SAILEE DEVELOPERS P.LTD, MUMBAI V. DCIT 9(3), MUMBAI

ITA 5625/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78849 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-05-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 12-05-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 06-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: KARAN M THAKKAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUM BAI , , BEFORE SHRI SANJAY ARORA, AM AND SHRI AMIT SHUKLA, JM ./ I.T.A. NO. 5625/MUM/2012 ( / ASSESSMENT YEAR: 2009-10) SAILEE DEVELOPERS PRIVATE LIMITED A/004, PRATHMESH HORIZON, LINK ROAD, NEW MBH COLONY, BORIWALI (W), MUMBAI-400 092 / VS. DY. CIT 9(3), ROOM NO. 664-A, AAYKAR BHAWAN, M.K. MARG, MUMBAI-400 020 ' ./# ./PAN/GIR NO. AAHCS 0854 Q ( '$ /APPELLANT ) : ( %&'$ / RESPONDENT ) '$ ' ( / APPELLANT BY : SHRI KARAN M. THAKKAR %&'$ ' ( / RESPONDENT BY : SHRI PITAMBAR DAS )* + ' , / DATE OF HEARING : 12.05.2014 -./ ' , / DATE OF PRONOUNCEMENT : 12.05.2014 / 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)-20, MUMBAI (CIT(A) FOR SH ORT) DATED 20.07.2012, DISMISSING THE ASSESSEES APPEAL CONTESTING ITS ASSESSMENT U/S .143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR THE ASSESSMENT YEAR (A. Y.) 2009-10 VIDE ORDER DATED 21.12.2011. 2. OPENING THE ARGUMENTS FOR AND ON BEHALF OF THE A SSESSEE, IT WAS SUBMITTED BY THE LD. AUTHORIZED REPRESENTATIVE (AR), THE ASSESSEES COUNSEL, THAT THE ONLY ISSUE ARISING IN 2 ITA NO. 5625/MUM/2012 (A.Y. 2009-10) SAILEE DEVELOPERS PRIVATE LIMITED VS. DY. CIT THE INSTANT APPEAL IS WITH REGARD TO THE DISALLOWAN CE MADE IN THE SUM OF RS.7,48,846/- U/S.14A OF THE ACT IN THE TERMS OF RULE 8D OF THE I NCOME TAX RULES, 1962 (THE RULES HEREINAFTER). FURTHER, THOUGH HE DOES NOT DISPUTE E ITHER THE INVOCATION OF THE PROVISION OR THE APPLICATION OF THE RULE 8D IN THE INSTANT CASE, BEING SUBSEQUENT TO A.Y. 2008-09, WITH EFFECT FROM WHICH THE SAID RULE BECOMES MANDATORY; THE WORKING BY THE REVENUE IS INFLICTED WITH SERIOUS MISTAKES, ADDUCING A COPY OF THE ASSESSEES AUDITED BALANCE-SHEET FOR THE RELEVANT YEAR TO EXHIBIT THE SAME. THE VALU E OF THE INVESTMENTS AT THE BEGINNING AND THE CLOSE OF THE YEAR, AS ADOPTED BY THE REVENU E, INCLUDES INVESTMENT IN BANK FDRS AND A PARTNERSHIP FIRM, I.E., TO THE TUNE OF RS.150 LACS AND RS.50 LACS RESPECTIVELY. EXCLUDING THE SAME WOULD LEAVE A MARGINAL INVESTMEN T IN THE RANGE OF RS.1.50 LACS, ONLY QUA WHICH R. 8D COULD APPLY. THE ASSESSEE HAS, IN FACT , EARNED A NOMINAL DIVIDEND AT RS. 14,896/- FOR THE CURRENT YEAR. THE LD. DEPARTMENTAL REPRESENTATIVE (DR), ON THE OT HER HAND, WOULD RELY ON THE ORDERS OF THE AUTHORITIES BELOW, STATING THAT THERE IS NOTHING ON RECORD TO SUBSTANTIATE THE CLAIMS BEING NOW RAISED BY THE ASSESSEE BEFORE THE TRIBUNAL. 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. OUR FIRST OBSERVATION IN THE MATTER IS THAT THE AMOUNT OF DIV IDEND EARNED IS OF LITTLE CONSEQUENCE IN DETERMINING THE DISALLOWANCE U/S.14A, WHICH IS TO B E WITH REFERENCE TO AND QUA THE EXPENDITURE INCURRED AND BEING CLAIMED BY THE ASSES SEE, ON ACCOUNT OF IT BEING INCURRED IN RELATION TO THE INCOME NOT FORMING PART OF THE T OTAL INCOME. AS LONG AS THEREFORE THE ASSESSEE HAS INCURRED THE EXPENDITURE WHICH COULD B E EITHER DIRECTLY OR INDIRECTLY ATTRIBUTED TO THE SAID INCOME OR FOR EARNING THE SA ME, A DISALLOWANCE TO THE PROPORTIONATE EXTENT WOULD FOLLOW; THE ASSESSEE IN THE INSTANT CA SE CLAIMING INTEREST IN THE SUM OF RS.199.15 LACS (REFER, INTER ALIA, GODREJ & BOYCE MFG. CO. LTD. V. DY. CIT [2010] 328 ITR 81 (BOM) AND CHEMINVEST LTD. V. ITO [2009] 121 ITD 318 (DEL-SB)). FURTHER, IT IS NOT ONLY THE INVESTMENT IN SHARES, YIELDING DIVIDEND, B UT ALSO THAT IN THE PARTNERSHIP FIRM THAT WOULD STAND TO BE RECKONED FOR THE PURPOSE OF THE R ELEVANT INVESTMENT IN COMPUTING THE DISALLOWANCE UNDER RULE 8D, I.E., WHERE NO INTEREST INCOME IS CONTRACTED FOR, SO THAT THE 3 ITA NO. 5625/MUM/2012 (A.Y. 2009-10) SAILEE DEVELOPERS PRIVATE LIMITED VS. DY. CIT ONLY INCOME THAT COULD ARISE FROM THE SAID INVESTME NT IS THE SHARE OF PROFIT, WHICH IS TAX- EXEMPT. AS REGARDS THE INCLUSION OF BANK FDRS, WHIC H IS APPARENT FROM THE RELEVANT SCHEDULE OF THE BALANCE-SHEET, WE DEPRECIATE THE TE NDENCY OF THE REVENUE AUTHORITIES TO, FIRSTLY, PROCEED TO MECHANICALLY APPLY THE FORMULA OF R. 8D AND, SECONDLY, NOT APPLY THE CORRECTIVE EVEN AT THE APPELLATE STAGE, RESULTING I N THE ASSESSEE BEING REQUIRED TO CARRY THE MATTER TO THE TRIBUNAL. 4. IN VIEW OF THE FOREGOING, WE ONLY CONSIDER IT FI T AND PROPER TO RESTORE THE MATTER BACK TO THE FILE OF THE A.O. FOR CONSIDERATION AFRE SH OF THE ASSESSEES CASE, APPLYING THE MANDATE OF RULE 8D WITH REGARD TO THE FACTS OF THE CASE, EVEN AS MANDATED BY SECTION 14A(2) R.W.S. 14A(3) OF THE ACT. WE DECIDE ACCORDIN GLY. 5. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 0/ 1 )2 30 ' 4' 567 8 * 9 ' :; ORDER PRONOUNCED IN THE OPEN COURT ON MAY 12, 2014 SD/- SD/- (AMIT SHUKLA) (SANJAY ARORA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER <+ MUMBAI; =) DATED : 12.05.2014 *.)../ 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 %)C2 , , C2/ , <+ / DR, ITAT, MUMBAI 6. B D3 E + / GUARD FILE ! ( / BY ORDER, )/(* + (DY./ASSTT. REGISTRAR) , <+ / ITAT, MUMBAI