RICHMOND REALTY P.LTD, MUMBAI V. ITO 10(2)(2), MUMBAI

ITA 5595/MUM/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3694 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-03-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 16-11-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 05-09-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B S BIST
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) & SHRI RAM LAL NEGI (JM) I.T.A. NO. 5595 /MUM/201 2 (ASSESSMENT YEAR 2009 - 2010) M/S. RICHMOND REALTY PVT. LTD., SHRIKANT CHAMBERS, 314, ABOVE HERO HONDA SHOWROOM, NR. R.K. STUDIO, MUMBAI - 71. VS. ITO 10(2)(2), MUMBAI ( APPELLANT ) .. ( RESPONDENT ) PAN NO.AA DCR4669N ASSESSEE BY : NONE DEPARTMENT BY : SHRI B.S. BIST (SR. DR) DATE OF HEARING : 0 3 .03.2016 DATE OF PRONOUNCEMENT : 03 .03.2016 O R D E R PER B.R. BASKARAN, AM : - THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DT. 28.6.2012 PASSED BY LD . CIT(A) - 22, MUMBAI FOR ASSESSMENT YEAR 2009 - 10 ON THE FOLLOWING ISSUES (A) DISALLOWANCE MADE U/S 14A OF THE ACT. (B) DISALLOWANCE OF PART OF REMUNERATION PAID TO THE DIRECTORS. 2. NONE APPEARED ON BEHALF OF THE ASSESSEE. WE NOTICED THAT THE ASSESSEE HAS FILED THIS APPEAL WAY BACK IN SEPTEMBER, 2012. 2 M/S. RICHMOND REALTY PVT. LTD. ITA NO. 5595/MUM/2012 SUBSEQUENTLY IN 2015, THE NOTICE WAS SENT BY REGISTERED POST TO THE ADDRESS GIVEN IN FORM NO. 36 BUT THE SAME WAS RETURNED BY THE POSTAL DEPARTMENT WITH THE NOTING THAT THE ASSESSEE DID NOT COLLECT THE TAPAL DESPITE NOTICE GIVEN BY THEM TO THE ASSESSEE TWO TIMES. SINCE THE APPEAL IS AN OLD ONE, WE PREFER TO DISPOSE OF THE APPEAL, EX P ARTE , WITHOUT THE PRESENCE OF THE ASSESSEE. 3. WE HEARD THE L D . DR AND PERUSED THE RECORD. THE FIRST ISSUE RELATES TO DISALLOWANCE MADE U/S 14A OF THE ACT. THE ASSESSEE HAS HELD INVESTMENTS IN SHARES TO THE TUNE OF RS. 13.70 CRORES. THE ASSESSEE DID NO T RECEIVE ANY DIVIDEND INCOME. HOWEVER, THE AO TOOK THE VIEW THAT THE DISALLOWANCE IS REQUIRED TO BE MADE AS PER RULE 8D, AND ACCORDINGLY COMPUTED THE DISALLOWANCE OF RS.4,78,890/ - UNDER RULE 8D(2)(III) OF THE INCOME TAX RULES. THE LD CIT(A) ALSO CONFIRM ED THE SAME BY FOLLOWING THE DECISION RENDERED BY THE DELHI SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF CHEM INVESTMENTS LTD. (124 TTJ 577) . 4. WE HEARD THE LD. DR ON THIS ISSUE. THE DECISION RENDERED BY THE SPECIAL BENCH IN THE CASE OF CHEM INVESTMENTS LTD. HAS SINCE BEEN REVERSED BY THE HONBLE DELHI HIGH COURT. HENCE, WE ARE OF THE VIEW THAT THIS ISSUE REQUIRES AFRESH ADJUDICATION. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND RESTORE THE SAME TO HIS FILE WITH T HE DIRECTION TO ADJUDICATE THE SAME AFRESH AFTER HEARING THE ASSESSEE. 5. THE NEXT ISSUE RELATES TO DISALLOWANCE OF PART OF REMUNERATION PAID TO THE DIRECTORS. THE AO NOTICED THAT THE ASSESSEE DECLARED INCOME OF RS. 10 LACS ONLY AGAINST WHICH IT HAD CL AIMED RS. 4.31 LACS TOWARDS VARIOUS EXPENSES. BESIDES THE ABOVE, THE ASSESSEE HAD ALSO 3 M/S. RICHMOND REALTY PVT. LTD. ITA NO. 5595/MUM/2012 PAID REMUNERATION TO ITS DIRECTORS TO THE EXTENT OF RS. 17.00 LACS . THE AO CONSIDERED THE SAME TO BE ON THE HIGHER SIDE AND ACCORDINGLY DISALLOWED 60% THEREOF. THE LD . CIT(A) ALSO CONFIRMED THE SAME. 6. WE HEARD THE LD. DR ON THIS ISSUE AND PERUSED THE RECORD. WE NOTICED THAT THE LD. CIT(A) HAS CONFIRMED THE ORDER OF THE AO ON THIS ISSUE BY PLACING RELIANCE ON THE DECISION RENDERED BY THE JURISDICTIONAL BOMBAY HIGH C OURT IN THE CASE OF CIT V. SATHRUNJAY DIAMOND (261 ITR 258) AND ALSO THE DECISION RENDERED BY THE HONBLE SUPREME COURT IN THE CASE OF NUND & SAMONT CO. PVT. LTD. (78 ITR 268) . 7. WE HEARD THE LD. DR ON THIS ISSUE AND PERUSED THE RECORD. WE NOTICED THAT THE REMUNERATION PAID TO THE DIRECTORS HAVE BEEN TESTED UNDER THE PROVISIONS OF SEC. 40A(2)(A) OF THE ACT. WE NOTICED THAT THE ASSESSEE HAS FAILED TO JUSTIFY THE QUANTUM OF REMUNERATION PAID TO ITS DIRECTORS. UNDER THESE SET OF FACTS, WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE LD. CIT(A) ON THIS ISSUE. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 03 .03.2016. S D / - S D / - (RAM LAL NEGI) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 03 . 03 . 2016 * SSL * 4 M/S. RICHMOND REALTY PVT. LTD. ITA NO. 5595/MUM/2012 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI