DUFON LABORATORIES P.LTD, MUMBAI V. DCIT 8(1),

ITA 5527/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75475 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 04-02-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 03-09-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DEEPAK SUTARIYA
• Assessee Lawyers: RAJESH S ATHAVALE
• Keywords: Depreciation; Search and seizure
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUM BAI , , BEFORE SHRI SANJAY ARORA, AM AND SHRI VIJAY PAL RA O, JM ./ I.T.A. NO. 5527/MUM/2012 ( / ASSESSMENT YEAR: 2009-10) DUFON LABORATORIES P. LTD. E-419, FLORAL DECK PLAZA, CENTRAL MIDC ROAD, ANDHERI (E), MUMBAI-400 093 / VS. DY. CIT-8(1), AAYAKAR BHAVAN, MUMBAI-400 020 ./ ./PAN/GIR NO. AAACD 1609 F ( ! /APPELLANT ) : ( '#! / RESPONDENT ) ! $ % / APPELLANT BY : SHRI RAJESH S. ATHAVALE '#! $ % / RESPONDENT BY : SHRI DEEPAK SUTARIYA & ' ( $ ) * / DATE OF HEARING : 04.02.2014 +,- $ ) * / DATE OF PRONOUNCEMENT : 07.02.2014 . / O R D E R PER SANJAY ARORA, A. M.: THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-16, MUMBAI (CIT(A) FOR SH ORT) DATED 01.06.2012, PARTLY ALLOWING THE ASSESSEES APPEAL CONTESTING ITS ASSES SMENT U/S.143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR THE ASSESSMEN T YEAR (A.Y.) 2009-10 VIDE ORDER DATED 29.04.2011. 2.1 OPENING THE ARGUMENTS FOR AND ON BEHALF OF THE ASSESSEE, IT WAS SUBMITTED BY THE LD. AUTHORIZED REPRESENTATIVE (AR), THE ASSESSEES COUNSEL, THAT THE APPEAL RAISES TWO ISSUES, EACH OF WHICH IS COVERED BY THE DECISION BY THE TRIBUNAL IN ITS OWN CASE FOR THE 2 ITA NO. 5527/MUM/2012 (A.Y. 2009-10) DUFON LABORATORIES P. LTD. VS. DY. CIT EARLIER YEARS, I.E., A.YS. 2007-08 AND 2008-09. PRO CEEDING ISSUE-WISE, HE CONTINUED, THE FIRST ISSUE IS IN RESPECT OF DISALLOWANCE U/S. 37(1 ) OF THE ACT IN RESPECT OF TRAINING EXPENDITURE OF THE DAUGHTER OF THE COMPANYS CMD. T HE TRIBUNAL HAS FOR THE EARLIER YEARS RESTORED THE MATTER BACK TO THE FILE OF THE ASSESSI NG OFFICER (A.O.), TAKING US THROUGH THE RELEVANT PART OF THE SAID ORDERS. A LIKE RESTORATION FOR THIS YEAR AS WELL MAY BE GRANTED. THE SECOND ISSUE, PRESSED PER GROUND NO. 2, IS IN R ESPECT OF DISALLOWANCE IN THE SUM OF RS.1,29,783/- U/S.14A READ WITH RULE 8D. PL ACING A COPY OF THE WORKING IN RESPECT OF SECTION 14A DISALLOWANCE, AS FURNISHED BEFORE TH E A.O., ON RECORD, HE STATED THAT THE ASSESSEE HAD SUO MOTU DISALLOWED RS.47,269/- BY WAY OF INTEREST UNDER RU LE 8D(2)(II). HOWEVER, AS NO OTHER INDIRECT EXPENDITURE TOWARD TA X-EXEMPT DIVIDEND INCOME (AT RS. 17.39 LACS) WAS INCURRED, THE DISALLOWANCE WAS REST RICTED THERETO. THE A.O., RATHER THAN STATING HIS REASONS FOR BEING NOT IN AGREEMENT WITH THE ASSESSEE, APPLIED R. 8D AND, ACCORDINGLY, DISALLOWED A FURTHER SUM OF RS.1,29,78 3/- UNDER R. 8D(2)(III), AND WHICH STOOD CONFIRMED BY THE LD. CIT(A), AGAIN WITHOUT ST ATING REASONS FOR THE SAME. 2.2 THE LD. DEPARTMENTAL REPRESENTATIVE (DR), ON TH E OTHER HAND, WOULD RELY ON THE ORDERS OF THE AUTHORITIES BELOW, STATING OF THEIR O RDERS AS BEING CONSISTENT WITH THE FACTS OF THE CASE AND THE LAW IN THE MATTER. 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD, INCLUDING THE ORDERS BY THE TRIBUNAL IN THE ASSESSEES OWN CASE F OR A.Y. 2007-08 (AT PB PGS. 8 TO 14) AND A.Y. 2008-09 (AT PB PGS. 1-7). 3.1 THE ISSUE WITH REGARD TO THE EDUCATION EXPENSES OF MS. PROTIMA WAGH IN USA HAS BEEN EXAMINED FROM THE POINT OF VIEW OF THE RESPECT IVE CASES OF BOTH THE PARTIES BY THE TRIBUNAL AND, FINDING THE ISSUE AS FACTUALLY INDETERMINATE, RESTO RED THE MATTER BACK TO THE FILE OF THE A.O. NO IMPROVEMENT IN THEIR RESPECTIVE CASES HAVING BEEN MADE FOR THE FOLLOWING YEAR (A.Y. 2008-09), THE SAME COURSE WAS FOLLOWED BY THE TRIBUNAL. THE SAME POSITION CONTINUES TO OBTAIN FOR THE CURRENT YEAR A S WELL, AS APPARENT FROM THE ORDERS OF THE AUTHORITIES BELOW. EVEN OTHERWISE, IT WOULD NOT BE PROPER FOR THE TRIBUNAL TO EMBARK 3 ITA NO. 5527/MUM/2012 (A.Y. 2009-10) DUFON LABORATORIES P. LTD. VS. DY. CIT ON AN ADJUDICATION, HAVING SET ASIDE THE MATTER TO THE REVENUE FOR THE EARLIER YEARS. WE, ACCORDINGLY, RESTORE THE MATTER WITH LIKE DIRECTION S, I.E., AS MADE BY THE TRIBUNAL VIDE PARA 3.4 OF ITS ORDER FOR A.Y. 2007-08 (IN ITA NO.6825/M UM/2011) AND PARA 4 FOR A.Y. 2008- 09 (IN ITA NO.7565/MUM/2011) BACK TO THE FILE OF TH E A.O. WE DECIDE ACCORDINGLY. 3.2 AS REGARDS THE DISALLOWANCE U/S.14A, THE INITIA L ONUS, EVEN AS EXPLAINED BY THE TRIBUNAL IN THE ASSESSEES CASE FOR A.Y. 2008-09 (R EFER PARAS 6.1 AND 6.2), IS ON THE ASSESSEE, AND WHICH HAS TO BE DISCHARGED WITH REFER ENCE TO ITS BOOKS OF ACCOUNT. MERELY DENYING INCURRING ANY EXPENDITURE WHICH, IT MUST BE APPRECIATED, WOULD BE EMBEDDED IN THE VARIOUS ACCOUNTS HEADS WHERE-UNDER THE GENERAL ADMINISTRATIVE EXPENDITURE INCURRED BY ANY BUSINESS ORGANIZATION, VIZ. RENT, TELEPHONE, OFFICE EXPENDITURE (INCLUDING DEPRECIATION ON OFFICE BUILDING; REPAIRS AND MAINTE NANCE