TATA SECURITIES LTD, MUMBAI V. ADDL CIT RG 4(2), MUMBAI

ITA 7052/MUM/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78897 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 7 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 07-05-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 11-10-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJEEV JAIN
• Assessee Lawyers: M M GOLWALA
• Keywords: Depreciation; Opportunity of being heard
• Section: 14A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE S/SHRI P.M.JAGTAP (AM) AND VIVEK VARMA, (JM) . . , , ./I.T.A.NO.7052/MUM/2010 ( / ASSESSMENT YEAR: 2007-08) TATA SECURITIES LIMITED, C/O KALYANIWALLA AND MISTRY, ARMY AND NAVI BUILDING, 3 RD FLOOR, 148, MAHATMA GANDHI RD., FORT,MUMBAI-400001 / VS. ADDITIONAL COMMISSIONER OF INCOME TAX, RANGE 4(2), AAYAKAR BHAVAN,M.K.ROAD, MUMBAI-400020 ./ ./PAN/GIR NO. : AAACT2150R ( # / APPELLANT) .. ( $%# / RESPONDENT) # / APPELLANT BY : SHRI M M GOLWALA $%# ' /RESPONDENT BY SHRI SANJE EV JAIN ' ) / DATE OF HEARING : 7.5.2014 ' ) /DATE OF PRONOUNCEMENT : 16.5.2014 / O R D E R PER P.M.JAGTAP,AM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF LD. CIT(A)-8, MUMBAI, DATED 10.8.2010 AND THE GROUNDS R AISED BY THE ASSESSEE THEREIN READ AS UNDER : 1. BOTH THE LOWER AUTHORITIES ERRED IN DENYING DE PRECIATION ON MEMBERSHIP CARD OF THE BOMBAY STOCK EXCHANGE. HAVI NG REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, THE APPELLANT SUBMITS THAT THE AO BE DIRECTED TO ALLOW THE SAID DEPRECIATION AMOUNTING TO RS.4,97,566/- 2. BOTH THE LOWER AUTHORITIES ERRED IN HOLDING THA T RULE 8D WAS APPLICABLE TO THE ASSESSMENT YEAR UNDER CONSIDERATI ON. THE APPELLANT SUBMITS THAT THE AO BE DIRECTED NOT TO APPLY RULE 8D TO THE ASSESSMENT YEAR UNDER CONSIDERATION; 3. BOTH THE LOWER AUTHORITIES ERRED IN HOLDING THA T EXPENDITURE ON FINANCE CHARGES WERE REQUIRED TO BE ALLOCATED TO TH E EARNING OF DIVIDEND INCOME, WHEN THERE WAS NO BORROWING BY THE COMPANY; 4. THE LD. CIT(A) ERRED IN MISCONSTRUING THE EXPL ANATION FURNISHED BY THE APPELLANT TO THE AO VIDE ITS LETTER DATED 23.1 1.2009. I.T.A.NO.7052/MUM/2010 2 5. HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, AND THE PROVISIONS OF LAW, THE APPELLANT SUBMITS THAT THE A O BE DIRECTED NOT TO ALLOCATE ANY INTEREST TO THE EARNING OF TAX FREE IN COME; 6. WITHOUT PREJUDICE TO WHAT IS STATED ABOVE, THE A O ERRED IN DISALLOWING RS.8,83,548/- UNDER RULE 8D (2)(II). 7. THE AO ERRED IN COMPUTING DISALLOWANCE UNDER RUL E 8D(2)(III) AT RS.20,44,638/-. WITHOUT PREJUDICE, THE APPELLANT SU BMITS THAT THE DISALLOWANCE CANNOT BE EXCEED RS.3,65,138/- IN ANY VIEW OF THE MATTER; 8. THE AO ERRED IN LEVYING INTEREST UNDER SECTION 2 34B AMOUNTING TO RS.3,72,395/-. THE APPELLANT DENIES ITS LIABILITY T O BE LEVIED THE SAID INTEREST, BECAUSE EVEN AS PER THE ASSESSMENT ORDER , IT HAS PAID MORE THAN 90% OF THE ASSESSED TAX BY WAY OF ADVANCE TAX; 9. THE AO ERRED IN LEVYING INTEREST UNDER SECTION 2 34C AMOUNTING TO RS.1,02,537/-. THE AO ERRED IN LEVYING INTEREST UND ER SECTION 234C IN RESPECT OF THE SECOND INSTALLMENT OF ADVANCE TAX, W HEN MORE THAN 36% OF THE ASSESSED TAX HAD BEEN DULY PAID, AND CONSEQUENT LY, THERE WAS NO DEFAULT. THE APPELLANT SUBMITS THAT INTEREST UNDER SECTION 234C CANNOT BE EXCEEDED RS.52,717/- IN ANY VIEW OF THE MATTER 2. AT THE TIME OF HEARING, THE LD. COUNSEL FOR TH E ASSESSEE HAS NOT PRESSED GROUNDS NO.1,8 AND 9 RAISED IN THE APPEAL OF THE A SSESSEE. THE SAME ARE ACCORDINGLY DISMISSED AS NOT PRESSED. 3. AS REGARDS GROUND NOS.2 TO 7, THE COMMON ISSUE I NVOLVED THEREIN RELATES TO THE DISALLOWANCE MADE BY AO AND CONFIRMED BY THE LD. CIT(A) U/S 14A OF THE INCOME TAX ACT, 1961 (THE ACT) R.W. RULE 8D OF THE INCOME TAX RULES, 1962 (THE RULES). AS SUBMITTED BY THE LD. COUNSEL FOR THE AS SESSEE, THE SIMILAR ISSUE WAS INVOLVED IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2005-06 AND VIDE ITS ORDER DATED 12.8.2009 PASSED IN ITA NO.4723/MUM/2 008 , THE SAME WAS RESTORED BY THE TRIBUNAL TO THE FILE OF THE AO FOR DECIDING THE SAME AFRESH IN THE LIGHT OF THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG. CO., 328 ITR 81 (BOM). IN ASSE SSMENT YEAR 2006-07 ALSO , THE TRIBUNAL RESTORED THE SIMILAR ISSUE VIDE ITS ORDER DATED 20.8.2011 PASSED IN ITA NO.3405/MUM/2010 TO THE FILE OF THE AO FOR DECI DING THE SAME AFRESH IN THE I.T.A.NO.7052/MUM/2010 3 LINE OF THE PROPOSITION LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ AND BOYCE MFG. CO.(SUPRA). AS HELD BY TH E HONBLE BOMBAY HIGH COURT IN THE SAID CASE, RULE 8D IS APPLICABLE PROSPECT IVELY FROM ASSESSMENT YEAR 2008-09 AND THE DISALLOWANCE U/S 14A PRIOR TO ASSES SMENT YEAR 2008-09 IS REQUIRED TO BE MADE BY FOLLOWING SOME REASONABLE METHOD. ACCORDINGLY, WE SET ASIDE THE IMPUGNED ORDER OF LD. CIT(A) SUSTA INING THE DISALLOWANCE MADE BY AO U/S 14A OF THE ACT BY APPLYING THE RULE 8D OF THE RULES AND RESTORE THE MATTER TO THE FILE OF AO WITH A DIRECTION TO RECOM PUTE THE DISALLOWANCE U/S 14A BY ADOPTING SOME REASONABLE METHOD AFTER GIVING A N OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. GROUND NOS. 2 TO 7 OF ASSES SEES APPEAL ARE ACCORDINGLY TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 4. IN THE RESULT, APPEAL OF THE ASSESSEE IS PART LY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH MAY , 2014 ' - . 16 TH MAY, 2014 ' SD SD ( / VIVEK VARMA ) ( . . / P.M.JAGTAP) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI: ON THIS 16TH DAY OF MAY, 2014 . . ./ SRL , SR. PS ' #$&' (' / COPY OF THE ORDER FORWARDED TO : 1. # / THE APPELLANT /APPLICANT 2. $%# / THE RESPONDENT. 3. 3 ( ) / THE CIT(A)- 4. 3 / CIT 5. $5 , ) 5 , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) ) 5 , /ITAT, MUMBAI