Amrita Mouldings Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 3113/DEL/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4036 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 17-03-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 22-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B S SHASTHANI
• Keywords: Opportunity of being heard; Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH : A NEW DELHI) (DELHI BENCH : A NEW DELHI) (DELHI BENCH : A NEW DELHI) (DELHI BENCH : A NEW DELHI) BEFORE SHRI G.E. VEERABHADRAPPA, HONBLE VICE PRES IDENT AND BEFORE SHRI G.E. VEERABHADRAPPA, HONBLE VICE PRES IDENT AND BEFORE SHRI G.E. VEERABHADRAPPA, HONBLE VICE PRES IDENT AND BEFORE SHRI G.E. VEERABHADRAPPA, HONBLE VICE PRES IDENT AND SHRI A.D. JAIN, JUDICIAL MEMMBER SHRI A.D. JAIN, JUDICIAL MEMMBER SHRI A.D. JAIN, JUDICIAL MEMMBER SHRI A.D. JAIN, JUDICIAL MEMMBER I.T.A. NOS.4402/DEL./09 & 3113/DEL./10 I.T.A. NOS.4402/DEL./09 & 3113/DEL./10 I.T.A. NOS.4402/DEL./09 & 3113/DEL./10 I.T.A. NOS.4402/DEL./09 & 3113/DEL./10 (ASSESSMENT YEARS : 2006 (ASSESSMENT YEARS : 2006 (ASSESSMENT YEARS : 2006 (ASSESSMENT YEARS : 2006- -- -07 & 07 07 & 07 07 & 07 07 & 07- -- -08) 08) 08) 08) AMRITA MOULDINGS AMRITA MOULDINGS AMRITA MOULDINGS AMRITA MOULDINGS PVT. LTD., PVT. LTD., PVT. LTD., PVT. LTD., VS. VS. VS. VS. DCIT, CIRCLE 1(1), DCIT, CIRCLE 1(1), DCIT, CIRCLE 1(1), DCIT, CIRCLE 1(1), 129, JOR BAGH, 129, JOR BAGH, 129, JOR BAGH, 129, JOR BAGH, NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. (PAN/GIR NO. : AAACA1774A) (PAN/GIR NO. : AAACA1774A) (PAN/GIR NO. : AAACA1774A) (PAN/GIR NO. : AAACA1774A) (APPELLANT) (APPELLANT) (APPELLANT) (APPELLANT) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) ASSESSEE BY : SHRI B.S. SHASTHANI, CA ASSESSEE BY : SHRI B.S. SHASTHANI, CA ASSESSEE BY : SHRI B.S. SHASTHANI, CA ASSESSEE BY : SHRI B.S. SHASTHANI, CA REVENUE BY : SHRI H.K. LAL, SR.DR REVENUE BY : SHRI H.K. LAL, SR.DR REVENUE BY : SHRI H.K. LAL, SR.DR REVENUE BY : SHRI H.K. LAL, SR.DR ORDER ORDER ORDER ORDER PER A.D. JAIN, JM THESE ARE ASSESSEES APPEALS FOR ASSESSMENT YEARS 2006-07 & 07-08 AGAINST THE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS)- IV, NEW DELHI, DATED 04.09.2009 AND 30.04.2010 RESP ECTIVELY, CONTENDING THAT THE CIT(A) HAS ERRED IN DISALLOWING T HE EXPENDITURE U/S 14A OF THE I.T. ACT, 1961. 3. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE COMPANY H AS RECEIVED DIVIDEND INCOME OF `3712802 AND `2913130 F OR ASSESSMENT YEARS 2006-07 AND 07-08, RESPECTIVELY WHICH WERE CLAI MED AS EXEMPT INCOME. ASSESSING OFFICER WAS OF THE OPINION THAT EAR NING OF THIS EXEMPT INCOME INVOLVED MANAGEMENT/ESTABLISHMENT EXPEN SES AND OTHER OFFICE EXPENSES BY THE ASSESSEE. HENCE, THE AO P ROCEEDED TO DISALLOW PROPORTIONATE EXPENSES U/S 14A OF THE IT ACT A TTRIBUTABLE TO EARNING DIVIDEND INCOME EXEMPT FROM TAX. ACCORD INGLY, THE AO PROCEEDED TO DISALLOW THE DIVIDEND INCOME FOR BOTH T HE ASSESSMENT YEARS AS RELATED TO EARNING OF EXEMPT INCOME. 4. UPON ASSESSEES APPEAL, LD. COMMISSIONER OF INCOME TAX (APPEALS) REFERRED THE ITAT DECISION IN THE CASE OF IT O VS. DAGA CAPITAL MANAGEMENT (P) LTD. 119 TTJ 289. THE CIT(A) OBSERV ED THAT AS PER THE ASSESSEES CALCULATION DISALLOWANCE U/S RULE 8D COMES T O ` 2,68,994/-. HENCE, SHE DIRECTED THE ASSESSING OFFICER TO VERIFY THE SAME AND ACCORDINGLY, MODIFY THE FIGURE OF DISALLOWAN CE U/S 14A. 5. AGAINST THIS ORDER THE ASSESSEE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD BOTH THE PARTIES AND HAVE PERUSED TH E MATERIAL PLACED ON RECORD. WE FIND THAT HONBLE MUMBAI HI GH COURT IN THE CASE OF GODREJ BOYCE MFG. CO. LTD. VS. DCIT IN ITA NO . 626 OF 2010 234 CTR 1 HAS OVERRULED THE ITAT DECISION OF DAGA CAPITAL MANAGEMENT (SUPRA) AND HELD THAT RULE 8D HAS BEEN NOTIFIED ON 24.3.2008 AND WILL BE APPLICABLE ONLY FROM ASSESSMENT YEAR 2008-09. HENCE , EXPENDITURE REASONABLE RELATED IN THIS REGARD IS TO BE DISALLOWED. BOTH THE COUNSEL FAIRLY AGREED TO THIS PROPOSITION. ACCORDINGLY, FOLL OWING THE PRECEDENT AS ABOVE, WE REMIT THIS ISSUE TO THE FILES OF THE ASSESSING OFFICER TO CONSIDER THE SAME AFRESH. NEEDLESS TO ADD THAT THE ASSESSE E SHOULD BE GIVEN ADEQUATE OPPORTUNITY OF BEING HEARD. 7. IN THE RESULT, BOTH THE APPEALS FILED BY THE ASSESSEE STAND ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 06.05.2011. SD/- SD/- (G.E. VEERABHADRAPPA) (A.D. JAIN) VICE PRESIDENT JUDICIAL MEMBER DATED: MAY 06, 2011. *SKB* COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A)-XVII, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DELHI. AR/ITAT