JAGUAR SERVICES P. LTD, MUMBAI V. ITO RG 10(2)3, MUMBAI

ITA 5996/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3917 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-05-2016
• Appeal Filed By: Assessee
• Bench Allotted: J
• Assessment Year: 2010-2011
• Appeal Filed On: 25-09-2014
• Court: TRIBUNAL
• Department Lawyers: SHABANA PARVEEN
• Assessee Lawyers: FALE E H BILIMORIA
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL J , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI SANJAY GARG , JM ./ ITA NO. 5996 / MUM/20 1 4 ( / ASSESSMENT YEAR : 20 10 - 11 ) JAGUAR SER VICES PRIVATE LIMITED, KALYANIWALLA & MISTRY, ARMY & NAVY BUILDING, 148, MAHATMA GANDHI ROAD, MUMBAI - 400001 VS. ITO - 10 ( 2 )( 3 ), MUMBAI ./ ./ PAN/GIR NO. : A AA CJ 1950 H ( / APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI FALEE H. BILIMORIA /REVENUE BY : MISS SHABANA PARVEEN / DATE OF HEARING : 0 4 /05/2016 / DATE OF PRONOUNCEMENT 04/05 /201 6 / O R D E R PER R.C.SHARMA (A.M) : T HIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - MUMBAI, FOR THE ASSESSMENT YEAR 20 10 - 11 . 2. ONLY GRIEVANCE OF THE ASSESSEE RELATES TO DISALLOWANCE OF RS.2,73,936/ - MADE BY THE AO U/S.14A R.W.RULE 8D AND THEREBY CONFIRMED BY THE CIT(A) . 3 . RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF ADVERTISING AND PROMOTIONAL ACTIVITIES. THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING TOTAL LOSS OF RS.9,40,449/ - , WHICH W AS PROCESSED ITA NO. 5996 /1 4 2 U/S.143(1) OF THE ACT. DURING THE ASSESSMENT PROCEEDING THE AO DID NOT ACCEPT THE CONTENTION OF ASSESSEE IN REGARD TO THE EXPENSES ATTRIBUTABLE TO EARNING OF THE DIVIDEND INCOME AND DISALLOWED THE SAME. IN APPEAL, THE CIT(A) UPHELD THE ASSESSM ENT ORDER. NOW, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. AT THE OUTSET, LD. AR PLACED AN ORDER OF TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2009 - 2010, WHEREIN UNDER SIMILAR FACTS AND CIRCUMSTANCES, MATTER WAS RESTORED BACK TO THE FILE OF AO AFTER OBSERVING AS UNDER : - 6. WE HAVE CONSIDERED THE SUBMISSIONS OF TH E ID. REPRESENTATIVES OF THE PARTIES. IT MAY BE OBSERVED THAT IN THE CASE OF 'GODREJ & BOYCE MANUFACTURING CO. LTD. 328 ITR 81, THE HON'BLE BOMBAY HIG H COURT HAS H ELD THAT RULE 8 D R.W.S. 14A(2) IS NOT ARBITRARY OR UNREASONABLE BUT CAN BE APP LIED ONLY IF THE ASSESSEE'S METHOD IS NOT SATISFACTORY. IT HAS BEEN FURTHER HELD THAT RULE 8 D IS NOT RETROSPECTIVE AND APPLIES FROM A.Y. 2008 - 09. IT MAY BE FURTHER OBSERVED THAT UNDER SECTION 1 4A OF THE INCOME TAX ACT, RESORT CAN BE MADE TO RULE 8 D OF THE INCOME TA X RULES FOR DETE RMINING THE AMOUNT OF EXPENDITURE IN RELATION TO EXEMPT INCOME, IF, THE AO IS NOT SATISFIED WITH THE CORRECTNESS OF THE CLAIM MADE BY THE ASSESSEE IN RESPECT OF SUCH EX PENDITURE. HOWEVER, A PERUSAL OF THE ASSESSMENT ORDER REVEALS THAT THE AO WITHOUT RECORDING ANY DISSATISFACTION WITH REGARD TO THE COMPUTATION/WORKING GIVEN BY THE ASSESSEE RELATING TO THE EXPENDITURE INCURRED FOR EARNING THE EXEMPT INCOME, STRAIGHTWAY APP LIED RULE 8D AGAINST THE MANDATE OF THE PROVISIONS OF SECTION 14A OF THE INCOME TAX ACT. THE LD. CIT(A) ALSO WRONGLY HELD THAT THE RULE 8D WAS MANDATORILY APPLICABLE WHILE CONFIRMING THE DISALLOWANCE. 7. SO KEEPING IN V IEW OF THE OVERALL FACTS AND CIRCUM STANCES OF THE CASE, WE RESTORE TH I S ISSUE BACK TO THE FILE OF THE AO WITH A DIRECTION THAT THE AO WILL EXAMINE THE COMPUTATION/CALCULATION MADE IN THIS REGARD BY THE ASSESSEE. THE AO WILL BE AT LIBERTY TO CALL FOR ANY RECORD/EVIDENCES OR STATEMENT ETC. F R OM THE ASSESSEE AS MAY BE REQUIRED BY HIM FOR DECIDIN G THE ISSUE UNDER CONSIDERATION. AFTER GOING THROUGH THE DETAILS PROVIDED BY THE ASSESSEE, IF THE AO WILL BE SATISFIED WITH THE OBJECTION/CALCULATION MADE BY THE ASSESSEE THEN HE WILL ASSESS THE INCOME A CCORDINGLY. HOWEVER, IF THE AO DOES NOT AGREE WITH THE COMPUTATION MADE BY THE ASSESSEE AND IN THAT EVENT, HE WILL HAVE TO RECORD HIS DISSATISFACTION WITH REASONING FOR THE SAME BY WAY OF A SPEAKING ORDER, THEN HE WILL BE AT LIBERTY TO ITA NO. 5996 /1 4 3 RESORT TO THE PROVIS IONS OF RULE 8D(2)(III). NEEDLESS TO SAY, THE ASSESSEE WILL CO - OPERATE AND PROMPTLY SUPPLY THE NECESSARY DETAILS, TO THE AO FOR DECIDING THE ISSUE UNDER CONSIDERATION. IT IS MADE CLEAR THAT OUR ABOVE DIRECTIONS ARE WITH RESPECT TO THE ISSUE OF DISALLOWANCE U/S.14A R.W.R.8D(2)(III) ONLY. 5. WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW AND FOUND THAT ON THE VERY SAME REASONING THE AO HAS MADE A DISALLOWANCE U/S.14A R.W.RULE 8D. THE TRIBUNAL HAS ELABORATELY DEALT WITH THE ISSUE AT PARA 6 & 7 AND THEREAFTER RESTORED THE MATTER BACK TO THE FILE OF AO WITH SPECIFIC DIRECTIONS. AS THE FACTS AND CIRCUMSTANCES DURING THE YEAR UNDER CONSIDERATION ARE SAME, RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL, THIS APPEAL IS ALSO RESTORED BACK TO THE FI LE OF AO FOR DECIDING IN TERMS OF DIRECTION GIVEN BY THE TRIBUNAL IN ITS ORDER DATED 9 - 4 - 2014 IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2009 - 2010. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . O RDER PRONOUNCED IN THE OP EN COURT ON THIS 04/05 / 201 6 . SD/ - ( SANJAY GARG ) SD/ - ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 13 /05 /201 6 . . /PKM , . / PS / C OPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY//