KRISHNA KEJRIWAL, MUMBAI V. ACIT 9(3), MUMBAI

ITA 2529/MUM/2011

• Counselvise Citation: 252919914 RSA 2011
• Duration Of Justice: 1 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-05-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 01-05-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 31-03-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P K B MENON
• Keywords: Earning of tax free income; Question of law

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A , MUMBAI BEFORE SHIRI R. S. SYAL, AM AND SHRI S. S. GODARA, JM ITA NO. : 5004/MUM/2010 ASSESSMENT YEAR : 2006-07 & ITA NO. : 2529/MUM/2011 ASSESSMENT YEAR : 2006-07 SHRI KRISHNA KEJRIWAL 88/B, GOVT. INDUSTRIAL ESTATE, KANDIVALI(W), MUMBAI-400 067 PAN NO: ADZPK 3811 B VS. DCIT CIRCLE 9(3) AAYAKAR BHAWAN, MUMBAI-400 021 (APPELLANT) (RESPONDENT) A SSESSEE BY : SHRI SAMEER DALAL DEPARTMENT BY : SHRI P. K. B. MENON DATE OF HEARING : 03.05.201 2 DATE OF PRONOUNCEMENT : 09.05.2012 ORDER PER R. S. SYAL, AM : THESE TWO APPEALS BY THE ASSESSEE RELATES TO THE A SSESSMENT YEAR 2006-07. FIRSTLY, WE ARE TAKING UP ITA NO.5004/MUM /2010 WHICH HAS BEEN FILED AGAINST THE ORDER PASSED BY THE LEARNED CIT(A) ON 19.04.2010. 2. THE ONLY GROUND TAKEN IN THE MEMORANDUM OF A PPEAL IS ABOUT THE CONFIRMATION OF DISALLOWANCE OF INTEREST ON ESTIMAT E BASIS AT `. 2,00,000/- OUT OF TOTAL INTEREST PAID OF `. 21,44,669/-. ITA NOS. 5004/MUM/2010 & 2529/MUM/2011 SHRI KRISHNA KEJRIWAL 2 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE SHOWED AN INTEREST RECEIPTS AT `. 37.28 LAKHS AGAINST WHICH DEDUCTION WAS CLAIMED FOR INTEREST PAYMENT OF `. 21.44 LAKHS. THE A.O. NOTED THAT THE ASSESSEE WAS PAYING INTEREST AT ABOUT 10 TO 12%, WHEREAS HE HAS CHARGED INTEREST AT A VERY LOW RATE OF ABOUT 2.59% ON LOAN ADVANCED TO M/S. GOODLUCK ELECTRONICS P. LTD., IN WHICH THE ASSESSEE IS A DIR ECTOR. RELYING ON VIEW TAKEN BY HIM IN THE IMMEDIATELY PRECEDING YEAR I.E. A.Y. 2005-06, THE A.O. MADE A DISALLOWANCE OF `. 2,00,000/-, WHICH CAME TO BE UPHELD IN THE FIRST APPEAL. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORDS. IT IS OBSERVED THAT THE SAID EARLIER ASSESSMENT YEAR 2005-06 CAME UP FOR ADJUDICATION BEFORE THE TRIBUNA L IN ITA NO. 7271/MUM/2008. VIDE ITS ORDER DATED 30.11.2007, A COPY OF WHICH IS AVAILABLE ON RECORD, THE TRIBUNAL HAS RESTORED THIS ISSUE TO THE FILE OF THE A.O. FOR A FRESH ADJUDICATION. AS BOTH THE SIDES A RE IN AGREEMENT WITH THE FACTS AND THE CIRCUMSTANCES OF THE ADDITION MAD E AND SUSTAINED IN THE CURRENT YEAR ARE MUTATIS MUTANDIS SIMILAR TO THOSE OF THE PRECEDING YEAR, IN OUR CONSIDERED OPINION IT WILL BE JUST AND FAIR IF THE IMPUGNED ORDER ON THIS ISSUE IS SET ASIDE AND THE MATTER IS RESTORED TO THE FILE OF THE A.O. WE ORDER ACCORDINGLY DIRECT HIM TO DECIDE THI S ISSUE AFRESH IN ACCORDANCE WITH THE DIRECTIONS GIVEN BY THE TRIBUNA L IN ITS ORDER FOR THE SAID EARLIER YEAR. ITA NOS. 5004/MUM/2010 & 2529/MUM/2011 SHRI KRISHNA KEJRIWAL 3 5. THE ASSESSEE HAS RAISED AN ADDITIONAL GROUND ABO UT THE DISALLOWANCE MADE U/S.14A. NO OBJECTION WAS TAKEN BY THE LEARNED DR ON THE ADMISSION OF THIS ADDITIONAL GROUND. SINCE S UCH GROUND EMANATES FROM THE IMPUGNED ORDER AND INVOLVES A QUESTION OF LAW TO BE DECIDED, WE ADMIT THIS GROUND AND TAKE IT UP FOR DISPOSAL ON ME RITS. 6. THE FACTS OF THIS GROUND ARE THAT THE ASSESSEE E ARNED CERTAIN EXEMPT INCOME AND NO DISALLOWANCE WAS OFFERED U/S.1 4A. THE A.O. MADE SUCH DISALLOWANCE AT `. 25,000/-. WHEN THE MATTER CAME UP BEFORE THE LEARNED CIT(A), HE DIRECTED THE A.O. TO WORK OUT TH E DISALLOWANCE IN ACCORDANCE WITH RULE 8D OF THE INCOME TAX RULES, 19 62. 7. HAVING HEARD BOTH THE SIDES AND PERUSED THE RELE VANT MATERIAL ON RECORD IT IS OBSERVED THAT THE ASSESSMENT YEAR UNDE R CONSIDERATION IS 2006-07. THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF GODREJ & BOYCE MANUFACTURING COMPANY LTD. VS. DCIT [2010] 32 8 ITR 81 (BOM) HAS HELD THAT RULE 8D CANNOT BE APPLIED IN RESPECT OF ANY YEAR PRIOR TO A.Y. 2008-09. IN THAT CASE, THE HON'BLE HIGH COURT HAS DIRECTED THE A.O. TO WORK OUT THE DISALLOWANCE U/S.14A ON SOME REASON ABLE BASIS WITHOUT HAVING ANY REGARD TO RULE 8D. SINCE THE YEAR INVOL VED BEFORE US IS NOT COVERED BY THE MANDATE OF RULE 8D, IN OUR CONSIDERE D OPINION, THE DIRECTION OF THE LEARNED CIT(A) FOR APPLYING RULE 8 D CANNOT BE SUSTAINED. THE LEARNED AR DID NOT RAISE ANY OBJECTION TO THE S USTENANCE OF AN ITA NOS. 5004/MUM/2010 & 2529/MUM/2011 SHRI KRISHNA KEJRIWAL 4 ADDITION AT `. 25,000/- AS WAS MADE BY THE A.O. IN THE ORIGINAL ASSESSMENT. WE, THEREFORE, UPHOLD THE DISALLOWANCE AT `. 25,000/- AS MADE BY THE A.O. IN THE ORDER PASSED U/S.143(3). TH IS GROUND IS ALLOWED TO THIS EXTENT. 8. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. 9. ITA NO.2529/MUM/2011 BEING THE OTHER APPEAL FILE D BY THE ASSESSEE FOR THE SAME ASSESSMENT YEAR I.E. A.Y. 200 6-07 WAS NOT PRESSED BY THE LEARNED AR. THE SAME, THEREFORE, STANDS DIS MISSED. 10. IN THE RESULT, THIS APPEAL IS DISMISSED. ORDER PRONOUNCED ON THIS OF 09 TH MAY, 2012. SD/ - SD/ - ( S. S. GODARA ) ( R. S. SYAL ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT: 09.05.2012 COPY FORWARDED TO : 1. THE APPELLANT, 2. THE RESPONDENT, 3. THE C.I.T. 4. CIT (A) 5. THE DR, A- BENCH, ITAT, MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI ROSHANI