PALLONJI & CO. P. LTD, MUMBAI V. ADDL CIT RG 2(2), MUMBAI

ITA 3184/MUM/2010

• Counselvise Citation: 318419914 RSA 2010
• Duration Of Justice: 3 year(s) 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 06-08-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 23-04-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: C TRIPURA SUNDARY
• Assessee Lawyers: K K VED; J D MISTRI
• Keywords: Depreciation; Source of fund; Unabsorbed depreciation
• Section: 143(3); 14A

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI - C BENCH. . . , , BEFORE S/SH. B.R. MITTAL, JUDICIAL MEMBER & RA JENDRA, ACCOUNTANT MEMBER ./ ITA NO. 3184/MUM/2010, ! ! ! ! ' ' ' ' / ASSESSMENT YEAR-2006-07 M/S M. PALLONJI & CO. PVT. LTD. C/O. TAJ PRINTING WORKS 46/A, CAWASJI PATEL STREET FORT, MUMBAI- 400 020 VS. THE ADDL. COMM. OF INCOME- TAX , RANGE-2(2), AAYKAR BHAVAN, MAHARSHI KARVE MARG, MUMBAI-400 020 PAN: AAACM3525B ( #$ / APPELLANT ) ( %&#$ / RESPONDENT ) #$ #$ #$ #$ ' ' ' ' / APPELLANT BY : SHRI J.D. MISTRI AND K.K.VED %&#$ ( ' / RESPONDENT BY : MS. C. TRIPURA SUNDARY ! ! ! ! ( (( ( )* )* )* )* / DATE OF HEARING : 14-08-2013 +,' ( )* / DATE OF PRONOUNCEMENT : 28-08-2013 ! ! ! ! , 1961 ( (( ( 254(1) )-) )-) )-) )-) . . . . ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, A.M. CHALLENGING THE ORDER DT.12-02-2010 OF THE CIT(A)-5 ,MUMBAI, ASSESSEE HAS FILED FOLLOWING GROUNDS OF APPEAL: 1: 0 RE.: DENIAL OF DEDUCTION U/S 80-IA OF THE INCOME-TAX ACT, 1961 : 1: 1 THE COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER OF DENYING THE APPELLANT THE DEDUCTION CLAIMED BY I T U/S. 80-IA OF THE INCOME-TAX ACT, 1961. 1: 2 THE APPELLANT SUBMITS THAT CONSIDERING THE FAC TS AND CIRCUMSTANCES OF ITS CASE AND THE LAW PREVAILING ON THE SUBJECT IT IS ENTITLED TO A DEDUC TION U/S. 80-IA OF THE INCOME-TAX ACT, 1961 AND THE COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE HELD AS SUCH. 1: 3 THE APPELLANT SUBMITS THAT THE ASSESSING OFFIC ER BE DIRECTED TO DELETE THE DISALLOWANCE SO MADE B Y HIM AND TO RE-COMPUTE ITS TOTAL INCOME ACCORDINGLY. 2 : 0 RE.: ADDITIONAL DISALLOWANCE U/S. 14A : 2: 1 THE COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER OF MAKING FURTHER DISALLOWANCE U/S. 1 4A OF THE INC OME-TAX ACT, 1961 BY APPLYING THE PROVISIONS OF RULE 8D OF THE INCOME-TAX RULES, 1962. 2 : 2 THE APPELLANT SUBMITS THAT CONSIDERING THE FA CTS AND CIRCUMSTANCES OF ITS CASE AND THE LAW PREVAILING ON THE SUBJECT NO FURTHER DISALLOWANCE U /S. 1 4A OF THE INCOME-TAX ACT, 1961 OTHER THAN THE ONE SUO MOTO MADE BY THE APPELLANT WAS CALLED F OR AND THE COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE HELD AS SUCH. 2 : 3 THE APPELLANT SUBMITS THAT THE PROVISIONS OF SECTION 1 4A OF THE INCOME-TAX ACT, 1961 AND THE RU LE SD OF THE INCOME-TAX RULES, 1962 ARE NOT APPLICABLE IN ITS CASE AND THE COMMISSIONER OF INCOME- TAX (APPEALS) OUGHT TO HAVE HELD AS SUCH. 2 : 4 THE APPELLANT SUBMITS THAT THE ASSESSING OFFI CER BE DIRECTED TO DELETE THE DISALLOWANCE MADE BY HIM AND TO RE-COMPUTE ITS TOTAL INCOME ACCORDINGLY. 3 : 0 RE.: GENERAL : 3: 1 THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND, SU BSTITUTE AND/OR MODIFY IN ANY MANNER WHATSOEVER ALL OR ANY OF THE FOREGOING GROUNDS OF A PPEAL AT OR BEFORE THE HEARING OF THE APPEAL. 2 ITA NO.3184/MUM/2010,(AY-2006-07) M/S M. PALLONJI & CO. PVT. LTD. 2. ASSESSEE COMPANY,ENGAGED IN THE BUSINESS OF INDUSTR IAL COATING WATER PROOFING AND POWER GENERATIO,FILED ITS RETURN OF INCOME ON 27.11.2006 DECLARING TOTAL INCOME OF RS. 46,03,77,203/-. INITIALLY THE RETURN WAS PROCESSED U/S. 143(1) OF T HE ACT.LATER ON ASSESSMENT WAS FINALISED U/S. 143(3) OF THE ACT BY THE ASSESSING OFFICER (AO),ON 22.12.2008,DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT RS. 47.15 CRORES. 2.1 .FIRST GROUND OF APPEAL IS ABOUT DISALLOWANCE OF CL AIM MADE BY THE ASSESSEE COMPANY U/S. 80IA OF THE ACT. DURING THE ASSESSMENT PROCEEDING, AO FO UND THAT ASSESSEE HAD CLAIMED A DEDUCTION OF RS. 31.38 LACS U/S. 80IA OF THE ACT, THAT THE ASSES SEE COMPANY HAD CONSTRUCTED WIND MILL ELECTRIC GENERATORS WHICH WERE INSTALLED AND COMMISSIONED IN F.Y. 1995-96 IN TAMILNADU AT A COST OF RS. 430.20 LAKHS,THAT THE ELECTRICITY GENERATED WAS BEI NG SOLD TO TAMILNADU STATE ELECTRICITY BOARD (TSEB),THAT THE ASSESSEE HAD CLAIMED 100% DEPREICIA TION ON THE COST OF WIND MILLS IN THE A.Y. 1996-97,THAT THE ASSESSEE HAD BEEN CARRYING FORWARD UNABSORBED DEPRECIATION AND SETTING OFF AGAINST THE INCOME OF SUBSEQUENT ASSESSMENT YEARS, THAT AFTER SETTING OFF THE LOSS OF THE 80IA UNIT IN THE A.Y. 2005-06 THERE WAS STILL LOSS OF RS. 1.4 7 CRORES AVAILABLE FOR SET OFF AGAINST THE PROFIT DERIVED FROM THE WIND MILLS AMOUNTING TO RS. 30,38, 852/-. A.O. ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THE DEDUCTION CLAIMED U/S. 80IA SHOULD NOT B E DISALLOWED.CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND REFERRING TO SUB-SECTION 7 OF SECT ION 80IA OF THE ACT,HE HELD THAT DEDUCTION CLAIMED BY THE ASSESSEE U/S. 80IA WAS TO BE DISALLO WED. 2.2. ASSESEE PREFERRED AN APPEAL BEFORE THE FIRST APPELL ATE AUTHORITY(FAA).AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE ASSESSMENT ORDE R, HE HELD THAT A.O. HAD ON THE BASIS OF PAST RECORDS CLEARLY BROUGHT OUT THE FACT THAT APPELLANT WAS CARRYING FORWARD THE UNABSORBED DEPRECIATION AND SETTING OFF AGAINST THE INCOME OF THE SUBSEQUENT ASSESSMENT YEARS, THAT PROFIT AMOUNTING TO RS. 30.38 LACS WAS DERIVED FROM THE WI ND MILLS FOR THE YEAR UNDER CONSIDERATION, THAT ASSESSEE HAD NOT DISPUTED THE ABOVE FACTS AND FIGUR ES, THAT ASSESSEE WAS MAINLY RELYING ON THE DECISIONS OF THE APPELLATE AUTHORITIES WHO HAD DECI DED THE ISSUE IN FAVOUR OF THE ASSESSEE FOR THE A.Y. 1997-98, 1998-99 AND FOR THE A.Y. 2005-06. HE FURTHER HELD THAT AHMEDABAD SPECIAL BENCH OF THE TRIBUNAL HAD DELIBERATED UPON THE EXACTLY ID ENTICAL ISSUE IN THE CASE OF GOLDMINE SHARES AND FINANCE P. LTD.(2008) 302 ITR (80) 208 (AHM)(SP ECIAL BENCH), THAT IN SECTION 80IA(7) A LEGAL FICTION HAD BEEN CREATED BY WHICH THE ELIGIBL E BUSINESS HAD BEEN TREATED AS THE ONLY SOURCE OF INCOME, THAT AS A CONSEQUENCE ALL OTHER SOURCES OF INCOME WOULD BE DEEMED TO BE NOT IN EXISTENCE, THAT DEPRECIATION/LOSS COULD NOT BE SET OFF AGAINST ANY OTHER SOURCE WHICH IS ASSUMED TO BE IN EXISTENCE, THAT THE PROVISION HAD OVERRIDE EF FECT OVER ALL OTHER PROVISIONS OF THE ACT, THAT THE SAID SECTION WAS INTRODUCED FOR COMPUTING THE PROFI T AND GAINS OF THE ELIGIBLE BUSINESS FOR DETERMINING THE QUANTUM OF DEDUCTION UNDER THE SECT ION, THAT ONCE THE DETERMINATION OF THE QUANTUM WAS OVER ONE HAD TO FALL BACK UPON THE PROV ISIONS OF THE ACT IN COMPUTING THE TOTAL INCOME, THAT THE DEEMING FICTION PROVIDED THAT THE PROFITS OF THE ELIGIBLE UNIT HAD TO BE CONSIDERED ON STANDALONE BASIS AND NOT REQUIRED TO BE ADJUSTED AGAINST LOSS IN OTHER UNITS, THAT LOSSES BY ELIGIBLE UNITS WERE TO BE ASSUMED AS NOT ADJUSTED A GAINST THE OTHER SOURCES AND WERE TO BE CARRIED FORWARD TO SET OFF AGAINST THIS SOURCE OF INCOME AL ONE, THAT PROFITS OF ELIGIBLE UNITS WAS TO BE COMPUTED AFTER DEDUCTION OF NOTIONAL BROUGHT FORWAR D LOSSES AND DEPRECIATION OF ELIGIBLE UNIT EVEN THOUGH THEY WERE SET OFF IN THE EARLIER YEARS, THAT IN LIGHT OF SUCH INTERPRETATION OF THE PROVISIONS OF SECTION 80IA(7) BY THE TRIBUNAL, THE STAND TAKEN BY THE A.O. WAS FULLY VINDICATED, THAT A.O. HAD CORRECTLY CONCLUDED THAT IN VIEWS OF THE PROVISIONS OF SUB-SECTION 7 OF SECTION 80IA THE PROFITS OF THE ELIGIBLE BUSINESS WAS TO BE COMPUTED AS SUCH EL IGIBLE BUSINESS WAS THE ONLY SOURCE OF INCOME OF THE ASSESSEE. HE FURTHER REFERRED TO THE DECISIO N OF NITCO TILES LTD. (30 SOT 474-MUM) AND ASHOK ALCO CHEM LTD(2005) 96 ITD 160-MUM AND HELD T HAT BY INTRODUCING SUB-SECTION 7 OF THE SECTION 80IA,THAT THE LEGISLATURE HAD CREATED A LEG AL FICTION THAT FOR THE PURPOSE OF APPLYING THE PROVISIONS CONTAINED IN THAT SUB-SECTION,THAT THE P ROFITS OR GAINS OF THE ELIGIBLE BUSINESS SHOULD BE COMPUTED AS IF THE ELIGIBLE BUSINESS WERE THE ONLY BUSINESS OF THE ASSESSEE RIGHT FROM THE INITIAL YEAR, THAT DECISION OF THE TRIBUNAL FOR THE A.Y. 19 97-98 AND DECISION TAKEN BY HIS PREDECESSOR FOR 3 ITA NO.3184/MUM/2010,(AY-2006-07) M/S M. PALLONJI & CO. PVT. LTD. THE A.Y. 2005-06 HAD BEEN OVERRULED BY THE SPECIAL BENCH DECISION DELIVERED IN THE CASE OF GOLDMINE SHARES AND FINANCE P. LTD.(SUPRA), THAT TH E A.O. WAS JUSTIFYING IN SETTING OFF UNABSORBED DEPRECIATION ETC. AND DENYING THE CLAIM OF DEDUCTION U/S. 80IA. 2.3. BEFORE US, AUTHORISED REPRESENTATIVE (AR) SUBMITTE D THAT ISSUE IN QUESTION WAS DECIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL FOR THE A.Y. 1997-98 AND 1998-99.HE REFERRED TO THE JUDGMENT OF VELAYUDHASWAMY SPINNING MILLS P. LTD. D ELIVERED THE HONBLE HIGH COURT OF MADRAS (340 ITR477).HE ALSO REFERRED TO THE DECISIO N OF THE MUMBAI TRIBUNAL PRONOUNCED IN THE CASE OF M/S PRASHANT CATERERS (ITA NO. 4093/ MUM/20 12 A.Y. 2007-08).DEPARTMENTAL REPRESENTATIVE (DR) SUPPORTED THE ORDER OF THE FAA. 2.4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE BEFORE US.WE FIND THAT SIMILAR ISSUE WAS DECIDED BY THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE EARLIER YEARS.THERE IS NO CHANGE IN THE FACTS AND CIRCUMSTANCES OF THE CASE IN THE YEAR UND ER CONSIDERATION,SO,THERE IS NO REASON FOR NOT FOLLOWING THE ORDER PASSED BY THE TRIBUNAL FOR THE EARLIER YEARS.IT APPEARS THAT THERE IS TYPOGRAPHICAL ERROR IN THE ORDER OF THE FAA-SECTION 80IA(7)HAS BEEN MENTIONED IN PLACE OF 80IA (5) OF THE ACT.IT IS SUB SECTION 5 OF SECTION 80IA WHICH DEALS WITH THE STAND ALONE BUSINESS AND TREATMENT TO BE GIVEN TO UNABSORBED DEPRECIATION.FA A HAS RELIED UPON THE ORDER OF THE SPECIAL BENCH OF TRIBUNAL DELIVERED IN THE CASE OF GOLDMIN E SHARES AND FINANCE P. LTD.(SUPRA).IN THAT MATTER TRIBUNAL HAD HELD THE VIEW THAT WERE EXPRESS ED BY THE FAA.WE FIND THAT HONBLE MADRAS HIGH COURT HAS CONSIDERED THE DECISION OF GOLDMINE SHARES AND FINANCE P. LTD.(SUPRA) WHILE DECIDING THE CASE OF VELAYUDHASWAMY SPINNING MILLS P. LTD.(SUPRA).ONE OF THE SUBSTANTIAL QUESTIONS OF LAW BEFORE THE HONBLE HIGH COURT READ AS UNDER: (D) WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL IS RIGHT IN LAW IN FOLL OWING THE DECISION OF THE SPECIAL BENCH IN THE CASE OF GOLDMINE SHARES AND FINANCE (P) LTD. [2008] 302 ITR (AT) 208 (AHD.) WHEN ADMITTEDLY THE SAID DECISION W AS RENDERED PRIOR TO THE AMENDMENT TO SECTION 80- IA BY THE FINANCE ACT, 1999 ?' AFTER DISCUSSING THE ISSUE AT LENGTH HONBLE COURT HELD AS UNDER : FROM A READING OF SUB-SECTION (1), IT IS CLEAR THAT IT PROVIDES THAT WHERE THE GROSS TOTAL INCOME OF AN ASSESSEE INCLUDES ANY PROFITS AND GAINS DERIVED BY AN UNDERTAKING OR AN ENTERPRISE FROM ANY BUSINESS REFERRED TO IN SUBSECTION (4), I.E., REFER RED TO AS THE ELIGIBLE BUSINESS, THERE SHALL, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF TH E SECTION, BE ALLOWED, IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE, A DEDUCTION OF AN AMOUNT EQUAL TO 100 PER CENT. OF THE PROFITS AND GAINS DERIVED FROM SUCH BUSINESS FOR TEN CONSECUTIVE AS SESSMENT YEARS. DEDUCTION IS GIVEN TO ELIGIBLE BUSINESS AND THE SAME IS DEFINED IN SUB-SECTION (4) . SUB-SECTION (2) PROVIDES OPTION TO THE ASSESSEE TO CHOOSE 10 CONSECUTIVE ASSESSMENT YEARS OUT OF 15 YEARS. OPTION HAS TO BE EXERCISED, IF IT IS NOT EXERCISED, THE ASSESSEE WILL NOT BE GET TING THE BENEFIT. FIFTEEN YEARS IS OUTER LIMIT AND THE SAME IS BEGINNING FROM THE YEAR IN WHICH THE UNDE RTAKING OR THE ENTERPRISE DEVELOPS AND BEGINS TO OPERATE ANY INFRASTRUCTURE ACTIVITY, ETC. SUB-SE CTION (5) DEALS WITH QUANTUM OF DEDUCTION FOR AN ELIGIBLE BUSINESS. THE WORDS 'INITIAL ASSESSMENT Y EAR' ARE USED IN SUB-SECTION (5) AND THE SAME IS NOT DEFINED UNDER THE PROVISIONS. IT IS TO BE NOT ED THAT 'INITIAL ASSESSMENT YEAR' EMPLOYED IN SUB-SECTION (5) IS DIFFERENT FROM THE WORDS 'BEGINN ING FROM THE YEAR' REFERRED TO IN SUB-SECTION (2). THE IMPORTANT FACTORS ARE TO BE NOTED IN SUB -SECTION (5) AND THEY ARE AS UNDER : '(1) IT STARTS WITH A NON OBSTANTE CLAUSE WHICH MEA NS IT OVERRIDES ALL THE PROVISIONS OF THE ACT AND OTHER PROVISIONS ARE TO BE IGNORED ; (2) IT IS FOR THE PURPOSE OF DETERMINING THE QUANTU M OF DEDUCTION ; (3) FOR THE ASSESSMENT YEAR IMMEDIATELY SUCCEEDING THE INITIAL ASSESSMENT YEAR ; (4) IT IS A DEEMING PROVISION ; (5) FICTION CREATED THAT THE ELIGIBLE BUSINESS IS T HE ONLY SOURCE OF INCOME ; AND (6) DURING THE PREVIOUS YEAR RELEVANT TO THE INITIA L ASSESSMENT YEAR AND EVERY SUBSEQUENT ASSESSMENT YEAR.' FROM A READING OF THE ABOVE, IT IS CLEAR THAT THE E LIGIBLE BUSINESS WERE THE ONLY SOURCE OF INCOME, DURING THE PREVIOUS YEAR RELEVANT TO THE INITIAL ASSESSMENT YEAR AND EVERY SUBSEQUENT ASSESSMENT YEARS. WHEN THE ASSESSEE EXERCISES THE OPTION, THE ONLY LOSSES OF THE YEARS BEGINNING FROM INITIAL ASSESSMENT YEAR ALONE ARE TO BE BROUGHT FORWARD AND NO LOSSES OF EARLIER YEARS WHICH WERE 4 ITA NO.3184/MUM/2010,(AY-2006-07) M/S M. PALLONJI & CO. PVT. LTD. ALREADY SET OFF AGAINST THE INCOME OF THE ASSESSEE. LOOKING FORWARD TO A PERIOD OF TEN YEARS FROM THE INITIAL ASSESSMENT IS CONTEMPLATED. IT DOES NOT ALLOW THE REVENUE TO LOOK BACKWARD AND FIND OUT IF THERE IS ANY LOSS OF EARLIER YEARS AND BRING F ORWARD NOTIONALLY EVEN THOUGH THE SAME WERE SET OFF AGAINST OTHER INCOME OF THE ASSESSEE AND THE SE T OFF AGAINST THE CURRENT INCOME OF THE ELIGIBLE BUSINESS. ONCE THE SET OFF IS TAKEN PLACE IN EARL IER YEAR AGAINST THE OTHER INCOME OF THE ASSESSEE, THE REVENUE CANNOT REWORK THE SET OFF AMOUNT AND B RING IT NOTIONALLY. A FICTION CREATED IN SUB- SECTION DOES NOT CONTEMPLATES TO BRING SET OFF AMOU NT NOTIONALLY. THE FICTION IS CREATED ONLY FOR THE LIMITED PURPOSE AND THE SAME CANNOT BE EXTEND ED BEYOND THE PURPOSE FOR WHICH IT IS CREATED. WE ARE OF THE OPINION THAT AT THE TIME OF DECIDING THE APPEAL FAA HAS RIGHTLY FOLLOWED THE DECISION OF THE SPECIAL BENCH.BUT,NOW AFTER THE ORD ER OF THE HONBLE HIGH COURT OF MADRAS LAW LAID DOWN BY THE SB HAS TO BE IGNORED. RESPECTFULLY ,FOLLOWING THE ORDER OF THE HONBLE MADRAS HIGH COURT AND THE ORDER OF THE TRIBUNAL FOR THE EA RLIER AYS.WE DECIDE GROUND NO.1 IN FAVOUR OF THE ASSESSEE. 3. SECOND GROUND OF APPEAL IS ABOUT DISALLOWANCE MADE U/S.14A OF THE ACT.DURING THE ASSESSMENT PROCEEDINGS, A.O. FOUND THAT THE ASSESSEE HAD SHOWN INVESTMENT OF RS. 159.68 CRORES INCOME FROM WHICH DOES NOT FOUND PART OF TOTAL INCOME, THA T THE ASSESSEE HAD INCURRED EXPENDITURE ON INTEREST AMOUNTING TO RS. 11.95 LACS. A.O. ASKED TH E ASSESSEE TO EXPLAIN AS TO WHY DISALLOWANCE SHOULD NOT BE MADE U/S.14A,R.W. RULE 8D OF THE INCO ME TAX RULES,1962(RULES).AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, HE HELD THAT ASSES SEE HAD FAILED TO PRODUCE THE EVIDENCE TO PROVE THE FACT THAT BORROWED FUNDS HAD NOT BEEN UTILISED FOR MAKING INVESTMENT, THAT IT SHOULD NOT BE BELIEVED THAT THE ASSESSEE HAD INCURRED OTHER EXPEN SES OF RS. 2.43 LACS ONLY FOR THE ACTIVITY OF INVESTMENT OF RS. 159 CRORES. INVOKING THE RULE 8D OF THE RULES HE DISALLOWED RS. 80,27,271/- (RS. 8,09,848-AVERAGE VALUE OF TOTAL ASSET + 69,73, 736)@ % OF THE AVERAGE OF THE VALUE