PILOT CREDIT CAPITAL P. LTD, MUMBAI V. DCIT 4(2), MUMBAI

ITA 2848/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49585 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-07-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 28-07-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 09-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: G P TRIVEDI
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, C BENCH, MUMBAI. BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER I.T.A NO.2848/ MUM/2010 ASSESSMENT YEAR: 2006-07 PILOT CREDIT CAPITAL PVT LTD. .. APPELLANT 802, P.J.TOWERS, DALAL STREET, MUMBAI-01. PA NO.AAACP 6004 C VS DY.CIT 4(2) ,. RESPONDEN T AAYAKAR BHAVAN, M.K. ROAD, MUMBAI. APPEARANCES: BHUPENDRA SHAH, FOR THE APPELLANT G.P.TRIVEDI, FOR THE RESPONDENT DATE OF HEARING : 28-07-2011 DATE OF PRONOUNCEMENT: 28-07-2011 O R D E R PER PRAMOD KUMAR: 1. BY WAY OF THIS APPEAL, THE ASSESSEE HAS CALLED INTO Q UESTION CORRECTNESS OF CIT(A)S ORDER DATED 25 TH JANUARY, 2010, IN THE MATTER OF ASSESSMENT UNDER SECTI ON 143(3) OF THE INCOME TAX ACT, 1961, FOR THE ASSESSMENT YEAR 2006-07 ON THE FOLLOWING GROUNDS: 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE AO ERRED IN DISALLOWING RS. 1,75,843 U/S.14A BY WRONGLY INTERPRETI NG RULE 8D. THE LD CIT(A) ALSO ERRED IN CONFIRMING THE SAME. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LA W, THE AO ERRED IN WRONGLY CHARGING INTEREST U/S.234B & 234C. I.T.A NO.2848/ MUM/2010 ASSESSMENT YEAR: 2006-07 2 2. FACTS IN BRIEF ARE THAT DURING THE COURSE OF ASSESSMEN T PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS EARNED EXEMP T DIVIDEND INCOME OF RS.44,633 AND HAS NOT ALLOCATED ANY EXPENSE INCURRED F OR EARNING OF SUCH TAX FREE INCOME. THE AO WAS OF THE OPINION THAT AS PER SECTIO N 14A OF THE I.T.ACT, NO DEDUCTION SHALL BE ALLOWED IN RESPECT OF EXPENDITURE INCURRED BY THE ASSESSEE IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE T OTAL INCOME UNDER THE ACT. ACCORDINGLY, HE APPLIED RULE 8D AND DISALLOWED RS.1, 75,843. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT (A) BUT WITHOUT ANY SUCCESS. 4. LEARNED REPRESENTATIVES AGREE THAT SO FAR AS THE QUE STION OF RULE 8D IS CONCERNED, THE ISSUE IS NOW COVERED IN FAVOUR OF THE A SSESEE BY THE HONBLE JURISDICTIONAL HIGH COURTS JUDGEMENT IN THE CASE OF G ODREJ & BOYCE MFG CO LTD VS DCIT (328 ITR 81), WHEREIN, IT HAS BEEN HELD THAT R ULE 8D OF THE INCOME TAX RULES, 1962 IS APPLICABLE ONLY PROSPECTIVELY I.E. FROM A.Y. 2008-09. THE ASSESSMENT YEAR INVOLVED IN THE PRESENT CASE IS 2006-07 AND, THEREFO RE, RULE 8D IS NOT APPLICABLE IN THE PRESENT CASE. THE HONBLE HIGH COURT HAS HELD TH AT A REASONABLE DISALLOWANCE FOR EXPENSES INCURRED IN EARNING DIVIDEND INCOME IS NEVER THELESS TO BE COMPUTED BY THE AO. IN VIEW OF THE DECISION OF THE HONBLE JURISDICT IONAL HIGH COURT IN THE CASE OF GODREJ BOYCE MFG CO. LTD (SUPRA) , WE REMIT THE ISSUE TO THE FILE OF THE AO TO RE- COMPUTE THE DISALLOWANCE U/S.14A IN THE LIGHT OF THE LAW LAID DOWN BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF GODREJ BOYCE MFG CO. LTD (SUPRA). 5. GROUND NO.1 IS THUS ALLOWED FOR STATISTICAL PURPOSES. 6. GROUND NO.2 IS CONSEQUENTIAL. THE AO IS DIRECTED A CCORDINGLY. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR ST ATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 28 TH JULY, 2011 SD/- (D. MANMOHAN) VICE PRESIDENT SD/- (PRAMOD KUMAR) ACCOUNTANT MEMBER MUMBAI, DATED 28 TH JULY, 2011 PARIDA I.T.A NO.2848/ MUM/2010 ASSESSMENT YEAR: 2006-07 3 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS),8, MUMBAI 4. COMMISSIONER OF INCOME TAX, 4, MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH C, MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI