ACIT 12(1), MUMBAI V. BUSINESS INDIA, MUMBAI

ITA 4659/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79441 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 17-07-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 11-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUM BAI , ! BEFORE SHRI SANJAY ARORA, AM AND DR. S. T. M. PAVA LAN, JM ' # I.T.A. NO. 4659/MUM/2012 ( / ASSESSMENT YEAR: 2007-08) ASST. CIT-12(1), ROOM NO.117, AAYAKAR BHAVAN, M. K. MARG, MUMBAI-400 020 # VS. BUSINESS INDIA 17/19, WADIA BUILDING, DALMAL STREET, FORT, MUMBAI-400 001 $ #'%' ./PAN/GIR NO. AADFB 7133 Q ( $& /APPELLANT ) : ( '($& / RESPONDENT ) $&)* / APPELLANT BY : SHRI JEEVANLAL LAVIDIYA '($&)* / RESPONDENT BY : NONE + ,)- / DATE OF HEARING : 17.07.2014 DATE OF ORDER : 22.07.2014 '.# O R D E R PER SANJAY ARORA, A. M.: THIS IS AN APPEAL BY THE REVENUE DIRECTED AGAINST T HE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-21, MUMBAI (CIT(A) FOR SH ORT) DATED 04.04.2012, PARTLY ALLOWING THE ASSESSEES APPEAL CONTESTING ITS ASSES SMENT U/S.143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR THE ASSESSMEN T YEAR (A.Y.) 2007-08 VIDE ORDER DATED 31.12.2009. 2. NONE APPEARED FOR AND ON BEHALF OF THE ASSESSEE- RESPONDENT, WHEN THE APPEAL WAS CALLED OUT FOR HEARING. HOWEVER, DUE NOTICE THROUGH THE LISTING PER THE NOTICE BOARD OF THE 2 ITA NO. 4659/MUM/2012 (A.Y. 2007-08) ASST. CIT VS. BUSINESS INDIA TRIBUNAL AS WELL AS BY WAY OF POSTING THROUGH NET, I.E., SUBSEQUENT TO THE INITIAL POSTING THROUGH PERSONAL SERVICE, HAVING BEEN MADE, WE CONS IDER THE ASSESSEE TO HAVE BEEN PUT TO NOTICE AND, ACCORDINGLY, PROCEEDED TO DECIDE THE AP PEAL AFTER HEARING THE PARTY BEFORE US. 3. THE ONLY ISSUE ARISING IN THIS APPEAL IS WITH RE GARD TO THE DISALLOWANCE U/S.14A OF THE ACT, MADE IN THE SUM OF RS.29,08,439/-, SINCE R ESTRICTED BY THE LD. CIT(A) TO RS.6,99,000/-, SO THAT THE REVENUE IS IN APPEAL. TH E DISALLOWANCE BY THE ASSESSING OFFICER (A.O.) STOOD MADE BY APPLYING RULE 8D; ITS COMPONENTS BEING AS UNDER: OUT OF INTEREST EXPENSES (INDIRECT) RS.12,09,112/- QUA OTHER INDIRECT EXPENSES RS.16,99,327/- RS.29,08,439/- THE ASSESSEE CARRIED THE MATTER IN APPEAL, WHEREAT IT WAS, ON THE BASIS OF THE UTILIZATION OF THE BORROWED FUNDS, AS SHOWN BY THE ASSESSEE WITH R EFERENCE TO ITS ACCOUNTS, FOUND THAT NO DISALLOWANCE OUT OF INTEREST EXPENDITURE, INCURR ED AND CLAIMED IN THE SUM OF RS.46.84 LACS, WAS CALLED FOR. OUT OF THE INDIRECT EXPENDITU RE, IT WAS OBSERVED BY THE LD. CIT(A) THAT OF THE TOTAL EXPENDITURE CLAIMED BY THE ASSESS EE PER ITS PROFIT AND LOSS ACCOUNT AT RS.2.28 CRORES, RS.2.15 CR. WAS ATTRIBUTABLE TO THE ASSESSEES BUSINESS ACTIVITY OF PRINTING, PURSUED PRINCIPALLY BY IT. THE BALANCE RS.12,91,817 /- WAS BY WAY OF COMMON EXPENDITURE, AND WHICH STOOD TO BE ALLOCATED BETWEE N THE ASSESSEES INVESTMENT ACTIVITY AND BUSINESS ACTIVITY. OBSERVING NOT MUCH MOVEMENT IN THE INVESTMENT DURING THE YEAR IN-AS-MUCH AS THERE APPEARED NO CHANGE IN THE INVES TMENT PER THE BALANCE-SHEET, IT WAS CONSIDERED PROPER BY HIM, TAKING THE ENTIRETY OF TH E FACTS AND CIRCUMSTANCES INTO CONSIDERATION, TO RESTRICT THE DISALLOWANCE TO RS.6 .99 LACS. AGGRIEVED, THE REVENUE IS IN APPEAL, RAISING THE FOLLOWING GROUNDS: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DIRECTING THE AO TO COMPUTE THE REA SONABLE DISALLOWANCE U/S 14A FOLLOWING THE HON'BLE BOMBAY HIGH COURT DEC ISION IN THE CASE OF GODREJ & BOYCE. 3 ITA NO. 4659/MUM/2012 (A.Y. 2007-08) ASST. CIT VS. BUSINESS INDIA 2. WHILE DOING SO THE LD. CIT(A) FAILED TO APPRECI ATE THE FACT THAT THE REVENUE HAS PROPOSED SLP AGAINST THE DECISION OF TH E HON'BLE HIGH COURT IN THE CASE OF GODREJ & BOYCE. 4. WE HAVE HEARD THE PARTY BEFORE US, AND PERUSED T HE MATERIAL ON RECORD. THE REVENUES CASE IS WHOLLY WITHOUT BASIS IN LAW; IT C HALLENGING THE IMPUGNED ORDER ON THE BASIS THAT THE DECISION BY THE HONBLE JURISDICTION AL HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG. CO. LTD. V. DY. CIT [2010] 328 ITR 81 (BOM) HAS NOT BEEN ACCEPTED BY I T, SO THAT IT HAS PROPOSED A SPECIAL LEAVE PETITION (SLP) BEFORE THE HONBLE APEX COURT. FIRSTLY, NO EVIDENCE WITH RESPECT TO THE MOVING THE SLP HAS BEEN ADDUCED. EVEN SO, THE SAME WOULD NOT DETRACT FROM THE BINDING NATURE OF THE JU DGMENT PETITIONED AGAINST; IN FACT, ON ALL THE AUTHORITIES SUBORDINATE TO THE HONBLE COUR T. IT IS THIS THAT LED US TO STATE OF THE REVENUES APPEAL AS BEING WHOLLY WITHOUT MERIT . IN FACT, THE ONLY MANNER IN WHICH THE IMPUGNED ORDER COULD BE VALIDLY CHALLENGED BY IT; R ULE 8D BEING NOT MANDATORY FOR THE CURRENT YEAR, WAS WITH REFERENCE TO SHOWING THAT TH E COMMON EXPENSES THAT STOOD TO BE BIFURCATED IS IN EXCESS OF RS.12.92 LACS IN-AS-MUCH AS WITHOUT DOUBT EXPENDITURE WHOLLY RELATING TO THE BUSINESS ACTIVITY WOULD NOT BE SUBJ ECT TO APPORTIONMENT EVEN UNDER RULE 8D, WHICH IS ONLY A RULE OF APPORTIONMENT. THE SECO ND ASPECT ON WHICH AN OBJECTION COULD POSSIBLY BE MADE BY THE REVENUE IS TO DISPUTE THE FINDING OF THE LD. CIT(A) WITH REGARD TO THE UTILIZATION OF BORROWED FUNDS, WHICH ASPECT STANDS EXPLICITLY DEALT WITH BY THE LD. CIT(A). NO MATERIAL TOWARD EITHER HAS HOWEV ER BEEN BROUGHT ON RECORD BY THE REVENUE. 5. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED . /0 -1 ) /) -23! ORDER PRONOUNCED IN THE OPEN COURT ON JULY 17, 2014 AT THE CONCLUSION OF THE HEARING. SD/- SD/- (DR. S. T. M. PAVALAN) (SANJAY ARORA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER + 4, MUMBAI; 5 DATED : 22.07.2014 4 ITA NO. 4659/MUM/2012 (A.Y. 2007-08) ASST. CIT VS. BUSINESS INDIA # ROSHANI , SR. PS ! ' #$%& ' &$ # COPY OF THE ORDER FORWARDED TO : 1. $& / THE APPELLANT 2. '($& / THE RESPONDENT 3. '' + 6- 7 8 / THE CIT(A) 4. '' + 6- / CIT - CONCERNED 5. 9: ;'-<= ' <=0 + 4, / DR, ITAT, MUMBAI 6. ; >? , # GUARD FILE ! ( / BY ORDER, )/(* + (DY./ASSTT. REGISTRAR) , + 4, / ITAT, MUMBAI