H.J SECURITIES P. LTD, MUMBAI V. ADDL CIT RG 4(1), MUMBAI

ITA 4669/MUM/2010

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 7278 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Assessment Year: 2007-2008
• Appeal Filed On: 04-06-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: NATASHA MANGAT
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

1 ITA NO. 4669/MUM/2010 (ASST YEAR 2007-08) IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI H BENCH MUMBAI BENCHES, MUMBAI BEFORE SHRI P M JAGTAP , AM & SHRI VIJAY PAL RAO, JM ITA NO. 4669/MUM/2010 (ASST YEAR 2007-08) M/S H J SECURITIES P LTD 24/26 GROUND FLOOR CAMA BUILDING DALAL ST FORT, MUMBAI 400 001 VS THE ADDL COMMR OF INCOME TAX RANGE 4(1), MUMBAI (APPELLANT) (RESPONDENT) PAN NO. AAACH5600E ASSESSEE BY MS NATASHA MANGAT REVENUE BY SHRI PARTHASARTHI NAIK DT OF HEARING 21.07.2011 DT OF PRONOUNCEMENT 5THAUG 2011 ORDER PER VIJAY PAL RAO, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 22.4.2010 OF THE CIT(A) FOR THE ASSESSMENT YEAR 200 7-08. 2 THE ONLY ISSUE ARISES FOR OUR CONSIDERATION AND A DJUDICATION IN THIS APPEAL WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) IS JUSTIFIED IN CONFIRMING THE DISALLOWANCE MADE BY THE ASSESSING O FFICER OF RS. 10,75,221/- U/S 14A OF THE I T ACT BY APPLYING RULE 8D OF THE I T RUL ES 1962. 3 WE HAVE HEARD THE LD AR OF THE ASSESSEE AND THE L D DR AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. THE LD AR OF THE ASSE SSEE HAS SUBMITTED THAT THE ONLY EXPENDITURE INCURRED BY THE ASSESSEE IS IN RESPEC T OF EARNING OF DIVIDEND INCOME OF RS.72,116/- AND NO OTHER EXPENDITURE HAS BEEN INCUR RED BY IT FOR EARNING TAX FREE INCOME BECAUSE THE DIVIDEND INCOME HAS DIRECTLY CR EDITED TO ITS BANK ACCOUNT BY 2 ITA NO. 4669/MUM/2010 (ASST YEAR 2007-08) ECS BY THE DISTRIBUTING COMPANIES. THE LD AR OF THE ASSESSEE HAS SUBMITTED THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER OF R S. 10,75,221/- IS HIGHLY EXCESSIVE, DISPROPORTIONATE AND ARBITRARY. IT WAS SUBMITTED THAT IN VIEW OF THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG P LTD VS ACIT REPORTED IN 328 ITR 81, RULE 8D IS NOT APPLICABLE FOR THE AS SESSMENT YEAR UNDER CONSIDERATION AND THEREFORE, THE DISALLOWANCE MADE U/S 14A BY A PPLYING RULE 8D IS NOT SUSTAINABLE. THE LD AR OF THE ASSESSEE HAS FURTHER SUBMITTED THAT WHEN THE ASSESSEE HAS CLEARLY BROUGHT OUT THE ACTUAL EXPENDITURE INCU RRED FOR EARNING OF TAX FREE INCOME THEN THE APPLICATION OF SEC. 14A IS RULED OU T. SHE HAS RELIED UPON THE DECISION OF THE TRIBUNAL IN THE CASE OF YATISH TRAD ING CO P LTD VS ACIT REPORTED IN 129 ITD 237. 3.1 ON THE OTHER HAND, THE LD DR ACCEPTED THE PROPO SITION THAT IN VIEW OF THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CA SE OF GODREJ & BOYCE MFG P LTD (SUPRA) RULE 8D IS NOT APPLICABLE FOR THE ASSESSME NT YEAR UNDER CONSIDERATION; THEREFORE, THIS ISSUE REQUIRED TO BE ADJUDICATED AF RESH. 4 IN VIEW OF THE ABOVE, WE REMIT THIS ISSUE TO THE RECORD OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION AS PER LAW AND IN VIEW OF TH E DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG P LTD (SUPR A) AS WELL AS THE DECISION RELIED UPON BY THE LD AR IN THE CASE OF YATISH TRADING CO P LTD (SUPRA). 5 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE I S ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON THE 5 TH DAY OF AUG 2011. SD/ SD/- ( P M JAGTAP ) ACCOUNTANT MEMBER ( VIJAY PAL RAO ) JUDICIAL MEMBER 3 ITA NO. 4669/MUM/2010 (ASST YEAR 2007-08) PLACE: MUMBAI : DATED: 5 TH AUG 2011 RAJ* COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI