JYOTI CERMIC INDUSTRIES P. LTD, MUMBAI V. DCIT 5(2), MUMBAI

ITA 5746/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 55550 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2011
• Appeal Filed By: Assessee
• Bench Allotted: I
• Assessment Year: 2007-2008
• Appeal Filed On: 15-07-2010
• Court: TRIBUNAL
• Section: 5(2); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH I BEFORE SHRI J SUDHAKAR REDDY (AM) & SHRI VIJAY PAL RAO (JM) I.T.A.NO. 5746/MUM/2010 (ASSESSMENT YEAR : 2007-08) JYOTI CERAMIC INDUSTRIES P. LTD. B-603, PARLE UDYAN CHS LTD. 25, PARK ROAD VILE PARLE EAST MUMBAI-400 057. VS. DCIT 5(2) ROOM NO. 571 AAYAKAR BHAVAN M.K. ROAD MUMBAI-400 020. PAN/GIR NO. : AAACJ0247P ASSESSEE BY : SHRI K. GOPAL DEPARTMENT BY : SHRI SUNIL KUMAR SINGH DATE OF HEARING : 22.9.2011 DATE OF PRONOUNCEMENT : 28.9.2011 ORDER PER J. SUDHAKAR REDDY, (AM) :- THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF LEARNED CIT(A)-9, MUMBAI DATED 25.5.2010 FOR A.Y . 2007-08. 2. THE SOLE ISSUE FOR ADJUDICATION IS QUANTIFICATIO N OF DISALLOWANCE U/S. 14A OF THE ACT. 3. AFTER HEARING RIVAL CONTENTION, WE FIND THAT THE REVENUE AUTHORITIES HAVE FOLLOWED THE DECISION OF THE SPECIAL BENCH OF THE ITAT IN THE CASE OF ITO VS. DAGA CAPITAL MANAGEMENT LTD., 26 SOT 603 (M UM)(SB) AND CONFIRMED THE DISALLOWANCE MADE BY THE ASSESSING OF FICER UNDER PROVISIONS OF RULE 14A BY APPLYING RULE 8D. JURISD ICTIONAL HIGH COURT IN THE CASE OF GODREJ AND BOYCE MANUFACTURING CO. LTD. , 328 ITR 81 (BOM) HAS REVERSED THE DECISION OF THE TRIBUNAL IN THE CA SE OF DAGA CAPITAL MANAGEMENT LTD. (SUPRA) AND HELD THAT RULE 8D CAN B E APPLIED ONLY PROSPECTIVELY. TO THIS EXTENT, THE ORDER OF LEARNED CIT(A) HAS TO BE REVERSED. BEFORE US LEARNED COUNSEL FOR THE ASSESSE E RELIED ON THE FOLLOWING DECISIONS :- JYOTI CERAMIC INDUSTRIES P. LTD. 2 SUPREME NON WOVENS P. LTD., ITA NO. 1295/MUM/2009 DATED 29.12.2010, E BENCH FOR A.Y. 2005-06. M/S. GODREJ AGROVET LTD. VS. ACIT, ITA NO. 1629/MUM /09 DATED 17.9.2010, G BENCH FOR A.Y. 2005-06. HE SUBMITTED THAT THE PRESUMPTION IN LAW IS IN HIS FAVOUR AND HENCE ON FACTS, NO DISALLOWANCE CAN BE MADE U/S. 14A. WHILE IT IS TRUE THAT THE COURT HAD TAKEN SUCH A VIEW, AS THE ASSESSING OFFIC ER HAS NOT LOOKED INTO THE MATTER, WE SET ASIDE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION IN ACCORDANCE WITH LAW. THE ASSESSING OFFICER SHALL KEEP IN MIND THE FOLLOWING DECISIONS OF THE TRIBUNA L WHILE ADJUDICATING THE MATTER. SHOPPERS STOP LTD. VS. ACIT, ITA NOS. 1448 & 4475/MUM/2010 DATED 30.8.2011 FOR A.Y. 2006-07 & 20 07- 08. M/S. K. RAHEJA CORP. PVT. LTD., ITA NO. 4099/MUM/20 10 DATED 24.6.2011 FOR A.Y. 1999-2000 M/S. SAHARA INDIA MASS COMMUNICATION LTD. VS. ACIT, ITA NO. 522/MUM/2006 DATED 28.4.2011 FOR A.Y. 2002-03 ACIT VS. VINOD CHOPRA FILMS P. LTD., ITA NO. 4019/M UM/2010 DATED 29.7.2011 FOR A.Y. 2006-07. SUPREME NON WOVENS P. LTD., ITA NO. 1295/MUM/2009 D ATED 29.12.2010, E BENCH FOR A.Y. 2005-06. M/S. GODREJ AGROVET LTD. VS. ACIT, ITA NO. 1629/MUM /09 DATED 17.9.2010, G BENCH FOR A.Y. 2005-06. 4. IN ALL THESE CASES IT HAS BEEN HELD THAT, IF THE RE ARE SUFFICIENT INTEREST FREE ADVANCES AVAILABLE WITH THE ASSESSEE, PRESUMPTION IS THAT, THE INVESTMENT WOULD HAVE BEEN MADE, OUT OF THESE I NTEREST FREE FUNDS GENERATED OR AVAILABLE WITH THE COMPANY. IF THE INT EREST FREE FUNDS WERE SUFFICIENT TO MEET THE INVESTMENT THEN NO DISALLOWA NCE OF INTEREST EXPENDITURE CAN BE MADE U/S. 14A. HENCE, THIS GROU ND OF THE ASSESSEE ON THE ISSUE ON DISALLOWANCE U/S. 14A, IS SET ASID E TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL ADJU DICATE THE MATTER AFRESH BY CONSIDERING ALL CONTENTIONS OF THE ASSESS EE. JYOTI CERAMIC INDUSTRIES P. LTD. 3 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER HAS BEEN PRONOUNCED ON 28 TH DAY OF SEPTEMBER, 2011. SD/- (VIJAY PAL RAO) JUDICIAL MEMBER SD/- (J.SUDHAKAR REDDY) ACCOUNTANT MEMBER DATED : 28 TH SEPTEMBER, 2011. COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A)-CONCERNED. 4. THE CIT, CONCERNED. 5. THE DR CONCERNED, MUMBAI 6. GUARD FILE BY ORDER TRUE COPY ASSTT. REGISTRAR, ITAT, MUMBAI PS