DANI SHARES & STOCKS P. LTD, MUMBAI V. DCIT RG 4(1), MUMBAI

ITA 3057/MUM/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 7761 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2007-2008
• Appeal Filed On: 19-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JI TENDRA YADAV
• Assessee Lawyers: SANJAY R PARIKH
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH: MUMBAI BEFORE SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO.3057/MUM/2010 (ASSESSMENT YEAR: 2007-08) M/S. DANI SHARES AND STOCKS PVT. LTD., 12, ORICON HOUSE, 7TH FLOOR, 14, K. DUBASH MARG, FORT, MUMBAI -400 001 .... ASSESSEE VS THE DY. COMMISSIONER OF INCOME-TAX, 4(1), AAYAKAR BHAVAN, M.K. ROAD, MUMBAI -400 020 .REVENUE PAN: AABCD 7681 A ASSESSEE BY: SHRI SANJAY R. PARIKH REVENUE BY: SHRI JITENDRA YADAV O R D E R PER R.S. PADVEKAR, JM IN THIS APPEAL THE ASSESSEE HAS CHALLENGED THE IMPU GNED ORDER OF THE LD. CIT (A)-8 MUMBAI DATED 9.03.2010 FOR THE A. Y. 2007-08. THE ASSESSEE HAS TAKEN THE MULTIPLE GROUNDS BUT THE EFF ECTIVE GROUND IS 1(I) & (II) WHICH READ AS UNDER:- 1(I) THE COMMISSIONER OF INCOME TAX (APPEALS)-8, M UMBAI (HEREINAFTER REFERRED TO AS THE CIT (A) ERRED IN CO NFIRMING DISALLOWANCE OF ` 28,37,710/- U/S.14A OF THE ACT R.W. RULE 8D OF THE INCOME-TAX RULES, 1962 IN ASSESSING THE BUSI NESS INCOME FOR THE YEAR. APPELLANT SUBMITS THAT THE CI T (A) OUGHT ITA 3057/M/2010 M/S. DANI SHARES AND STOCKS PVT. LTD. 2 TO HAVE DELETED EXCESS DISALLOWANCE OF ` 28,22,710/- MADE BY THE DCIT AS EXPENDITURE INCURRED IN RELATION TO DIVIDEND INCOME WHICH DOES NOT FORM PART OF TOTAL INCOME. (II) THE CIT (A) ERRED IN HOLDING THAT THE PROVISI ONS OF RULE 8D MADE IN VIEW OF SECTION 14A(2) SHALL APPLY FOR D ETERMINING THE AMOUNT OF EXPENDITURE IN RELATION TO EXEMPT INC OME FOR ALL PENDING PROCEEDINGS AND THUS ERRED IN CONFIRMING T HE DISALLOWANCE OF ` 28,37,710/- MADE PURSUANT THERETO FOR ASSESSMENT YEAR 2007-08. 2. WE HAVE HEARD THE PARTIES. THE SHORT CONTROVERSY I S WHETHER THE A.O. WAS JUSTIFIED IN MAKING THE DISALLOWANCE U/S.1 4A R.W. RULE 8D OF THE ACT. THE ASSESSEE HAS DECLARED THE DIVIDEND IN COME OF ` 13,27,632/- WHICH IS CLAIMED EXEMPT U/S.10(34) OF THE I.T. ACT. THE A.O. HAS NOTED THAT THE ASSESSEE HAS NOT ALLOCATED ANY EXPENDITURE INCURRED TOWARDS EARNING OF THE SAID DIVIDEND INCOME AND HENCE, IN V IEW OF SECTION 14A AS WELL AS RULE 8D THE EXPENDITURE ATTRIBUTABLE FOR EA RNING THE DIVIDEND INCOME IS REQUIRED TO BE DISALLOWED. THE A.O., THE REFORE, MADE THE DISALLOWANCE OF ` 28,37,710/- BY APPLYING RULE 8D. THE LD. COUNSEL SUBMITTED THAT THERE IS NO QUESTION OF MAKING ANY D ISALLOWANCE FROM THE EXPENDITURE CLAIMED BY THE ASSESSEE AS NO EXPENDITU RE IS ATTRIBUTABLE TO THE DIVIDEND INCOME. WE HAVE ALSO HEARD THE LD. D. R. 3. NOW, THE HONBLE HIGH COURT OF BOMBAY HAS CONS IDERED THE SCOPE OF SECTION 14A AS WELL AS RULE 8D IN THE CASE OF GO DREJ BOYCE MFG. CO. LTD. VS. JCIT 328 ITR 81 (BOM). ADMITTEDLY, THE SA ID DECISION WAS NOT AVAILABLE BEFORE THE A.O. AS WELL AS LD. CIT (A). WE, THEREFORE, CONSIDER IT FIT TO RESTORE THE ISSUE TO THE FILE OF THE A.O. WI TH THE DIRECTION TO DECIDE THIS ISSUE DE NOVO IN THE LIGHT OF THE PRINCIPLES LAID DOWN BY THE HO NBLE HIGH COURT OF BOMBAY IN THE CASE OF GODREJ BOYCE MF G. CO. LTD. (SUPRA). THE A.O. SHOULD ALSO TAKE INTO CONSIDERATION THE CO NTENTION OF THE ITA 3057/M/2010 M/S. DANI SHARES AND STOCKS PVT. LTD. 3 ASSESSEE THAT NO EXPENDITURE IS ATTRIBUTABLE FOR EA RNING THE DIVIDEND INCOME WHICH IS CLAIMED BY THE ASSESSEE IN THE PROF IT AND LOSS ACCOUNT. NEEDLESS TO SAY, THE A.O. SHOULD GIVE OPPORTUNITY O F BEING HEARD TO THE ASSESSEE. 4. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 3 1ST MARCH 2011. SD/- SD/- ( B. RAMAKOTAIAH) ACCOUNTANT MEMBER ( R.S. PADVEKAR ) JUDICIAL MEMBER MUMBAI, DATE: 31ST MARCH 2011 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) 8, MUMBAI. 4) THE CIT 4, MUMBAI. 5) THE D.R. D BENCH, MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T., MUMBAI *CHAVAN ITA 3057/M/2010 M/S. DANI SHARES AND STOCKS PVT. LTD. 4 SR.N. EPISODE OF AN ORDER DATE INITIALS CONCERNED 1 DRAFT DICTATED ON 29.03.2011 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 29.03.2011 SR.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 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER