JYOTI PRAKASH DUTTA, MUMBAI V. THE ASSISTANT COMMISSIONER OF INCOME TAX-16(1), (FORMERLY ACIT 11(1)) , MUMBAI

ITA 5032/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7844 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-12-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 24-07-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHA
• Assessee Lawyers: DILKHUSH MALESHA
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM ITA NO. 5032 / MUM/20 17 ( ASSESSMENT YEAR : 2006 - 07 ) ACIT 16 (1), MUMBAI VS. SHRI JYOTI PRAKASH DUTTA 101 - 102, SAIBABA TOWERS, N.DUTTA MARG, FOUR BUNGALOWS, ANDHERI WE ST MUMBAI 400 058 PAN/GIR NO. AABPD2975L APPELLANT ) .. RESPONDENT ) ASSESSEE BY SHRI DILKHUSH MALESHA REVENUE BY MS. N. HEMALATHA DATE OF HEARING 25 / 10 /201 7 DATE OF PRONOUNCEME NT 26 / 12 /201 7 / O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) - 4, MUMBAI DATED 23/05/2017 FOR A.Y.2006 - 07 IN THE MATTER OF ORDER PASSED U/S. 250 OF THE IT ACT. 2. THE FOLLOWING GROUNDS HAVE BEEN TAKEN BY THE REVENUE: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW LD COMMISSIONER OF INCOME TAX (APPEALS) - 4('LD CIT (A)') ERRED IN CONFIRMING THE ACTION OF LD. ASSISTANT COMMISSIONER OF INCOME TAX - 16(1) ('LD AO') IN DISALLOWING A SUM RS. 4,50,450 / - U/ S. 14A OF THE INCOME TAX ACT BEING 0.5% OF AVERAGE INVESTMENT, AND IGNORED SPECIFIC DIRECTION OF HON'BLE MUMBAI ITAT THAT DISALLOWANCE SHALL BE REASONABLE AND RULE 8D IS NOT APPLICABLE TO AY 2006 - 07. 2. THAT THE ORDER OF LD CIT (A) IS BAD IN LAW AND ON FA CTS. 3. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND THE FOREGOING GROUNDS OF APPEAL AS MAY BE CONSIDERED NECESSARY EITHER BEFORE OR DURING THE HEARING. ITA NO. 5032/MUM/2017 SHRI. JYOTI PRAKASH DUTTA 2 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. 4. IN THIS CASE, AO HAS MADE DISALLOWANCE UND ER RULE 8D (2)(III) EQUAL TO 5% OF AVERAGE INVESTMENT FOR THE A.Y.2006 - 07 UNDER CONSIDERATION. AS PER THE DECISION OF JUDISDICTIONAL HIGH COURT IN CASE OF GODREJ AND BOYCE MANUFACTURING COMPANY 328 ITR 81 , RULE 8D IS NOT APPLICABLE PRIOR TO THE A.Y.2008 - 09 , HOWEVER, REASONABLE DISALLOWANCE IS REQU IRED TO BE MADE. IN THIS CASE, I FOUND THAT ASSESSEE HAS EA RNED INTEREST INCOME ON TAX FREE BONDS AND DIVIDEND INCOME2 . FULL DETAILS OF EXPENDITURE WERE GIVEN. 5. AS PER LEARNED AR, NO EXPENDITURE WAS INCURRED FOR EARNING EXEMPT INCOME. KEEPING IN VIEW TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE AND RESPECTFULLY FOLLOWING THE ORDER OF THE BOMBAY HIGH COUR T AS STATED ABOVE, I DIRECT THE AO TO RESTRICT DISALLOWANCE TO THE EXTENT OF RS.50,000/ - . I DIRECT ACCORDIN GLY. 5. IN THE RESULT, APPEAL IS ALLOWED IN PART. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 26 / 12 /2017 S D/ - ( R.C.SHARMA ) ACCOUNTANT MEMBER MUMBAI ; DATED 26 / 12 /201 7 KARUNA SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//