GIRDHARILAL AGRAWAL, MUMBAI V. ADDL CIT 12(3), MUMBAI

ITA 4831/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 55379 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 21-09-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 10-06-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A K NAYAK
• Keywords: Opportunity of being heard; Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G, MUMBAI BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER. I.T.A. NO. 4831/MUM/2010. ASSESSMENT YEAR : 2006-07. SHRIGIRDHARILAL AGRAWAL, ADDL. COMMISSIONER OF 302, VIKAS BUILDING, VS. INCOME TAX, 12(3), 11, BANK STREET, FORT, MUMBAI. MUMBAI 400001. PAN : AABPA 1257E APPELLANT. RESPONDENT. APPELLANT BY : SHRI NONE. RESPONDENT BY : SHRI A.K. NAYAK. DATE OF HEARING : 21-09-2011 DATE OF PRONOUNCEMENT : 30-09-2011. O R D E R. PER P.M. JAGTAP, A.M. : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF LEARNED CIT(APPEALS)-23, MUMBAI DATED 05-04-2010 AND THE SO LITARY ISSUE ARISING OUT OF THE SAME RELATES TO THE DISALLOWANCE OF RS.23,33,69 8/- MADE BY THE AO AND CONFIRMED BY THE LEARNED CIT(APPEALS) U/S 14A READ WITH RULE 8D OF INCOME TAX RULES, 1962. 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUA L WHO IS ENGAGED IN THE BUSINESS OF TRADING OF IRON AND STEEL AND ALLIED PR ODUCTS IN THE NAME AND STYLE OF HIS PROPRIETARY CONCERN M/S GIRDHARILAL & CO. THE RETUR N OF INCOME FOR THE YEAR UNDER 2 ITA NO. 4831/MUM/2010 ASSESSMENT YEAR:2006-07 CONSIDERATION WAS FILED BY HIM ON 31-10-2006 DECLAR ING TOTAL INCOME OF RS.33,44,73,126/-. IN THE SAID RETURN, THE ASSESSEE HAD CLAIMED EXEMPTION IN RESPECT OF SUBSTANTIAL INCOME RECEIVED IN THE FORM OF DIVIDEND AND LONG TERM CAPITAL GAINS. NO DISALLOWANCE ON ACCOUNT OF ANY EX PENDITURE INCURRED IN RELATION TO THE SAID EXEMPT INCOME, HOWEVER, WAS MADE BY THE ASSESSEE AS PER THE PROVISIONS OF SECTION 14A. IN THE ASSESSMENT COMPLE TED U/S 143(3), THE AO WORKED OUT SUCH EXPENSES INCURRED BY THE ASSESSEE IN RELAT ION TO EXEMPT INCOME AT RS.23,33,698/- BY APPLYING RULE 8D OF INCOME-TAX RU LES, 1962 AND MADE A DISALLOWANCE TO THAT EXTENT U/S 14A. ON APPEAL, THE LEARNED CIT(APPEALS) CONFIRMED THE SAID DISALLOWANCE MADE BY THE AO U/S 14A READ WITH RULE 8D RELYING ON THE DECISION OF SPECIAL BENCH OF ITAT IN THE CASE OF DAGA CAPITAL MANAGEMENT P. LTD. 117 ITD 169 (MUM.) (SB) WHEREIN IT WAS HELD THAT RULE 8D HAS RETROSPECTIVE APPLICATION. AGGRIEVED BY THE OR DER OF THE LEARNED CIT(APPEALS), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE T RIBUNAL. 3. AT THE TIME OF HEARING, NONE HAS APPEARED ON BEH ALF OF THE ASSESSEE. THIS APPEAL IS, THEREFORE, BEING DISPOSED OF AFTER HEARI NG THE LEARNED DR AND PERUSING THE RELEVANT RECORD. IT IS OBSERVED THAT THE ISSUE INVOLVED IN THIS APPEAL IS SQUARELY COVERED BY THE DECISION OF HONBLE BOMBAY HIGH COUR T IN THE CASE OF GODREJ BOYCE MANUFACTURING CO. LTD. (2010) 234 CTR (BOM) 1 , WHEREIN IT HAS BEEN HELD THAT RULE 8D OF INCOME-TAX RULES, 1962 IS APPLICABL E ONLY FROM ASSESSMENT YEAR 2008-09. AS FURTHER HELD BY HONBLE HIGH COURT, THE DISALLOWANCE U/S 14A FOR THE YEARS PRIOR TO ASSESSMENT YEAR 2008-09 HAS TO BE MA DE BY ADOPTING SOME REASONABLE METHOD. RESPECTFULLY FOLLOWING THE SAID DECISION OF HONBLE JURISDICTIONAL HIGH COURT, WE SET ASIDE THE IMPUGNE D ORDER OF THE LEARNED CIT(APPEALS) ON THIS ISSUE AND RESTORE THE MATTER T O THE FILE OF THE AO WITH A DIRECTION TO RECOMPUTE THE DISALLOWANCE OF EXPENSES TO BE MADE U/S 14A BY 3 ITA NO. 4831/MUM/2010 ASSESSMENT YEAR:2006-07 APPLYING SOME REASONABLE METHOD AFTER GIVING THE AS SESSEE AN OPPORTUNITY OF BEING HEARD. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TRE ATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 30 TH DAY OF SEPT., 2011. SD/- SD/- (R.S. PADVEKAR) (P.M. J AGTAP) JUDICIAL MEMBER. ACCO UNTANT MEMBER MUMBAI, DATED: 30 TH SEPT., 2011. COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, G-BENCH. (TRUE COPY ) BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI BENCHES , MUMBAI. WAKODE