SIGNET OVERSEAS LTD, MUMBAI V. ACIT 7(2), MUMBAI

ITA 7593/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75707 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-03-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2008-2009
• Appeal Filed On: 24-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: DEVENDRA A MEHTA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUM BAI , , BEFORE SHRI SANJAY ARORA, AM AND SHRI AMIT SHUKLA, JM ./ I.T.A. NO. 7593/MUM/2012 ( / ASSESSMENT YEAR: 2008-09) SIGNET OVERSEAS LTD. C/O. M/S. RAVI & DEV., CHARTERED ACCOUNTANTS, 601, A WING, AURUS CHAMBERS, BEHIND MAHINDRA TOWERS, S. S. AMRUTWAR MARG, WORLI, MUMBAI-400 013 / VS. ASST. CIT-7(2), MUMBAI ' ./# ./PAN/GIR NO. AACBS 3489 F ( '$ /APPELLANT ) : ( %&'$ / RESPONDENT ) '$ ' ( / APPELLANT BY : SHRI DEVENDRA A. MEHTA %&'$ ' ( / RESPONDENT BY : SHRI ASHOK SURI )* + ' , / DATE OF HEARING : 06.03.2014 -./ ' , / DATE OF PRONOUNCEMENT : 06.03.2014 / O R D E R PER SANJAY ARORA, A. M.: THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-9, MUMBAI (CIT(A) FOR SHO RT) DATED 27.11.2012, PARTLY ALLOWING THE ASSESSEES APPEAL CONTESTING ITS ASSES SMENT U/S.143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR THE ASSESSMEN T YEAR (A.Y.) 2008-09 VIDE ORDER DATED 16.12.2010. 2 ITA NO. 7593/MUM/2012 (A.Y. 2008-09) SIGNET OVERSEAS LTD. VS. ASST. CIT 2. OPENING THE ARGUMENTS FOR AND ON BEHALF OF THE A SSESSE, IT WAS SUBMITTED BY THE LD. AUTHORIZED REPRESENTATIVE (AR), THE ASSESSEES COUN SEL, THAT THE ONLY ISSUE ARISING IN THE INSTANT APPEAL IS THE DISALLOWANCE U/S.14A READ WIT H RULE 8D OF THE INCOME TAX RULES, 1962, EFFECTED IN THE SUM OF RS.15,85,470/-. THE AS SESSEE HAD, IN FACT, ANALYZED ITS EXPENDITURE FOR ITS RELATION, OR NOT SO, WITH THE I NCOME NOT FORMING PART OF THE TOTAL INCOME, BEING DIVIDEND AND LONG TERM CAPITAL GAINS (LTCG) AT RS.36,841/- AND RS.33,84,945/- RESPECTIVELY FOR THE CURRENT YEAR. T HERE IS, THUS, NO QUESTION OF INCLUSION OF THE INDIRECT ADMINISTRATIVE EXPENDITURE, I.E., W HICH HAS NO RELATION WITH THE INCOME NOT FORMING PART OF THE TOTAL INCOME, FOR THE PURPOSE O F DISALLOWANCE U/S.14A. THE AUTHORITIES BELOW, HOWEVER, HAVE PROCEEDED ON THE PRESUMPTION T HAT R. 8D BEING MANDATORY SHALL HAVE A DIRECT APPLICATION, I.E., WITHOUT REFERENCE TO THE FACTUAL POSITION AND IN DISREGARD OF THE PROVISIONS OF SECTIONS 14A(2) AND 14A(3) OF THE ACT. REFERENCE IN THIS REGARD WAS MADE BY HIM TO THE DECISIONS, INTER ALIA , IN THE CASE OF GODREJ & BOYCE MFG. CO. LTD. VS. DY. CIT [2010] 328 ITR 81 (BOM) AND MAXOPP INVESTMENT LTD. VS. CIT [2012] 347 ITR 272 (DELHI). 