Devarsons Industries Pvt.Ltd., Ahmedabad V. The ACIT.,(OSD),Range-1, Ahmedabad

ITA 3428/AHD/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6011 (ITAT-AHMEDABAD)
• Duration Of Justice: 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 29-07-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 27-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAMIR DECRIAL
• Keywords: Opportunity of being heard
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B BEFORE SHRI MUKUL KUMAR SHRAWAT, JUDICIAL MEMBER AND SHRI A. K. GARODIA, ACCOUNTANT MEMBER I.T.A. NO.3428 / AHD/2010 (ASSESSMENT YEAR 2006-07) DEVARSONS INDUSTRIES PVT. LTD., 441.GIDC ESTATE, ODHAV, AHMEDABAD-382445 VS. CIT(A) VI, AHMEDABAD PAN/GIR NO. : AAACD9671M (APPELLANT) .. (RESPONDENT) APPELLANT BY: WRITTEN SUBMISSION RESPONDENT BY: SHRI SAMIR DECRIAL, SR. DR O R D E R PER SHRI A. K. GARODIA, AM:- THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LD. CIT(A) VI, AHMEDABAD DATED 18.10.2010 FOR THE ASSESSMENT Y EAR 2006-07. 2. ALTHOUGH, THE ASSESSEE HAS RAISED FOUR GROUNDS O F APPEAL BUT THE ONLY GRIEVANCE OF THE ASSESSEE IS REGARDING THE ORDER OF LD. CIT(A) AS PER WHICH HE HAS CONFIRMED ADDITION OF RS.1.50 LACS ON ACCOUN T OF DISALLOWANCE U/S 14A OF THE INCOME TAX ACT, 1961. 3. ON THE DATE OF HEARING, NONE APPEARED ON BEHALF OF THE ASSESSEE BUT A WRITTEN SUBMISSION FROM LD. A.R. OF THE ASSESSEE IS AVAILABLE ON RECORD, AS PER WHICH, IT HAS BEEN REQUESTED THAT AS PER THE JU DGMENT OF HONBLE BOMBAY HIGH COURT RENDERED IN THE CASE OF GODREJ & BOYCE M ANUFACTURING PVT. LTD. AS REPORTED IN 328 ITR 81 (MUMBAI) AND AS PER THE T RIBUNAL DECISION RENDERED IN THE CASE OF YATISH TRADING CO. LTD. VS ACIT 129 ITD 237 I.T.A.NO.3428 /AHD/2010 2 (MUMBAI), IT WAS HELD THAT RULE 8D IS NOT APPLICABL E PRIOR TO THE INSERTION IN ASSESSMENT YEAR 2008-09. IT HAS BEEN REQUESTED THA T FOR THIS REASON, DISALLOWANCE CONFIRMED BY LD. CIT(A) OF RS.1.50 LAC S SHOULD BE DELETED. 4. LD. D.R. OF THE REVENUE SUPPORTED THE ORDERS OF AUTHORITIES BELOW. IT WAS ALSO SUBMITTED BY HIM THAT EVEN AS PER THE JUDG EMENT OF HONBLE BOMBAY HIGH COURT RENDERED IN THE CASE OF GODREJ & BOYCE MFG. CO. LTD. (SUPRA), THE A.O. CAN MAKE DISALLOWANCE U/S 14A ON A REASONABLE BASIS ALTHOUGH HE CAN RESORT TO THE PROVISIONS OF RULE 8D PRIOR TO THE ASSESSMENT YEAR 2008-09. IT WAS HIS SUBMISSION THAT THE MATTE R MAY BE RESTORED BACK TO THE FILE OF THE A.O. FOR A FRESH DECISION AS PER TH E JUDGMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG . PVT. LTD. (SUPRA). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW AND THE JUDGMENT OF HON'BLE HIGH COURT OF BOMBAY IN THE CAS E OF GODREJ & BOYCE MANUFACTURING PVT. LTD. (SUPRA). IN THE PRESENT CA SE, THE ASSESSEE HAS EARNED EXEMPT DIVIDEND INCOME OF RS.23,17,095/- AND THE A. O. MADE DISALLOWANCE OF RS.2,71,069/- U/S 14A BY APPLYING THE PROVISIONS OF RULE 8D BY OBSERVING THAT IN THE ABSENCE OF ANY CALCULATION GIVEN BY THE ASSESSEE, HE IS APPLYING RULE 8D. LD. CIT(A) HAS CONFIRMED THE DISALLOWANCE TO THE EXTENT OF RS.1.50 LACS. IT WAS HELD BY HON'BLE HIGH COURT OF BOMBAY IN THE CASE OF GODREJ & BOYCE MANUFACTURING PVT. LTD. THAT RULE 8D IS NOT RETROSPECTIVE AND HENCE, IT CANNOT BE INVOKED IN ANY ASSESSMENT Y EAR PRIOR TO 2008-09. HENCE, IN THE PRESENT CASE, SINCE THIS ASSESSMENT Y EAR INVOLVED IN ASSESSMENT YEAR 2006-07, RULE 8D CANNOT BE INVOKED AS HAS BEEN DONE BY THE A.O. AND BY LD. CIT(A). BUT AS PER THE JUDGMENT OF BOMBAY H IGH COURT, THE A.O. CAN MAKE DISALLOWANCE ON A REASONABLE BASIS. HENCE , WE SET ASIDE THE ORDER OF LD. CIT(A) ON THIS ISSUE AND RESTORE THE MATTER BACK TO THE FILE OF THE A.O. FOR A FRESH DECISION IN THE LIGHT OF THE JUDGMENT O F HON'BLE HIGH COURT OF I.T.A.NO.3428 /AHD/2010 3 BOMBAY RENDERED IN THE CASE OF GODREJ & BOYCE MANU FACTURING PVT. LTD. (SUPRA). A.O. WILL ALSO CONSIDER ANY OTHER JUDICIA L PRONOUNCEMENT WHICH IS AVAILABLE AT THE RELEVANT POINT OF TIME WHILE HE IS DECIDING THE ISSUE AND HE SHOULD PASS NECESSARY ORDER AS PER LAW AS PER ABOVE DISCUSSION AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO TH E ASSESSEE. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 7. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH JULY 2011. SD./- SD./- (MUKUL KUMAR SHRAWAT) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED : 29 TH JULY, 2011 SP COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD 6. THE GUARD FILE 1. DATE OF DICTATION 29/7 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 29/7. OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S. 29/7 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 29/7 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S. 29/7 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 29/07/11 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. ..