MAHARAJA SHREE UMAID MILLS LTD, Jaipur V. ACIT, Jaipur

ITA 717/JPR/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5376 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 7 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 29-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PURUSHOTTAM KAHSYAP
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH FOE FLAG ;KN O] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI VIKRAM SINGH YA DAV, AM VK;DJ VIHY LA- @ ITA NO. 717/JP/2013 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2010-11 M/S MAHARAJA SHREE UMAID MILLS LTD., KHETAN BHAWAN, M.I. ROAD., JAIPUR. CUKE VS. ACIT, CIRCLE-6, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ L A-@ PAN/GIR NO.: AABCM 1849 B VIHYKFKHZ @ APPELLANT IZR;FKHZ @ RESPONDENT FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SHRI P.C. PARWAL (CA) JKTLO DH VKSJ LS @ REVENUE BY : SHRI PURUSHOTTAM KAHSYAP (ADDL.CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 09/02/2016 MN?KKS'K .KK DH RKJH[ K @ DATE OF PRONOUNCEMENT : 27/04/2016 VKNS'K @ ORDER PER: R.P. TOLANI, JM THIS IS AN APPEAL FILED BY THE APPELLANT AGAINST TH E ORDER DATED 12/07/2013 PASSED BY THE LEARNED CIT(A)-II, JAIPUR FOR A.Y. 2010-11. THE RESPECTIVE GROUNDS OF APPEAL RAISED BY THE APPELLAN T ARE AS UNDER:- 1 THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE DISALLOWA NCE OF RS.25,23,000/- MADE BY AO U/S 14A READ WITH RULE 8D. ITA 717/JP/2013_MAHARAJA SHREE UMAID MILLS LTD. VS ACIT 2 1.1 THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE DISALLOWA NCE MADE BY AO ONLY FOR THE REASON THAT AO HAS RECORDED THE SATISFACTION FOR INCURRENCE OF EXPENSES AGAINST THE EXEMPT INCOME WITHOUT EXAMINING/ DECIDING WHETHER ON FACTS OF THE CASE SUCH SATISFACTION IS JUSTIFIED AN D VALID. 1.2 THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED ON FACTS AND IN LAW IN HOLDING THAT ANY OTHER CALCULATION FOR DISALLOWANCE CANNOT BE SUBSTITUTED F OR MANDATORY RULE 8D. 1.3 THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED ON FACTS AND IN LAW IN HOLDING THAT THE DECISI ONS RELIED UPON BY THE APPELLANT ARE RELATED TO THE PER IOD PRIOR TO THE APPLICABILITY OF RULE 8D I.E. AY 2008- 09 AND HENCE ARE NOT APPLICABLE TO THE PRESENT ASSESSMENT YEAR. 2. THE LD COUNSEL FOR THE ASSESSEE CONTENDS THAT THE SIMILAR ISSUE AROSE IN THE PRECEDING YEAR I.E. A.Y. 2009-10 AND T HE HONBLE ITAT VIDE ORDER DATED 08/01/2016 PASSED IN ITA NO. 364/JP/201 3 IN ASSESSEES OWN CASE HAD SET ASIDE THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER BY FOLLOWING OBSERVATIONS. 13. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH TH E PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. R ULE 8D OF THE RULES IS SQUARELY APPLICABLE ON THE CASE OF ASSESSEE. THE ASSESSEE HAS DIVIDEND INCOME. THE ASSESSEE HAD INVESTED RS. 4464.17 LACS IN SHARES AND HAVE DIVIDE ND INCOME OF RS. 39.51 LACS DURING THE YEAR UNDER CONSIDERATION. AS PER SECTION 14A READ WITH RULE 8D, THE CERTAIN DISALLOWANCE IS TO BE MADE BY THE ASSESSING OFFICER ITA 717/JP/2013_MAHARAJA SHREE UMAID MILLS LTD. VS ACIT 3 BUT WHATEVER CALCULATION MADE BY THE ASSESSING OFFIC ER IS NOT JUSTIFIED EVEN THE ASSESSEE HAS MIXED COMMON FU ND. IN PAST, THE ASSESSING OFFICER HAD DISALLOWED U/S 14 A REASONABLE I.E. IN A.Y. 2007-08 IT WAS RS. 1,71,000/ - AND IN A.Y. 2008-09 IT WAS RS. 54,986/- AS PER PAPER BO OK FILED BY THE ASSESSEE. THEREFORE, THE ASSESSING OFFI CER IS DIRECTED TO RECOMPUTE THE DISALLOWANCE AFTER CONSIDE RING ALL THE FACTS MENTIONED BY THE ASSESSEE IN HIS SUBM ISSION BEFORE US. ACCORDINGLY, THIS ISSUE IS ALSO SET ASID E TO THE ASSESSING OFFICER TO DECIDE THE DISALLOWANCE U/S 14A OF THE ACT. 14. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES ONLY. LD. COUNSEL FURTHER CONTENDS THAT ACCORDING TO THE ASSESSEE, THERE IS A MISTAKE IN THE ORDER OF THE ITAT, INASMUCH AS IT HAS BEEN HELD THAT RULE 8D OF THE INCOME TAX RULES, 1962 (IN SHORT THE RULES ) IS SQUARELY APPLICABLE ON THE CASE OF ASSESSEE, WHEREAS THE SAM E ITSELF WAS UNDER CHALLENGE. THOUGH IT WAS NOT AN ISSUE BEFORE ITAT IN THE APPEAL HOWEVER SUCH OBSERVATIONS HAVE BEEN GIVEN INADVERTANTLY. BY NOW VARIOUS COURTS JUDGMENTS HAVE DEFINED THE APPLICABILITY AND SCOPE OF RULE 8D OF THE RULES. THEREFORE, FOR PROPER ADJUDICATION OF CASE, IT IS IMPERATIVE THAT ALL THESE JUDGMENTS ARE CONSIDERED AND APPLICABILITY OF RULE 8D IS PROPERLY APPRECIATED. THE ASSESSEE HAS NO OBJECTION TO SET AS IDE WITH A PRAYER ITA 717/JP/2013_MAHARAJA SHREE UMAID MILLS LTD. VS ACIT 4 THAT SUITABLE DIRECTIONS IN THIS BEHALF MAY BE GIVE N SO THAT THE ASSESSEE IS NOT EXPOSED TO RIGID APPLICATION OF RULE 8D WITHOUT CONSIDERING THE JUDICIAL CITATIONS ON ITS SCOPE. 3. THE LD DR SUPPORTED THE ORDER OF THE LOWER AUTHORI TIES. 4. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. SINCE THE ISSUE IN QUESTION IS SET ASIDE BY THE ITAT IN ASSESSEES OWN CASE IN I MMEDIATELY PRECEDING YEAR, THE SAME IS TO BE FOLLOWED. HOWEVER, WE FIND MER IT IN THE CONTENTION OF THE LD COUNSEL FOR THE ASSESSEE AND WE DIRECT THE ASSESSING OFFICER THAT APPLICABILITY AND THE SCOPE OF RULE 8D SHOULD BE CONSIDERED AS ENUNCIATED BY VARIOUS JUDICIAL PRECEDENTS. THERE FORE, THE SETTING ASIDE IS MADE WITH THESE OBSERVATIONS, WHICH LD. AO WILL KEE P IN MIND WHILE DECIDING THE ISSUE AFRESH. 5. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED F OR STATISTICAL PURPOSES ONLY. ORDER PRONOUNCED IN THE OPEN COURT ON 27/04/2016. SD/- SD/- FOE FLAG ;KNO V KJ-IH-RKSYKUH (VIKRAM SINGH YADAV) (R.P.TOLANI) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ @ JAIPUR FNUKAD @ DATED:- 27 TH APRIL, 2016 ITA 717/JP/2013_MAHARAJA SHREE UMAID MILLS LTD. VS ACIT 5 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- MAHARAJA SHREE UMAID MILLS LTD., JAIP UR 2. IZR;FKHZ @ THE RESPONDENT- THE A.C.I.T., CIRCLE-6, JAIPUR 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 717/JP/2013) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR