ACIT 6(2), MUMBAI V. ENGINEERING & AGENCIES P.LTD, MUMBAI

ITA 5127/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83952 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-10-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 20-10-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 13-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LAV KUMAR
• Keywords: Tax effect
• Section: 14A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E MUMBAI . . , . . , BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER /AND SHRI R.C.SHARMA , ACCOUNTANT MEMBER ITA NO.5127/MUM/2012 (A.Y.2007-08) DY. COMMISSIONER OF INCOME TAX, CIR. 6(2), ROOM NO.563, AAYKAR BHAVAN, MK ROAD, MUMBAI 400 020 (APPELLANT ) VS. M/S. ENGINEERING & AGENCIES PVT. LTD. 4 TH FLOOR, STERLING CENTRE, DR. A.B.ROAD, WORLI, MUMBAI 400018 PAN:AAACE 1612P (RESPONDENT) APPELLANT BY : SHRI LAV KUMAR RESPONDENT BY : NONE DATE OF HEARING : 20/10/2014 DATE OF PRONOUNCEMENT : 20 /10/2014 ORDER PER I.P.BANSAL, J.M: THIS IS AN APPEAL FILED BY THE REVENUE. IT IS DI RECTED AGAINST PASSED BY LD. CIT(A)-12 MUMBAI DATED 21/5/2012 FOR ASSESSMENT YEAR 2007-08. GROUNDS OF APPEAL READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT DISALLOWANCE U/S.14A COULD NO T BE COMPUTED BY APPLYING RULE 8D RELYING ON THE DECISION OF JURISDICTIONAL H IGH COURT IN THE CASE OF M/S. GODREJ & BOYCE MFG. LTD. ( 328 ITR 81,BOMBAY) WITHO UT APPRECIATING THE FACT THAT THE REVENUE HAS CHALLENGED THE SAID DECISION A ND FILED SLP. 2. THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED . 2. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS EARNED EXEMPTED DIVIDEND INCOME OF RS.80,47,166/-. THE AO CALCULA TED DISALLOWANCE UNDER SECTION 14A R.W.R. 8D AT A SUM OF RS.11,86,624/-. THE DISA LLOWANCE WAS AGITATED IN AN ITA NO.5127/MUM/2012 (A.Y.2007-08) 2 APPEAL FILED BEFORE LD. CIT(A). IT WAS SUBMITTED T HAT RULE 8D COULD NOT BE APPLIED TO ASSESSMENT YEAR 2007-08 AS PER DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG. COMPANY LTD., 328 ITR 81 (BO M). IT WAS ALSO SUBMITTED THAT ACCORDING TO VARIOUS DECISIONS OF TRIBUNAL THE DISA LLOWANCE, IF ANY, SHOULD BE RESTRICTED TO 5% OF THE DIVIDEND INCOME. ALL THESE DECISIONS ARE REFERRED TO IN PARA 4.5 OF THE ORDER PASSED BY LD. CIT(A). RELYING ON THESE SUBMISSIONS OF THE ASSESSEE LD. CIT(A) HAS UPHELD THE DISALLOWANCE TO THE EXTEN T OF 5% OF THE EXEMPTED INCOME AND REST OF THE DISALLOWANCE HAS BEEN DELETED. TH E REVENUE IS AGGRIEVED, HENCE, HAS FILED AFOREMENTIONED GROUNDS OF APPEAL. 3. NOTICE OF HEARING WAS SENT TO ASSESSEE, HOWEVER, NONE WAS PRESENT ON BEHALF OF THE ASSESSEE. 4. DURING THE COURSE OF HEARING THE DISALLOWANCE DE LETED BY LD. CIT(A) WAS CALCULATED WHICH STANDS TO A SUM OF RS.7,84,266/- O N WHICH TAX EFFECT WOULD BE A SUM OF LESS THAN RS.3.00 LACS. ACCORDING TO THE LATEST INSTRUCTION ISSUED BY CBDT DATED 10/07/2014 UNDER SECTION 268A OF THE INCOME TAX ACT, 1961 (INSTRUCTION NO.5/2014 (F.NO.279/MISC.142/2007-ITJ( PT)] VIDE WHICH THE TAX EFFECT LIMIT FOR FILING THE APPEAL BEFORE THE TRIBUNAL WAS ENHANCED FROM RS.3.00 LACS TO RS.4.00 LACS. 5. WE HAVE HEARD LD. D.R. ACCORDING TO FOLLOWIN G DECISIONS OF HONBLE JURISDICTIONAL HIGH COURT, SUCH NOTIFICATIONS ISSUE D UNDER SECTION 268A WOULD BE APPLICABLE EVEN TO THE APPEALS FILED BEFORE ISSUE OF THE NOTIFICATION IF THE LIMIT IS ENHANCED: 1. IN THE CASE OF CIT VS. SMT. VIJAYA KAVEKAR (201 3 30 TAXMANN.COM 412) IT WAS HELD AS UNDER: SECTION 260A, READ WITH SECTION 268A, OF THE INCOME -TAX ACT, 1961 - HIGH COURT - APPEALS TO - TAX EFFECT - WHETHER INSTRUCTION NO. 3 OF 2011, DATED 9-2-2011, SPECIFYING MONETARY LIMIT OF RS. 10 LAKHS FOR MAINT AINABILITY OF APPEAL BEFORE HIGH COURT IS APPLICABLE ON PENDING APPEALS AS WELL - HE LD, YES - WHETHER, THEREFORE, WHERE TAX EFFECT IN REVENUES APPEALS WAS LESS THAN RS. 10 LAKHS WHICH WAS FILED ITA NO.5127/MUM/2012 (A.Y.2007-08) 3 EVEN PRIOR TO ISSUE OF INSTRUCTION DATED 9-2-2011, SAME WAS TO BE DISMISSED BEING NON-MAINTAINABLE - HELD, YES [IN FAVOUR OF AS SESSEE ] 2. IN THE CASE OF CIT VS. MADHUKAR IMANDAR (2009 1 85 TAXMAN 101] IT WAS HELD AS UNDER: SECTION 268A, READ WITH SECTION 119, OF THE INCOME- TAX ACT, 1961 - APPEAL OR APPLICATION FOR REFERENCE - FILING OF, BY INCOME-TA X AUTHORITY - WHETHER CIRCULAR/INCOME-TAX INSTRUCTION NO. 5 OF 2008, DATE D 15-5-2008 ISSUED BY CBDT DIRECTING INCOME-TAX AUTHORITIES NOT TO FILE APPEAL S IF TAX EFFECT IS LESS THAN RS. 4 LAKHS WOULD BE APPLICABLE TO CASES PENDING BEFORE H IGH COURT AS ON 15-5-2008 EITHER FOR ADMISSION OR FOR FINAL DISPOSAL, EVEN TH OUGH SAID APPEALS AND/OR PETITIONS WERE FILED BEFORE HIGH COURT PRIOR TO 15- 5-2008 - HELD, YES 6. IN VIEW OF THE ABOVE DISCUSSION WE DISMISS THE APPEAL FILED BY THE REVENUE ON ACCOUNT OF LOW TAX EFFECT AS PER AFOREMENTIONED IN STRUCTION ISSUED BY CBDT 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 20/10/20 14 !' # $%& 20/10/2014 ! ' SD/- SD/- ( . . /R.C.SHARMA ) ( . . / I.P. BANSAL ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; $% DATED 20/10/2014 ()* ()* ()* ()* +*') +*') +*') +*') / COPY OF THE ORDER FORWARDED TO : 1. ,- / THE APPELLANT 2. (.,- / THE RESPONDENT. 3. / ( ) / THE CIT(A)- 4. / / CIT 5. *0' ()% , , / DR, ITAT, MUMBAI 6. '1 2 / GUARD FILE. % % % % / BY ORDER, .*) () //TRUE COPY// 3 33 3 / 4 4 4 4 5 5 5 5 (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI . % . ./ VM , SR. PS