY FOLLOWING THE JUDGEMENT WE SET ASIDE THE ORDERS OF THE INCOME-TAX AUTHORITIES ON THIS POINT AND RESTORE BOTH THE ISSUES TO THE FI LE OF THE ASSESSING OFFICER WHO SHALL CONSIDER THE APPLICABIL ITY OF THE SECTION 14A AFRESH IN THE LIGHT OF THE GUIDELINES A FTER GIVING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE . THE GROUNDS ARE ALLOWED FOR STATISTICAL PURPOSES. 3. THE GROUND NO.3 IS DIRECTED AGAINST THE DECISION OF THE CIT(A) TO THE EFFECT THAT THE PROFIT OF RS.2,47,660 /- ON SALE OF INVESTMENT HAS NOT BEEN REDUCED BY THE ASSESSEE WHI LE CLAIMING DEDUCTION UNDER SECTION 10B. WE HAVE CONSIDERED THE FACTS. IN THE AUDIT REPORT UNDER SECTION 10B FILED IN FORM NO .56G, THE ASSESSEE HAS COMMENCED THE WORKING OF THE PROFITS O F THE BUSINESS FROM THE FIGURE OF NET PROFIT AS PER THE P ROFIT AND LOSS ACCOUNT. THE LONG TERM CAPITAL LOSS OF RS.10,77,000 /- HAS BEEN ADDED BACK AND THE SHORT TERM AND LONG TERM CAPITAL GAINS ON MUTUAL FUNDS AND SHARES TOTALLING TO RS.13,24,659/- HAS BEEN REDUCED. THE NET EFFECT OF ADDING BACK THE LONG TE RM CAPITAL LOSS AND DEDUCTING THE SHORT TERM AND LONG TERM CAP ITAL GAINS IS RS.2,47,659/- (RS.13,24,659 RS.10,77,000). THUS I N EFFECT THE ITA NO.2128/MUM/10 3 PROFIT OF RS.2,47,660/- ON THE SALE OF THE INVESTME NTS STANDS REDUCED FROM THE NET PROFIT AS PER THE PROFIT AND L OSS ACCOUNT. THE INCOME TAX AUTHORITIES WERE NOT JUSTIFIED IN AG AIN REDUCING THE AFORESAID FIGURE FROM THE NET PROFIT FOR THE PU RPOSE OF CALCULATING THE DEDUCTION UNDER SECTION 10B. WE ACC ORDINGLY ACCEPT THE GROUND. 4. THE GROUND NO.4 IS DISMISSED AS NOT PRESSED. 5. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS DAY OF 12 TH JANUARY, 2011 IN THE OPEN COURT. SD/- ( P.M. JAGTAP ) SD/- ( R.V.EASWAR ) ACCOUNTANT MEMBER PRESIDENT MUMBAI, DATED 12 TH JANUARY, 2011. SOMU COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT (A)-18, MUMBAI. 4. THE CIT-8 MUMBAI 5. THE DR F BENCH /TRUE COPY/ BY ORDE R ASSTT. REGISTRAR, I.T.A.T, MUMBAI