M/s. Pranidhi Holding Pvt. Ltd., New Delhi V. ACIT, New Delhi

ITA 3174/DEL/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4033 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 04-05-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 25-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Earning of tax free income; Rule 8D
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH : F NEW DELHI) (DELHI BENCH : F NEW DELHI) (DELHI BENCH : F NEW DELHI) (DELHI BENCH : F 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. NO.3174/DEL./2010 I.T.A. NO.3174/DEL./2010 I.T.A. NO.3174/DEL./2010 I.T.A. NO.3174/DEL./2010 (ASSESSMENT YEAR : 2007 (ASSESSMENT YEAR : 2007 (ASSESSMENT YEAR : 2007 (ASSESSMENT YEAR : 2007- -- -08) 08) 08) 08) M/S PRANIDHI HOLDING P. LTD., M/S PRANIDHI HOLDING P. LTD., M/S PRANIDHI HOLDING P. LTD., M/S PRANIDHI HOLDING P. LTD., VS. VS. VS. VS. ACIT ACIT ACIT ACIT, CIRCLE 14(1), L , CIRCLE 14(1), L , CIRCLE 14(1), L , CIRCLE 14(1), L- -- -7, 7, 7, 7, GREEN PARK EXTENSION, GREEN PARK EXTENSION, GREEN PARK EXTENSION, GREEN PARK EXTENSION, NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. (PAN/GIR NO. : N.A.) (PAN/GIR NO. : N.A.) (PAN/GIR NO. : N.A.) (PAN/GIR NO. : N.A.) (APPELLANT) (APPELLANT) (APPELLANT) (APPELLANT) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) ASSESSEE BY : NONE (APPLICATION REJECTED) ASSESSEE BY : NONE (APPLICATION REJECTED) ASSESSEE BY : NONE (APPLICATION REJECTED) ASSESSEE BY : NONE (APPLICATION REJECTED) REVENUE BY : SMT. ANUSHA KHURANA, SR.DR REVENUE BY : SMT. ANUSHA KHURANA, SR.DR REVENUE BY : SMT. ANUSHA KHURANA, SR.DR REVENUE BY : SMT. ANUSHA KHURANA, SR.DR ORDER ORDER ORDER ORDER PER A.D. JAIN, JM THIS IS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2007-08 AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)- XVII, NEW DELHI, DATED 21.04.2010, CONTENDING THAT THE CIT(A ) HAS ERRED IN DISALLOWING THE EXPENDITURE U/S 14A OF THE I.T. ACT, 1961. 2. IN THIS CASE, THE LD.COUNSEL FOR THE ASSESSEE REQUESTED FOR ADJOURNMENT VIDE APPLICATION DATED 04.05.2011, WHIC H WAS REJECTED. HAVING HEARD THE LD.DR., WE PROCEEDED TO DISPOSE OF T HE APPEAL EX- PARTE. 3. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE COMPANY H AS RECEIVED DIVIDEND INCOME OF ` 2,68,994/- WHICH WAS C LAIMED 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 A SUM OF `2,68,994/- 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 THE LD.DR AND HAVE PERUSED THE RECO RDS. WE FIND THAT HONBLE MUMBAI HIGH COURT IN THE CASE OF GODREJ BOYCE MFG. CO. LTD. VS. DCIT IN ITA NO. 626 OF 2010 234 CTR 1 H AS OVERRULED THE ITAT DECISION OF DAGA CAPITAL MANAGEMENT (SUPRA) AN D HELD THAT RULE 8D HAS BEEN NOTIFIED ON 24.3.2008 AND WILL BE APPLIC ABLE ONLY FROM ASSESSMENT YEAR 2008-09. HENCE, EXPENDITURE REASONABLE RELATED IN THIS REGARD IS TO BE DISALLOWED. ACCORDINGLY, FOLLOWIN G THE PRECEDENT AS ABOVE, WE REMIT THIS ISSUE TO THE FILES OF THE ASSESSING OF FICER TO CONSIDER THE SAME AFRESH. NEEDLESS TO ADD THAT THE ASSESSE E SHOULD BE GIVEN ADEQUATE OPPORTUNITY OF BEING HEARD. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE STANDS AL LOWED 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