PATALOON INDUSTRIES LTD, MUMBAI V. ADDL CIT 8(2), MUMBAI

ITA 7673/MUM/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3946 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 22-01-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 14-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHIJIT PATANKAR
• Assessee Lawyers: ADITYA BHATT
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH , MUMBAI , !!' !!' !!' !!' , , # # # # BEFORE SHRI RAJENDRA SINGH, AM, AND SHRI SAN JAY GARG, JM /. I.T.A. NO.7673/MUM/2011 ( $' $' $' $' %' %' %' %' / ASSESSMENT YEAR: 2007-08) PATALOON INDUSTRIES LTD., KNOWLEDGE HOUSE, SHYAM NAGAR, OFF. J.V. LINK ROAD, JOGESHWARI(E), MUMBAI :-400 060 $ $ $ $ / VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, WARD -8 (2), MUMBAI . & /. ' /. PAN/GIR NO. :AABCP 9866 D ( &( / APPELLANT ) : ( )*&( / RESPONDENT ) &( + / APPELLANT BY : SHRI ADITYA BHATT )*&( + / RESPONDENT BY : SHRI ABHIJIT PATANKAR, $ - / DATE OF HEARING : 25. 07. 2013 /0% - /DATE OF PRONOUNCEMENT : 25 .07. 2013 1 / O R D E R PER :RAJENDRA SINGH (AM) THIS APPEAL BY THE ASSESSEE IS DIREC TED AGAINST THE ORDER DATED 22.09.2011 OF CIT(A)-17 MUMBAI, FOR THE ASSESSMENT YEAR 2007-08 . THE ONLY DISPUTE RAISED BY THE ASSESSEE IN THIS APPEAL IS REGARDING DISALLOWANCE O F EXPENSES IN RELATION TO EXEMPT INCOME U/S 14A OF THE INCOME TAX ACT. 2. THE FACTS IN BRIEF ARE THAT THE AO NOTED THAT ASSESSEE HAD RECEIVED DIVIDEND INCOME OF RS. 50,82,203/- WHICH WAS EXEMPTED FROM TAX. THE AS SESSEE HAD HOWEVER, NOT ATTRIBUTED ANY 2 7637 M 2011,(AY 2007-08) PATALOON INDUSTRIES LTD. VS. AC IT EXPENDITURE TO THE EXEMPT INCOME. THE AO OBSERVED T HAT THE SOME EXPENDITURE WAS REQUIRED ON MANAGING INVESTMENT FROM WHICH EXEMPT INCOME HAD BEEN EARNED. HE COMPUTED THE EXPENSES RELATING TO THE EXEMPT INCOME AS PER RULE 8D WHICH GAVE THE DISALLOWANCE OF INTEREST AT RS. 2,50,86, 679/- AND OTHER EXPENSES A T RS. 18,93,560/- AGGREGATING TO RS. 2,69,80,239/-. HOWEVER, THE AO LIMITED DISALLOWANCE ONLY TO THE EXTENT OF DIVIDEND EARNED. HE THUS, DISALLOWED A SUM OF RS. 50,82,203/-. IN AP PEAL CIT(A) CONFIRMED DISALLOWANCE AGGRIEVED BY WHICH THE ASSESSEE IS IN APPEAL BEFOR E THE TRIBUNAL. 3. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE RECO RDS CONSIDERED THE MATER CAREFULLY. BOTH AO AND CIT(A) HAVE COMPUTED DISALLOWANCE OF EX PENSES U/S 14A AS PER RULE 8D. HOWEVER, IN VIEW OF JUDGMENT OF HONBLE HIGH COURT OF BOMBAY IN CASE OF GODREJ VOICE MANUFACTURING COMPANY LIMITED (328 ITR 81) RULE 8D IS APPLICABLE ONLY FROM ASSESSMENT YEAR 2008-09. IN RESPECT OF PRIOR ORDERS, HONBLE HIGH COURT HELD THAT DISALLOWANCE HAS TO BE COMPUTED ON A REASONABLE BASIS AFTER ALLOWING OP PORTUNITY OF HEARING TO THE ASSESSEE. THE ASSESSMENT YEAR INVOLVED IN THE PRESENT APPEAL IS A Y 2007-08. THEREFORE, RULE 8D IS NOT APPLICABLE. WE THEREFORE, SET ASIDE THE ORDER OF CI T (A) AND RESTORE THE MATTER TO THE FILE OF AO, FOR PASSING THE AFRESH ORDER AFTER NECESSARY EX AMINATION IN THE LIGHT OF THE OBSERVATIONS MADE ABOVE AND AFTER ALLOWING OPPORTUNITY AGREEING TO THE ASSESSEE. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSE. -3 $'- 44 5467844 4 9- - : ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH DAY OF JULY, 2013 . 1 /0% $3 25.07.2013 0 ! SD/- SD/- ( SANJAY GARG ) ( RAJENDRA SINGH ) /JUDICIAL MEMBER 4 / ACCOUNTANT MEMBER MUMBAI: $4 DATED : 25. 07.2013 $ . /. PRAMOD KUMAR, PS