DCIT, New Delhi V. M/s Jalco Financial Services Pvt. Ltd., New Delhi

ITA 4719/DEL/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0027 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 30-03-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 28-10-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: JAYANT MISRA
• Assessee Lawyers: N O N E
• Keywords: Opportunity of being heard; Transactions in derivatives
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, IN THE INCOME TAX APPELLATE TRIBUNAL, IN THE INCOME TAX APPELLATE TRIBUNAL, IN THE INCOME TAX APPELLATE TRIBUNAL, NEW DELHI, BENCH NEW DELHI, BENCH NEW DELHI, BENCH NEW DELHI, BENCH D DD D BEFORE SHRI R. P. TOLANI, JUDICIAL MEMBER AND SHRI A K GARODIA, ACCOUTANT MEMBER ITA NO. 4719 /DEL/2010 (ASSESSMENT YEAR 2006-07) DCIT, CIRCLE 4(1), VS. M/S. JAICO FINANCIAL SERVIC ES PVT. LTD., NEW DELHI. G-28, KALKAJI, NEW DELHI. (APPELLANTS) (RESPONDENTS) PAN / GIR NO. AAACJ2791E APPELLANT BY: SHRI JAYANT MISRA, CIT DR RESPONDENT BY: N ONE ORDER ORDER ORDER ORDER PER A. K. GARODIA, AM: PER A. K. GARODIA, AM: PER A. K. GARODIA, AM: PER A. K. GARODIA, AM: 1. THIS IS REVENUES APPEAL DIRECTED AGAINST THE OR DER OF LD. CIT(A) VII, NEW DELHI DATED 06.09.2010 FOR THE ASSE SSMENT YEAR 2006-07. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: 1) THE ORDER OF THE LD. CIT(A) IS ERRONEOUS & CONT RARY TO FACTS AND LAW. 2) ON THE FACT AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) HAS ERRED IN RESTRICTING THE AD DITION MADE U/S 14A TO ` 62,67,578/- AS AGAINST ` 6,67,51,557/- MADE BY THE ASSESSING OFFICER. 3) THE LD. CIT(A) IGNORED THE FACT THAT THE DISALL OWANCE HAS BEEN CORRECTLY MADE BY THE ASSESSING OFFICER UNDER SECTION 14A OF THE ACT AS PER THE PROVISIONS OF RULE 8D OF I T RULES. 2. NONE APPEARED ON BEHALF OF THE ASSESSEE IN SPITE OF NOTICE AND HENCE WE DECIDE THIS APPEAL EX-PARTE QUA THE AS SESSEE. 3. LD. D.R. FOR THE REVENUE SUPPORTED THE ASSESSMEN T ORDER. THE BENCH ENQUIRED FROM LD. D.R. FOR THE REVENUE TH AT WHEN LD. CIT(A) HAS DECIDED THE ISSUE AFTER CONSIDERING THE JUDGMENT OF HON'BLE HIGH COURT OF BOMBAY RENDERED IN THE CASE O F GODREJ & BOYCE MANUFACTURING PVT. LTD. 234 CTR 01 (BBY) THEN WHY THIS I.T.A.NO. 4719/DEL/2010 2 ORDER OF CIT(A) SHOULD NOT BE CONFIRMED. IN REPLY, IT WAS SUBMITTED BY THE LD. D.R. FOR THE REVENUE THAT THE MATTER SHO ULD BE RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER FOR A FRE SH DECISION IN THE LIGHT OF THIS DECISION OF HON'BLE HIGH COURT OF BOM BAY RENDERED IN THE CASE OF GODREJ & BOYCE MANUFACTURING PVT. LTD. (SUPRA) BECAUSE IT IS NOT CLEAR AS TO FROM WHERE CIT(A) HAS ADOPTED THE AMOUNT OF TOTAL PROFIT FROM SALE PURCHASE OF SHARES AND F&O S EGMENT OF ` 1243.88 LACS BECAUSE THE TOTAL INCOME DECLARED BY T HE ASSESSEE IN THE RETURN OF INCOME IS ONLY ` 410.17 LACS AND HENC E, THE ISSUE SHOULD BE RESTORED BACK TO THE FILE OF THE ASSESSIN G OFFICER FOR A FRESH DECISION. 4. WE HAVE CONSIDERED THE SUBMISSIONS OF LD. D.R. F OR THE REVENUE AND HAVE GONE THROUGH THE ORDERS OF AUTHORI TIES BELOW. WE FIND THAT THE ASSESSING OFFICER HAS MADE DISALLO WANCE OF ` 667.51 LACS ON THE BASIS OF RULE 8D BUT AS PER THE JUDGMENT OF HON'BLE HIGH COURT OF BOMBAY RENDERED IN THE CASE O F GODREJ & BOYCE MANUFACTURING PVT. LTD., RULE 8D IS PERSPECTI VE AND HENCE WILL APPLY W.E.F. ASSESSMENT YEAR 2008-09 AND HENCE THE SAID RULE IS NOT APPLICABLE IN THE PRESENT YEAR BEING ASSESSMENT YEA R 2006-07. THIS ASPECT HAS BEEN NOTED BY THE CIT(A) AND THEREAFTER, HE HAS WORKED OUT DISALLOWANCE AT ` 62,67,575/- ON THE BASIS OF P ROPORTION OF DIVIDEND INCOME AND TOTAL PROFIT FROM SALE PURCHASE OF SHARES AND F&O SEGMENT WHICH HAS BEEN TAKEN BY HIM AT A FIGURE OF ` 1243.88 LACS AS AGAINST DIVIDEND INCOME OF ` 91.69 LACS. T HERE IS NO BASIS INDICATED BY HIM FOR TAKING THIS FIGURE ON ` 1243.8 8 AS TOTAL PROFIT FROM SALE PURCHASE OF SHARES & F&O SEGMENT. WHEN T HE INCOME DECLARED BY THE ASSESSEE IN ITS RETURN OF INCOME IS ONLY ` 410.77 LACS, THEN HOW THERE CAN BE PROFIT FROM SALE PURCHA SE OF SHARES AND F & O SEGMENT OF ` 1243.88 LACS. THE ASSESSEE HAS NOT APPEARED BEFORE US TO EXPLAIN THIS FACT AND HENCE, WE DEEM I T FIT AND PROPER TO RESTORE THE MATTER BACK TO THE FILE OF THE ASSES SING OFFICER FOR A FRESH DECISION IN THE LIGHT OF THIS JUDGEMENT OF HO N'BLE HIGH COURT OF I.T.A.NO. 4719/DEL/2010 3 BOMBAY RENDERED IN THE CASE OF GODREJ & BOYCE MANUF ACTURING PVT. LTD. (SUPRA). THE ASSESSING OFFICER SHOULD PASS NE CESSARY ORDER AS PER LAW AS PER ABOVE DISCUSSION AFTER PROVIDING ADE QUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 5. IN THE RESULT, APPEAL OF THE REVENUE STANDS ALLO WED FOR STATISTICAL PURPOSES. 6. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE O F HEARING ON 30 TH MARCH 2011. SD./- SD/- (R. P. TOLANI) (A K GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED:30 TH MARCH, 2011 SP. COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT TRUE COPY: BY ORDER 4. CIT(A) 5. DR DY. REGISTRAR, ITAT, NEW DELHI