KUONI TRAVELS (INDIA) P LTD, MUMBAI V. DCIT 3(2), MUMBAI

ITA 7440/MUM/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5749 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 14-12-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M L PERUMAL
• Assessee Lawyers: RAJESH CHAMARIA
• Keywords: Commercial expediency; Revised return
• Section: 14A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A MUMBAI . . , / , BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER /AND SHRI SANJAY ARORA, ACCOUNTANT MEMBER . / ITA NO. 7440/MUM/2012 ' ' ' ' # # # # / ASSESSMENT YEAR 2007-08 M/S.KUONI TRAVEL (INDIA) PRIVATE LIMITED, 8 TH FLOOR, TOWER A, URMI ESTATE, 95, GANPATRAO KADAM MARG, LOWER PAREL(W) MUMBAI - 13. ' ' ' ' / VS. THE DY. COMMISSIONER OF INCOME TAX -3(2), ROOM NO. 608, 6 TH FLOOR, AAYKAR BHAVAN, MK ROAD, MUMBAI -20. $ ./ % ./ PAN/GIR NO. : AAACS 0170L ( $& / APPELLANT ) .. ( '($& / RESPONDENT ) APPELLANT BY : SHRI RAJESH CHAMARIA RESPONDENT BY : SHRI M.L.PERUMAL ' ) *+ / DATE OF HEARING : 25/02/2014 ,# ) *+ / DATE OF PRONOUNCEMENT : 25/02/2014 - / O R D E R PER I.P.BANSAL, JM: THIS IS AN APPEAL FILED BY THE ASSESSEE. IT IS DIRECTED AGAINST THE ORDER PASSED BY LD. CIT(A)-4 MUMBAI DATED 22/10/2012 PAS SED UNDER SECTION 250(6) OF THE INCOME TAX ACT,1961 (THE ACT) FOR TH E ASSESSMENT YEAR 2007-08. THE GROUNDS OF APPEAL READ AS UNDER: THE HONBLE CIT(A) ERRED IN LAW AND FACTS IN UPHOL DING DISALLOWANCE OF RS.21,09,058/- I.E. OUT OF INTEREST RS.12,14,496/- AND OUT OF EXPENSES RS.8,94,562/- U/S. 14A OF THE ACT AGAINST TAX FREE INCOME OF RS.11,59,845/- . / ITA NO. 7440/MUM/2012 ' ' ' ' # # # # / ASSESSMENT YEAR 2007-08. 2 MAINLY WITH REFERENCE TO INVESTMENT MADE IN SUBSIDI ARY COMPANIES. THE REASONS GIVEN BY HIM FOR DOING SO ARE WRONG AND CONTRARY TO THE FACTS OF THE CASE AND PROVISIONS OF LAW. 2. IN THE REVISED RETURN OF INCOME FILED THE ASSESS EE COMPUTED DISALLOWANCE AT RS.21,09,058/- UNDER SECTION 14A R.W. RULE 8D OF THE INCOME TAX ACT, 1961(THE ACT). DURING THE COURSE OF ASSESSMENT PRO CEEDINGS THE ASSESSEE SUBMITTED RECALCULATION OF DISALLOWANCE AT A SUM OF RS.3,43,778/-. IT WAS THE CASE OF THE ASSESSEE THAT DISALLOWANCE WAS WRONGLY CALCULATED AT RS.21,09,058/- IN THE REVISED RETURN AS CERTAIN INV ESTMENT MADE IN SUBSIDIARY COMPANIES WERE OUT OF COMMERCIAL EXPEDIENCY, THEREF ORE, THE AMOUNT OF DISALLOWANCE REQUIRED TO BE MADE WAS A SUM OF RS.3, 43,778/-. HOWEVER, AO DID NOT ACCEPT SUCH SUBMISSION OF THE ASSESSEE AND CALCULATED THE DISALLOWANCE AT A SUM OF RS.27,37,178/- UNDER SECTI ON 14A R.W.RULE 8D OF THE ACT. AGGRIEVED, ASSESSEE FILED AN APPEAL BEFORE LD . CIT(A). IT WAS PLEADED BEFORE LD. CIT(A) THAT DISALLOWANCE ONLY TO THE EX TENT OF RS.3,43,778/- SHOULD BE MADE ON THE TAX FREE INCOME OF RS.11,59,845/-. LD. CIT(A) ALSO DID NOT ACCEPT SUCH SUBMISSION OF THE ASSESSEE. BY REFERRI NG TO THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG . COMPANY LTD. VS. DCIT, 328 ITR 81(BOM) LD. CIT(A) OBSERVED THAT SOME REASO NABLE DISALLOWANCE HAS TO BE MADE AND DISALLOWANCE HAS BEEN CONFIRMED TO T HE EXTENT OF RS.21,09,058/- AS WAS COMPUTED BY THE ASSESSEE IN T HE REVISED RETURN OF INCOME. THE ASSESSEE IS AGGRIEVED, HENCE, HAS FIL ED AFOREMENTIONED GROUND OF APPEAL. 3. IT WAS SUBMITTED BY LD. AR THAT THE MATTER SHOUL D BE RESTORED BACK TO THE FILE OF AO WITH A DIRECTION TO RECALCULATE DI SALLOWANCE AS PER THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG. COMPANY LTD. VS. DCIT(SUPRA). 4. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDER PASSED BY AO AND LD. CIT(A). . / ITA NO. 7440/MUM/2012 ' ' ' ' # # # # / ASSESSMENT YEAR 2007-08. 3 5. WE HAVE HEARD BOTH THE PARTIES AND THEIR CONTENT IONS HAVE CAREFULLY BEEN CONSIDERED. THE DISALLOWANCE CALCULATED BY THE ASS ESSEE IN THE REVISED RETURN WAS IN ACCORDANCE WITH RULE 8D. ACCORDING TO THE D ECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG. COMPA NY VS. DCIT (SUPRA), RULE 8D WAS NOT APPLICABLE IN RESPECT OF A.Y 2007-08. T HEREFORE, WE ARE OF THE OPINION THAT THE MATTER IS REQUIRED TO BE RESTORED BACK TO THE FILE OF AO WITH A DIRECTION TO RECALCULATE THE DISALLOWANCE AS PER AF OREMENTIONED DECISION OF HONBLE BOMBAY HIGH COURT AFTER GIVING THE ASSESSEE A REASONABLE OPPORTUNITY OF HEARING. WE DIRECT ACCORDINGLY. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES IN THE MANNER AFORESAID. ORDER PRONOUNCED IN THE OPEN COURT ON 25/02/201 4 - ) ,# . /'0 25/02/2014 ) 1 SD/- SD/- ( / SANJAY ARORA ) ( . . / I.P. BANSAL ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; /' DATED 25/02/2014 - - - - ) )) ) '*2 '*2 '*2 '*2 32#* 32#* 32#* 32#* / COPY OF THE ORDER FORWARDED TO : 1. $& / THE APPELLANT 2. '($& / THE RESPONDENT. 3. 4 ( ) / THE CIT(A)- 4. 4 / CIT 5. 251 '*' , , / DR, ITAT, MUMBAI 6. 16 7 / GUARD FILE. -' -' -' -' / BY ORDER, (2* '* //TRUE COPY// 8 88 8 / 9 9 9 9 (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI . ' . ./ VM , SR. PS