DCIT CEN CIR 36, MUMBAI V. M/S. MORYA HOUSING LTD., MUMBAI

ITA 804/MUM/2011

• Counselvise Citation: 80419914 RSA 2011
• Duration Of Justice: 2 year(s) 10 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 28-11-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 28-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3); 14A

Judgement Text

G IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI .. , # %, & # ' BEFORE SHRI P.M. JAGTAP, AM AND SHRI SANJAY GARG, J M ./ I.T.A. NO.804 /MUM/2011 ( &% % / ASSESSMENT YEAR : 2007-2008 DY. COMMISSIONER OF INCOME TAX CENTRAL RANGE 36, R. NO. 11, AAYAKAR BHAWAN, M.K. ROAD, MUMBAI 400 020. / VS. M/S MORYA HOUSING LIMITED, 2, HOMESTEAD, 16, DATTATRAYA RD., SANTACRUZ (W), MUMBAI 400 054. . / PAN : AACCM3719K ( / APPELLANT ) .. ( / RESPONDENT ) APPELLANT BY SHRI R.K. SAHU RESPONDENT B Y : SHRI SUBHASH S. SHETTY / DATE OF HEARING : 28-11-2013 / DATE OF PRONOUNCEMENT : 06-12-2013 [ / O R D E R PER P.M. JAGTAP, A.M . : .. , THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A) 41, MUMBAI DATED 01-11-2010 AND ITS GRIEVA NCE IS PROJECTED IN THE FOLLOWING GROUNDS RAISED THEREIN:- 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) IS RIGHT IN DIRECTING THE A.O. TO MAKE DISALLOWANCE U/S 14-A AS PER DECISION OF BOMBAY HIGH COURT IN TH E CASE OF GODREJ AND BOYCE MFG. CO. LTD. WHICH IS NOT ACCEPTED BY T HE DEPARTMENT AND SLP HAS BEEN FILED BEFORE HONBLE SUPREME COURT SO FAR AS IT HELD PROVISIONS OF RULE 8D DOES NOT OPERATE RETROSPECTIV ELY AND HENCE ARE NOT APPLICABLE UPTO A.Y. 2007-08. ITA 804/M/11 2 2. THE APPELLANT PRAYS THAT THE ORDER OF COMMISSIONER OF INCOME- TAX (APPEAL) ON THE ABOVE GROUND BE SET ASIDE AND T HAT OF THE ASSESSING OFFICER BE RESTORED. THE APPELLANT CRAVE S ;LEAVE TO AMEND OR ALTER ANY GROUNDS OR ADD A NEW GROUND WHIC H MAY BE NECESSARY. 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY WH ICH IS ENGAGED IN THE BUSINESS OF DEVELOPMENT AND CONSTRUCTION OF REAL ES TATE. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY IT ON 24-10-2007 DECLARING TOTAL INCOME OF RS. 46,42,736/-. IN THE SAID RETURN, SHA RE PROFIT OF RS. 13,10,482/- RECEIVED FROM THE PARTNERSHIP FIRM WAS CLAIMED TO B E EXEMPT BY THE ASSESSEE U/S 10(2A) OF THE INCOME TAX ACT, 1961. NO DISALLO WANCE ON ACCOUNT OF EXPENSES INCURRED IN RELATION TO THE SAID EXEMPT IN COME, HOWEVER, WAS MADE BY THE ASSESSEE IN THE COMPUTATION OF TOTAL INCOME AS REQUIRED BY THE PROVISIONS OF SECTION 14-A OF THE ACT. THE A.O., TH EREFORE, WORKED OUT SUCH EXPENSES INCURRED BY THE ASSESSEE IN RELATION TO EX EMPT INCOME BY APPLYING RULE 8-D OF THE INCOME TAX RULES, 1962 AT RS. 7,55, 739/- AND DISALLOWANCE TO THAT EXTENT WAS MADE BY HIM U/S 14A OF THE ACT I N THE ASSESSMENT COMPLETED U/S 143(3) OF THE ACT VIDE AN ORDER DATED 9-12-2009. 3. AGAINST THE ORDER PASSED BY THE A.O. U/S 143(3) OF THE ACT, APPEAL WAS PREFERRED BY THE ASSESSEE BEFORE THE LD. CIT(A) WHO HELD FOLLOWING THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ AND BOYCE MFG. CO. LTD. VS. DCIT (2010) 328 ITR 81 (BOM.) THAT RULE 8-D HAV ING PROSPECTIVE APPLICATION FROM A.Y. 2008-09 WAS NOT APPLICABLE TO THE YEAR UNDER CONSIDERATION. HE ALSO HELD THAT THE DISALLOWANCE U /S 14-A WAS REQUIRED TO BE MADE BY THE A.O. FOR THE YEARS PRIOR TO A.Y. 2008-0 9 BY ADOPTING SOME REASONABLE BASIS AS HELD BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG. CO. LTD. (SUPRA). HE, ACCORDING LY, DIRECTED THE A.O. TO RECOMPUTE THE DISALLOWANCE TO BE MADE U/S 14A OF TH E ACT BY ADOPTING SOME REASONABLE BASIS AFTER PROVIDING A REASONABLE OPPOR TUNITY TO THE ASSESSEE OF ITA 804/M/11 3 BEING HEARD. AGGRIEVED BY THE ORDER OF THE LD. CIT( A), THE REVENUE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ONLY