STRATEGIC CAPITAL CORPORATION LTD, MUMBAI V. ACIT (OSD) 2(3), MUMBAI

ITA 5792/MUM/2010

• Counselvise Citation: 579219914 RSA 2010
• Duration Of Justice: 1 year(s) 4 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Next Hearing Date: 17-11-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 16-07-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V V SHASTRI
• Keywords: Opportunity of being heard
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH H,MUMBAI BEFORE SHRI D.K. AGARWAL (JM) & SHRI R.K. PANDA ( AM) I.T.A. NO.5792/MUM/2010 (A.Y. 2007-08) M/S. STRATEGIC CAPITAL CORPORATION LTD., 44, STRATEGIC HOUSE, MINT ROAD, FORT, MUMBAI-400 001. PAN: AAACS5283Q. VS. ASSTT. COMMR. OF INCOME-TAX (OSD)- 2(3), MUMBAI. APPELLANT RESPONDENT APPELLANT BY SHRI VIMAL PUNMIYA. RESPONDENT BY SHRI V.V. SHA STRI. DATE OF HEARING 17-11-2011 DATE OF PRONOUNCEMENT 25 - 11 - 2011 O R D E R PER D.K. AGARWAL, JM : THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED A GAINST THE ORDER DATED 08-06-2010 PASSED BY THE LD. CIT(A) FOR THE ASSESSMENT YEAR 20 07-08. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE COMPANY IS ENGAGED IN THE BUSINESS AS A TRADER IN SLR AND NON-SLR BONDS. DURING THE CO URSE OF ASSESSMENT PROCEEDINGS, THE AO, FROM THE P & L ACCOUNT, OBSERVED THAT THE ASSESSEE HAS EARNED A DIVIDEND INCOME OF RS.3,42,669/- WHICH HAS BEEN CLAIMED AS EXEMPT. ON BEING ASKED AS TO WHY THE PROVISIONS OF SEC. 14A READ WITH RULE 8D SHOULD NOT BE APPLIED, THE AS SESEE, VIDE LETTER DATED 10-12-2009, MERELY SUBMITTED A WORKING FOR DISALLOWANCE OF EXPENDITURE OF RS.3,638/- U/S. 14A. HOWEVER, THE AO DID NOT ACCEPT THE ASSESSEES COMPUTATION. THE AO, AFTER APPLYING THE PROVISOS OF SEC. 14A READ ITA NO.5792/M/2010 STRATEGIC CAPITAL CORPN. LTD. 2 WITH RULE 8D AND KEEPING IN VIEW THE DECISION OF TH E SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. DAGA CAPITAL & MANAGEMENT CO. PVT. LTD. (11 7 ITD 169), WORKED OUT THE DISALLOWANCE AMOUNTING TO RS.5,37,073/- AS PER WORKING GIVEN AT PAGE 3 OF THE ASSESSMENT ORDER OVER AND ABOVE THE AMOUNT DISALLOWED BY THE ASSESSEE RS.3,63 8/- AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. ON APPEAL, THE LD. CIT(A), WHILE AGRE EING WITH THE VIEWS OF THE AO, CONFIRMED THE DISALLOWANCE 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 DI SALLOWANCE OF RS.5,37,073/- U/S.14A AND LEVY OF INTEREST U/S.234B AND 234C OF THE ACT. 4. AT THE TIME OF HEARING, BOTH THE PARTIES HAVE AG REED THAT THE ISSUE OF DISALLOWANCE OF RS.5,37,073/- U/S.14A STANDS COVERED BY THE JUDGMEN T OF HONBLE JURISDICTIONAL HIGH COURT IN GODREJ & BOYCE MFG. CO. LTD. VS. DCIT (2010) 328 IT R 81 (BOM.), THEREFORE, BOTH THE ISSUES MAY BE SET ASIDE TO THE FILE OF AO. 5. HAVING CAREFULLY CONSIDERED THE SUBMISSIONS OF T HE RIVAL PARTIES AND PERUSING THE MATERIAL AVAILABLE ON RECORD, WE FIND MERIT IN THE PLEA OF THE PARTIES THAT THE ISSUE STANDS COVERED BY THE RECENT JUDGMENT OF THE HONBLE JURISDICTIONA L HIGH COURT IN GODREJ & BOYCE MFG. CO. LTD. VS. DCIT (SUPRA), WHEREIN THEIR LORDSHIPS, AFTER CO NSIDERING THE DECISION OF THE TRIBUNAL IN DAGA CAPITAL MANAGEMENT PVT. LTD. (117 ITD 169) (MUM) (S B), WHILE HOLDING THAT THE PROVISIONS OF SUB-SECTIONS (2) AD (3) OF SEC. 14A OF THE ACT ARE CONSTITUTIONALLY VALID, HAVE HELD VIDE PLACITUM 88(VI) APPEARING AT PAGE 138 OF THE ITR AS UNDER : (VI) EVEN PRIOR TO ASSESSMENT YEAR 2008-09, WHEN R ULE 8D WAS NOT APPLICABLE, THE ASSESSING OFFICER HAS TO ENFORCE TH E PROVISIONS OF SUB SECTION (1) OF SECTION 14A. FOR THAT PURPOSE, THE A SSESSING OFFICER IS DUTY BOUND TO DETERMINE THE EXPENDITURE WHICH HAS BEEN INCURRED IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INC OME UNDER THE ACT. THE ASSESSING OFFICER MUST ADOPT A REASONABLE BASIS OR METHOD CONSISTENT WITH ALL THE RELEVANT FACTS AND CIRCUMSTANCES AFTER FURNISHING A REASONABLE OPPORTUNITY TO THE ASSESSEE TO PLACE ALL GERMANE MATERIAL ON THE RECORD.' ITA NO.5792/M/2010 STRATEGIC CAPITAL CORPN. LTD. 3 RESPECTFULLY FOLLOWING THE ABOVE JUDGMENT, WE SET A SIDE THE ORDERS PASSED BY THE REVENUE AUTHORITIES ON BOTH THE ISSUES AND SEND BACK THE MA TTER TO THE FILE OF THE AO DECIDE THE SAME AFRESH IN THE LIGHT OF THE DIRECTIONS OF THE HONBL E JURISDICTIONAL HIGH COURT IN THE ABOVE CITED CASE AND ACCORDING TO LAW AFTER PROVIDING REASONAB LE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE GROUNDS TAKEN BY THE ASSESSEE ARE THEREFORE PA RTLY ALLOWED FOR STATISTICAL PURPOSES. 6. IN THE RESULT, THE ASSESSEES APPEAL STANDS PART LY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE 25TH DAY OF NOVEMBER, 2011. SD/- SD/- (R.K. PANDA ) (D.K. AGARWAL) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI: 25TH NOVEMBER , 2011. NG: COPY TO : 1. ASSESSEE. 2.DEPARTMENT. 3 CIT(A)-6,MUMBAI. 4 CIT-2,MUMBAI. 5.DR,H BENCH,MUMBAI. 6.MASTER FILE. (TRUE COPY) BY ORDER, ASST.REGISTRA R, ITAT, MUMBAI. ITA NO.5792/M/2010 STRATEGIC CAPITAL CORPN. LTD. 4 DETAILS DATE INITIALS DESIGNATI ON 1. DRAFT DICTATED ON 18-11-2011 SR.PS/ 2. DRAFT PLACED BEFORE AUTHOR 21-11-2011 SR.PS/ 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/A M 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/ 6. KEPT FOR PRONOUNCEMENT ON SR.PS/ 7. FILE SENT TO THE BENCH CLERK SR.PS/ 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9. DATE ON WHICH FILE GOES TO THE AR 10. DATE OF DISPATCH OF ORDER