URDAVAN INVESTMENT AND TRADING P.LTD, MUMBAI V. ACIT 2(3), MUMBAI

ITA 2454/MUM/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 3518 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2007-2008
• Appeal Filed On: 29-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUM EET KUMAR
• Assessee Lawyers: LATA PARULEKAR
• Keywords: Business income; Opportunity of being heard; Retrospective amendment
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, F, MUMBAI BEFORE SHRI R V EASWAR, PRESIDENT AND SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER I T A NO: 2454/MUM/2010 (ASSESSMENT YEAR: 2007-08) URUDAVAN INVESTMENT AND TRADING PVT. LTD. APPELLA NT MUMBAI (PAN: AAACU1353M) VS ASSISTANT COMMISSIONER OF INCOME TAX RESPONDENT CIRCLE 2(3), MUMBAI APPELLANT BY: MR VIJAY MEHTA & MS LATA PARULEKAR RESPONDENT BY: MR SUMEET KUMAR O R D E R R V EASWAR, PRESIDENT: THE APPEAL HAS BEEN FILED BY THE ASSESSEE AND IT R ELATES TO THE ASSESSMENT YEAR 2007-08. THE ONLY ISSUE IS WHE THER THE REVENUE AUTHORITIES WERE JUSTIFIED IN DISALLOWING ` 16,45,723/-/- BY INVOKING SECTION 14A OF THE INCOME TAX ACT, 1961, R EAD WITH RULE 8D OF THE INCOME TAX RULES. THE ASSESSING OFFICER INVOKED SECTION 14A AND HELD THAT EXPENDITURE INCURRED BY T HE ASSESSEE IN ORDER TO EARN THE DIVIDEND INCOME, WHICH IS EXEMPT FROM INCOME TAX, SHOULD BE DISALLOWED. HE INVOKED RULE 8D AND CALCULATED THE DISALLOWANCE AT ` 16,45,723/-/- AND THE SAME WAS ADDED BACK TO THE BUSINESS INCOME. THE DISALLOWANCE HAVING BEEN CONFIRMED BY THE CIT(A), THE ASSESSEE IS IN FURTHER APPEAL BEFOR E THE TRIBUNAL. 2. IN THE RECENT JUDGMENT OF THE HONBLE BOMBAY H IGH COURT IN THE CASE OF GODREJ & BOYCE MFG. CO. LTD. VS. DEPUTY COMMISSIONER OF INCOME TAX, IN INCOME TAX APPEAL NO. 626 OF 2010 AND WRIT ITA NO: 2 PETITION NO. 758 OF 2010, DATED 12 TH AUGUST 2010, IT HAS BEEN HELD THAT RULE 8D IS APPLICABLE ONLY FROM THE ASSESSMENT YEAR 2008-09 AND CANNOT BE INVOKED WITH RETROSPECTIVE EFFECT. I N THIS JUDGMENT THE HONBLE HIGH COURT HAS ALSO LAID DOWN CERTAIN G UIDELINES FOR THE PURPOSE OF INVOKING SECTION 14A AND WORKING OUT THE DISALLOWANCE TO BE MADE OUT OF THE EXPENDITURE INCURRED BY THE A SSESSEE. RESPECTFULLY FOLLOWING THE JUDGMENT, WE SET ASIDE T HE ORDERS OF THE DEPARTMENTAL AUTHORITIES ON THIS POINT AND RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO H IM TO FOLLOW THE GUIDELINES LAID DOWN IN THE AFORESAID JUDGMENT AND TAKE A FRESH DECISION REGARDING THE APPLICABILITY OF SECTION 14A , AFTER GIVING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE . THE APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTIC AL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST DECEMBER 2010. SD/- SD/- (PRAMOD KUMAR) (R V EASWAR) ACCOUNTANT MEMBER PRESIDENT MUMBAI, DATED 31 ST DECEMBER 2010 SALDANHA COPY TO: 1. URUDAVAN INVESTMENT AND TRADING PVT. LTD. 209-210, ARCADIA BUILDING 195, NARIMAN POINT, MUMBAI 400 021 2. ACIT, CIRCLE 2(3) 3. CIT-2 4. CIT(A)-6 5. DR F BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI