NICHE FINANCIAL SERVICES P. LTD, MUMBAI V. DCIT RG 1(2), MUMBAI

ITA 3842/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 48948 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 12-05-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: T T JACOB
• Assessee Lawyers: K GOPAL
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B,MUMBAI BEFORE SHRI R.S. SYAL (AM) & SMT. ASHA VIJAYARAGHA VAN (JM) I.T.A.NO.3842/MUM/2010 (A.Y. 2005-06) M/S. NICHE FINANCIAL SERVICES PVT.LTD., 511, MAKER BHAVAN NO.2, NEW MARINE LINES,MUMBAI-400 020. PAN: AACCN0485H VS. DY. COMMR. OF INCOME-TAX, RANGE 1(2), MUMBAI. APPELLANT RESPONDENT APPELLANT BY SHRI K. GOPAL. RESPONDENT BY SHRI T .T. JACOB. O R D E R PER R.S. SYAL, AM : THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDE R PASSED BY THE CIT(A) ON 18-02-2010 IN RELATION TO THE ASSTT. YEAR 2005-0 6. THE ONLY ISSUE RAISED IN THIS APPEAL IS AGAINST THE COMPUTATION OF DISALLOWA NCE U/S.14A OF THE ACT. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE DECLARED EXEMPT DIVIDEND INCOME TO THE TUNE OF RS.9,91,311/- U/S.10 (34) OF THE ACT. THE AO OPINED THAT THE PROVISIONS OF SEC. 14A WERE APPLICA BLE. HE, THEREFORE, WORKED OUT DISALLOWANCE OF RS.70,526/-. 3. WHEN THE MATTER WAS BROUGHT TO THE LD. CIT(A), IT WAS NOTICED BY HIM THAT DISALLOWANCE WAS CALLED FOR UNDER RULE 8D. HE, THER EFORE, MADE ENHANCEMENT BY MAKING TOTAL DISALLOWANCE AT RS.10,41,304/-. THE A SSESSEE IS AGGRIEVED AGAINST THE ENHANCEMENT AS WELL AS THE MAKING OF ADDITION B Y THE AO. 4. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD, IT IS NOTED THAT THE ASSESSMENT YEAR UND ER CONSIDERATION IS 2005-06. RULE 8D HAS BEEN INSERTED W.E.F. ASSESSMENT YEAR 20 07-08. THE HONBLE JURISDICTIONAL HIGH COURT IN GODREJ & BOYCE MFG. CO . VS. DCIT (2010) 328 ITR 81 ITA NO.3842/M/10 NICHE FINANCIAL SERVICES LTD. 2 (BOM) HAS HELD THAT THE DISALLOWANCE IS CALLED FOR U/S.14A IN THE CIRCUMSTANCES PREVAILING BEFORE US. IT HAS ALSO BEEN HELD THAT TH E DISALLOWANCE SHOULD BE WORKED OUT BY THE AO ON SOME REASONABLE BASIS IN TH E YEARS IN WHICH RULE 8D IS NOT APPLICABLE AS THE SAME IS PROSPECTIVE IN NATURE . IN THE LIGHT OF THIS JUDGMENT, IT BECOMES APPARENT THAT RULE 8D CANNOT BE APPLIED TO THE ASSESSMENT YEAR UNDER CONSIDERATION. THUS, THE ENHANCEMENT MADE BY THE LD. CIT(A) ON THE BASIS OF RULE 8D IS DELETED. THE LD. A.R. HAS NOT RAISED ANY OBJECTION TO THE SUSTENANCE OF DISALLOWANCE MADE BY THE AO AT RS.70,526/-. WE, THEREFORE, HOLD THAT ADDITION BE SUSTAINED AT RS.70,526/-. 5. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED ON THE 27TH DAY OF MAY, 2011. SD/- SD/- (SMT. ASHA VIJAYARAGHAVAN) (R.S. SYAL) JUDICIAL MEMBER ACCOUNT ANT MEMBER MUMBAI: 27TH MAY , 2011. NG: COPY TO : 1. DEPARTMENT. 2.ASSESSEE. 3 CIT(A)-2MUMBAI. 4 CIT-1,CITY-3,MUMBAI. 5.DR,B BENCH,MUMBAI. 6.MASTER FILE. (TRUE COPY) BY ORDER, ASST.REGISTRAR, ITAT, MUMBAI. ITA NO.3842/M/10 NICHE FINANCIAL SERVICES LTD. 3 DETAILS DATE INITIALS DESIGN ATION 1. DRAFT DICTATED ON 25-05-11 SR.PS/ 2. DRAFT PLACED BEFORE AUTHOR 25-05-11 SR.PS/ 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/ 6. KEPT FOR PRONOUNCEMENT ON SR.PS/ 7. FILE SENT TO THE BENCH CLERK SR.PS/ 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9. DATE ON WHICH FILE GOES TO THE AR 10. DATE OF DISPATCH OF ORDER *