DSP HMK HOLDINGS P.LTD, MUMBAI V. ASST CIT CIR 2(1), MUMBAI

ITA 6779/MUM/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3170 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2016
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 12-02-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 06-11-2012
• Court: TRIBUNAL
• Department Lawyers: VIVEK BATRA SR
• Assessee Lawyers: MADHUR AARWAL
• Keywords: Opportunity of being heard; Principle of natural justice
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER I.T.A. NO.6779/M/2012 (ASSESSMENT YEAR: 2009 - 2010 ) DSP HMK HOLDINGS PVT LTD., 11 TH FLOOR, MAFATLAL CENTRE, NARIMAN POINT, MUMBAI - 21. / VS. ACIT, CIRCLE 2(1), MUMBAI - 20. ./ PAN : AAACH1037K ( / APPELLANT) .. ( / RESPONDENT ) I.T.A. NO.6477 /M/2012 (ASSESSMENT YEAR: 2009 - 2010 ) ACIT - 2(1), MUMBAI. / VS. DSP HMK HOLDINGS PVT LTD., 11 TH FLOOR, MAFATLAL CENTRE, NARIMAN POINT, MUMBAI - 21. ./ PAN : AAACH1037K ( / APPELLANT) .. ( / RESPONDENT ) / ASSESSEE BY : SHRI MADHUR AARWAL / REVENUE BY : SHRI VIVEK BATRA, SR. AR / DATE OF HEARING : 31.03.2016 / DATE OF PRONOUNCEMENT : 31.03.2016 / O R D E R PER D. KARUNAKARA RAO, AM: THERE ARE TWO APPEALS UNDER CONSIDERATION AND THEY ARE CROSS APPEALS FOR THE ASSESSMENT YEAR 2009 - 2010 . BOTH THESE APPEALS ARE RAISED AGAINST THE ORDER OF THE CIT (A) - 4, MUMBAI DATED 28.8.2012 . SINCE, THE ISSUES RAISED IN THESE APPEALS ARE INTERCONNECTED, THEREFORE, FOR THE SAKE OF CONVENIENCE, THEY ARE CLUBBED, HEARD TOGETHER AND DISPOSED OF IN THIS CONSOLIDATED ORDER. APPEAL WISE ADJUDICATION IS GIVEN IN THE FOLLOWING PARAGRAPHS OF THIS ORD ER. 2. THE ONLY ISSUE RAISED IN THESE TWO APPEALS RELATES TO THE DISALLOWANCE U/S 14A READ WITH RULE 8D OF THE ACT. IN CONNECTION WITH THIS ISSUE, LD COUNSEL FOR THE 2 ASSESSEE SUBMITTED THAT THE DISALLOWANCE MADE BY THE AO HAS FAR EXCEEDED THE TOTAL CLAIM OF EXPENDITURE IN THE P & L ACCOUNT. BRINGING OUR ATTENTION TO THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE AY 2008 - 2009 IN ITA NO. 7598/M/2011, DATED 22.1.2014, COPY OF WHICH IS PLACED ON RECORD, AND SUBMITTED THAT THE TRIBUNAL GRANTED RELIEF ALLOWING THE ARGUMENTS OF THE ASSESSEE AS DISCUSSED IN PARA 5 OF THE SAID ORDER OF THE TRIBUNAL (SUPRA). HE FURTHER SUBMITTED THAT VARIOUS DECISIONS ARE NOW IN FORCE ON THE ISSUE OF WHETHER THE AO IS ALLOWED TO DISALLOW THE EXPENDITURE, WHICH IS DEBITED TO THE P & L ACCOUNT. FURTHER, HE FAIRLY MENTIONED THAT THIS ISSUE MAY BE REMANDED TO THE FILE OF THE AO FOR CONSIDERING THE RATIO LAID DOWN IN THE SAID ASSESSEES OWN CASE (SUPRA) FOR THE AY 2008 - 2009 AND OTHER JUDGMENTS, IF ANY, ON THE SUBJECT. 3. AFT ER HEARING BOTH THE PARTIES, WE FIND THE SAID PARA 5 OF THE TRIBUNALS ORDER IN ASSESSEES OWN CASE FOR THE AY 2008 - 2009 (SUPRA) IS RELEVANT IN THIS REGARD. CONSIDERING THE SIGNIFICANCE OF THE SAID PARA 5 OF THE TRIBUNALS ORDER (SUPRA), THE SAME IS EXTRA CTED AS UNDER: - 5. WE ARE OF THE CONSIDERED VIEW THAT A REASONABLE ALLOCATION OF EXPENDITURE HAS TO BE MADE WHICH CAN BE ATTRIBUTED TO THE INCOME WHICH IS CHARGEABLE TO TAX PARTICULARLY BANK INTEREST INCOME OF RS. 28.50 CRS AS AGAINST DIVIDEND INCOME OF R S. 12.46 CRS (APPROXIMATELY). CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT EXPENDITURE OF RS. 7,21,927/ - AS WORKED OUT BY ASSESSEE, THE DETAILS OF WHICH ARE MENTIONED BY AO AT PAGE 2 OF THE ASSESSMENT ORDER, IS R EASONABLE TO MAKE DISALLOWANCE U/S 14A READ WITH RULE 8D. ACCORDINGLY, WE RESTRICT THE DISALLOWANCE TO RS. 7,21,927/ - BY REVERSING THE ORDERS OF AUTHORITIES BELOW AND ALLOW THE GROUNDS OF APPEAL TAKEN BY ASSESSEE. HENCE, THE GROUNDS OF APPEAL TAKEN BY AS SESSEE ARE ALLOWED. 4. ON PERUSAL OF THE ABOVE DECISION OF THE TRIBUNAL, WE AGREE WITH THE LD COUNSELS ARGUMENT AND REMAND THE MATTER TO THE FILE OF THE AO. WE DIRECT THE AO TO APPLY THE SAID RATIO TO THE FACTS OF THE PRESENT CASE AND OTHER DECISIONS, I F ANY, IN FORCE AND DECIDED THE ISSUE IN ACCORDANCE WITH LAW. AO SHALL GRANT A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AS PER THE SET PRINCIPLES OF NATURAL JUSTICE. ACCORDINGLY, ALL THE GROUNDS RAISED IN BOTH THE CROSS APPEALS ARE ALLOWED F OR STATISTICAL PURPOSES. 5. IN THE RESULT, BOTH THE CROSS APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES. 3 ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST MARCH, 2016. S D / - S D / - ( AMIT SHUKLA ) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 31 .3.2016 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI