IL & FS TRANSPORTATION NETWORSK LTD, MUMBAI V. ADDL CIT RG 10(1), MUMBAI

ITA 5888/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 55490 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Assessment Year: 2007-2008
• Appeal Filed On: 26-07-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SANJIV DUTT
• Assessee Lawyers: D V LAKHANI
• Keywords: Rule 8D; Set aside
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, I, MUMBAI BEFORE S/SHRI D.K.AGARWAL (JM) AND B. RAMAKOTAIAH ( A.M ) ITA NO.5888/MUM/2010 (ASSESSMENT YEAR : 2007-08) IL&FS TRANSPORTATION NETWORKS LTD., PLOT NO.C-22, G BLOCK, BANDRA KURLA COMPLEX, BANDRA (EAST), MUMBAI-400051 PAN: AABCC5460A ADDL. COMMISSIONER OF INCOME TAX, 10(1), MUMBAI. APPELLANT V/S RESPONDENT DATE OF HEARING : 29.9.2011 DATE OF PRONOUNCEMENT : 12.10.2011 APPELLANT BY : SHRI D.V.LAKHANI RESPONDENT BY : SHRI SANJIV DUTT O R D E R PER D.K.AGARWAL (JM) THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 31.5.2010 PASSED BY THE LD . CIT(A) FOR THE ASSESSMENT YEAR 2007-08. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE COMPANY IS ENGAGED IN THE BUSINESS OF SURFACE TRA NSPORT BUSINESS AND TRADING IN CONSTRUCTION MATERIALS, FI LED RETURN DECLARING TOTAL INCOME AT RS.73,32,91,700/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO FURNISH DETAILS U/S 14A OF THE INCOME TAX ACT, 1 961(IN SHORT THE ACT) READ WITH RULE 8D OF THE INCOME TA X RULES, ITA NO.5888/MUM/2010 (ASSESSMENT YEAR : 2007-08) 2 1962. IN RESPONSE, IT WAS INTERALIA SUBMITTED THAT THE ASSESSEE COMPANY HAS USED ITS OWN FUNDS IN MAKING SUCH INVESTMENTS, THEREFORE, NO DISALLOWANCE SHOULD BE M ADE U/S 14A OF THE ACT. HOWEVER, THE AO DID NOT ACCEPT THE ASSESSEES SUBMISSIONS. THE AO AFTER RELYING ON TH E DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF ITO V/S DAGA CAPITAL MANAGEMENT PVT. LTD. AND OTHE R DECISION WORKED OUT THE DISALLOWANCE U/S 14A OF THE ACT AMOUNTING TO RS.3,83,53,875/- AS PER THE CALCULATIO N APPEARING AT PAGE 3 OF THE ASSESSMENT ORDER. ON A PPEAL, THE LD. CIT(A) FOLLOWING THE EARLIER APPELLATE ORDE R FOR THE IMMEDIATELY PRECEDING YEAR 2006-07 CONFIRMED THE AD DITION 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 THE ADDITION OF RS.3,83, 53,875/- MADE BY THE AO U/S 14A READ WITH RULE 8D OF THE IN COME TAX RULES, 1962. 4. AT THE TIME OF HEARING, BOTH THE PARTIES HAVE AG REED THAT THIS ISSUE STANDS COVERED BY THE JUDGMENT OF HON'BLE JURISDICTIONAL HIGH COURT IN GODREJ & BOYCE MFG. CO . LTD., V/S. DCIT (2010) 328 ITR 81 (BOM.) THEREFORE, THE ISSUE MAY BE SET ASIDE TO THE FILE OF THE ASSESSING OFFICER. ITA NO.5888/MUM/2010 (ASSESSMENT YEAR : 2007-08) 3 5. HAVING CAREFULLY HEARD THE SUBMISSIONS OF THE RI VAL PARTIES AND PERUSING THE MATERIAL AVAILABLE ON RECO RD, WE FIND MERIT IN THE PLEA OF THE PARTIES THAT THE ISSUE ST ANDS COVERED BY THE RECENT JUDGMENT OF THE HONBLE JURISDICTIO NAL HIGH COURT IN GODREJ & BOYCE MFG. CO. LTD., V/S. DCIT ( SUPRA), WHEREIN THEIR LORDSHIPS AFTER CONSIDERING THE DECI SION OF THE TRIBUNAL IN DAGA CAPITAL MANAGEMENT PVT. LTD . (117 ITD 169 (MUM)(SB), WHILE HOLDING THAT THE PROVISION S OF SUB SECTIONS (2) AND (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 RULE 8D WAS NOT APPLICABLE, THE ASSESSING OFFICER H AS TO ENFORCE THE PROVISIONS OF SUB SECTION (1) OF SEC TION 14A. FOR THAT PURPOSE, THE ASSESSING OFFICER IS DU TY BOUND TO DETERMINE THE EXPENDITURE WHICH HAS BEEN INCURRED IN RELATION TO INCOME WHICH DOES NOT FOR M PART OF THE TOTAL INCOME UNDER THE ACT. THE ASSESS ING OFFICER MUST ADOPT A REASONABLE BASIS OR METHOD CONSISTENT WITH ALL THE RELEVANT FACTS AND CIRCUMST ANCES AFTER FURNISHING A REASONABLE OPPORTUNITY TO THE ASSESSEE TO PLACE ALL GERMANE MATERIAL ON THE RECOR D; RESPECTFULLY FOLLOWING THE ABOVE JUDGMENT WE SET AS IDE THE ORDERS PASSED BY THE REVENUE AUTHORITIES ON THIS AC COUNT AND SEND BACK THE MATTER TO THE FILE OF THE ASSESSING O FFICER TO DECIDE THE SAME AFRESH IN THE LIGHT OF THE DIRECTI ONS OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE ABOVE CITE D CASE AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEA RD TO THE ITA NO.5888/MUM/2010 (ASSESSMENT YEAR : 2007-08) 4 ASSESSEE AND ACCORDINGLY THE GROUNDS TAKEN BY THE A SSESSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. 6. IN THE RESULT, THE ASSESSEES APPEAL STANDS PAR TLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH O CT., 2011. SD S D (B. RAMAKOTAIAH) (D .K.AGARWAL) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 12 TH OCT., 2011 SRL: COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT CONCERNED 4. CIT(A) CONCERNED 5. DR CONCERNED BENCH 6. GUARD FILE. BY ORDER TRUE COPY ASSTT. REGISTRAR, ITAT, MUMBAI