ACIT CIR 6(1), MUMBAI V. BUSINESS COMBINE LTD, MUMBAI

ITA 6487/MUM/2011

• Counselvise Citation: 648719914 RSA 2011
• Duration Of Justice: 2 year(s) 1 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-11-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 11-11-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 23-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SU RENDRA KUMAR
• Assessee Lawyers: AJIT SHAHDIMPLE SHAH
• Keywords: Earning of tax free income
• Section: 143(3); 14A

Judgement Text

, CH CHCH CH INCOME TAX APPELLATE TRIBUNAL,MUMBAI - B BENCH. . .. . , !' !' !' !' # # # # $%&' $%&' $%&' $%&' , % () % () % () % () BEFORE S/SH.D.MANMOHAN,VICE-PRESIDENT & RAJENDR A,ACCOUNTANT MEMBER ./ ././ ./ ITA NO.6487/MUM/2011 , + + + +/ // / ASSESSMENT YEAR-2007-08 ACIT CIR 6(1) R.NO. 506, 5 TH FLOOR, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020 VS. BUSINESS COMBINE LTD. BOMBAY FOOTWEAR PVT. LTD. COMPOUND, OPP. N.K.G S B BANK DEONAR, MUMBAI-400088 PAN: AAACB1636L ( ,- / // / APPELLANT ) ( ./,- / RESPONDENT ) ,- 0 % ,- 0 % ,- 0 % ,- 0 % / / / / APPELLANT BY : SHRI SURENDR A KUMAR ./,- 1 0 % / RESPONDENT BY : SHRI AJIT SHAH/DIMPLE SHAH 1 2 1 2 1 2 1 2 / // / DATE OF HEARING : 11/11/2013 3+ 1 2 / DATE OF PRONOUNCEMENT : 13/11/2013 , 1961 1961 1961 1961 1 1 1 1 254 254 254 254( (( (1 11 1) )) )% &2<2 (%= % &2<2 (%= % &2<2 (%= % &2<2 (%= ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, A.M. CHALLENGING THE ORDER DATED 30.06.2011 OF THE CIT(A )-6,MUMBAI,ASSESSING OFFICER(AO) HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT DISALLOWANCE U/S. 14A CANNOT BE WORKED OUT BY APPLY ING RULE 8D FOR THE YEAR UNDER CONSIDERATION, RELYING ON THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF M/S. GODREJ BOYCE MFG. LTD. VS . CIT(2010) 328 ITR 81 (BOM) WITHOUT APPRECIATING FAC T THAT THE SAID DECISION WAS NOT ACCEPTED BY THE REVENUE AND SLP HAS BEEN FILED AGAINST THE SAME. 2.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN RESTRICTING THE DISALLOWANCE U/S 14A AT RS. 1,00,000/- INSTEAD OF RS. 13,00,000/- WITHOUT GIVING ANY BASIS. 3.THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 4 . THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GR OUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 2. ASSESSEE-COMPANY,ENGAGED IN THE BUSINESS OF MANUFAC TURING AND SALE OF S.G. CASTINGS FILED ITS RETURN OF INCOME ON 29.10.2007 DECLARING LOSS OF RS .2.52 LACS.AO FINALISED THE ASSESSMENT U/S 143(3) OF THE ACT ON 07.12.2009 DETERMINING THE TOT AL INCOME OF THE ASSESSEE AT RS.(-) 14,46,344/- .DURING THE ASSESSMENT PROCEEDINGS, AO FOUND THAT A SSESSEE HAD EARNED EXEMPT INCOME. HE MADE A DISALLOWANCE OF RS.13,00,086/- U/S. 14A OF THE AC T R.W. RULE 8D OF THE INCOME TAX RULES, 1962 (RULES). 3. ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPEL LATE AUTHORITY (FAA).IT WAS SUBMITTED BEFORE HIM THAT ASSESSEE HAD MADE INVESTMENT IN SHA RES AND SECURITIES LONG AGO, THAT IT HAD NOT BORROWED ANY SPECIFIC FUND FOR MAKING INVESTMENT IN SHARES, THAT THE ASSESSEE HAD EARNED RS. 400/- BY WAY OF DIVIDEND INCOME, THAT IT HAD NOT IN CURRED ANY EXPENDITURE FOR EARNING TAX FREE 2 ITA NO. 6487/MUM/2011 BUSINESS COMBINE LTD. INCOME, THAT PROVISIONS OF RULE 8D OF THE ACT WERE NOT APPLICABLE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION.AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE ASSESSMENT ORDER, HE HELD THAT RULE 8D WAS APPLICABLE FROM THE ASSESSMENT YEA R 2008-09 ONLY, AS PER THE JUDGMENT OF THE HONBLE HIGH COURT OF BOMBAY DELIVERED IN THE CASE OF M/S. GODREJ BOYCE MFG. CO. LTD.( 32 0 ITR 81 ), THAT HONBLE COURT HAD HELD THAT REASONABLE AMOU NT SHOULD BE DETERMINED FOR MAKING DISALLOWANCE U/S 14A OF THE ACT. CONSIDERING THE FA CTS AND CIRCUMSTANCES OF THE CASE HE HELD THAT DISALLOWANCE AMOUNTING TO RS.1,00,000/- WOULD BE AP PROPRIATE IN THE CASE UNDER CONSIDERATION. HE DELETED THE BALANCE AMOUNT OF DISALLOWANCE I.E. RS. 12,00,086/- MADE BY THE AO. 4. BEFORE US, DEPARTMENTAL REPRESENTATIVE(DR) SUPPORTE D THE ORDER OF THE AO. NONE APPEARED ON BEHALF OF THE ASSESSEE. AFTER PERUSING THE MATERIAL AVAILABLE TO US, IT IS FOUND THAT AO HAD INVOKED THE PROVISIONS OF RULE 8D R.W. SECTION 14A WITHOUT ANY BASIS, THAT ASSESSEE HAD EARNED MEAGER DIVIDEND INCOME FOR THE YEAR UNDER CONSIDERATION. I N OUR OPINION ADDITION AMOUNTING TO RS. 13,00,086/- WAS NOT JUSTIFIABLE, AS THE PROVISIONS OF RULE 8D WERE NOT APPLICABLE FOR AY-2007- 08.THEREFORE UPHOLDING THE ORDER OF THE FAA, WE DEC IDE EFFECTIVE GROUND OF APPEAL AGAINST THE AO. AS A RESULT,APPEAL FI LED BY THE AO STANDS DISMISSED. > )? >2 VF/KDKJH 1 >$ 1 $ 2 @. ORDER PRONOUNCED IN THE OPEN C OURT ON 13 TH NOVEMBER,2013 . (%= 1 3+ % & A B( 13 UOA UOAUOA UOA , 2013 1 < C SD/- SD/- ( . .. . / D. MANMOHAN ) ( $%&' $%&' $%&' $%&' / RAJENDRA ) !' !' !' !' / VICE-PRESIDENT % () % () % () % () /ACCOUNTANT MEMBER / MUMBAI, B( /DATE: 13.11 . 2013 (%= 1 .2D E%D+2 (%= 1 .2D E%D+2 (%= 1 .2D E%D+2 (%= 1 .2D E%D+2/ COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / ,- 2. RESPONDENT / ./,- 3. THE CONCERNED CIT (A) / F G 4. THE CONCERNED CIT / F G 5. DR B BENCH, ITAT, MUMBAI / DH < .2 CH CHCH CH , . . & . 6. GUARD FILE/ < I / D2 .2 //TRUE COPY// (%= / BY ORDER, / $ DY./ASST. REGISTRAR , /ITAT, MUMBAI