THEREOF), ELECTRICITY, ETC. IS DEBITED. THE LEGAL ASPECT QUA SECTION 14A(2) STANDS DISCUSSED IN DETAIL BY THE T RIBUNAL IN THE CASE OF AFL (P.) LTD. VS. ASST. CIT [2013] 28 ITR (TRIB) 263 (MUM), ALSO NOTING THE DECISIONS IN THE MATTER BY THE HONBLE COURTS, AS GODREJ & BOYCE MANUFACTURING COMPANY LTD. VS. DY. CIT REPORTED IN [2010] 328 ITR 81 (BOM) AND MAXOPP INVESTMENT LTD. VS. CIT [2012] 347 ITR 272 (DELHI). IN THE FACTS OF THE PRESENT CASE, WE OBSERVE MOVEM ENT IN THE INVESTMENT - WHICH IS STATED TO BE IN MUTUAL FUNDS, PORTFOLIO, SO THAT TH ERE HAS BEEN ACQUISITION AS WELL AS DISPOSAL OF INVESTMENTS DURING THE YEAR. IN FACT, E VEN AS STATED BY THE TRIBUNAL PER ITS SAID ORDER, THE DECISION-MAKING IN ITS RESPECT (INVESTME NT) IS LOCATED AT THE HIGHER ECHELONS OF THE MANAGEMENT, AND WHICH WOULD ONLY BE UPON EXPEND ING TIME AND RESOURCES. THE ASSESSE HAS CLEARLY NOT DISCHARGED THE SAID INITIAL ONUS IN THE INSTANT CASE, SO THAT THE REVENUE COULD NOT BE FAULTED WITH FOR APPLYING R. 8 D, WHICH IN FACT STANDS APPLIED BY THE ASSESSEE AS WELL, ALBEIT IN PART (REFER PARA 2.1 AB OVE). THE LD. AR, THOUGH FACTUALLY NOT INCORRECT WHILE STATING BEFORE US THAT THE MATTER S TANDS REMITTED BY THE TRIBUNAL BACK TO THE FILE OF THE A.O. FOR THAT YEAR, HAS IN FACT, WE ARE AFRAID TO SAY, MIS-REPRESENTED THE FACTS, INASMUCH AS THE SAID RESTORATION WAS ONLY FOR THE L IMITED PURPOSE OF WORKING THE CORRECT AMOUNT OF DISALLOWANCE U/R. 8D, OBSERVING A DIFFERE NCE IN THE SAID WORKING (REFER PARA 6.3 4 ITA NO. 5527/MUM/2012 (A.Y. 2009-10) DUFON LABORATORIES P. LTD. VS. DY. CIT OF ITS ORDER). NO SUCH CONFLICT OR UNCERTAINTY INFL ICTS THE AMOUNT PER R. 8D(2)(III) FOR THE CURRENT YEAR, ITS WORKING AT THE IMPUGNED AMOUNT OF RS.1,29,783/- HAVING BEEN FURNISHED BY THE ASSESSEE ITSELF. WE, THEREFORE, CONFIRM THE SAID DISALLOWANCE. WE DECIDE ACCORDINGLY. 4. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY A LLOWED FOR STATISTICAL PURPOSES. /- )0 '1 2/) $ 3$ 456 7 8 7. 9 ) $ ) :; ORDER PRONOUNCED IN THE OPEN COURT ON FEBRUARY 07, 2014 SD/- SD/- (VIJAY PAL RAO) (SANJAY ARORA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER & <( MUMBAI; =' DATED : 07.02.2014 .'../ ROSHANI , SR. PS !' # $%&' (!'% / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. '#! / THE RESPONDENT 3. & >) ( ) / THE CIT(A) 4. & >) / CIT - CONCERNED 5. A B ')'C1 , * C1- , & <( / DR, ITAT, MUMBAI 6. B D2 E ( / GUARD FILE !' ) / BY ORDER, */)+ , (DY./ASSTT. REGISTRAR) , & <( / ITAT, MUMBAI