ADVANCE CONSTRUCTION P. LTD, MUMBAI V. ACIT 8(1), MUMBAI

ITA 6313/MUM/2010

• Counselvise Citation: 631319914 RSA 2010
• Duration Of Justice: 1 year(s) 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 12-04-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 23-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V V SHASTRI
• Keywords: Earning of tax free income
• Section: 14A; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES H, MUMBAI BEFORE SHRI B. RAMAKOTAIAH (AM) AND SHRI S.S. GODAR A (JM) ITA NO.6313/M/2010 ASSESSMENT YEAR: 2007-08 ADVANCE CONSTRUCTION CO. PVT. LTD., KAVITA, PLOT NO.37, 2 ND FLOOR, VITHAL NAGAR CO-OP. HOUSING SOC., 11 TH ROAD JVPD SCHEME, MUMBAI 400 049. PAN: AABCA0710B VS. ACIT 8(1), AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020. (APPELLANT) (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY: SHRI V. V. SHASTRI DATE OF HEARING: 12.4.2012 DATE OF PRONOUNCEMENT:20.04.2012 O R D E R PER S.S. GODARA, J.M: THE ASSESSEE HAS FILED THE INSTANT APPEAL AGAINST T HE ORDER OF LD. CIT (A)-16, MUMBAI DATED 1.6.2010 FOR THE ASSESSMENT YEAR 2007-08. 2. IN THE INSTANT APPEAL, THERE ARE TOTAL FOUR GROU NDS. GROUND NOS. 1 & 2 ARE REGARDING APPLICABILITY OF SEC. 14A OF THE INCOME TAX ACT (HE REINAFTER TO BE REFERRED AS THE ACT) R.W., RULE 8D OF THE INCOME TAX RULES. GROUND NO.1.3 IS REGAR DING APPLICABILITY OF SEC. 115JB OF THE ACT. SINCE, GROUND NOS. 1 TO 1.3 ARE INTER-CONNECTED THE Y ARE BEING DECIDED TOGETHER HEREUNDER. 3. FACTS GIVING RISE TO FILING OF THE INSTANT GROUN D NOS. 1 TO 1.3 ARE THAT THE ASSESSEE IS A COMPANY INVOLVED IN THE BUSINESS OF CONSTRUCTION AN D DEVELOPMENT WORK. REGARDING THE 2 ITA NO.6313/M/2010 ASSESSMENT YEAR IN HAND, IT CLAIMED BEFORE THE ASSE SSING OFFICER THAT IT HAD EARNED DIVIDEND INCOME OF RS. 6,08,963/-. IN THE RETURN, IT DID NO T COMPUTE THE EXPENDITURE IN EARNING EXEMPT INCOME U/S 14A OF THE ACT. 3.1. THE ASSESSING OFFICER DID NOT AGREE WITH THE A BOVE SAID CLAIM MADE BY THE ASSESSEE. THEREFORE, BY RELYING ON THE CASE LAW ITO VS. M/S. DAGA CAPITAL MANAGEMENT PVT. LTD., 312 ITR 1 , COMPUTED THE ABOVE SAID EXPENSES U/S 14A R.W., RULE 8D OF THE INCOME TAX RULES TO THE TUNE OF RS. 26,54,590/-. SIMILARLY, ALSO COMPUTED BOOK PROFITS U/S 115JB OF THE ACT AS RS. 1,42,10,037/- VIDE ASSESSMENT ORDER DATED 27.10.20 09. 3.2. IN APPEAL, THE LD. CIT (A) HAS ALSO UPHELD THE FINDINGS OF THE ASSESSMENT OFFICER. HENCE, THE INSTANT GROUNDS BEFORE US. 4. OPENING HIS ARGUMENTS, LEARNED AR BEFORE US HAS CONTENDED THAT THE AUTHORITIES BELOW HAVE COMMITTED AN ILLEGALITY IN DECIDING THE ISSUE IN HAND U/S 14A R.W., RULE 8D IN VIEW OF THE CASE LAW IN CASE OF M/S. DAGA CAPITAL MANAGEMENT PV T. LTD., (SUPRA). HE SUBMITTED THAT RULE 8D IS APPLICABLE ONLY W.E.F., THE AY 2008-09. REGA RDING APPLICABILITY OF BOOK PROFITS U/S 115JB, HE HAS SUBMITTED THAT THE SAID PROVISION IS NOT APP LICABLE AS IT IS A SPECIAL PROVISION DEALING WITH SPECIAL CIRCUMSTANCES. THEREFORE, PRAYED FOR ACCEP TANCE OF THE APPEAL. 5. ON THE OTHER HAND, LD. DR HAS JUSTIFIED THE IMPU GNED ORDER. HE PRAYED FOR REJECTION OF THE APPEAL. 6. WE HAVE HEARD BOTH THE LEARNED REPRESENTATIVES. IMPUGNED ORDER HAS BEEN PERUSED. THE ISSUE IN HAND I.E., APPLICABILITY OF SEC.14A R. W., RULE 8D IS NO MORE RES INTEGRA. HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF GODREJ BOY CE 234 CTR 1 HAS ALREADY HELD THAT RULE 8D IN QUESTION IS APPLICABLE ONLY W.E.F., AY 2008-09 WHER EAS ASSESSMENT YEAR UNDER CONSIDERATION IS 3 ITA NO.6313/M/2010 2007-08. REGARDING THE ASSESSMENT YEAR IN HAND, TH E APPROPRIATE CRITERIA WHICH HAS TO BE ADOPTED IN COMPUTING THE EXPENDITURE INCURRED IN EA RNING EXEMPT INCOME IS THAT OF REASONABLE BASIS. 6.1. SO FAR AS APPLICABILITY OF SEC. 115JB (COMPUTA TION OF BOOK PROFITS) IS CONCERNED; NEITHER THE ASSESSING OFFICER NOR THE LD. CIT (A) HAS JUSTI FIED THE APPLICABILITY OF SAID PROVISION QUA THE FACTS AND CIRCUMSTANCES OF THE CASE. IN OUR OPINIO N, BOOK PROFIT PROVISION UNDER THE ACT DEALS WITH PARTICULAR SITUATION WHICH IS PRIMA FACIE NOT A CASE IN HAND. 7. ACCORDINGLY, AS PER ABOVE DISCUSSION, WE DEEM IT APPROPRIATE THAT THE ASSESSING OFFICER SHALL RE-EXAMINE THE MATTER BY GRANTING ADEQUATE OP PORTUNITY OF HEARING TO THE ASSESSEE REGARDING COMPUTATION OF SEC. 14A EXPENSES AFRESH A S WELL AS REGARDING APPLICABILITY OF SEC. 115JB OF THE ACT. 8. WE ORDER ACCORDINGLY. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 20 TH DAY OF APRIL, 2012. SD/- SD/- (B. RAMAKOTAIAH) (S.S. GODARA) ACCOUNTANT MEMBER JUDICIAL ME MBER DATE : 20.04.2012 AT :MUMBAI OKK COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A), MUMBAI CONCERNED 4. THE CIT, MUMBAI CONCERNED 5. THE DR H BENCH, ITAT, MUMBAI 4 ITA NO.6313/M/2010 // TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI.