BATLIBOI EVIORMENTAL ENGINEERING LTD, MUMBAI V. ITO 10(2)(1), MUMBAI

ITA 6674/MUM/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59918 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2012
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 16-09-2010
• Court: TRIBUNAL
• Department Lawyers: P C MAURYA
• Assessee Lawyers: V MOHAN
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B BEFORE SHRI D. MANMOHAN (VP) & SHRI RAJENDRA (AM) I.T.A.NO. 6674/MUM/2010 (ASSESSMENT YEAR : 2007-08) BATLIBOI ENVIRONMENTAL ENGINEERING LTD. BATLIBOI HOUSE GOVANDI WEST MUMBAI-400 043. VS. ITO 10(2)(1) AAYAKAR BHAVAN M.K. ROAD MUMBAI-400 020. APPELLANT RESPONDENT PAN/GIR NO. : AAACH1091B ASSESSEE BY : SHRI V. MOHAN DEPARTMENT BY : SHRI P.C. MAURYA DATE OF HEARING : 27.3.2012 DATE OF PRONOUNCEMENT : 27.3.2012 ORDER PER D.MANMOHAN (VP) :- THIS APPEAL BY THE ASSESSEE-COMPANY IS DIRECTED AGA INST THE ORDER PASSED BY LEARNED CIT(A)-21, MUMBAI AND IT PERTAINS TO A.Y. 2007-06. 2. IT IS NOT IN DISPUTE THAT THE ASSESSEE EARNED DI VIDEND INCOME OF ` 3,31,000/-WHICH WAS CLAIMED AS EXEMPT U/S. 10(34) O F THE ACT. ASSESSING OFFICER SOUGHT TO DISALLOW PROPORTIONATE EXPENDITURE U/S. 14A OF THE ACT AND BY APPLYING THE FORMULA PROVIDED UND ER RULE 8D OF THE INCOME TAX RULES, HE ADDED THE AMOUNT DISALLOWABLE AT ` 2,06,000/-. LEARNED CIT(A) AFFIRMED THE ACTION OF THE ASSESSING OFFICER AND THUS ASSESSEE IS IN APPEAL BEFORE US. 3. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT RULE 8D IS PROSPECTIVE IN OPERATION, AS HELD IN THE CASE OF GO DREJ & BOYCE MANUFACTURING CO. LTD. VS. DICT, (2010) 328 ITR 81 (BOM) AND HENCE ONLY REASONABLE EXPENDITURE, IF ANY, HAS TO BE DISA LLOWED, WITHOUT APPLYING FORMULA PRESCRIBED IN RULE 8D. HE ALSO REF ERRED TO PAGE NO. 3 OF THE ASSESSMENT ORDER TO SUBMIT THAT THE ASSESSING O FFICER ADMITTED THAT BATLIBOI ENVIRONMENTAL ENGINEERING LTD. 2 NO EXPENDITURE WAS INCURRED TO EARN DIVIDEND INCOME AND HENCE THERE IS NO CASE FOR DISALLOWANCE OF ANY EXPENDITURE. 4. ON THE OTHER HAND, LEARNED DEPARTMENTAL REPRESEN TATIVE SUBMITTED THAT THE ASSESSING OFFICER AS WELL AS LEA RNED CIT(A) HAVE PROCEEDED ON THE FOOTING THAT RULE 8D IS RETROSPECT IVE IN OPERATION AND THERE WAS NO OCCASION FOR THEM TO CONSIDER AS TO RE ASONABLENESS OF THE EXPENDITURE ATTRIBUTABLE TOWARDS EARNING OF EXEMPT INCOME. 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE RECORD. IN THE LIGHT OF THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT (SUPRA), WE ARE OF THE VIEW THAT RULE 8D IS N OT APPLICABLE TO A.Y. 2007-08. WE THEREFORE, SET ASIDE THE ORDERS OF THE TAX AUTHORITIES AND DIRECT THE ASSESSING OFFICER TO RECONSIDER THE CLAI M OF THE ASSESSEE IN ACCORDANCE WITH LAW. PRONOUNCED ACCORDINGLY IN THE OPEN COURT. APPEAL F ILED BY THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURP OSES. SD/- (RAJENDRA) ACCOUNTANT MEMBER SD/- (D. MANMOHAN) VICE-PRESIDENT DATED : 27 TH MARCH, 2012. COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A)-CONCERNED. 4. THE CIT, CONCERNED. 5. THE DR CONCERNED, MUMBAI 6. GUARD FILE BY ORDER TRUE COPY ASSTT. REGISTRAR, ITAT, MUMBAI PS