HERTZ CHEMCIALS LTD, MUMBAI V. DCIT RG 8(2), MUMBAI

ITA 4107/MUM/2010

• Counselvise Citation: 410719914 RSA 2010
• Duration Of Justice: 1 year(s) 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Next Hearing Date: 13-07-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 20-05-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: BALKRISHNA MENON
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH H, MUMBAI BEFORE SHRI P.M.JAGTAP, ACCOUNTANT MEMBER & SHRI R.S. PADVEKAR, JUDICIAL MEMBER. I.T.A. NO. 4107/MUM/2010. ASSESS MENT YEAR : 2006-07. M/S HERTZ CHEMICALS LTD., DY. COMMISSIONER OF INCOME-TAX, 2&3 SARAF KASKAR INDL. ESTATE, VS. RANGE-8(2), MUMBAI. S.V.ROAD, JOGESHWARI (WEST), MUMBAI 400102. PAN AAACH 2664L APPELLANT. RESPONDENT. APPELLANT BY : NONE . RESPO NDENT BY : SHRI BALKRISHNA MENON. O R D E R. PER P.M. JAGTAP, A.M. : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF LEARNED CIT(APPEALS)-17, MUMBAI DATED 25 TH FEBRUARY, 2010 AND THE SOLITARY ISSUE ARISING OUT OF THE SAME RELATES TO THE DISALLOWANCE MADE BY THE AO AND CONFIRMED BY THE LEARNED CIT(APPEALS) U/S 14A READ WITH RULE 8D OF I NCOME-TAX RULES, 1962. 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY WH ICH IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND PROCESSING OF PERFUME S AND COSMETICS. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILE D BY THE ASSESSEE ON 28-11-2006 2 ITA NO. 4107/MUM/2010 ASSESSMENT YEAR : 2006-07. DECLARING A TOTAL INCOME OF RS.2,24,81,245/-. IN T HE PROFIT & LOSS ACCOUNT FILED ALONG WITH THE SAID RETURN, DIVIDEND INCOME OF RS.5 ,11,29,095/- WAS CREDITED BY THE ASSESSEE AND AFTER DEDUCTING A SUM OF RS.4,09,15,2 35/- U/S 94, THE BALANCE AMOUNT OF RS.1,02,13,861/- WAS CLAIMED AS EXEMPT FROM TAX. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICED BY THE AO TH AT NO DISALLOWANCE ON ACCOUNT OF EXPENDITURE INCURRED FOR EARNING THE EXEMPT INC OME WAS MADE BY THE ASSESSEE AS PER THE PROVISIONS OF SECTION 14A. HE, THEREFORE , WORKED OUT SUCH EXPENSES BY APPLYING RULE 8D OF INCOME-TAX RULES, 1962 AT RS.1, 36,89,871/- AND MADE A DISALLOWANCE TO THAT EXTENT U/S 14A.ON APPEAL, THE LEARNED CIT(APPEALS) CONFIRMED THE SAID DISALLOWANCE MADE BY THE AO RELY ING ON THE DECISION OF SPECIAL BENCH OF ITAT IN THE CASE OF ITO VS. DAGA CAPITAL M ANAGEMENT P. LTD. 26 SOT 603. AGGRIEVED BY THE ORDER OF THE LEARNED CIT(APPE ALS), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 3. AFTER CONSIDERING THE SUBMISSION AND PERUSING TH E RELEVANT MATERIAL ON RECORD, IT IS OBSERVED THAT THE ISSUE INVOLVED IN T HE PRESENT APPEAL IS SQUARELY COVERED BY THE DECISION OF HONBLE BOMBAY HIGH COUR T IN THE CASE OF DCIT VS. GODREJ AND BOYCE MFG. CO. LTD. 328 ITR 81WHEREIN IT WAS HELD THAT RULE 8D IS APPLICABLE ONLY FROM ASSESSMENT YEAR 2007-08 AND PR IOR TO ASSESSMENT YEAR 2007- 08, THE QUANTUM OF DISALLOWANCE TO BE MADE U/S 14A HAS TO BE DETERMINED BY ADOPTING SOME REASONABLE METHOD. KEEPING IN VIEW TH E SAID DECISION OF HONBLE JURISDICTIONAL HIGH COURT, WE SET ASIDE THE IMPUGNE D ORDER OF THE LEARNED CIT(APPEALS) ON THIS ISSUE AND RESTORE THE MATTER T O THE FILE OF THE AO WITH A DIRECTION TO DETERMINE THE QUANTUM OF DISALLOWANCE OF EXPENSES TO BE MADE U/S 14A BY ADOPTING SOME REASONABLE METHOD. THE RELEVAN T GROUND OF ASSESSEES APPEAL IS ACCORDINGLY TREATED AS PARTLY ALLOWED. 3 ITA NO. 4107/MUM/2010 ASSESSMENT YEAR : 2006-07. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TRE ATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES AS INDICATED ABOVE. . ORDER PRONOUNCED ON THIS 29 TH DAY OF JULY, 2011. SD/- SD/- (R.S. PADVEKAR) (P.M. JAGTAP) JUDICIAL MEMBER A CCOUNTANT MEMBER MUMBAI, DATED: 29 TH JULY, 2011. WAKODE COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, H-BENCH. (TRUE COPY ) BY ORD ER ASSTT. R EGISTRAR, ITAT, MUMBAI BEN CHES, MUM BAI.