TRACTOR ENGTINEERS LTD, MUMBAI V. ADDL CIT 2(3), MUMBAI

ITA 3309/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49206 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Next Hearing Date: 29-06-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 28-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PARESH JOHARI
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, J BENCH, MUMBAI. BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER I.T.A NO.3309/ MUM/2010 ASSESSMENT YEAR: 2006-07 TRACTOR ENGINEERS LIMITED, .. APPELLANT L&T HOUSE, N.M.MARG, BALLARD ESTATE, MUMBAI-001. PA NO.AAACT 4499 B VS ADDL. CIT, CIRCLE 2(3) ,. RESPONDEN T AAYAKAR BHAVAN, M.K. ROAD, MUMBAI. APPEARANCES: HEENA DOSHI, FOR THE APPELLANT PARESH JOHARI, FOR THE RESPONDENT O R D E R PER PRAMOD KUMAR: 1. BY WAY OF THIS APPEAL, THE ASSESSEE HAS CHALLENGED C ORRECTNESS OF CIT(A)S ORDER DATED 18 TH JANUARY, 2010, IN THE MATTER OF ASSESSMENT UNDER SECTI ON 143(3) OF THE INCOME TAX ACT, 1961, FOR THE ASSESSMENT YEAR 2006 -07 ON THE FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF CERTAIN AMOU NT OF INTEREST & OTHER EXPENDITURE ALLEGEDLY ATTRIBUTABLE TO INCOME EARNED ON INVESTMENTS MADE IN US 64 BONDS UNDER SECTION 14A OF THE INCOME TAX AT, 1 961. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LD CIT(A) ERRED IN CONFIRMING THE APPLICATION OF RULE 8D RETR OSPECTIVELY FOR THE PURPOSE OF COMPUTING DISALLOWANCE UNDER SECTION 14A OF THE AC T FOR A.Y. 2006-07. 2. BRIEFLY STATED THE MATERIAL FACTS ARE LIKE THIS. DU RING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSE E HAS CLAIMED ` .1,45,631 (INTEREST INCOME CLAIMED EXEMPT U/S.10 FROM TAX FREE UTI BONDS) AS INCOME EXEMPT I .T.A NO.3309/ MUM/2010 ASSESSMENT YEAR: 2006-07 TRACTOR ENGINEERS LIMITED 2 FROM TAX. THE ASSESSING OFFICER, RELYING ON THE DECISIO N OF THE ITAT MUMBAI IN THE CASE OF DAGA CAPITAL MANAGEMENT P LTD., 117 ITD 169( MUM)(SB), APPLIED RULE 8D READ WITH SECTION 14A AND DISALLOWED RS. 4,83,144. T HE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT (A) BUT WITHOUT ANY SUCCESS. 4. LEARNED REPRESENTATIVES AGREE THAT SO FAR AS THE QUE STION OF RULE 8D IS CONCERNED, THE ISSUE IS NOW COVERED IN FAVOUR OF THE A SSESEE BY THE HONBLE JURISDICTIONAL HIGH COURTS JUDGEMENT IN THE CASE OF G ODREJ & BOYCE MFG CO LTD VS DCIT (328 ITR 81), WHEREIN, IT HAS BEEN HELD THAT R ULE 8D OF THE INCOME TAX RULES, 1962 IS APPLICABLE ONLY PROSPECTIVELY I.E. FROM A.Y. 2008-09. THE ASSESSMENT YEAR INVOLVED IN THE PRESENT CASE IS 2006-07 AND, THEREFO RE, RULE 8D IS NOT APPLICABLE IN THE PRESENT CASE. THE HONBLE HIGH COURT HAS HELD TH AT A REASONABLE DISALLOWANCE FOR EXPENSES INCURRED IN EARNING DIVIDEND INCOME IS NEVER THELESS TO BE COMPUTED BY THE AO. IN VIEW OF THE DECISION OF THE HONBLE JURISDICT IONAL HIGH COURT IN THE CASE OF GODREJ BOYCE MFG CO. LTD (SUPRA) AND AS AGREED TO BY THE PARTIES, WE REMIT THE ISSUE TO THE FILE OF THE AO TO RE-COMPUTE THE DISALLOWANCE U/S.14A IN THE LIGHT OF THE LAW LAID DOWN BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF GODREJ BOYCE MFG CO. LTD (SUPRA). 5. IN THE RESULT, APPEAL IS ALLOWED FOR STATISTICAL PUR POSES. PRONOUNCED IN THE OPEN COURT ON 29 TH JUNE, 2011 SD/- (V. DURGA RAO) JUDICIAL MEMBER SD/- (PRAMOD KUMAR) ACCOUNTANT MEMBER MUMBAI, DATED 29 TH JUNE, 2011 PARIDA COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS),6 MUMBAI 4. COMMISSIONER OF INCOME TAX, 2 , MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH J, MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI