TRADE WINGS INSTITUTE OF MANAGEMENT LTD, MUMBAI V. DCIT CIR 2(3), MUMBAI

ITA 6626/MUM/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62422 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2007-2008
• Appeal Filed On: 14-09-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Opportunity of being heard
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E, MUMBAI BEFORE SHRI P.M.JAGTAP, ACCOUNTANT MEMBER & SHRI N.V. VASUDEVAN, JUDICIAL MEMBER. I.T.A. NO. 6626/MUM/2010 ASSESSMENT YEAR : 2007-08. TRADE WINGS INSTITUTE OF DY. COMMISSIONER OF MANAGEMENT LTD., VS. INCOME-TAX, 30 K, DUBHASH MARG, CIRCLE-2(3), KALA GHODA, FORT, MUMBAI. MUMBAI 400 023. PAN AABCT2097E. APPELLANT. RESPONDENT. APPELLANT BY : MS. NATASHA MANGAT. RESPONDENT B Y : SHRI P.C. MAURYA. DATE OF HEARI NG : 18-04-2012. DATE OF PRONOUNC EMENT : 16-05-2012, O R D E R PER P.M. JAGTAP, A.M. : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF LEARNED CIT(APPEALS)-6, MUMBAI DATED 14-07-2010 AND THE SOL ITARY ISSUE ARISING OUT OF THE SAME RELATES TO THE DISALLOWANCE OF RS.25,95,204/- MADE BY THE AO AND CONFIRMED BY THE LEARNED CIT(APPEALS) U/S 14A READ WITH RULE 8D OF THE INCOME-TAX RULES, 1962. 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY WH ICH IS ENGAGED IN THE BUSINESS OF IMPARTING MANAGEMENT TRAINING. THE RETU RN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY IT ON 24-10-2007 D ECLARING TOTAL INCOME AT NIL. IN 2 ITA NO.6626/MUM/2010 THE SAID RETURN, DIVIDEND INCOME OF RS.1,64,730/- R ECEIVED DURING THE YEAR UNDER CONSIDERATION WAS CLAIMED TO BE EXEMPT BY THE ASSES SEE. THE EXPENSES INCURRED IN RELATION TO EARNING OF THE SAID INCOME WERE DISALLO WED BY THE ASSESSEE TO THE EXTENT OF RS.16,473/- BEING 10% OF THE DIVIDEND INCOME AS REQUIRED BY THE PROVISIONS OF SECTION 14A. IN THE ASSESSMENT COMPLETED U/S 143(3) , THE AO, HOWEVER, WORKED OUT SUCH EXPENSES AT RS.26,11,677/- BY APPLYING RUL E 8D OF THE INCOME-TAX RULES, 1962 AND MADE AN ADDITION OF RS.25,92,204/- ON THIS ISSUE. ON APPEAL, THE LEARNED CIT(APPEALS) CONFIRMED THE SAID DISALLOWANCE MADE B Y THE AO U/S 14A READ WITH RULE 8D RELYING ON THE DECISION OF SPECIAL BENCH OF ITAT IN THE CASE OF DAGA CAPITAL MANAGEMENT P. LTD. 117 ITD 169 (MUM.) (SB) WHEREIN IT WAS HELD THAT RULE 8D HAS RETROSPECTIVE APPLICATION. AGGRIEVED B Y THE ORDER OF THE LEARNED CIT(APPEALS), THE ASSESSEE HAS PREFERRED THIS APPEA L BEFORE THE TRIBUNAL. 3. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERVED THAT THE ISSUE INVOLVED IN THIS APPEAL IS SQUARELY COVERED BY THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MANUFACTURING CO. LTD. (2010) 234 CT R (BOM) 1, WHEREIN IT HAS BEEN HELD THAT RULE 8D OF INCOME-TAX RULES, 1962 IS APPLICABLE ONLY FROM ASSESSMENT YEAR 2008-09. AS FURTHER HELD BY HONBLE HIGH COURT, THE DISALLOWANCE U/S 14A FOR THE YEARS PRIOR TO ASSESSMENT YEAR 2008 -09 HAS TO BE MADE BY ADOPTING SOME REASONABLE METHOD. RESPECTFULLY FOLLOWING THE SAID DECISION OF HONBLE JURISDICTIONAL HIGH COURT, WE SET ASIDE THE IMPUGNE D ORDER OF THE LEARNED CIT(APPEALS) ON THIS ISSUE AND RESTORE THE MATTER T O THE FILE OF THE AO WITH A DIRECTION TO RECOMPUTE THE DISALLOWANCE OF EXPENSES TO BE MADE U/S 14A BY APPLYING SOME REASONABLE METHOD AFTER GIVING THE AS SESSEE AN OPPORTUNITY OF BEING HEARD. AS SUBMITTED BY THE LEARNED COUNSEL FOR THE ASSESSEE, A SIMILAR ISSUE HAS ALREADY BEEN DECIDED BY THE LEARNED CIT(APPEALS) IN ASSESSEES OWN CASE FOR 3 ITA NO.6626/MUM/2010 ASSESSMENT YEAR 2008-09 BY AN ORDER DATED 09-09-201 1 WHEREIN THE REASONABLE DISALLOWANCE TO BE MADE U/S 14A HAS BEEN DECIDED. T HE AO IS, THEREFORE, DIRECTED TO TAKE INTO CONSIDERATION THE SAID DECISION OF THE LEARNED CIT(APPEALS) WHILE COMPUTING THE DISALLOWANCE OF EXPENSES TO BE MADE U /S 14A IN THE YEAR UNDER CONSIDERATION. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TRE ATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 16 TH DAY OF MAY, 2012. SD/- SD/- (N.V.VASUDEVAN) (P.M. JAG TAP) JUDICIAL MEMBER ACC OUNTANT MEMBER MUMBAI, DATED: 16 TH MAY, 2012. COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, E-BENCH. (TRUE COPY) BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI. WAKODE