JITENDRA J. MEHTA, MUMBAI V. DCIT (ODS-II) CEN RG-7, MUMBAI

ITA 4772/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49409 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-07-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2007-2008
• Appeal Filed On: 09-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH I, MUMBAI BEFORE THE HONBLE PRESIDENT, SHRI R.V.EASWAR AND SHRI T.R. SOOD (AM) I.T.A.NO.4772/MUM/2010 ASSESSMENT YEAR: 2007-08 SHRI JITENDRA J. MEHTA, 1401, RAHEJA CENTER, NARIMAN POINT, MUMBAI 400 021. PAN : AAAPM 2381 K VS. THE DY. DIRECTOR OF INCOME-TAX (OSD-II) CENTRAL RANGE-7, MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VIJAY MEHTA RESPONDENT BY : SHRI SUNIL KUMAR SINGH O R D E R PER T.R. SOOD, AM: THIS APPEAL IS LATE BY FIVE DAYS. A CONDONATION PETITION ALONG WITH AFFIDAVITS HAVE BEEN FILED. THE LEARNED COUNSEL FO R THE ASSESSEE REFERRING TO THE CONDONATION PETITION POINTED OUT THAT THE APPEAL WA S REQUIRED TO BE FILED BEFORE THE TRIBUNAL ON 4.6.2010 BUT ACTUALLY HAS BEEN FIL ED ON 09.06.2010. THE MAIN REASON WAS THAT DURING THE RELEVANT POINT OF TIME S HRI RAJESH PARADKAR, SENIOR MANAGER, WHO WAS LOOKING AFTER THE TAX MATTERS FEL L SERIOUSLY ILL WITH SEVERE BACK PAIN AND THEREFORE, THERE WAS DELAY IN FILING THE A PPEAL. A MEDICAL CERTIFICATE FOR THE ILLNESS OF SHRI RAJESH PARADKAR FROM 25.05.2010 TO 07.062010 HAS BEEN FILED. AFFIDAVIT OF SHRI RAJESH PARADKAR AS WELL AS SHRI J ITENDRA MEHTA HAVE ALSO BEEN FILED, WHEREIN THE FACT OF ILLNESS OF SHRI RAJESH P ARADKAR HAS BEEN REITERATED. THE LEARNED COUNSEL FOR THE ASSESSEE MADE A PRAYER THAT THE DELAY IN FILING THE APPEAL IS UNINTENTIONAL AND, THEREFORE, THE SAME MAY BE CO NDONED. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPRESENTATIVE LEFT THE IS SUE TO THE DISCRETION OF THE BENCH. 2. AFTER CONSIDERING THE SUBMISSIONS, WE ARE SATISF IED THAT THERE AS SUFFICIENT CAUSE FOR DELAY IN FILING THE APPEAL AND, THEREFORE , THE DELAY IS CONDONED. ITA NO.4772/MUM/2010 SHRI JITENDRA J. MEHTA 2 3. THE ONLY DISPUTE RAISED IN THIS APPEAL IS REGARD ING DISALLOWANCE OF ` 5,06,619/- UNDER SECTION 14A OF THE ACT. DURING TH E ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE WAS DEA LING WITH TAX FREE INVESTMENTS AND HAD EARNED SOME DIVIDEND INCOME WHICH IS EXEMPT . THEREFORE, THE PROVISIONS OF SECTION 14A READ WITH RULE 8D WAS INVOKED AND DI SALLOWANCE OF 0.5% ON AVERAGE INVESTMENT WAS MADE. 4. ON APPEAL, THE ACTION OF THE ASSESSING OFFICER W AS CONFIRMED BY THE LEARNED CIT(A) BY FOLLOWING THE DECISION OF THE SPE CIAL BENCH OF THE TRIBUNAL IN THE CASE OF DAGA CAPITAL MANAGEMENT PVT. LTD. (117 ITD 169)(SB). 5. BEFORE US THE LEARNED COUNSEL FOR THE ASSESSEE S UBMITTED THAT THE HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ AND BOYCE M FG. CO. LTD. V. DCIT (328 ITR 81)(BOM) HAS HELD THAT RULE 8D HAS NO RETROSPEC TIVE APPLICATION AND, THEREFORE, THE MATTER MAY BE REMANDED TO THE FILE O F THE ASSESSING OFFICER FOR RE- WORKING THE DISALLOWANCE. 6. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPR ESENTATIVE SUBMITTED THAT IN THE SAME DECISION THE HONBLE BOMBAY HIGH C OURT HAS FURTHER HELD THAT REASONABLE DISALLOWANCE U/S.14A WOULD STILL BE MADE AND, THEREFORE, THE MATTER MAY BE REMANDED. 7. AFTER HEARING THE RIVAL SUBMISSIONS CAREFULLY, WE F IND THAT THE HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ AND BOYCE M FG. CO. LTD. (SUPRA) HAS HELD AS UNDER: THAT THE PROVISIONS OF RULE 8D OF THE RULES WHICH HAVE BEEN NOTIFIED WITH EFFECT FROM MARCH 24, 2008, WOULD APPLY WITH EFFECT FROM ASSESSMENT YEAR 2008-09.EVEN PRIOR TO ASSESSMENT YEAR 2008-09, WHEN RULE 8D WAS NOT APPLICABLE, THE ASSESSING OFFICER HAD TO ENFORC E THE PROVISIONS OF SUB- SECTION (1) OF SECTION 14A. FOR THAT PURPOSE, THE ASSESSING OFFICER IS DUTY BOUND TO DETERMINE THE EXPENDITURE WHICH HAS BEEN I NCURRED IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INC OME UNDER THE ACT. THE ASSESSING OFFICER MUST ADOPT A REASONABLE BASIS OR METHOD CONSISTENT WITH ALL THE RELEVANT FACTS AND CIRCUMSTANCES AFTER FURNISHING A REASONABLE OPPORTUNITY TO THE ASSESSEE TO PLACE ALL GERMANE MA TERIAL ON THE RECORD. THE PROCEEDINGS FOR ASSESSMENT YEAR 2002-03 WOULD S TAND REMANDED TO THE ASSESSING OFFICER. THE ASSESSING OFFICER SHOULD DETERMINE AS TO ITA NO.4772/MUM/2010 SHRI JITENDRA J. MEHTA 3 WHETHER THE ASSESSEE HAD INCURRED ANY EXPENDITURE ( DIRECT OR INDIRECT) IN RELATION TO DIVIDEND INCOME/INCOME FROM MUTUAL FUND S WHICH DOES NOT FORM PART OF THE TOTAL INCOME AS CONTEMPLATED UNDER SECTION 14A. THE ASSESSING OFFICER CAN ADOPT A REASONABLE BASIS FOR EFFECTING THE APPORTIONMENT. WHILE MAKING THAT DETERMINATION, TH E ASSESSING OFFICER SHOULD PROVIDE A REASONABLE OPPORTUNITY TO THE ASSE SSEE OF PRODUCING ITS ACCOUNTS AND RELEVANT OR GERMANE MATERIAL HAVING A BEARING ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 8. RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE HONBLE BOMBAY HIGH COURT, WE SET ASIDE THE ORDER OF THE LEARNED CIT(A) AND REMIT THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO RE-COM PUTE THE DISALLOWANCE UNDER SECTION 14A IN THE LIGHT OF THE DECISION OF THE HON BLE BOMBAY HIGH COURT CITED SUPRA. 9. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON 14 TH JULY, 2011. SD. SD. (R.V. EASWAR) (T.R. SOOD) PRESIDENT ACCOUNTANT MEMBER MUMBAI, DATED THE 14 TH JULY, 2011. KN COPY TO: 1. THE ASSESSEE 2. THE REVENUE 3. THE CIT, CENTRAL II, MUMBAI. 4. THE CIT(A)-40, MUMBAI 5. THE DR I BENCH, MUMBAI BY ORDER /TRUE COPY/ ASST. REGISTRAR, ITAT, MUMBAI ITA NO.4772/MUM/2010 SHRI JITENDRA J. MEHTA 4