LAKESH SHRIKANTH KAUL, MUMBAI V. ACIT CIR 12(1), MUMBAI

ITA 4129/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49320 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 21-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P C MOURYA
• Assessee Lawyers: LALCHAND CHOUDHARY
• Section: 14A; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER ITA NO. 4129/MUM./2010 (ASSESSMENT YEAR : 2007-08 ) DATE OF HEARING: 16.6.2011 LAKESH SHRIKANTH KAUL M/S. KAUL ENTERPRISES 101, SHREEJI CHAMBERS JANMABHOOMI MARG MUMBAI 400 001 PAN AADPK3314C .. APPELLANT V/S ASSTT. COMMISSIONER OF INCOME TAX CIRCLE-12(1), AAYAKAR BHAVAN 101, M.K. ROAD, MUMBAI 400 020 .... RESPONDENT ASSESSEE BY : MR. LALCHAND CHOUDHARY REVENUE BY : MR. P.C. MOURYA O R D E R PER J. SUDHAKAR REDDY, A.M. THIS APPEAL PREFERRED BY ASSESSEE, IS DIRECTED AGAI NST THE IMPUGNED ORDER DATED 17 TH MARCH 2010, PASSED BY THE COMMISSIONER (APPEALS)-X XIII, MUMBAI, FOR ASSESSMENT YEAR 2007-08. 1. ON THE FACTS AND IN LAW AND IN ABSENCE OF ANY C LAIM FROM ANY SOURCE OF INCOME FOR EXPENDITURE BY THE APPELLANT I N RESPECT OF HIS PERSONAL INVESTMENTS, THE CIT(A) WAS NOT JUSTIFIED IN CONFIRMING DISALLOWANCE OF ` 4,41,572 MADE BY THE A.O. BY INVOKING THE LAKESH SHRIKANTH KAUL ITA NO. 4129/MUM./2010 2 PROVISIONS OF SECTION 14A OF THE ACT R/W RULE 8D OF THE I.T. RULES, 1962, IN RESPECT OF DIVIDEND INCOME EARNED BY THE A PPELLANT. 2. THE LEARNED CIT(A) OUGHT TO HAVE HELD THAT THE A PPELLANT HAVING NOT INCURRED / CLAIMED ANY EXPENDITURE IN RESPECT O F DIVIDEND INCOME, THE PROVISIONS OF SECTION 14A R/W RULE 8D WOULD NOT APPLY TO THE FACTS OF THIS CASE AND THE DISALLOWANCE OF ` 4,41,572 IS THUS UNWARRANTED. 2. BEFORE US, LEARNED COUNSEL, MR. LALCHAND CHOUDHARY , ON BEHALF OF THE ASSESSEE, SUBMITS THAT THE ASSESSEE HAD MADE INVEST MENTS IN ITS INDIVIDUAL CAPACITY AND HE HAS NOT CLAIMED ANY EXPENDITURE ON THE SAME. HE SUBMITS THAT THE ASSESSING OFFICER WRONGLY APPLIED RULE-8D AND DISAL LOWED ` 4,41,572 UNDER SECTION 14A OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT' ). HIS CASE IS THAT, THE EXPENDITURE WAS INCURRED IN ITS PROPRIETARY CONCERN WHICH HAS NOTHING TO DO WITH THE INVESTMENTS MADE IN THE PERSONAL CAPACITY. HE SUBMI TS THAT THE FIRST APPELLATE AUTHORITY HAS APPLIED THE DECISION OF MUMBAI SPECIA L BENCH OF THIS TRIBUNAL IN ITO V/S DAGA CAPITAL MANAGEMENT PVT. LTD. (2008) 119 TT J (MUM.) (SB) 289 , AND THAT THIS DECISION OF THE TRIBUNAL WAS REVERSED BY THE HON'BLE BOMBAY HIGH COURT IN GODREJ & BOYCE MFG. CO. LTD. V/S DCIT, (2010), 328 ITR 081 (BOM.) . HE SUBMITS THAT, AS THERE IS NO EXPENDITURE INCURRE D BY THE ASSESSEE FOR EARNING DIVIDEND INCOME, THE ENTIRE DISALLOWANCE SHOULD BE DELETED. 3. LEARNED DEPARTMENTAL REPRESENTATIVE, MR. P.C. MOURY A, RELIED ON THE JUDGMENT OF HON'BLE BOMBAY HIGH COURT IN GODREJ & BOYCE MFG. CO. LTD. (SUPRA) AND SUBMITS THAT THE ISSUE MAY BE SET ASIDE TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION. 4. AFTER HEARING THE RIVAL SUBMISSIONS, WE SET ASIDE T HE MATTER TO THE FILE OF ASSESSING OFFICER FOR DENOVO ADJUDICATION IN LINE W ITH THE JUDGMENT OF HON'BLE BOMBAY HIGH COURT IN GODREJ & BOYCE MFG. CO. LTD. (SUPRA). THE ASSESSING OFFICER IS SPECIFICALLY DIRECTED TO CONSIDER THE CL AIM OF THE ASSESSEE THAT THE INVESTMENTS HAVE BEEN MADE IN INDIVIDUAL CAPACITY A ND THAT THESE INVESTMENTS HAVE NOTHING TO DO WITH THE BUSINESS OF THE ASSESSEE AND THAT NO EXPENDITURE CLAIMED BY THE ASSESSEE IN ITS PROPRIETARY CONCERN, IS RELATAB LE TO EARNING OF INCOME BY WAY OF DIVIDEND. IF, FACTUALLY, THE ASSESSEE PROVES THE CA SE, NO DISALLOWANCE WILL BE MADE UNDER SECTION 14A. WITH THESE OBSERVATIONS, WE REST ORE THE MATTER TO THE FILE OF ASSESSING OFFICER. LAKESH SHRIKANTH KAUL ITA NO. 4129/MUM./2010 3 5. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR STA TISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 24.6.2011 SD/- D. MANMOHAN VICE PRESIDENT SD/- J. SUDHAKAR REDDY ACCOUNTANT MEMBER MUMBAI, DATED: 24 TH JUNE 2011 COPY TO : (1) THE ASSESSEE; (2) THE RESPONDENT; (3) THE CIT(A), MUMBAI, CONCERNED; (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, A BENCH, ITAT, MUMBAI. TRUE COPY BY ORDER PRADEEP J. CHOWDHURY ASSISTANT REGISTRAR SR. PRIVATE SECRETARY ITAT, MUMBAI BENCHES, MUMBAI