PAWAN KUMAR P. CHAUDHARY, MUMBAI V. DCIT CIR 4(2), MUMBAI

ITA 52/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8239 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-11-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 04-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANDIP GOYAL
• Assessee Lawyers: PAWAN KUMAR CHOUDHARY
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C, MUMBAI BEFORE SHRI RAJENDRA SINGH, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER ITA NO. 52/MUM/2011 (ASSESSMENT YEAR: 2006-07) M/S PAWAN KUMAR P. CHAUDHARY 187, DADI SETH, AGYARI LANE, SINGHANIA WADI 4 TH FLOOR, MUMBAI -400 020 PAN AAAPC 5238 N VS DCIT CIR 4(2) MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PAWAN KUMAR CHOUDHARY RESPONDENT BY : SHRI SANDIP GOYAL DATE OF HEARING: 19.11.2012 DATE OF PRONOUNCEMENT: 19.11.2012 O R D E R PER VIVEK VARMA, JM: THE INSTANT APPEAL IS FILED BY THE ASSESSEE, AGAINST THE O RDER OF THE CIT(A) 11, MUMBAI, DATED 27.10.2010, WHEREIN THE SOLITARY ISSUE IS WITH REGARD TO THE CORRECTNESS OF APPLICABILITY OF SECTION 1 4A READ WITH RULE 8D. 2. THE ASSESSEE HIMSELF REPRESENTED HIS CASE AND SUBMITTED THAT (A) RULE 8D IS NOT APPLICABLE AS THE ASSESSMENT YEAR INVOKED IN 2006-07, (B) HE FURTHER SUBMITTED THAT EVEN SECTION 14A CANNOT BE MADE APPLICABLE BECAUSE, THOUGH THE ASSESSEE IS IN SHARE TRADIN G BUSINESS, HE HAS EARNED DIVIDEND INCOME ON HIS OLD INVESTMENTS, AND THAT THE DIVIDENDS ARE AUTOMATICALLY CREDITED IN HIS BANK ACCOUNT T HOUGH ECS ITA NO. 52/MUM/2011 M/S PAWAN KUMAR P. CHAUDHARY 2 FACILITY & (C) THAT IN THE PROCEEDINGS YEAR, THE COORDINATE BENCH OF T HE ITAT IN HIS CASE IN ITA NO. 530/MUM/2009 HAD DELETED TH E ADDITION MADE U/S 14A. 3. THE ASSESSEE, THEREFORE, PLEADED THAT IN THE CURRENT YEAR AS WELL, THE DISALLOWANCE SHOULD BE DELETED. 4. THE DR RELIED ON THE ORDERS OF THE REVENUE AUTHORITY. 5. WE HAVE PERUSED THE ORDERS OF THE REVENUE AUTHORIT Y AND HAVE ALSO PERUSED THE ORDER OF THE COORDINATE BENCH IN THE A SSESSEES OWN CASE IN ASSESSMENT YEAR 2005-06, AND WE FIND THAT THOUG H THE CIT(A) AGREED RULE 8D IS NOT TO BE APPLIED, BUT HE APPLIED THE S AME FORMULA AND ASSESSED THE SAME FIGURE OF DISALLOWANCE OF RS. 2,28,04 7, AS COMPUTED BY THE AO. THIS WE CANNOT SUSTAIN AND WE DELET E THIS ADDITION. HOWEVER, SECTION 14A CANNOT BE IGNORED AND CERT AIN DISALLOWANCE HAS TO BE MADE, WE FIND OURSELVES BEING COVERE D BY THE COORDINATE BENCH IN HIS OWN CASE, BUT THE COORDINATE DID NOT OBSERVE IN DEFINITE TERMS THAT WHETHER THE ASSESSEE WAS MAINTAININ G SEPARATE BOOKS FOR THE PURPOSE OF BUSINESS AND FOR INVESTMENTS. 5. IN THESE CIRCUMSTANCES, WE FEEL THAT IN THE INTERES T OF JUSTICE, THE ISSUE U/S 14A BE RESTORED TO THE FILE OF THE AO, WHO SHALL EXAMINE THE DISTINCT CONDUCT OF BUSINESS OF TRADING OF SHARES ON THE O NE HAND AND INVESTMENTS IN SHARES ON THE OTHER. HE SHALL ALSO GIVE DE FINITE FINDING ON THE ISSUE, THAT NO BORROWED FUNDS HAVE BEEN UTILIZED B Y THE ASSESSEE TO FUND HIS INVESTMENTS, AND THEN ACCORDINGLY DECIDE, IF A T ALL, ANY DISALLOWANCE IS CALLED FOR. 6. AS A CONSEQUENCE, THE ORDER OF CIT(A), DISALLOWING RS. 2,28,047 UNDER SECTION 14A IS SET ASIDE, WITH THE ABOVE DIRECTIONS TO THE AO, NEEDLESS TO SAY THAT THE AO SHALL AFFORD ADEQUATE OPPORT UNITY TO THE ASSESSEE TO PRESENT HIS CASE. ITA NO. 52/MUM/2011 M/S PAWAN KUMAR P. CHAUDHARY 3 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 19/11/2012. SD/- ( RAJENDRA SINGH ) ACCOUTANT MEMBER SD/- ( VIVEK VARMA ) JUDICIAL MEMBER MUMBAI, DATE: 19/11/2012 COPY TO : 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A)- 22 , MUMBAI. 4) THE CIT 10, MUMBAI, 5) THE D.R. C BENCH, MUMBAI. 6) COPY TO GUARD FILE. BY ORDER ASSTT. REGISTRAR I.T.A.T., MUMBAI RASIKA