DIMENSION DATA INDIA LTD ( FORMELRY DATACRAFT INDIA LTD), MUMBAI V. ADDL CIT CIR 2(1), MUMBAI

ITA 225/MUM/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3398 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-05-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 29-04-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 10-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR RAJENDRA KUMAR
• Keywords: Opportunity of being heard; Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH D, MUMBAI BEFORE SHRI P.M.JAGTAP, ACCOUNTANT MEMBER AND DR. S.T.M. PAVALAN, JUDICIAL MEMBER ITA NO. 225/MUM/2012 ASSESSMENT YEAR: 2007-08 DIMENSION DATA INDIA LTD. (FORMERLY DATACRAFT INDIA LTD) 2 ND FLOOR, TRADE VIEW BUILDING, PANDURANG BHUDKAR MARG, KAMALA MILLS COMPOUND, LOWER PAREL MUMBAI-. 400013 PAN :AAACD 2145 G VS. ADDL CIT CIR2(1) MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MANISH SHAH RESPONDENT BY : DR. RAJENDRA KUMAR DATE OF HEARING : 29.04.2013 DATE OF PRONOUNCEMENT : 17.05.2013 O R D E R PER DR. S.T.M. PAVALAN, JM: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF THE LD.CIT(A)-4, MUMBAI DATED 13.10.2011 FOR THE ASSESS MENT YEAR 2007-08. 2. THE GROUNDS OF APPEAL RELATE TO THE SOLITARY ISS UE OF DISALLOWANCE MADE BY THE AO UNDER SECTION 14A READ WITH RULE 8(D) AND TH E SAME CONFIRMED BY THE LD.CIT(A). 3. BRIEFLY STATED ASSESSEE RECEIVED DIVIDEND INCOME OF RS.2,30,33,167/- AND THE SAME WAS CLAIMED EXEMPT FROM INCOME TAX, WHEREAS A DISALLOWANCE EQUAL TO 2% OF ITA NO. 225/MUM/2012 DIMENSION DATA INDIA LTD. A SSESSMENT YEAR 2007-08 . 2 THE DIVIDEND INCOME WAS OFFERED UNDER SECTION 14A C LAIMING THAT THE AO IN EARLIER YEAR HAD DISALLOWED 2% OF THE EXEMPT INCOME AND THE REFORE, THE SAME HAD BEEN OFFERED IN THE YEAR UNDER CONSIDERATION. HOWEVER, I N THE ASSESSMENT FRAMED UNDER SECTION 143(3), THE AO MADE A FURTHER DISALLOWANCE OF RS.14,26,507/- AND ADDED THE SUM TO THE TOTAL INCOME OF THE ASSESSEE. ON APP EAL, THE LD.CIT(A) CONFIRMED THE IMPUGNED DISALLOWANCE MADE BY THE AO. AGGRIEVED BY THE ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS NOTED THAT THE QUESTION OF MAKING DIS ALLOWANCE U/S 14A IS NO MORE RES INTEGRA IN VIEW OF THE JUDGMENT OF THE HONBLE BOMBAY HIG H COURT IN GODREJ & BOYCE LTD. MFG. CO. VS. DCIT [(2010) 328 ITR 81 (BO M)] HOLDING THAT THE PROVISIONS OF SECTION 14A ARE APPLICABLE IN CIRCUMS TANCES AS ARE PREVAILING PRESENTLY AND THE DISALLOWANCE HAS TO BE WORKED OUT BY THE AO ON SOME `REASONABLE BASIS AND NOT RULE 8D IN SO FAR AS THE ASSESSMENT YEARS P RIOR TO 2008-09 ARE CONCERNED. PRESENTLY WE ARE DEALING WITH THE A.Y. 2007-08. IN SUCH YEAR, OBVIOUSLY RULE 8D CANNOT BE APPLIED, BUT THE DISALLOWANCE IS REQUIRED TO BE WORKED OUT ON SOME REASONABLE BASIS. AS THE AUTHORITIES BELOW HAVE COM PUTED THE DISALLOWABLE AMOUNT AS PER RULE 8D, SUCH COMPUTATION CANNOT BE UPHELD. UNDER SUCH CIRCUMSTANCES, WE SET ASIDE THE IMPUGNED ORDER AND RESTORE THE MATTER TO THE FILE OF THE AO FOR DECIDING THE QUANTUM OF DISALLOWANCE, AS PER THE AF ORE-NOTED JUDGMENT, AFTER ALLOWING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 17 TH DAY OF MAY, 2013. SD/- SD/- (P.M.JAGTAP) (DR. S.T.M. PAVALAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 17.05.2013. *SRIVASTAVA ITA NO. 225/MUM/2012 DIMENSION DATA INDIA LTD. A SSESSMENT YEAR 2007-08 . 3 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR D BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.