FORTRESS CAPITAL MANAGEMENT SERVICES P. LTD, MUMBAI V. ITI 4(2)(4), MUMBAI

ITA 4834/MUM/2010

• Counselvise Citation: 483419914 RSA 2010
• Duration Of Justice: 1 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2006-2007
• Appeal Filed On: 10-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M R KUBAL
• Assessee Lawyers: PRAVIN N CHAVAN
• Keywords: Opportunity of being heard; Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F MUMBAI BEFORE SHRI P.M. JAGTAP (AM) AND SMT. ASHA VIJAYARA GHAVAN (JM) ITA NO. 4834/MUM/2010 ASSESSMENT YEAR-2006-07 M/S. FORTRESS CAPITAL MANAGEMENT SERVICES PVT. LTD., 2 ND FLOOR, DARYANAGAR HOUSE, 69, M.K. ROAD, MARINE LINES, MUMBAI-400 002 VS. THE ITO 4(2)(4), AAYAKAR BHAVAN, MUMBAI-400 020 (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI PRAVIN N. CHAVAN RESPONDENT BY: MR. M.R. KUBAL O R D E R PER ASHA VIJAYARAGHAVAN (JM) THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED A GAINST THE ORDER DATED 15.3.2010 PASSED BY THE LD. CIT(A)- 8 FOR THE ASSESSMENT YEAR 2006-07. 2. THE ONLY GROUND RAISED IN THIS APPEAL IS AGAINST THE CONFIRMATION OF DISALLOWANCE U/S. 14A AT RS. 44,785/- OF THE I.T. A CT. 3. THE ASSESSEE COMPANY HAD FILED E-RETURN ON 20 TH OCTOBER 2006 FOR GROSS TOTAL INCOME OF RS. 7,14,303/-. DURING THE R ELEVANT PREVIOUS YEAR, THE ASSESSEE HAD EARNED TAX FREE DIVIDEND INCOME OF RS. 5,57,928/-. WHILE COMPLETING THE ASSESSMENT U/S. 143(3), THE AS SESSING OFFICER HAS COMPUTED THE DISALLOWANCE U/S. 14A OF RS. 44,785/- BEING THE ENTIRE EXPENSES DEBITED TO PROFIT & LOSS A/C. ITA NO. 4834/M/2010 2 5. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE T HE LD. CIT(A). CIT(A) DISMISSED THE ASSESSEES APPEAL BY OBSERVING AS UNDER: THE ITAT SPECIAL BENCH, MUMBAI IN CASE OF DAGA CAP ITAL MANAGEMENT PVT. LTD. FOR A.Y. 2001-02 IN ITA NO. 80 57/M/03 HAS HELD THAT THE PROVISIONS OF SEC. 14A(2) AND 14A(3) ARE RETROSPECTIVE IN NATURE AND THE RESULTANT RULE 8D ARE THEREFORE R ETROSPECTIVE IN NATURE. THE PROVISIONS OF RULE 8D MADE IN VIEW OF SEC. 14A(2) SHALL APPLY FOR DETERMINING THE AMOUNT OF EXPENDITURE IN RELATION TO EXEMPT INCOME FOR ALL PENDING PROCEEDINGS. THE ACTION OF THE AO TO COMPUTE DISALLOWANCE U/S. 1 4A AS PER RULE 8D IS FOUND TO BE CORRECT AND IS CONFIRMED. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ELEVANT MATERIAL ON RECORD. IT IS NOTED THAT THE QUESTION OF MAKING DISALLOWANCE U/S. 14A IS NO MORE RES INTEGRA IN VIEW OF THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN GODREJ & BOYCE LTD. MFG. CO. VS DCIT (2010) 238 ITR 81 (BOM) HOLDING THAT THE PROVISIONS OF SEC. 14A ARE A PPLICABLE IN CIRCUMSTANCES AS ARE PREVAILING PRESENTLY AND THE D ISALLOWANCE HAS TO BE WORKED OUT BY THE AO ON SOME REASONABLE BASIS AND NOT RULE 8D. UNDER SUCH CIRCUMSTANCES, WE SET ASIDE THE IMPUGNED ORDER AND RESTORE THE MATTER TO THE FILE OF THE AO FOR DECIDING THE Q UANTUM OF DISALLOWANCE, AS PER THE AFORE-NOTED JUDGMENT, AFTER ALLOWING A R EASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 24 TH DAY OF JUNE, 2011 SD/- SD/- (P.M. JAGTAP) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 24 TH JUNE, 2011 RJ ITA NO. 4834/M/2010 3 COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR F BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, I.T.A.T, MUMBAI ITA NO. 4834/M/2010 4 DATE INITIALS 1 DRAFT DICTATED ON: 22 . 0 6 . 201 1 SR. PS/PS 2. DRAFT PLACED BEFORE AUTHOR: 22 .0 6 .2011 ______ SR. PS/PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER: _________ ______ JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER: _________ ______ JM/AM 5. APPROVED DRAFT COMES TO THE SR. PS/PS: _________ ______ SR. PS/PS 6. KEPT FOR PRONOUNCEMENT ON: _________ ______ SR. PS/PS 7. FILE SENT TO THE BENCH CLERK: _________ ______ SR. PS/PS 8. 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK: DATE ON WHICH FILE GOES TO AR _________ ______ 10 . DATE OF DISPATCH OF ORDER: _________ ______