MEDIORALS LABS P. LTD, MUMBAI V. DCIT CEN CIR 2, MUMBAI

ITA 2665/MUM/2010

• Counselvise Citation: 266519914 RSA 2010
• Duration Of Justice: 1 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 30-05-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 07-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B MUMBAI BEFORE SHRI R.S. SYAL (AM) AND SMT. ASHA VIJAYARAG HAVAN (JM) ITA NO.2665/MUM/2010 ASSESSMENT YEAR- 2007-08 M/S. MEDIORALS LABS PVT. LTD., 12, GUNBOW STREET, HORNBY VIEW BLDG., FORT, MUMBAI-400 001 PAN-AAACA 5145M VS. THE DCIT, CEN CIR. 2 OLD CGO BLDG., M.K. MARG, MUMBAI-400 020 (APPELLANT) (RESPONDENT) APPELLANT BY: NONE RESPONDENT BY: SHRI R.K. GUPTA O R D E R PER ASHA VIJAYARAGHAVAN (JM) THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED A GAINST THE ORDER DATED 15.2.2010 PASSED BY THE LD. CIT(A)-36 FOR THE ASSESSMENT YEAR 2007-08. 2. NONE APPEARED ON BEHALF OF THE ASSESSEE THEREFOR E WE HEARD THE LD. DEPARTMENTAL REPRESENTATIVE AND DISPOSE OF THIS MAT TER EXC PARTE ON MERIT. 3. THE ONLY GROUND RAISED IN THIS APPEAL IS AGAINST THE CONFIRMATION OF DISALLOWANCE U/S. 14A AT RS. 3,40,915/- OF THE I.T. ACT. 4. THE ASSESSEE HAD EARNED TAX FREE DIVIDEND OF RS. 76,67,506/-. THE AO DISALLOWED RS. 3,40,915/- AS PER RULE 8D OF THE I.T. RULES. THE ASSESSEE SUBMITTED THAT THE FUNDS INVESTED IN EARNI NG TAX FREE INCOME WERE OUT OF INTERNAL ACCRUALS AND HENCE NO DISALLOW ANCE SHOULD BE PERMITTED U/S. 14A OF THE I.T. ACT, 1961. ITA NO. 2665/M/10 2 5. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE T HE LD. CIT(A). CIT(A) DISMISSED THE ASSESSEES APPEAL BY OBSERVING AS UNDER: I HAVE PERUSED THE SUBMISSIONS OF THE APPELLANT AN D THE ORDER OF THE AO. I FIND THAT THIS ISSUE IS COVERED IN FAVOUR OF THE REVENUE BY THE ORDER OF THE SPECIAL BENCH OF THE HO NBLE ITAT, MUMBAI IN THE CASE OF ITO VS DAGA CAPITAL MANAGEMEN T PVT. LTD. 117 ITD 169 (2009). FOLLOWING THE ORDER, THE ADDIT ION MADE BY THE AO IS UPHELD AND THE GROUND OF THE APPELLANT IS DIS MISSED. 6. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATIV E AND PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS NOTED THAT THE QUESTION OF MAKING DISALLOWANCE U/S. 14A IS NO MORE RES INTEGRA IN VIEW OF THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN GODREJ & BOYCE LTD . MFG. CO. VS DCIT (2010) 238 ITR 81 (BOM) HOLDING THAT THE PROVISIONS OF SEC. 14A ARE APPLICABLE IN CIRCUMSTANCES AS ARE PREVAILING PRESE NTLY AND THE DISALLOWANCE HAS TO BE WORKED OUT BY THE AO ON SOME REASONABLE BASIS AND NOT RULE 8D. 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 AFORE-NOTED JUD GMENT, AFTER ALLOWING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSE SSEE. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 31 ST DAY OF MAY, 2011 SD/- SD/- (R.S. SYAL) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEM BER MUMBAI, DATED 31 ST MAY, 2011 RJ ITA NO. 2665/M/10 3 COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR B BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, I.T.A.T, MUMBAI ITA NO. 2665/M/10 4 DATE INITIALS 1 DRAFT DICTATED ON: 30 .0 5 .2011 SR. PS/PS 2. DRAFT PLACED BEFORE AUTHOR: 30 .05 .2011 ______ SR. PS/PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER: _________ ______ JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER: _________ ______ JM/AM 5. APPROVED DRAFT COMES TO THE SR. PS/PS: _________ ______ SR. PS/PS 6. KEPT FOR PRONOUNCEMENT ON: _________ ______ SR. PS/PS 7. FILE SENT TO THE BENCH CLERK: _________ ______ SR. PS/PS 8. 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK: DATE ON WHICH FILE GOES TO AR _________ ______ 10. DATE OF DISPATCH OF ORDER: _________ ______