CON TENTION RAISED BY THE LD. D.R. IS THAT THE ISSUE RELATING TO THE DISALLOWANCE U/S 14A OF THE ACT HAS BEEN WRONGLY SET ASIDE BY THE LD. CIT(A) TO THE A.O. SIN CE HE HAS NO POWER TO DO SO AS PER THE AMENDMENT MADE IN THE PROVISIONS OF SECT ION 251(1)(A) OF THE ACT BY THE FINANCE ACT, 2001 WITH EFFECT FROM IST DAY O F JUNE, 2001. IN THIS REGARD, IT IS OBSERVED THAT THE PROVISIONS OF SECTI ON 251(1)(A) OF THE ACT, STOOD AS PRIOR TO THE AMENDMENT MADE BY THE FINANCE ACT 2 001 WERE AS UNDER:- SECTION 251:- POWER OF THE COMMISSIONER OF INCOME TAX (APPEALS). IN DISPOSING OF AN APPEAL, THE COMMISSIONER (APPEALS) SHALL HAVE THE FOLLOWING POWERS:- (A) '251(1)(A): IN AN APPEAL AGAINST AN ORDER OF AS SESSMENT, HE MAY CONFIRM, REDUCE, ENHANCE OR ANNUL THE ASSESSMENT OR HE MAY SET ASIDE THE ASSESSMENT BACK TO THE ITO FOR MAKING FRE SH ASSESSMENT IN ACCORDANCE WITH THE DIRECTIONS GIVEN BY HIM AND AFTER MAKING SUCH FURTHER ENQUIRY AS MAY NECESSARY, AND THE ITO SHALL THEREUPON PROCEED TO MAKE SUCH FRESH ASSESSMENT AND DETERMINE THE AMOUNT OF TAX PAYABLE ON THE BASIS OF SUCH FRES H ASSESSMENT.. BY THE FINANCE ACT, 2001, THE PORTION BEGINNING WIT H THE WORDS 'OR HE MAY SET ASIDE' AND ENDING WITH THE WORDS' ON THE BASIS OF SUCH FRESH ASSESSMENT', IN SECTION 251(1)(A) WAS OMITTED W.E.F. IST DAY OF JUNE, 2001 AND CONSEQUENTLY THE COMMISSIONER OF INCOME TAX (APPEALS) HAS NOW NO POWER TO SET ASIDE THE ASSESSMENT AND REFER THE CASE BACK TO THE ITO FOR M AKING FRESH ASSESSMENT IN ACCORDANCE WITH THE DIRECTION GIVEN BY HIM. IN OUR OPINION, THE LD. CIT(A), IN THE PRESENT CASE, HOWEVER, HAS NOT SET ASIDE THE AS SESSMENT AND REFERRED THE CASE BACK TO THE ITO FOR MAKING FRESH ASSESSMENT. O N THE OTHER HAND, THE ISSUE INVOLVED IN THE APPEAL OF THE REVENUE RELATIN G TO THE DISALLOWANCE U/S 14-A OF THE ACT HAS BEEN DECIDED BY HIM VIDE HIS IM PUGNED ORDER ON MERIT IN PRINCIPLE HOLDING THAT RULE 8-D OF THE INCOME TAX R ULES, 1961 INVOKED BY THE ITA 804/M/11 4 A.O. FOR MAKING THE DISALLOWANCE U/S 14-A OF THE AC T IS NOT APPLICABLE TO THE YEAR UNDER CONSIDERATION I.E A.Y. 2007-08 AS THE SA ME IS APPLICABLE PROSPECTIVELY FROM A.Y. 2008-08 AS HELD BY THE HON BLE BOMBAY HIGH COURT IN THE CASE OF GODREJ AND BOYCE MFG. CO. LTD. (SUPRA). AS FURTHER HELD BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ AND BOYCE MFG. CO. LTD. (SUPRA), THE DISALLOWANCE U/S 14-A FOR THE YEARS PR IOR TO A.Y. 2008-09 WAS REQUIRED TO BE MADE BY THE A.O. BY ADOPTING SOME RE ASONABLE BASIS AND ACCORDINGLY THE A.O. WAS DIRECTED BY THE LD. CIT(A) TO RECOMPUTE THE DISALLOWANCE TO BE MADE U/S 14A OF THE ACT BY ADOPT ING SOME REASONABLE BASIS AFTER GIVING THE ASSESSEE A REASONABLE OPPORT UNITY OF BEING HEARD. IN OUR OPINION, IT IS THUS A CASE WHERE THE LD. CIT(A) CAN BE SAID TO HAVE REDUCED THE ASSESSMENT BY RESTRICTING THE DISALLOWANCE MADE U/S 14A OF THE ACT WHICH IS WITHIN THE POWERS CONFERRED UPON HIM U/S 251(1)(A) OF THE ACT AS AMENDED BY FINANCE ACT 2001 W.E.F. IST DAY OF JUNE, 2001. WE, THEREFORE, FIND NO INFIRMITY IN THE IMPUGNED ORDER OF THE LD. CIT(A) DIRECTING T HE A.O. TO RECOMPUTE THE DISALLOWANCE TO BE MADE U/S 14A OF THE ACT BY ADOPT ING SOME REASONABLE BASIS AND UPHOLDING THE SAME, WE DISMISS THIS APPEA L FILED BY THE REVENUE. 5. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 6 TH DECEMBER, 2013. . ( ) * 06-12-2013 SD/- SD/- (SANJAY GARG) (P.M. JAGTAP ) (- JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; * DATED 06-12-2013 [ .-../ RK , SR. PS ITA 804/M/11 5 , -&./ 0/ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / () / THE CIT(A)41, MUMBAI. 4. / / CIT III,, MUMBAI 5. 2 --4 , 4 , / DR, ITAT, MUMBAI E BENCH 6. 7 / GUARD FILE. / BY ORDER, 2 - //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI