CYRUS INVESTMENT P. LTD, MUMBAI V. DCIT 1(1), MUMBAI

ITA 2622/MUM/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0964 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 05-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PREMANAND J
• Assessee Lawyers: BEHARILAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI , , BEFORE SHRI SANJAY ARORA , A M AND SHRI SANJAY GARG , J M ./ I.T.A. NO. 2622/MUM/2013 ( / ASSESSMENT YEAR: 2008 - 09) CYRUS INVESTMENTS PVT. LIMITED ESPLANADE HOUSE, HAZARIMAL SOMANI MARG, FORT, MUMBAI 400 001 / VS. DY. CIT - 1(1), AAYAKAR BHAVAN, M. K. ROAD, MUMBAI ./ ./ PAN/G IR NO. AAACC 2880 P ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI BEHARILAL / RESPONDENT BY : SHRI PREMANAND J / DATE OF HEARING : 08.04.2015 / DATE OF PRONOUNCEMENT : 08 .04.2015 / O R D E R PER SANJAY ARORA, A. M.: THIS IS AN A PPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 1 , MUMBAI (CIT(A) FOR SHORT) DATED 07.02.2013 , DISMISSING THE A SSE SSEES APPEAL CONTESTING ITS ASSESSMENT U/S.143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR THE ASSESSMENT YEAR (A.Y.) 2008 - 09 VIDE ORDER DATED 19.11.2010 . 2. OPENING THE ARGUMENTS FOR AND ON BEHALF OF THE ASSESSEE, IT WAS SUBMITTED BY THE LD. AUTHORIZED REPRESENTATIVE (AR), THE ASSESSEES COUNSEL, THAT THE APPEAL FOR THE CURRENT YEAR STANDS COVERED BY THE ORDER BY THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE IMMEDIATELY FOLLOWING YEAR, I.E., A.Y. 2009 - 10, PLACING A COPY OF THE SAME ON RE CORD (IN 2 ITA NO. 2622/MUM/2013 (A.Y. 2008 - 09) CYRUS INVESTMENTS PVT. LIMITED VS. DY. CIT ITA NO. 2705/MUM/2013 DATED 19.01.2015) AND TAKING US T HROUGH THE RELEVANT PARA ( # 7) THEREOF. THE ASSESSEE HAD MADE A SUO MOTU DISALLOWANCE OF RS.8,71,597/ - U/S.14A AGAINST ITS DIVIDEND INCOME O F RS.25,38,01,470/ - , CLAIMED AND ALLOWED EXEMPT U/S .10(34) OF THE ACT. THE ASSESSING OFFICER (A.O.), WHILE BEING IN AGREEMENT WITH THE ASSESSEE THAT NO DISALLOWANCE QUA INTEREST EXPENDITURE, WHETHER DIRECT OR INDIRECT , WAS TO BE EFFECTED IN THE FACTS AND CIRCUMSTANCES OF THE CASE , HOWEVER, DISAGREE D AS REG ARDS THE DISALLOWANCE QUA THE ADMINISTRATIVE EXPENDITURE, ESTIMATING THE SAME AT 0.5% OF THE AVERAGE RELEVANT INVESTMENT OBTAINING DURING THE YEAR, I.E., IN TERMS OF RULE 8D(2)(III) , AT RS.68,50,38 4/ - . EVEN AS THE ASSESSEE MADE STRONG S UBMISSIONS BEFORE TH E LD. CIT(A), SEEKING TO EXHIBIT THAT THE TOTAL ADMINISTRATIVE EXPENDITURE , AS CLAIMED BY THE ASSESSEE PER ITS RETURN OF INCOME , WAS TO THE TUNE OF RS.43.54 LACS ONLY, HE , YET, FOR THE SAME REASONS THAT GUIDED THE A.O., CONFIRM ED THE IMPUGNED DISALLOWANCE. THE SAME IS INEXPLICABLE, AND CONTRARY TO THE DECISION BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG. CO. LTD. V. DY. CIT [2010] 328 ITR 81 (BOM), WHICH HAS CLARIFIED THAT BEFORE THE A.O. PROCEEDS TO DETERMINE THE DISALLOWANCE UNDER THE R ULES , HE HAS TO BE DISSATISFIED WITH THE CORRECTNESS OF THE ASSESSEES CLAIM FOR EXPENDITURE IN RELATION TO INCOME NOT FORMING PART OF THE TOTAL INCOME UNDER THE ACT. THIS WAS PRECISELY THE REASON THE TRIBUNAL RESTORED THE MATTER BACK TO THE FI LE OF THE A.O. IN THE ASSESSEES CASE FOR A.Y. 2009 - 10 (SUPRA). THE LD. D EPARTMENTAL REPRESENTATIVE (D R ) COULD NOT REBUT THE ASSERTION S MADE BY THE LD. AR. 3. WE HAVE HEARD THE PARTIES AND PERUSED THE MATERIAL ON RECORD. A S APPARENT FROM THE FOREGOING, THERE HAS BEEN A MECHANICAL APPLICATION OF R ULE 8D BY THE REVENUE IN THE INSTANT CASE . UNDER THE CIRCUMSTANCES , WE ONLY CONSIDER IT FIT AND PROPER TO RESTORE THE MATTER BACK TO THE FILE OF THE A.O. TO ADJUDICATE THE ISSUE OF DISALLOWANCE, IF ANY, EXIGIBLE U/S.14A OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, INCLUDING THE ASSESSEES ACCOUNTS , ALSO AD H ERING FOR THE PURPOSE TO THE PROCEDURE PRESCRIBED THEREIN. WE, THUS, COMPLETELY ENDORSE THE RELIANCE AS WELL AS THE APPLICATION OF THE DECISION BY TH E TRIBUNAL 3 ITA NO. 2622/MUM/2013 (A.Y. 2008 - 09) CYRUS INVESTMENTS PVT. LIMITED VS. DY. CIT IN THE ASSESSEES OWN CASE FOR A.Y. 2009 - 10 UNDER SIMILAR CIRCUMSTANCES. WE DECIDE ACCORDINGLY. 4. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON APRIL 08 , 201 5 SD/ - SD/ - ( SANJAY GARG ) (S ANJAY ARORA) / J UDICIAL MEMBER / A CCOUNTANT MEMBER MUMBAI ; DATED : 08 . 0 4 .201 5 . . ./ ROSHANI , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI