DHARMAYUG INVESTMENTS LTD, MUMBAI V. DCIT 1(1), MUMBAI

ITA 5381/MUM/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59701 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-01-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 24-01-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 01-07-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: C G K NAIR
• Assessee Lawyers: V MOHAN
• Keywords: Depreciation
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, D, MUMBAI BEFORE SHRI D.K.AGARWAL (JM) AND SHRI T.R.SOOD(AM) ITA NO.5381/MUM/2010 (ASSESSMENT YEAR: 2006-07) M/S DHARMAYUG INVESTMENTS LTD., THE TIMES OF INDIA BUILDING, DR.D.N.ROAD, FORT, MUMBAI-400001. PAN:AAACD1346D DY. COMMISSIONER OF INCOME TAX, RANGE -1(1), ROOM NO.579, AAYAKAR BHAVAN, M K ROAD, MUMBAI-400020. APPELLANT V/S RESPONDENT DATE OF HEARING : 24.1.2012 DATE OF PRONOUNCEMENT : 27.1.2012 APPELLANT BY : SHRI V.MOHAN RESPONDENT BY : SHRI C.G.K.NAIR O R D E R PER D.K.AGARWAL (JM) THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 11.2.2010 PASSED BY THE L D. CIT(A) FOR THE ASSESSMENT YEAR 2006-07. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF INVESTMENT AND LEASING, BROKING BUSINESS FOR SALE OF MUTUAL FUNDS, FILED RETURN DECLARING TOTAL INCOME O F RS.1,39,47,560/-. DURING THE COURSE OF ASSESSMENT ITA NO.5381/MUM/2010 (ASSESSMENT YEAR: 2006-07) 2 PROCEEDINGS, IT WAS INTERALIA OBSERVED BY THE AO TH AT THE ASSESSEE HAS CLAIMED DIVIDEND INCOME OF RS.1,50,92,318/- AS EXEMPT FROM TAXATION. THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THE DISALLOWANCE U/S 14A OF THE INCOME TAX ACT, 1961(IN SHORT THE ACT) BE NOT MADE AS PER RULE 8D OF THE INCOME TAX RULES, 1962. IN RESPONSE, THE ASSESSEE HAS FILED HIS WRITTEN EXPLANATION AND ALSO CONTENDE D THAT RULE 8D IS NOT APPLICABLE. HOWEVER, THE AO D ID NOT ACCEPT THE ASSESSEES EXPLANATION. THE AO AFT ER RELYING ON THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN ITO V/S DAGA CAPITAL MANAGEMENT P. LTD. (2009) 312 ITR (AT) 1 (SB) (MUM) APPLIED RULE 8D AND DISALLOWED A SUM OF RS.1,55,408/- U/S 14A OF THE ACT AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. ON APPEAL, THE LD.CIT(A) WHILE AGREEING WITH THE VIEWS OF THE AO, CONFIRMED THE DISALLOWANC E MADE BY THE AO. 3. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US CHALLENGING IN ALL THE GROUNDS THE SUSTENANCE OF ADDITION OF ITA NO.5381/MUM/2010 (ASSESSMENT YEAR: 2006-07) 3 RS.1,55,408/- MADE BY THE AO U/S 14A OF THE ACT READ WITH RULE 8D OF THE RULES. 4. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT AS PER PROFIT AND LOSS ACCOU NT THE TOTAL EXPENDITURES ARE RS.1,55,408/- WHICH INCLUDES DEPRECIATION OF RS.63,805/-. THE AO HAS SEPARATELY DISALLOWED DEPRECIATION OF RS.63,805/-, THEREFORE, HE HAS NO OBJECTION IF THE DISALLOWANCE U/S 14A IS REDUCED TO RS.91,603/- (TOTAL EXPENDITURE CLAIMED AS PER PROFIT AND LOSS ACCOUNT RS.1,55,408 RS.63,805/- DEPRECIATION SEPARATELY DISALLOWED) WHI CH WAS NOT OBJECTED TO BY THE LD. DR. 5. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABL E ON RECORD. WE FIND MERIT IN THE PLEA OF THE LD. COUN SEL FOR THE ASSESSEE THAT OUT OF TOTAL EXPENDITURE CLAI MED IN PROFIT AND LOSS ACCOUNT IS RS.1,55,408/-, THE A O SEPARATELY DISALLOWED THE DEPRECIATION OF RS.63,80 5/-, WHICH WAS NOT DISPUTED BY THE ASSESSEE, THEREFORE, BALANCE AMOUNT OF DISALLOWANCE U/S 14A COMES TO RS.91,603/- FOR WHICH BOTH THE PARTIES HAVE NO OBJECTION. THIS BEING SO, WE DIRECT THE AO TO REDU CE ITA NO.5381/MUM/2010 (ASSESSMENT YEAR: 2006-07) 4 THE DISALLOWANCE U/S 14A TO RS.91,603/- AS AGAINST RS.1,55,408/- DISALLOWED. WE HOLD AND ORDER ACCORDINGLY. THE GROUNDS TAKEN BY THE ASSESSEE ARE , THEREFORE, PARTLY ALLOWED. 6. IN THE RESULT, THE ASSESSEES APPEAL STANDS PART LY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27TH JAN.,2012. SD SD (T.R.SOOD) (D.K.AGARW AL) ACCOU NTANT MEMBER JUDICIAL MEMBER MUMBAI, 27TH JANUARY, 2012 SRL: COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT CONCERNED 4. CIT(A) CONCERNED 5. DR CONCERNED BENCH 6. GUARD FILE. TRUE COPY BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI