J.B. ADVANI &COMPANY P.LTD, MUMBAI V. DCIT 2(2), MUMBAI

ITA 6207/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9410 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: J
• Next Hearing Date: 23-10-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 08-09-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S D SRIVASTAVA SHRI A B KOLI
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH J, MUMBAI BEFORE SHRI R. S. SYAL, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER ITA NO. 6207/MUM/2011 (ASSESSMENT YEAR: 2008-09) J B ADVANI & COMPANY PVT. LTD., ADOR HOUSE, 4 TH FLOOR, 6K. DUBASH MARG, MUMBAI 400 023 PAN: AAACJ 1966 D VS DY. COMMISSIONER OF INCOME-TAX - 2(2), AAYAKAR BHAVAN, M.K. MARG, MUMBAI -400 020 (APPELLANT) (RESPONDENT) APPELLANT BY : MS AARTI SATHE RESPONDENT BY : SHRI S.D. SRIVASTAVA SHRI A.B. KOLI DATE OF HEARING: 23.10.2012 DATE OF PRONOUNCEMENT: 21.11.2012 O R D E R PER VIVEK VARMA, JM: THE APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF C IT(A) 5, MUMBAI, DATED 07.06.2011. 2. THE SOLITARY ISSUE IS WITH REGARD TO DISALLOWANCE OF RS. 7,83,907 UNDER SECTION 14A BY APPLYING RULE 8D OF THE INCOME TAX RULES. 3. AT THE TIME OF HEARING BEFORE US, THE AR SUBMITTED THA T PROVISIONS OF SECTION 14A CANNOT BE MADE APPLICABLE ON THE ASSESSEE, AS THE ASSESSEE HAS NOT INCURRED ANY EXPENDITURE IN EA RNING SUCH INCOME. THE AR POINTED OUT THAT IN ITS SUBMISSIONS MADE BEFORE THE REVENUE AUTHORITIES IT WAS SUBMITTED THAT CERTAIN INVEST MENTS WERE J B ADVANI & COMPANY PVT. LTD. ITA 6207/MUM/2011 2 QUITE OLD AND ALSO VIDE LETTER DATED 19.11.2010 THE AO, IT W AS SUBMITTED THAT THERE WERE NO BORROWINGS MADE BY THE COMPANY. 4. THE AR, THEREFORE, SUBMITTED THAT IN SUCH CIRCUMSTANC ES PROVISIONS OF SECTION 14A READ WITH RULE 8D SHALL NOT BE AP PLICABLE ON THE ASSESSEE. THE AR REFERRED TO THE DECISION OF CIT VS HERO CYCLE LTD., REPORTED IN 323 ITR 518 (P&H), WHEREIN THE HONBLE P&H HIG H COURT SPECIFIED THAT DISALLOWANCE U/S 14A REQUIRES FINDING OF INCURRING OF EXPENDITURE. WHERE IT IS FOUND THAT FOR EARNING EXEMP TED INCOME NO EXPENDITURE HAS BEEN INCURRED DISALLOWANCE U/S 14A CANNOT S TAND . 5. THE DR, ON THE OTHER HAND REFERRED TO THE CASE OF G ODREJ BOYCE MFG. CO. LTD. REPORTED IN 328 ITR 81 (BOM), WHEREIN HONBLE BOMBAY HIGH COURT, BEING THE JURISDICTIONAL HIGH COURT HAS HELD THA T DISALLOWANCE HAS TO BE MADE FROM ASSESSMENT YEAR 2008-0 9 ONWARDS, IF THE ASSESSEE HAS DECLARED EXEMPT INCOME IN ITS COMPUTA TION. THE DR, THEREFORE, PLEADED THAT THERE WAS NO INFIRMITY IN THE OR DERS OF THE REVENUE AUTHORITIES. 6. WE HAVE HEARD THE ARGUMENTS FROM BOTH THE SIDES. TH E ASSESSMENT YEAR IN QUESTION IS 2008-09, WHEREIN, THE HON BLE JURISDICTIONAL HIGH COURT AT BOMBAY HAS HELD THAT ALLOCATIO N OF EXPENSES U/S 14A HAS TO BE MADE IN ACCORDANCE WITH TH E FORMULA PRESCRIBED UNDER RULE 8D. 7. THE PLAIN READING OF THE SECTION AND THE RULE IS VERY CLEAR ON THE ISSUE, THAT WHERE AN ASSESSEE DECLARE AN INCOME AND CLAI MS IT TO BE EXEMPT, PROVISIONS OF SECTION 14A SHALL BE TRIGGERED AND CO NSEQUENTLY, RULE 8D SHALL BECOME OPERATIVE. 8. SINCE THE ASSESSEE FALLS WITHIN THE JURISDICTION OF HONBLE BOMBAY HIGH COURT, FINDINGS IN THAT CASE SHALL HAVE TO BE T AKEN INTO J B ADVANI & COMPANY PVT. LTD. ITA 6207/MUM/2011 3 CONSIDERATION. THEREFORE, RESPECTFULLY FOLLOWING THE DECISION O F HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG. CO LTD. (SUPRA), WE HOLD THAT ALLOCATION OF EXPENSES, COMPUTED AS PER THE PRESCRIBED FORMULA UNDER RULE 8D HAS TO BE MADE FOR APPROPRIATE DIS ALLOWANCE UNDER SECTION 14A. 9. IN THE CIRCUMSTANCES, WE DO NOT FIND ANY REASON TO D ISTURB THE FINDINGS OF THE CIT(A) WHO HAS SUSTAINED THE ORDER OF THE AO ON SECTION 14A. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 21/11/2012. SD/- (R. S. SYAL) ACCOUTANT MEMBER SD/- (VIVEK VARMA) JUDICIAL MEMBER MUMBAI, DATE: 21/11/2012 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A)- 5, MUMBAI. 4) THE CIT -2, MUMBAI, 5) THE D.R. J BENCH, MUMBAI. 6) COPY TO GUARD FILE. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T., MUMBAI *CHAVAN