ANSHUL SPECIALTY MOLECULES LTD.(FORMERLY KNOWN AS ANSHUL CHEMICALS LTD.), MUMBAI V. DY.CIT, CENTRAL CIRCLE-38, MUMBAI

ITA 3729/MUM/2009

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 4111 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 17-08-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 09-06-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K SINGH
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A, MUMBAI BEFORE SHRI J. SUDHAKAR REDDY, A.M. AND SHRI V. DUR GA RAO, J.M. ITA NO. 3729/M/2009 ASSESSMENT YEAR: 2006-07 ANSHUL SPECIALITY MOLECULES LTD. APPELLANT (FORMERLY KNONW AS ANSHUL CHEMICALS LTD.,) 13, ARADHANA INDUSTRIAL DEVELOPMENT CORPN., NEAR VIRWANI INDUSTRIAL ESTATE, GOREGAON (E), MUMBAI 400 063. (PAN AABCA4003H) VS. DY. COMMISSIONER OF INCOME-TAX, RESPONDENT CENTRAL CIRCLE 38, AAYAKAR BHAVAN, ROOM NO. 112, 1 ST FLOOR, M.K. ROAD, MUMBAI 400 020. APPELLANT BY : NONE RESPONDENT BY : MR. K. SINGH . ORDER PER V. DURGA RAO, J.M.: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF CIT(A), CENTRAL VI, MUMBAI, PASSED ON 27/04/2009 FOR THE ASSESSMENT YEAR 2006-07, WHEREIN THE ASSESSEE HAS R AISED THE FOLLOWING GROUND OF APPEAL:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE CIT(A) ERRED IN UPHOLDING THE ACTION OF THE AO IN MAKING DISALLOWANCE UNDER SECTION 14A AS PER RULE 8D AT RS . 72,44,965/- AGAINST AN AMOUNT OF RS. 66,52,920/- DI SALLOWED BY THE APPELLANT IN THE RETURN OF INCOME. ITA NO. 3729/M/09 ANSHUL SPECIALITY MOLECULES LTD. 2 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE HAD RECEIVED DIVIDEND OF RS. 39,35,110/- FROM THE DOMES TIC COMPANIES DURING THE YEAR UNDER CONSIDERATION, WHICH WAS CLAI MED AS EXEMPT U/S 10(34 OF THE ACT. THE ASSESSEE HAD PAID INTERES T ON BORROWED FUNDS AND ALSO MADE INVESTMENT IN SHARES. IN ITS RE TURN OF INCOME THE ASSESSEE DISALLOWED AN AMOUNT OF RS. 66,52,920/ -, AGAINST WHICH THE AO COMPUTED THE DISALLOWANCE U/S 14A AMOU NTING TO RS. 72,44,965/- AS PER RULE 8D OF IT RULES, 2008. FOLLO WING THE DECISION OF ITAT SPECIAL BENCH IN THE CASE OF ITO V. DAGA CAPITAL MANAGEMENT PVT. LTD., 119 TTJ (M)(SB) 289. BEFORE T HE CIT(A), THE AR OF THE ASSESSEE CONTENDED THAT THE EXCESSIVE DIS ALLOWANCE MADE BY THE AO U./S 14A BE DELETED ON THE GROUND THAT RU LE 8D HAD BEEN INSERTED BY INCOME-TAX (FIFTH AMENDMENT) RULES , 2008 WITH EFFECT FROM 24 TH MARCH, 2008, THEREFORE, IT COULD NOT BE APPLIED TO ASSESSMENT YEAR 2006-07. WITHOUT PREJUDICE TO THE A BOVE, IT WAS ALSO SUBMITTED THAT DISLALOWANCE AS PER RULE 8D COU LD BE MADE BY THE AO ONLY IF THE AO HAVING REGARD TO THE ACCOUNTS OF THE ASSESSEE WAS NOT SATISFIED WITH THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE CIT(A) CONFIRMED THE ACTION OF THE AO. 3. NONE APPEARED ON BEHALF OF THE ASSESSEE. WE HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE DISALLOWANCE U/S 14A SHOUL D BE CALCULATED IN THE LIGHT OF LATEST JUDGMENT OF THE HONBLE JURI SDICTIONAL HIGH COURT IN THE CASE OF GODREJ & BOYCE MANUFACTURING C O. LTD. VIDE INCOME TAX APPEAL NO. 626 OF 2010 AND W.P. OF 758 O F 2010, JUDGMENT DATED 12.08.2010. THEREFORE, WE REMIT THE MATTER BACK TO THE FILE OF THE AO WITH A DIRECTION TO COMPUTE T HE DISALLOWANCE U/S 14A IN THE LIGHT OF THE JUDGMENT OF THE JURISDI CTIONAL HIGH COURT IN THE CASE OF GODREJ & BOYCE MANUFACTURING C O. LTD., AFTER PROVIDING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE IN THE MATTER. ITA NO. 3729/M/09 ANSHUL SPECIALITY MOLECULES LTD. 3 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TRE ATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 29 TH DAY OF OCTOBER, 2010. SD/- SD/- (J. SUDHAKAR REDDY) (V. DURGA RAO) ACCOUNTANT MEMBER JUDIC IAL MEMBER DATED: 29 TH OCTOBER, 2010 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE, A BENCH, I.T .A.T., MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR, I.T.A.T., MUMBAI. KV