DCIT, New Delhi V. M/s SRF Polymers Ltd., Gurgaon

ITA 4852/DEL/2010

• Counselvise Citation: 485220114 RSA 2010
• Duration Of Justice: 1 year(s) 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-02-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2007-2008
• Appeal Filed On: 04-11-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: Y KAKKAR
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI B.C. MEENA ITA NO. 4456/DEL/2010 ASSTT. YR: 2007-08 KAMA HOLDING LTD. VS. ACIT, CIR. 9(1), (FORMERLY SRF POLYMERS LTD.) NEW DELHI. BLOCK-C, SECTOR-45, GURGAON. AND ITA NO. 4852/DEL/2010 ASSTT. YR: 2007-08 ACIT, CIR. 9(1), VS. SRF POLYMERS LTD. NEW DELHI. BLOCK-C, SECTOR-45, GURGAON (HARYANA) PAN/GIR NO. AAFCS9521A (APPELLANT) ( RESPONDENT ) ASSESSEE BY : SHRI SATYEN SETHI ADV. REVENUE BY : MS. Y. KAKKAR DR O R D E R PER R.P. TOLANI, J.M : THESE ARE CROSS APPEALS, FILED BY THE ASSESSEE AS WELL AS THE REVENUE AGAINST THE ORDER OF CIT(A) DATED 12-8-2010 RELATIN G TO A.Y. 2007-08. BOTH THE APPEALS ARE HEARD TOGETHER AND DISPOSED OF BY A CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. RESPECTIVE GROUNDS RAISED ARE AS UNDER: ASSESSEES APPEAL (ITA NO. 4456/DEL/10): THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (A) HAS ERRED IN UPHOLDING THE DISALLOWANCE OF INTEREST AND DEEMED E XPENSES UNDER SECTION 14A OF THE INCOME-TAX ACT READ WITH R ULE 8D. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (A) HA FAILED TO 2 APPRECIATE THAT PROVISIONS OF SUB SECTION (2) AND ( 3) OF SECTION 14A ARE NOT APPLICABLE. REVENUES APPEAL (ITA NO. 4852/DEL/10) : ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN LAW AS WELL AS ON MERITS IN DIRECTING THE AO TO RE- COMPUTE THE DISALLOWANCE U/S 14A AS PER RULE 8D AFT ER REDUCING THE FINANCIAL CHARGES FROM THE INTEREST CO NSIDERED IN THE ASSESSMENT ORDER AND NOT TO REDUCE CURRENT LIA BILITIES FROM THE TOTAL ASSETS FOR THE PURPOSE OF CALCULATING DIS ALLOWANCE UNDER RULE 8D, WHILE THE AO COMPUTED THE DISALLOWAN CE CORRECTLY AT RS. 4,33,84,679/- AS PER METHOD PRESCR IBED UNDER RULE 8D OF THE ACT. 2. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN THIS CASE RULE 8D HAS BEEN HELD TO BE RETROSPECTIVE IN NATURE AND THE DISALLOWANCE HAS BEEN WORKED OUT BY APPLYING RULE 8D. HONBLE BOMBAY HIGH COURT IN SUBSEQUENT JUDGMENT IN THE CASE OF GODREJ & BOYCE M FG. CO. LTD. VS. DCIT & ANOTHER (2010) 234 CTR (BOM) 1 HAS HELD RULE 8D TO BE PROSPECTIVE IN NATURE. THUS, RULE 8D WOULD NOT BE APPLICABLE TO TH E ASSESSMENT YEAR IN QUESTION I.E. 2007-08. THE HONBLE HIGH COURT, HOWE VER, HAS DIRECTED THAT INDIRECT EXPENSES WHICH MAY BE ATTRIBUTABLE ON A RE ASONABLY PROPER BASIS CAN ONLY BE DISALLOWED. 3. LEARNED DR IS HEARD. 4. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN VIEW OF THE FOREGOINGS AND KEEPING IN VIEW THE 3 HONBLE BOMBAY HIGH COURT JUDGMENT IN THE CASE OF G ODREJ & BOYCE MFG. CO. LTD. (SUPRA), WE ARE INCLINED TO SET ASIDE THE ISSUE INVOLVED IN THESE APPEALS BACK TO THE FILE OF AO TO DECIDE THE SAME A FRESH. 5. IN THE RESULT, ASSESSEES APPEAL AS WELL AS REVE NUES APPEAL ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 13-02-2012. SD/- SD/- ( B.C. MEENA ) ( R.P. TOLANI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 13-02-2012. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR 4