UMESH B. DHARNIDHARKA, MUMBAI V. ACIT 12(1), MUMBAI

ITA 4927/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49234 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2006-2007
• Appeal Filed On: 14-06-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KUBAL
• Assessee Lawyers: S UNIL HIRWAT
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F, MUMBAI BEFORE SHRI P.M.JAGTAP, ACCOUNTANT MEMBER & SMT. ASHA VIJAYRAGHAVAN, JUDICIAL MEMBER. I.T.A. NO.4927/MUM/2010. ASSESS MENT YEAR : 2006-07 SHRI UMESH B. DHARNIDHARKA, A SSTT. COMMISSIONER OF INCOME-TAX, C/O KARNVAT & CO., VS. 12(1), MUMBAI. 2A KITAB MAHAL, 1 ST FLOOR, 192 DR. D.N. ROAD, MUMBAI 400 001. PAN AABPD 4546K. APPELLANT. RESPONDENT. APPELLANT BY : SHRI S UNIL HIRWAT. RESPON DENT BY : SHRI M.R. KUBAL. 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 22-03-2010 AND THE SO LITARY ISSUE ARISING OUT OF THE SAME RELATES TO THE DISALLOWANCE OF RS.4,59,077 /- MADE BY THE AO AND CONFIRMED BY THE LEARNED CIT(APPEALS) U/S 14A READ WITH RULE 8D OF INCOME TAX RULES, 1962. 2 ITA NO.4927/MUM/2010 ASSESSMENT YEAR:2006-07. 2. IN THE RETURN OF INCOME FILED FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD CLAIMED EXEMPTION IN RESPECT OF INCOME EARNED I N THE FORM OF DIVIDEND ON SHARES AND LONG TERM CAPITAL GAINS. NO DISALLOWANCE ON ACCOUNT OF ANY EXPENDITURE INCURRED IN RELATION TO THE SAID EXEMPT INCOME, HOW EVER, WAS MADE BY THE ASSESSEE AS PER THE PROVISIONS OF SECTION 14A. IN THE ASSESS MENT COMPLETED U/S 143(3), THE AO WORKED OUT SUCH EXPENSES INCURRED BY THE ASSESSE E IN RELATION TO EXEMPT INCOME AT RS.4,59,077/- BY APPLYING RULE 8D OF INCO ME-TAX RULES, 1962 AND DISALLOWED THE SAID AMOUNT 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.)(S.B.) WHEREIN IT WAS HELD THAT RULE 8D HAS A RETROSPECTIVE APPLICATION. 3. AT THE TIME OF HEARING BEFORE US, THE LEARNED RE PRESENTATIVES OF BOTH THE SIDES HAVE AGREED THAT THE ISSUE INVOLVED IN THIS APPEAL NOW STANDS SQUARELY COVERED BY THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CA SE OF GODREJ BOYCE MANUFACTURING CO. LTD. (2010) 234 CTR (BOM) 1, WHER EIN IT HAS BEEN HELD THAT RULE 8D OF INCOME-TAX RULES, 1962 IS APPLICABLE ONL Y FROM ASSESSMENT YEAR 2008- 09. AS FURTHER HELD BY HONBLE HIGH COURT, THE DISA LLOWANCE U/S 14A FOR THE YEARS PRIOR TO ASSESSMENT YEAR 2008-09 HAS TO BE MADE BY ADOPTING SOME REASONABLE METHOD. RESPECTFULLY FOLLOWING THE SAID DECISION OF HONBLE JURISDICTIONAL HIGH COURT, WE SET ASIDE THE IMPUGNED ORDER OF THE LEARN ED CIT(APPEALS) ON THIS ISSUE AND RESTORE THE MATTER TO THE FILE OF THE AO WITH A DIRECTION TO RECOMPUTE THE DISALLOWANCE OF EXPENSES TO BE MADE U/S 14A BY APPL YING SOME REASONABLE METHOD AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING H EARD. 3 ITA NO.4927/MUM/2010 ASSESSMENT YEAR:2006-07. 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 JUNE, 2011. SD/- SD/- (ASHA VIJAYRAGHAVAN) (P.M. JA GTAP) JUDICIAL MEMBER ACCO UNTANT MEMBER MUMBAI, DATED: 30 TH JUNE, 2011. WAKODE COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, F-BENCH. (TRUE COPY) BY ORD ER ASSTT. R EGISTRAR, ITAT, MUMBAI BEN CHES, MUMBA I.