Appeal details
Counselvise Citation
[2011] 134 COUNSELVISE.COM (IT) 4323 (ITAT-DELHI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 1 month(s) 13 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
06-04-2011
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
D
Next Hearing Date
06-04-2011
Assessment Year
2006-2007
Appeal Filed On
22-02-2010
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI K.G. BANSAL ITA NO. 786/DEL/10 ASSTT. YR: 2006-07 KAY JAY AUTO LTD., VS. ADDL. CIT RANGE-5, C/O WAHI & CO. CAS NEW DELHI. K-1, KAILASH COLONY, NEW DELHI. PAN/ GIR NO.AAACK0163H ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : SHRI LALIT KUMAR SHARMA ADV. ASSESSEE BY : SHRI A.K. MONGA SR. DR O R D E R PER R.P. TOLANI, J.M: : THIS IS ASSESSEES APPEAL AGAINST CIT(A)S ORDER DATED 28-1-2010 RELATING TO A.Y. 2006-07. 2. FOR WANT OF SUFFICIENT REASONS, ADJOURNMENT APPL ICATION MOVED ON BEHALF OF THE ASSESSEE HAS BEEN REJECTED BY US. ACC ORDINGLY, WE PROCEED TO DISPOSE OF THE APPEAL EX PARTE, QUA THE ASSESSEE, O N MERITS AND IN THAT PROCESS WE HAVE HEARD LEARNED DR AND HAVE GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. 3. SOLE GROUND RAISED IS AS UNDER: THE HONBLE CIT(APPEALS) HAS ERRED IN LAW AND ON F ACTS IN CONFIRMING THE ADDITION OF RS. 8,36,400/- MADE BY T HE LD. ADCIT U/S 14A OF THE I.T. ACT TAKING SUPPORT OF THE APPLICABILITY OF RULE 8D WHEREAS THE SAME IS APPLIC ABLE W.E.F. 24-03-2008. 2 4. FACTS, IN BRIEF, ARE THAT FOR THE ASSESSMENT YEA R IN QUESTION, IN ITS RETURN OF INCOME, ASSESSEE HAD DISCLOSED TAX-FREE D IVIDEND INCOME OF RS. 5,12,200/-. DURING ASSESSMENT PROCEEDINGS THE AO OB SERVED THAT ASSESSEE HAD INVESTED SUBSTANTIAL AMOUNT. HE REQUIRED THE AS SESSEE TO EXPLAIN AS TO WHY DISALLOWANCE U/S 14A BE NOT MADE ON THE BASIS O F CALCULATION MADE UNDER RULE 8D READ WITH SEC. 14A OF THE I.T. ACT. R EJECTING ASSESSEES EXPLANATION TO THE EFFECT THAT RULE 8D WAS PROSPECT IVE IN NATURE APPLICABLE FROM A.Y. 1998-99 AND WAS NOT APPLICABLE FOR THE AS SESSMENT YEAR IN QUESTION, THE AO RECOURSING TO SEC. 14A AND APPLYI NG RULE 8D DISALLOWED AN AMOUNT OF 8,36,000/-. 4.1. AGGRIEVED, ASSESSEE PREFERRED FIRST APPEAL, WH ERE CIT(A), BY FOLLOWING THE ORDER OF ITAT SPECIAL BENCH MUMBAI IN THE CASE OF ITO VS. DAGA CAPITAL MANAGEMENT (P) LTD., CONFIRMED THE A CTION OF AO, BY HOLDING THAT RULE 8D WAS RETROSPECTIVE IN NATURE. A GGRIEVED, THE ASSESSEE IS NOW BEFORE US. 5. WE HAVE HEARD THE LEARNED DR AND PERUSED THE MAT ERIAL AVAILABLE ON RECORD. WE FIND THAT THE HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MANUFACTURING CO. LTD. 234 CTR (BOM) 1, HAS , INTER ALIA, OBSERVED AS UNDER: V) THE PROVISIONS OF RULE 8D OF THE INCOME TAX RUL ES WHICH HAVE BEEN NOTIFIED WITH EFFECT FROM 24 MARCH 2008 S HALL APPLY WITH EFFECT FROM ASSESSMENT YEAR 2008-09. VI). EVEN PRIOR TO ASSESSMENT YEAR 2008-09, WHEN RU LE 8D WAS NOT APPLICABLE, THE ASSESSING OFFICER HAS TO ENFORC E THE PROVISIONS OF SUB SECTION (1) OF SECTION 14A. FOR T HAT PURPOSE, THE ASSESSING OFFICER IS DUTY BOUND TO DETERMINE TH E EXPENDITURE, WHICH HAS BEEN INCURRED IN RELATION TO INCOME, WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THE ACT. THE ASSESSING OFFICER MUST ADOPT A REASONABLE BASIS OR METHOD CONSISTENT WITH ALL THE RELEVANT FACTS AND CIRCUMST ANCES AFTER 3 FURNISHING A REASONABLE OPPORTUNITY TO THE ASSESSEE TO PLACE ALL GERMANE MATERIAL ON THE RECORD. 5.1. IN VIEW OF HONBLE MUMBAI HIGH COURT JUDGMENT, HOLDING RULE 8D TO BE PROSPECTIVELY APPLICABLE FROM A.Y. 2008-09 ONWAR DS, WE SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND RESTORE THE MATER B ACK TO THE FILE OF AO TO DECIDE THE SAME AFRESH IN ACCORDANCE WITH LAW AFTER AFFORDING AN OPPORTUNITY TO THE ASSESSEE OF BEING HEARD. 6. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 06-04-2011. SD/- SD/- ( K.G. BANSAL ) ( R.P. TOLANI ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 06-04-2011. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR
