CYRUS INVESTMENTS P.LTD, MUMBAI V. ASST CIT 1(1), MUMBAI

ITA 2705/MUM/2013

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9444 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-01-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 19-01-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 08-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIP
• Assessee Lawyers: BIHARI LAL
• Section: 14A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BE NCH, MUMBAI , !' #$%& , '' ' ( BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ./I .T.A. NO.2705 /MUM/2013 ( ! ! ! ! ) ) ) ) / ASSESSMENT YEAR : 2009-10 M/S. CYRUS INVESTMENTS PVT. LTD., ESPLANADE HOUSE, HAZARIMAL SOMANI MARG, FORT, MUMBAI-400 001 ! ! ! ! / VS. THE ACIT-1(1), AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400 020 * '' ./ + ./ PAN/GIR NO. : AAACC 2880P ( *, / APPELLANT ) .. ( -.*, / RESPONDENT ) *, / ' / APPELLANT BY: SHRI BIHARILAL -.*, 0 / ' / RESPONDENT BY: SHRI NEIL PHILIP ! 0 12' / DATE OF HEARING :19.01.2015 3) 0 12' / DATE OF PRONOUNCEMENT :19.01.2015 '4 / O R D E R PER N.K. BILLAIYA, AM: THIS IS AN APPEAL BY THE ASSESSEE PREFERRED AGAINST THE ORDER OF THE LD. CIT(A)-1, MUMBAI DT.07.02.2013 PERTAINING TO A. Y.2009-10. 2. THE ASSESSEE HAS RAISED TWO SUBSTANTIAL GROUNDS OF APPEAL. GROUND NO. 1 RELATES TO THE DISALLOWANCE MADE U/S. 14A R.W . RULE 8D. ITA NO. 2705/MUM/2013 2 3. THE ASSESSEE IS A NON-BANKING FINANCE COMPANY EN GAGED IN THE BUSINESS OF FINANCING. THE RETURN FOR THE YEAR WAS SELECTED FOR SCRUTINY ASSESSMENT. WHILE SCRUTINIZING THE RETURN OF INCOM E, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS EARNED DIVIDE ND INCOME OF RS. 27,03,29,550/- AND THE SAME WAS CLAIMED AS EXEMPT/- U/S. 10(34) OF THE ACT. THE ASSESSEE WAS ASKED TO EXPLAIN WHY THE APP ROPRIATE DISALLOWANCE BE NOT MADE OUT IN RESPECT OF EXPENSES INCURRED FOR EARNING THE DIVIDEND INCOME. THE ASSESSEE REPLIED THAT IT IS A NON-BANK ING FINANCE COMPANY HENCE SEC. 14A IS NOT APPLICABLE. 3.1. THE SUBMISSIONS OF THE ASSESSEE WERE OUTRIGHTL Y REJECTED BY THE AO. THE AO WAS OF THE FIRM BELIEF THAT RULE 8D IS APPLICABLE AND THE DISALLOWANCE NEED TO BE MADE U/S. 14A OF THE ACT. THE AO PROCEEDED BY COMPUTING THE DISALLOWANCE AS PER RULE 8D AND DISAL LOWED RS. 60,01,670/-. 4. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT(A) BUT WITHOUT ANY SUCCESS. 5. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE STAT ED THAT THE ASSESSEE HAS SUO-MOTU DISALLOWED RS. 17,15,000/- AND THE AO HAS NOT POINTED OUT ANY ERROR OR DEFECT IN THE DISALLOWANCE MADE BY THE ASSESSEE. WITHOUT RECORDING ANY DISSATISFACTION IN RESPECT OF THE CLA IM MADE BY THE ASSESSEE, THE AO ERRED IN COMPUTING THE DISALLOWANCE AS PER R ULE 8D. 6. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 7. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE LOWE R AUTHORITIES. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG. CO. ITA NO. 2705/MUM/2013 3 LTD. VS DCIT& ANOTHER 328 ITR 81 HAS HELD THAT SUB- SECTION (2) OF SEC. 14A DOES NOT ENABLE THE ASSESSING OFFICER TO APPLY THE METHOD PRESCRIBED BY RULE 8D WITHOUT DETERMINING IN THE FI RST INSTANCE THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE IN RESPECT OF EXPENDITURE INCURRED IN RELATION TO INCOME WHICH DOES NOT FORM PART OF T HE TOTAL INCOME UNDER THE ACT, THAT HE CAN PROCEED TO MAKE A DETERMINATIO N UNDER THE RULES. TAKING A LEAF OUT OF THESE OBSERVATIONS OF THE HON BLE JURISDICTIONAL HIGH COURT, WE RESTORE THE ISSUE TO THE FILE OF THE AO. THE AO IS DIRECTED TO VERIFY THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE AND DECIDE THE ISSUE AFRESH AS PER PROVISIONS OF THE LAW. GROUND NO. 1 IS ALLOWED FOR STATISTICAL PURPOSE. 8. GROUND NO. 2 RELATES TO THE DENIAL OF THE DEDUCT ION OF SUO-MOTU DISALLOWANCE MADE BY THE ASSESSEE OUT OF THE TOTAL DISALLOWANCE COMPUTED BY THE AO. 9. AS WE RESTORED THE ISSUE OF COMPUTING THE DISALL OWANCE TO THE FILE OF THE AO, THE AO IS DIRECTED TO DECIDE THIS ISSUE ALSO AFRESH AFTER COMPUTING THE DISALLOWANCE U/S. 14A R.W. RULE 8D. T HIS GROUND IS ALLOWED FOR STATISTICAL PURPOSE. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF H EARING ON 19 TH JANUARY, 2014. SD/- SD/- (JOGINDER SINGH ) (N.K. BILLAIYA) /JUDICIAL MEMBER '' / ACCOUNTANT MEMBER MUMBAI; 5! DATED : 19.01.2015 . ! . ./ RJ , SR. PS ITA NO. 2705/MUM/2013 4 '4 '4 '4 '4 0 00 0 -1# -1# -1# -1# 6'#)1 6'#)1 6'#)1 6'#)1 / COPY OF THE ORDER FORWARDED TO : 1. *, / THE APPELLANT 2. -.*, / THE RESPONDENT. 3. 7 ( ) / THE CIT(A)- 4. 7 / CIT 5. #8 -1! , , / DR, ITAT, MUMBAI 6. 9 : / GUARD FILE. '4! '4! '4! '4! / BY ORDER, .#1 -1 //TRUE COPY// ; ;; ; / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI