JUST DIAL LTD ( FORMERLY KNOWN AS JUST DIAL P.LTD), MUMBAI V. DCIT 9(2), MUMBAI

ITA 6671/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8618 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-10-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: J
• Next Hearing Date: 17-10-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 04-10-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: M SUBRAMANIAN
• Keywords: Depreciation; Opportunity of being heard
• Section: 14A; 32

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL J , BENCH MUMBAI . , BEFORE SHRI B.R.JAIN , A M & SHRI VIVEK VARMA , J M ITA NO. 6671 / MU M/ 20 1 1 ( ASSESSMENT YEAR : 200 8 - 20 0 9 ) M/S JUST DIAL LTD., M - 501, PALM COURT COMPLEX, LINK ROAD, MALAD(WEST), MUMBAI - 400 064. VS. DCIT 9(2), MUMBAI PAN/GIR NO. : AAACA 8049 G ( APPELLANT ) .. ( RESPONDENT ) /A SSESSEE BY : MR. M.SUBRAMANIAN /RE VENUE BY : MR. RAKESH RANJAN DATE OF HEARING : 1 7 TH OCT ., 2012 DATE OF PRONOUNCEMENT : 19 TH OCT.,20 12 O R D E R PER B.R. JAIN ( A .M. ) : THIS APPEAL BY ASSESSEE AGAINST THE ORDER DATED 19 - 7 - 2011 OF LEANED CIT(A) - 20 , MUMBAI, RAISES FOLLOWING GROUNDS : - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN DI SPOSING OF THE APPEAL AND THAT TOO WITHOUT FULLY AND PROPERLY CONSIDERING THE WRITTEN SUBMISSION AS WELL AS THE EVIDENCE SUBMITTED DURING THE COURSE OF HEARING PROCEEDINGS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A ) ERRED IN APPROVING THE ACTION OF THE A.O. IN DISALLOWING OF RS.14,61,023/ - U/S 14A OF THE I.T. ACT. 2. IN GROUND NO. 1 & 2, B RIEFLY THE FACTS STATED ARE THAT THE ASSESSEE RECEIVED DIVIDEND INCOME OF RS. 1,43,80,215/ - AND CLAIMED TO HAVE ITA NO. 6671 /20 1 1 2 INCURRED NO EXPE NSES WHATSOEVER FOR EARNING THE SAID INCOME. THE ASSESSING OFFICER, HOWEVER, DISALLOWED A SUM OF RS. 14, 61,023/ - U/S 14A OF THE I.T.ACT ON THE BASIS STATED IN RULE 8D OF THE INCOME TAX RULES, 1962 . BEFORE THE LD. CIT(A), THE ASSESSEE CONTENDED THAT THE INVE STMENTS ON WHICH THE DIVIDEND INCOME WAS RECEIVED, WAS NOT THE AMOUNT WHICH CAN BE TAKEN AS WHOLLY EXEMPT. THERE WERE INVESTMENTS YIELDING NON - TAXABLE INCOME TO THE EXTENT OF RS. 10.35 CRORES ONLY WHILE THE REST OF THE INVESTMENTS BEING PART OF THE TOTAL IN VESTMENTS OF RS. 21.36 CRORES WERE THE INVESTMENT, WHICH W ERE YIELDING TAXABLE INCOME. LEARNED CIT(A), HOWEVER, CONFIRMED THE DISALLOWANCE MADE BY THE ASSESSING AUTHORITY WITHOUT APPRECIATING CORRECT FACTS OF THE CASE . 3. HEARD PARTIES, WITH REFERENCE T O MATERIAL ON RECORD. THE ASSESSEES PLEA IS THAT WHEN INCOME ON INVESTMENTS IS TAXABLE THEN THE SAME SHALL BE OUT OF PURVIEW OF SECTION 14A OF THE ACT. IT WAS, THEREFORE, THE DUTY OF THE AUTHORITIES BELOW TO HAVE CONSIDERED THIS PECULIAR FACT BEFORE APPLY ING PROVISION OF RULE 8D OF THE INCOME TAX RULES, 1962 FOR MAKING DISALLOWANCE ON THAT BASIS. W E, THEREFORE, REMIT THE MATTER TO THE FILE OF THE ASSESSING AUTHORITY TO VERIFY THE CORRECTNESS OF THE PLEA RAISED BY THE ASSESSEE AND ADJUDICATE THE ISSUE IN AC CORDANCE WITH LAW AFTER PROVIDING REASONABLE AND EFFECTIVE OPPORTUNITY OF BEING HEARD TO HIM. ITA NO. 6671 /20 1 1 3 4 . AS REGARDS GROUND NO. 3 IN APPEAL, LEARNED CIT(A) HAS CONFIRMED THE DISALLOWANCE OF DEPRECIATION ON GOODWILL CLAIM ED TO BE AN INTANGIBLE ASSET WITHIN THE MEAN ING OF SECTION 32 (I) (II) OF THE IT ACT BY FOLLOWING HIS EARLIER DECISION FOR ASSESSMENT ORDER 2007 - 08 ON THE PRINCIPLE OF JUDICIAL CONSISTENCY. 5. HEARD PARTIES WITH REFERENCE TO JUDGMENT BY THE HON BLE APEX COURT IN THE CASE OF CIT VS. SMIFS SECURITIES L TD., PASSED IN CIVIL APPEAL NO.5961 OF 2012, VIDE JUDGMENT DATED 22 ND AUGUST, 2012 , WHERE QUESTION INVOLVED IS AS UNDER : - QUESTION NO.[B]: WHETHER GOODWILL IS AN WITHIN THE MEANING OF SECTION 32 OF THE INCOME TAX ACT, 1961, AND WHETHER DEPRECIATION ON GOODWILL IS ALLOWABLE UNDER THE SAID SECTION? THE HONBLE APEX COURT HAVING CONSIDERED THE FINDING OF FACT THAT THE DIFFERENCE BETWEEN THE COST OF ASSET AND THE AMOUNT PAID CONSTITUTED GOODWILL AND THIS FINDING BEING A FACTUAL FINDING, ANSWERED THE ISSU E IN FAVOUR OF THE ASSESSEE THAT THE GOODWILL IS AN ASSET ON WHICH DEPRECIATION HAS TO BE ALLOWED. 6 . IN THE PRESENT CASE, HOWEVER, SUCH A FINDING OF FACT HA S NEITHER BEEN REACHED BY THE LEARNED CIT(A) IN THE IMPUGNED ORDER NOR BY THE LEARNED ASSESSING A UTHORITY WHICH COULD ENABLE US TO SHOW OUR INDULGENCE. IN THAT VIEW OF THE MATTER, WE CONSIDER IT APPROPRIATE TO SET ASIDE THE ORDER AND REMIT THE MATTER BACK TO THE ASSESSING AUTHORITY FOR RECORDING A FINDING OF FACT AS TO HOW THE ASSESSEE ACQUIRED OR GEN ERATED THE GOODWILL OR THERE IS NO GOODWILL IN FACT AND THEREAFTER ITA NO. 6671 /20 1 1 4 REACH THE DECISION AFRESH IN ACCORDANCE WITH LAW HAVING REGARD TO THE JUDGMENT RENDERED BY THE HONBLE APEX COURT IN THE CASE OF CIT VS. SMIFS SECURITIES LTD., (SUPRA) . THE ASSESSEE SHALL B E AFFORDED REASONABLE OPPORTUNITY OF BEING HEARD. 7. IN THE RESULT, APPEAL BY THE ASSESSEE STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSES ONLY . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 19 TH DAY OF OCT . , 2012. 19 TH OCT . , 2012 SD/ - SD/ - ( ) ( VIVEK V ARMA ) ( . ) ( B.R.JAIN ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 19 TH OCT ./ 2012. /PKM , PS COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) - X, MUMBAI. 4. / CIT 5. / DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// / BY ORDER, ( DY./ASSTT. REGISTRAR) / ITAT, MUMBAI