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. AS DISCUSSED IN DETAIL BY THE TRIBUNAL IN THE CASE OF AFL (P.) LTD. VS. ASST. CIT [2013] 28 ITR (TRIB) 263 (MUM), AND WITH REFERENCE TO THE AFORE-CITED DECISIONS ONLY, THE INITIAL AND THE PRIMARY ONUS TO SHOW THAT R. 8D, WH ICH IS ONLY A MANNER OF ESTIMATION WHICH WILL APPLY IN DEFAULT, IS ON THE ASSESSEE. ON CE, HOWEVER, THE ASSESSEE EXHIBITS THE EXPENDITURE CLAIMED AS BEARING NO RELATION WITH THE INCOME NOT FORMING PART OF THE TOTAL INCOME, OR HAS ALLOCATED THE EXPENDITURE RELATED TH EREWITH, AS THE COMMON ADMINISTRATIVE EXPENDITURE, THE SAME, OR THE BASIS THEREOF, AS THE CASE MAY BE, WOULD HAVE TO BE NECESSARILY VERIFIED BY THE ASSESSING OFFICER (A.O. ) IN TERMS OF SECTIONS 14A(2) AND 14A(3) OF THE ACT, AND HE CANNOT PROCEED TO MECHANI CALLY APPLY R.8D. THE DECISIONS IN THE CASE OF GODREJ & BOYCE MFG. CO. LTD. (SUPRA) AND MAXOPP INVESTMENT LTD. (SUPRA) ARE EXPLICITLY CLEAR IN THE MATTER. THE SAID ONUS, THOU GH, IS ONEROUS INASMUCH AS THE EXPENDITURE STANDS INCURRED IN THE REGULAR COURSE O F BUSINESS, AND THE ACCOUNTS ARE 3 ITA NO. 7593/MUM/2012 (A.Y. 2008-09) SIGNET OVERSEAS LTD. VS. ASST. CIT GENERALLY NOT ALIGNED ACTIVITY-WISE. EVEN SO, THE R ESOURCES MAY NOT BE DEDICATED SOLELY FOR INVESTMENT ACTIVITY, WHICH INVOLVES DECISION MA KING, LOCATED GENERALLY AT THE HIGHER ECHELONS OF THE MANAGEMENT, SO THAT EXPENSES ON VAR IOUS COMMON ACTIVITIES, VIZ. SALARY, RENT, TELEPHONE, ELECTRICITY, CONVEYANCE, ET. AL. H AVE TO BE NECESSARILY APPORTIONED ON SOME DEFINED BASIS, AND THAT IS THE PREMISES OF R.8 -D, SEEKING TO LEND UNIFORMITY TO, AND ELIMINATE ARBITRARINESS FROM, THE SAID PROCESS, I.E ., ACROSS ALL ASSESSMENTS UNDER THE ACT. IT IS NOT CLEAR TO US ON THE PERUSAL OF THE RECORD IF THE SAID INITIAL ONUS - ON WHICH ASPECT OF THE MATTER THERE WAS IN PRINCIPLE AGREEME NT BY THE LD. AR, HAS BEEN, AS CLAIMED, DISCHARGED IN THE FACTS AND CIRCUMSTANCES OF THE CA SE. BE THAT AS IT MAY, WE, IN THE FITNESS OF THINGS ONLY CONSIDER IT FIT AND PROPER THAT THE MATTER IS RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER (A.O.) FOR FRESH CONSIDERATION AS WELL AS OPPORTUNITY TO THE ASSESSEE TO PRESENT ITS CASE BEFORE HIM. THERE IS NO ESTOPPEL A GAINST LAW, AND BOTH THE PARTIES ARE BOUND TO DISCHARGE THE ONUS CAST ON THEM U/S.14A OF THE ACT. THE A.O. SHALL ADJUDICATE THE MATTER AFRESH PER A SPEAKING ORDER, RECORDING C LEARLY HIS FINDING/S QUA SS. 14A(2)/(3) OF THE ACT. WE DECIDE ACCORDINGLY. 4. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 0/ 1 )2 30 ' 4' 567 8 * 9 ' :; ORDER PRONOUNCED IN THE OPEN COURT ON MARCH 06, 201 4 SD/- SD/- (AMIT SHUKLA) (SANJAY ARORA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER <+ MUMBAI; =) DATED : 10.03.2014 *.)../ ROSHANI , SR. PS 4 ITA NO. 7593/MUM/2012 (A.Y. 2008-09) SIGNET OVERSEAS LTD. VS. ASST. CIT ! ' #$%& ' &$ / COPY OF THE ORDER FORWARDED TO : 1. '$ / THE APPELLANT 2. %&'$ / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. @*A B %)C2 , , C2/ , <+ / DR, ITAT, MUMBAI 6. B D3 E + / GUARD FILE ! ( / BY ORDER, )/(* + (DY./ASSTT. REGISTRAR) , <+ / ITAT, MUMBAI