SANKALP CONSUMER PRODUCTS P. LTD, MUMBAI V. ACIT RG 2(3), MUMBAI

ITA 3112/MUM/2009

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 4330 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-10-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 12-10-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 13-05-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUMIT KUMAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E : MUMBAI BEFORE SHRI D.K. AGARWAL, (JM) AND SHRI R.K. PAND A,(AM) ITA NO.3112/MUM/2009 ASSESSMENT YEAR : 2006-07 M/S. SANKALP CONSUMER PRODUCTS PVT. LTD. 103, MINT CHAMBER, 45/47, MINT ROAD OPP. GPO FORT, MUMBAI-400 001. ..( APPELLANT ) P.A. NO. (AACCS 2368 A) VS. ASSTT. COMMISSIONER OF INCOME TAX RANGE-2(3) MUMBAI. ..( RESPONDENT ) APPELLANT BY : SHRI SHAILESH SHAH RESPONDENT BY : SHRI S UMIT KUMAR O R D E R PER D.K. AGARWAL (JM). THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED A GAINST THE ORDER DATED 13.3.2009 PASSED BY THE LD. CIT(A) FOR THE AS SESSMENT YEAR 2006-07. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE COMPANY IS ENGAGED IN PROVIDING SERVICES IN THE FIELD OF MARKE TING OF CONSUMER PRODUCTS. IT FILED RETURN DECLARING TOTAL INCOME OF RS.3,36,6 1,928/-. DURING THE COURSE OF ASSESSMENT PROCEEDING ON EXAMINATION OF BALANCE SHEET AND P&L ACCOUNT IT WAS INTERALIA OBSERVED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS EARNED INCOME FROM DIVIDEND ETC. WHICH IN TURN HAS BEEN CLAIMED AS EXEMPT. THE ASSESSING OFFICER AFTER PROVIDING OPPORTUNITY T O THE ASSESSEE AND IN THE ABSENCE OF ANY SATISFACTORY REPLY OF THE ASSESSEE, FOLLOWED THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN ITO VS. DAGA CAPIT AL MANAGEMENT (P) LTD. (2009) 117 ITD 169(MUM.)(SB) AND WORKED OUT THE DIS ALLOWANCE U/S.14A OF ITA NO.3112/M/09 A.Y:06-07 2 THE INCOME TAX ACT , 1961(THE ACT) RS.42,34,737/- A S PER WORKING APPEARING AT PAGE-3 OF THE ASSESSMENT ORDER AND ACCORDINGLY C OMPLETED THE ASSESSMENT AT AN INCOME OF RS.6,46,79,230/-, VIDE ORDER DATED 26.12.2008 PASSED U/S.143(3) OF THE ACT. ON APPEAL, THE LD. C IT(A) FOR THE SAME REASONS CONFIRMED THE DISALLOWANCE MADE BY THE ASSE SSING OFFICER . 3. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) T HE ASSESSEE IS IN APPEAL BEFORE US CHALLENGING IN ALL THE GROUNDS THE SUSTENANCE OF DISALLOWANCE OF RS.42,34,737/- MADE U/S.14A OF THE ACT. 4. AT THE TIME OF HEARING BOTH PARTIES HAVE AGREED THAT THIS ISSUE IS SQUARELY COVERED BY THE JUDGMENT OF HON'BLE JURISDI CTIONAL HIGH COURT IN GODREJ & BOYCE MFG. CO. LTD., VS. DCIT, THEREFORE, THE ISSUE MAYBE DECIDED ACCORDINGLY. 5. HAVING CAREFULLY HEARD THE SUBMISSIONS OF THE RIV AL PARTIES AND PERUSING THE MATERIAL AVAILABLE ON RECORD, WE FIND MERIT IN PLEA OF THE PARTIES THAT THE ISSUE STANDS COVERED BY THE RECENT JUDGMEN T OF THE HONBLE JURISDICTIONAL HIGH COURT IN GODREJ & BOYCE MFG. CO. LTD. VS. DCIT IN INCOME TAX APPEAL NO.626 OF 2010 AND WRIT PETITION NO.758 OF 2010 DATED 12.8.2010 WHEREIN THEIR LORDSHIPS AFTER CONSIDERIN G THE DECISION OF THE TRIBUNAL IN DAGA CAPITAL MANAGEMENT PVT. LTD. SUPRA , WHILE HOLDING THAT THE PROVISIONS OF SUB SECTIONS (2) AND (3) OF SEC.14A O F THE ACT ARE CONSTITUTIONALLY VALID HAVE HELD VIDE PARA-74 (VI) OF THE JUDGMENT AS UNDER : 74(VI) EVEN PRIOR TO ASSESSMENT YEAR 2008-09, WHEN RULE 8D WAS NOT APPLICABLE, THE ASSESSING OFFICER H AS TO ENFORCE THE PROVISIONS OF SUB SECTION (1) OF SECTION 14A. FOR THAT PURPOSE, THE ASSESSING OFFICER IS DUTY BOUND TO DET ERMINE THE EXPENDITURE WHICH HAS BEEN INCURRED IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THE ACT. THE ASSESSING OFFICER MUST ADOPT A REASONABLE BASIS OR METHOD CONSISTENT WITH ALL THE RELEVANT FACTS AND CIRCUMST ANCES AFTER FURNISHING A REASONABLE OPPORTUNITY TO THE ASSESSEE TO PLACE ALL GERMANE MATERIAL ON THE RECORD; ITA NO.3112/M/09 A.Y:06-07 3 RESPECTFULLY FOLLOWING THE ABOVE JUDGMENT WE SET AS IDE THE ORDERS PASSED BY THE REVENUE AUTHORITIES ON THIS ACCOUNT AND SEND BA CK THE MATTER TO THE FILE OF THE ASSESSING OFFICER WHO SHALL DECIDE THE SAME AFRESH IN THE LIGHT OF THE DIRECTIONS OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE ABOVE CITED CASE AND ACCORDING TO LAW AFTER PROVIDING REASONABLE OPPORTU NITY OF BEING HEARD TO THE ASSESSEE AND ACCORDINGLY THE GROUNDS TAKEN BY THE A SSESSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. 6. IN THE RESULT, THE ASSESSEE'S APPEAL STANDS PART LY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 22.10.2010. SD/- SD/- (R.K. PANDA) ( D.K. AGARWAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 22.10.2010. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.