INVESTMENT+ RS. 2,43,687/- DISALLOWED BY THE ASSESS EE ITSELF).AS HE FOUND THAT ASSESSEE ITSELF HAD DISALLOWED RS. 2.43 LACS,SO FINALLY HE MADE THE DIS ALLOWANCE OF RS. 77.83 LACS. 3.1. ASSESSEE PREFERRED AN APPEAL BEFORE THE FAA.AFTER C ONSIDERING THE SUBMISSIONS OF THE ASSESSEE HE HELD THAT ACTION TAKEN BY THE A.O. WAS IN CONSONANCE WITH THE DECISION OF MUMBAI ITAT DELIVERED IN THE CASE OF DAGA CAPITAL INVESTME NT LTD. (26 SOT 603). UPHOLDING THE ADDITION MADE BY THE A.O.,HE DISMISSED THE APPEAL F ILED BY THE ASSESSEE-COMPANY. 3.2. BEFORE US, AUTHORISED REPRESENTATIVE(AR) SUBMITTED THAT AFTER THE DECISION OF HONBLE HIGH COURT IN THE CASE OF DAGA CAPITAL INVESTMENT LTD.OB SERVATIONS MADE BY THE FAA WERE TO BE IGNORED,THAT THE YEAR UNDER CONSIDERATION WAS ASSES SMENT ORDER 2006-07, THAT RULE 8D WAS NOT APPLICABLE IN THAT ASSESSMENT YEAR. DEPARTMENTAL RE PRESENTATIVE(DR) RELIED UPON THE ORDER OF THE FAA. 3.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT WHILE DECIDING THE APPEAL, FAA DID NOT HAVE THE BENEFIT O F THE JUDGMENT OF THE HONBLE JURISDICTION HIGH COURT AND HE HAD DECIDED THE ISSUE FOLLOWING T HE DECISION OF ITAT MUMBAI DELIVERED IN THE CASE OF DAGA CAPITAL INVESTMENT LTD.(SUPRA), WE ARE OF THE OPINION THAT RULE 8D IS NOT APPLICABLE FOR THE YEAR UNDER CONSIDERATION. ASSESSEE HIMSELF HAS DISALLOWED A SUM OF RS. 2.43 LACS. IN OUR OPINION THE MATTER NEEDS FURTHER INVESTIGATION.THER EFORE, IN THE INTEREST OF JUSTICE,WE RESTORE BACK THE MATTER TO THE FILE OF THE A.O. FOR PASSING FRES H ADJUDICATION ORDER AFTER AFFORDING THE REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. GROUND NO.2 IS ALLOWED IN PART IN FAVOUR OF THE ASSESSEE. AS A RESULT,APPEAL FILED BY THE ASSESSEE STANDS PARTLY ALLOWED. / )0 / )0 / )0 / )0 !/) !/) !/) !/) 2 2 2 2 3 3 3 3 ( (( ( - -- - . 4) . 4) . 4) . 4) ( (( ( ) ) ) ) 56 5656 56 . ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH AUGUST,2013 . 5 ITA NO.3184/MUM/2010,(AY-2006-07) M/S M. PALLONJI & CO. PVT. LTD. . ( +,' 7 8! 28 -) , 2013 , ( - 9 SD/- SD/- ( . : : : : . . B.R.MITTAL ) ( / RAJENDRA ) / JUDICIAL MEMBER /ACCOUNTANT MEMBER / MUMBAI, 8! /DATE: 28 TH AUGUST,2013 SK . . . . ( (( ( %); %); %); %); <;') <;') <;') <;') / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / #$ 2. RESPONDENT / %&#$ 3. THE CONCERNED CIT (A) / = > , 4. THE CONCERNED CIT / = > 5. DR C BENCH, ITAT, MUMBAI / ;?- %)! , . . . 6. GUARD FILE/ - @ &;) &;) &;) &;) %) %)%) %) //TRUE COPY// .! / BY ORDER, A / 5 DY./ASST. REGISTRAR , /ITAT, MUMBAI