Prism International Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 3417/DEL/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 52694 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 1 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 20-09-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 03-08-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRATIMA KAUSHIK
• Assessee Lawyers: A K CHADHA
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F, NEW DELHI BEFORE SHRI U.B.S. BEDI, JUDICIAL MEMBER & SHRI B.K. HALDAR, ACCOUNTANT MEMBER ITA NO. 3417/DEL/2009 ASSESSMENT YEAR: 2006-07 PRISM INTERNATIONAL PVT. LTD., VS. DCIT, R-215, FIRST FLOOR, CIRCLE 14(1), GREATER KAILASH-I, NEW DELHI. NEW DELHI. AAACP6995N (APPELLANT) (RESPONDENT) APPELLANT BY : SH. A.K. CHADHA, CA RESPONDENT BY : SMT. PRATIMA KAUSHIK, SR. DR ORDER PER U.B.S. BEDI, J.M. THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER PASSED BY LD. CIT(A)-XVII, NEW DELHI DATED 15.5.200 9 RELEVANT TO A.Y. 2006-07, WHEREBY CONFIRMATION OF DISALLOWANCE AT RS. 6,36,756/- MADE U/S 14A BY AO H AS BEEN CHALLENGED. 2. LD. COUNSEL FOR THE ASSESSEE WHILE CHALLENGING T HE ORDERS OF THE AUTHORITIES BELOW IN MAKING AND CONFI RMING THE DISALLOWANCE U/S 14A TO THE EXTENT OF RS. 6,36,756/ - HAS SUBMITTED THAT IN VIEW OF EARLIER YEARS DECISION I N THE CASE OF ITA NO. 3417/D/2009 2 THE ASSESSEE, DISALLOWANCE TO THE EXTENT OF RS. 78, 690/- AS MADE BY THE ASSESSEE ITSELF WHICH SHOULD BE SUSTAIN ED AND BALANCE ADDITION MAY BE DELETED BECAUSE WORKING HAS BEEN GIVEN AS CONTAINED IN EARLIER YEARS ORDER AND HAS ALSO BEEN FURNISHED BEFORE FIRST APPELLATE AUTHORITY FOR THIS YEAR, THEREFORE, THE APPEAL OF THE ASSESSEE SHOULD BE ALL OWED. 3. LD. DR PLEADED THAT IN VIEW OF BOMBAY HIGH COURT DECISION IN THE CASE OF M/S GODREJ & BOYCE MANUFACT URING COMPANY (MUMBAI) LTD. VS. DCIT IN ITA NO. 626 OF 20 10 AND WP NO. 758 OF 2010, RULE 8D IS HOLD TO BE PROSPECTI VELY AFFECTIVE AND AS PER THE SAID DECISION, MATTER HAS TO GO BACK TO THE AO FOR DETERMINING CORRECT AMOUNT OF DISALLO WANCE U/S 14A. THEREFORE, IN ALL FAIRNESS ORDERS OF AUTHORIT IES BELOW SHOULD BE SET ASIDE AND MATTER SHOULD BE RESTORED B ACK ON THE FILE OF AO WITH THE DIRECTION TO RE-DECIDE THE ISSU E AFRESH IN THE LIGHT OF DIRECTION ISSUED BY THE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MANUFACTURING COMPANY (MUMBAI) LT D. (SUPRA) AND TO THIS PLEA OF THE LD. DR, LD. AR FOR THE ASSESSEE DID NOT OBJECT AND RATHER SUBMITTED THAT MATTER CAN GO BACK TO AO FOR RECONSIDERATION. ITA NO. 3417/D/2009 3 4. WE HAVE HEARD BOTH THE SIDES AND CONSIDERED THE MATERIAL ON RECORD AND FIND THAT WHILE CONSIDERING THE DISALLOWANCE U/S 14A OF THE ACT, THE AO HAS SIMPLY APPLIED RULE 8D IN ORDER TO WORK OUT THE DISALLOWANCE AND C IT(A) HAS CONFIRMED SUCH ACTION OF THE AO. THE HONBLE BOMBA Y HIGH COURT IN THE CASE OF GODREJ & BOYCE MANUFACTURING C OMPANY (MUMBAI) LTD. (SUPRA), WHILE DEALING WITH THE SAME ISSUE HAS GIVEN GUIDELINES WHICH READ AS UNDER: - VI) EVEN PRIOR TO A.Y. 2008-09, WHEN RULE 8D WAS NOT APPLICABLE, THE AO HAS TO ENFORCE THE PROVISIONS OF SUB SECTION (1) OF SEC. 14A. FOR THAT PURPOSE, THE AO IS DUTY BOUND TO DETERMINE THE EXPENDITURE WHICH HAS BEEN INCURRED IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THE ACT. THE AO MUST ADOPT A REASONABLE BASIS OR METHOD CONSISTENT WITH ALL THE RELEVANT FACTS AND CIRCUMSTANCES AFTER FURNISHING A REASONABLE OPPORTUNITY TO THE ASSESSEE TO PLACE ALL GERMANE MATERIAL ON THE RECORD; VII) THE PROCEEDINGS FOR A.Y. 2002-03 SHALL STAND REMANDED BACK TO THE AO. THE AO SHALL DETERMINE AS TO WHETHER THE ASSESSEE HAS INCURRED ANY EXPENDITURE ITA NO. 3417/D/2009 4 (DIRECT OR INDIRECT) IN RELATION TO DIVIDEND INCOME/INCOME FROM MUTUAL FUNDS WHICH DOES NOT FORM PART OF THE TOTAL INCOME AS CONTEMPLATED U/S 14A. THE AO CAN ADOPT A REASONABLE BASIS FOR EFFECTING THE APPORTIONMENT. WHILE MAKING THAT DETERMINATION, THE AO SHALL PROVIDE A REASONABLE OPPORTUNITY TO THE ASSESSEE OF PRODUCING ITS ACCOUNTS AND RELEVANT OR GERMANE MATERIAL HAVING A BEARING ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 6. WE ALSO FIND THAT SUCH GUIDELINES OF HONBLE BOM BAY HIGH COURT ARE BEING FOLLOWED BY DIFFERENT BENCHES OF ITAT TO REMIT THIS ISSUE TO AO, SO, IN VIEW OF FACTS, CIRCU MSTANCES AND MATERIAL ON RECORD AND IN THE LIGHT OF DECISION OF HONBLE BOMBAY HIGH COURT, WE ARE OF THE CONSIDERED VIEW TH AT IT WOULD MEET THE ENDS OF JUSTICE IN CASE ISSUE IN REL ATION TO DISALLOWANCE U/S 14A IS RESTORED BACK ON THE FILE O F THE AO WITH THE DIRECTION TO DETERMINE THE REASONABLENESS OF DISALLOWANCE AFRESH TAKING INTO ACCOUNT THE GUIDE L INES GIVEN BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF GOD REJ & BOYCE MANUFACTURING COMPANY LTD. (SUPRA). NEEDLESS TO MENTION THAT AO SHALL GIVE ADEQUATE OPPORTUNITY TO THE ITA NO. 3417/D/2009 5 ASSESSEE BEFORE DECIDING THE ISSUE AFRESH AND CONSI DER THE MATERIAL ALREADY ON RECORD OR TO BE PLACED BY THE A SSESSEE AND ALSO ADDITIONAL PLEA IF RAISED WHILE CONSIDERIN G THE CLAIM OF THE ASSESSEE WITH RESPECT TO DISALLOWANCE U/S 14A O F THE INCOME TAX ACT FOLLOWING THE SAID DECISION. WE HOL D AND DIRECT ACCORDINGLY. 7. AS A RESULT, THE APPEAL OF THE ASSESSEE GETS ACC EPTED FOR STATISTICAL PURPOSES. THIS DECISION WAS PRONOUNCED IN THE OPEN COURT SOO N AFTER THE CONCLUSION OF HEARING ON 20 TH SEPTEMBER, 2011. SD/- SD/- (B.K. HALDAR) (U.B.S. B EDI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 20.9.11 *KAVITA COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR