MBM TUBES P.LTD, MUMBAI V. ITO 5(2)(3), MUMBAI

ITA 2241/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7918 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2017
• Appeal Filed By: Assessee
• Bench Allotted: J
• Next Hearing Date: 12-01-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 16-04-2015
• Court: TRIBUNAL
• Department Lawyers: BEENA SANTOSH
• Assessee Lawyers: RUTURAJ GURJAR
• Keywords: Opportunity of being heard; Principle of natural justice
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ITA NO.3123/M/2016 (AY 2008 - 2009) M/S. LAVGAN DOCKYARD PVT LTD., BAKHTAWAR, 4 TH FLOOR, NARIMAN POINT, MUMBAI - 400021. / VS. INCOME TAX OFFICER, WARD - 9(2)(2), MUMBAI. ./ PAN : AAACL6788P ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI RUTURAJ GURJAR / RESPONDENT BY : MS. BEENA SANTOSH, DR / DATE OF HEARING : 23.03.2017 / DATE OF PRONOUNCEMENT : 24 .03.2017 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 3.5.2016 IS AGAINST THE ORDER OF THE CIT (A)20, MUMBAI DATED 27.1.2016 FOR THE ASSESSMENT YEAR 2008 - 2009. 2. IN THIS APPEAL, ASSESSEE RAISED THE VARIOUS ARGUMENTATIVE GROUNDS AND SUBMITTED THAT ALL OF THEM RELATE TO T HE DISALLOWANCE U/S 14A READ WITH RULE 8D(2)(III) OF THE INCOME TAX RULES, 1962. 3. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT DURING THE YEAR ASSESSEE EARNED EXEMPT DIVIDEND INCOME OF RS. 41,19,050/ - . ASSESSEE DID NOT MAKE ANY DISALLOWANCE U/S 14 A OF THE ACT. HOWEVER, IN THE ASSESSMENT PROCEEDINGS, AO QUANTIFIED THE DISALLOWANCE OF RS. 4,24,975/ - APPLYING 0.5% ON THE AVERAGE INVESTMENTS. BRINGING MY ATTENTION TO THE AVERAGE INVESTMENT, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFF ICER / CIT (A) ERRED IN INCLUDING THE NEW INELIGIBLE INVESTMENTS IN THE SAID AVERAGE INVESTMENT CALCULATIONS THEREBY EXCESS AMOUNT WAS DISALLOWED UNDER CLAUSE (III) OF RULE 8D(2) OF THE IT RULES. LD COUNSEL FOR THE ASSESSEE FOUND MISTAKE IN CONSIDERING TH E AVERAGE INVESTMENT OF RS. 8.42 CRS (ROUNDED OF) AND MENTIONED THAT AROUND RS. 6.50 CRS SHOULD BE THE CORRECT AVERAGE INVESTMENTS. 2 4. ON HEARING BOTH THE PARTIES AND ON PERUSAL OF THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE RELEVANT MATERIAL PLAC ED BEFORE THE TRIBUNAL, I FIND, THE MATTER SHOULD BE REMANDED TO THE FILE OF THE AO FOR CONSIDERING THE ASSESSEES ARGUMENTS AND PASS A SPEAKING ORDER ON THE ISSUE AFTER GRANTING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AS PER THE SET PRINCI PLES OF NATURAL JUSTICE. ACCORDINGLY I ORDER. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUN CED IN THE OPEN COURT ON 2 4 TH MARCH, 2017. SD/ - (D. KARUNAKARA RAO) ACCOUNTANT MEMBER MUMBAI ; 24.03.2017 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI