SUNSTAR GRAPHICS P. LTD, MUMBAI V. ITO 7(2)(4), MUMBAI

ITA 7268/MUM/2010

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71946 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 19-12-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 25-10-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PARMINDER
• Assessee Lawyers: GIRISH BALEKUNDRI
• Keywords: Depreciation; Opportunity of being heard
• Section: 14A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E B ENCH, MUMBAI . . , , !'# , $ % BEFORE SHRI I.P. BANSAL, JM AND SHRI N.K. BILLAI YA, AM ./ I.T.A. NO.7268/MUM/2010 ( & & & & / ASSESSMENT YEAR :2005-06 M/S. SUNSTAR GRAPHICS PVT. LTD., A-6, NEELAM CENTRE, S.K. AHIRE MARG, WORLI, MUMBAI-400 025 THE ITO, WARD 7(2)(4), AAYAKAR BHAVAN, MUMBAI-400 020 ' $ ./ () ./PAN/GIR NO. :AABCS 9955Q ( '* /APPELLANT ) .. ( +,'* / RESPONDENT ) '* - / APPELLANT BY : ` SHRI GIRISH BALEKUNDRI +,'* . - /RESPONDENT BY : SMT. PARMINDER . /0$ / DATE OF HEARING :19.12.2013 12& . /0$ / DATE OF PRONOUNCEMENT : 19.12.2013 3 / O R D E R PER N.K. BILLAIYA, AM: WITH THIS APPEAL THE ASSESSEE HAS CHALLENGED THE CO RRECTNESS OF THE ORDER OF THE LD. CIT(A)-13, MUMBAI DT.28.4.2010 PE RTAINING TO A.Y. 2005-06. 2. THE ASSESSEE HAS RAISED 11 SUBSTANTIVE GROUNDS O F APPEAL. GROUND NO. 1 TO 8 RELATE TO 1/5 TH DISALLOWANCE OF EXPENSES UNDER THE HEAD (A) LEGAL EXPENSES (B) DEPRECIATION ON MOTOR CAR (C) MOTOR CAR INSURANCE ITA NO.7268/M/2010 2 (D) ENTERTAINMENT EXPENSES (E) BUSINESS PROMOTION ( F) CLUB EXPENSES (G) TELEPHONE EXPENSES AND (H) MOBILE PHONE EXPENSES . ALL THESE EXPENSES HAVE BEEN DISALLOWED FOR PERSONAL USAGE OF THE DIRE CTORS. THE LD. COUNSEL VEHEMENTLY SUBMITTED THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY AND IN THE CASE OF A PRIVATE LIMITED COMPAN Y, THERE CANNOT BE ANY ELEMENT OF PERSONAL USAGE BY THE DIRECTORS. TH E LD. COUNSEL FURTHER ARGUED THAT THE DIRECTORS ARE INDIVIDUALLY ASSESSED TO TAX AND IF ANY DISALLOWANCES ARE MADE FOR PERSONAL USAGE OF DIRECT ORS, THE SAME BECOMES PERQUISITE IN THE HANDS OF THE DIRECTORS. IT IS THE SAY OF THE LD. AR THAT THE MATTER MAY BE RESTORED BACK TO THE FILE S OF THE AO FOR PROPER VERIFICATION. 3. THE LD. DEPARTMENTAL REPRESENTATIVE FAIRLY CONCE DED. 4. WE HAVE CAREFULLY PERUSED THE ASSESSMENT ORDER. WE FIND FORCE IN THE CONTENTION OF THE LD. COUNSEL. ALL THE DISALLO WANCES UNDER THE HEAD MENTIONED HEREINABOVE ARE MADE FOR THE ALLEGED PERS ONAL USAGE BY THE DIRECTORS. WE RESTORE THIS ISSUE BACK TO THE FILES OF THE AO. THE AO IS DIRECTED TO VERIFY THE INDIVIDUAL RETURN OF THE DIR ECTORS AND DECIDE THIS ISSUE AFRESH AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. GROUND NO. 1 TO 8 ARE ACCORDINGLY RESTOR ED BACK TO THE FILES OF THE AO AND ALLOWED FOR STATISTICAL PURPOSE. 5. GROUND NO. 9 AND 10 ARE WITHDRAWN BY THE LD. COU NSEL AND ARE ACCORDINGLY DISMISSED AS WITHDRAWN. 6. GROUND NO. 11 RELATES TO THE DISALLOWANCE U/S. 1 4A R.W. RULE 8D OF THE ACT. 7. IT IS A SETTLED POSITION OF LAW, THE APPLICATION OF RULE 8D WITH SEC. 14A IS PROSPECTIVE AND IS APPLICABLE FROM A.Y. 2008 -09 AS PER THE ITA NO.7268/M/2010 3 DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT I N THE CASE OF GODREJ & BOYCE MANUFACTURING CO. LTD. 328 ITR 81. THEREFOR E, THIS ISSUE IS ALSO RESTORED BACK TO THE FILES OF THE AO. THE AO IS DI RECTED TO DECIDE THE ISSUE AFRESH WITHOUT APPLYING RULE 8D. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 19.12.2013 . 3 . 2& $ 4 56 19.12.2013 2 . 7 SD/- SD/- (I.P. BANSAL ) (N. K. BILLAIYA) /JUDICIAL MEMBER $ / ACCOUNTANT MEMBER MUMBAI; 5 DATED 19/12 /2013 . . ./ RJ , SR. PS 3 3 3 3 . .. . +/ +/ +/ +/ 8 &/ 8 &/ 8 &/ 8 &/ / COPY OF THE ORDER FORWARDED TO : 1. '* / THE APPELLANT 2. +,'* / THE RESPONDENT. 3. 9 ( ) / THE CIT(A)- 4. 9 / CIT 5. :7 +/ , , / DR, ITAT, MUMBAI 6. 7; < / GUARD FILE. 3 3 3 3 / BY ORDER, , / +/ //TRUE COPY// = == = / > > > > ( ( ( ( (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI