ASIA INVESTMENTS P. LTD, MUMBAI V. ITO 2(1), MUMBAI

ITA 4710/MUM/2010

• Counselvise Citation: 471019914 RSA 2010
• Duration Of Justice: 1 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 07-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K B MENON
• Assessee Lawyers: SANTOSH PARAB
• Section: 14A; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI RAJENDRA SINGH, ACCOUNTANT MEMBER ITA. NO. 4710/MUM/2010 ASSESSMENT YEAR 2006-2007 ASIA INVESTMENTS PVT. LTD. MUMBAI 400 038. PAN AAACA4539K VS. ACIT (OSD) 2 (1) MUMBAI. (APPELLANT) (RESPONDENT) FOR APPELLANT : SHRI SANTOSH PARAB FOR RESPONDENT : SHRI PKB MENON DATE OF HEARING : 20-09-2011 DATE OF PRONOUNCEMENT : 20-09-2011 ORDER PER D.MANMOHAN, V.P. 1. THIS APPEAL IS DIRECTED AGAINST THE ORDER OF TH E CIT(A)-IV, MUMBAI AND IT PERTAINS TO THE ASSESSMENT YEAR 2006- 2007. 2. FACTS IN BRIEF ARE THAT THE ASSESSEE-COMPANY, W HICH IS ENGAGED IN THE BUSINESS OF MAKING INVESTMENTS, PURC HASED SHARES OF OTHER COMPANIES TO THE TUNE OF RS. 106 CRORES. AS P ER THE AUDITORS NOTE THE ASSESSEE-COMPANY MADE INVESTMENTS FOR ACQU IRING THE CONTROLLING INTEREST AND NOT FOR THE PURPOSE OF BUS INESS. ASSESSEE- COMPANY HAD OBTAINED SECURED AND UNSECURED LOANS TO THE EXTENT OF RS. 51.16 CRORES. THE COMPANY HAD ALSO EARNED DIVID END OF RS.7.92 CRORES WHICH IS EXEMPT FROM TAX UNDER SECTION 10 (3 3) OF THE ACT. UNDER THE CIRCUMSTANCES, THE ASSESSING OFFICER WAS OF THE OPINION THAT INTEREST EXPENDITURE AND ADMINISTRATIVE EXPEND ITURE RELATABLE TO EARNING DIVIDEND INCOME DESERVES TO BE DISALLOWED U NDER SECTION 14A OF THE ACT. HE WORKED OUT THE AMOUNT DISALLOWABLE U NDER SECTION 14A OF THE ACT AND ACCORDINGLY DISALLOWED A SUM OF RS. 4,34,70,542/-. 2 3. ON AN APPEAL FILED BY THE ASSESSEE, LEARNED CIT (A) FOLLOWED THE DECISION OF THE ITAT, MUMBAI SPECIAL B ENCH IN THE CASE OF ITO, MUMBAI VS. DAGA CAPITAL MANAGEMENT (P) LTD. (2 009) 117 ITD 169 (SB) (MUM.) TO HOLD THAT THE ASSESSING OFFICER WAS JUSTIFIED IN APPLYING RULE 8D FOR WORKING OUT THE AMOUNT DISALLO WABLE UNDER SECTION 14A OF THE ACT. 4. AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE US. LEA RNED COUNSEL SUBMITTED THAT IN THE LIGHT OF DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG. CO. L TD. VS. DCIT AND ANOTHER (2010) 328 ITR 81 (BOM.), RULE 8D IS APPLIC ABLE PROSPECTIVELY AND DISALLOWANCE UNDER SECTION 14A SHOULD NOT BE WO RKED OUT BY APPLYING RULE 8D OF I.T. RULES FOR THE YEAR UNDER C ONSIDERATION. 5. WE HAVE HEARD THE LEARNED DR AND CAREFULLY PERU SED THE RECORD. 6. HAVING REGARD TO THE CIRCUMSTANCES OF THE CASE, WE SET ASIDE THE MATTER TO THE FILE OF THE ASSESSING OFFIC ER WHO IS DIRECTED TO WORK OUT THE AMOUNT DISALLOWABLE UNDER SECTION 14A OF THE ACT WITHOUT APPLYING RULE 8D OF THE I.T. RULES. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT, ON THIS THE 2 0 TH DAY OF SEPTEMBER, 2011. SD/- SD/- (RAJENDRA SINGH) (D.MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI, DATE 20 TH SEPTEMBER, 2011 VBP/- 3 COPY TO 1. ASIA INVESTMENTS PVT. LTD., 4 TH FLOOR, MAGNET HOUSE, DOUGALL ROAD, BALLARD ESTATE, MUMBAI 400 038. PAN AAACA453 9K 2. ACIT (OSD) 2 (1), MUMBAI. 3. CIT(A)-4, MUMBAI. 4. CIT-2, MUMBAI 5. DR A BENCH 6. GUARD FILE (TRUE COPY) BY ORDER ASST. REGISTRAR, ITAT, MUMBAI BENCHES MUMBAI.