VALUABLE INFRASTRUCTURE P.LTD, MUMBAI V. ADDL CIT 8(3), MUMBAI

ITA 8187/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9347 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2008-2009
• Appeal Filed On: 07-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: OM PRAKASH MEENA
• Keywords: Opportunity of being heard; Earning of tax free income

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI . . !'#$ , % &' BEFORE SHRI H.L. KARWA, PRESIDENT AND SHRI N.K. BILLAIYA, AM ./I.T.A. NO. 8187/MUM/2011 ( ( ( ( ( / ASSESSMENT YEAR : 2008-09 M/S. VALUABLE INFRASTRUCTURE PVT. LTD., C/O KARNAVAT & CO., 2A KITAB MAHAL, 1 ST FLOOR, 192 DR. D.N. ROAD, MUMBAI-400 001 / VS. THE ADDL CIT 8(3), MUMBAI ') % ./ *+ ./PAN/GIR NO. : AACCV 2734M ( ), /APPELLANT ) .. ( -.), / RESPONDENT ) ), / / APPELLANT BY: SHRI SUNIL HIRAWAT -.), 0 / / RESPONDENT BY : SHRI OM PRAKASH MEENA 0 12% / DATE OF HEARING : 20.11.2012 34( 0 12% / DATE OF PRONOUNCEMENT : 23.11.2012 &5 / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT[A]-18 MUMBAI DATED 29.07.2011 PERTAINING TO TH E ASSESSMENT YEAR 2008 -09 . 2. THE ASSESSEE HAS SHOWN ITS GRIEVANCE BY RAISING TWO GROUNDS OF APPEAL.BY GROUND NO.1 , THE ASSESSEE HAS CHALLENGE D THE CORRECTNESS OF THE ORDERS OF THE LOWER AUTHORITIES WHO OUGHT TO HA VE CONSIDERED THE DISALLOWABLE EXPENDITURE AS COMPUTED BY THE ASSESSE E AS PER THE PROVISIONS OF SEC.14A[2] OF THE ACT. ITA NO. 8187/MUM/2011 2 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT FO R THE YEAR UNDER CONSIDERATION THE ASSESSEE FILED ITS RETURN OF INCO ME ELECTRONICALLY ON 16.06.2009 DECLARING TOTAL INCOME AT RS. 37,72,32,9 84.00 . THE RETURN WAS SELECTED FOR SCRUTINY ASSESSMENT AND ACCORDINGL Y STATUTORY NOTICES U/S 143[2] / 142[1]] WERE ISSUED AND SERVED UPON THE AS SESSEE. 4. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS THE AO NOTICED THAT THE ASSESSEE HAS EARNED DIVIDEND INCOME OF RS. 11096991.00 WHICH IT CLAIMED TO BE EXEMPT FROM TAX . THE AO OBSERVED THA T THE ASSESSEE HAS NOT ATTRIBUTED ANY EXPENDITURE FOR EARNING EXEMPT I NCOME NOR IT HAS DISALLOWED ANY EXPENSE IN ITS COMPUTATION OF INCOME FOR THE YEAR UNDER CONSIDERATION. THE AO INVOKED THE PROVISIONS OF SEC .14A R.W RULE 8D OF THE ACT, AND CALCULATED THE DISALLOWABLE EXPENDITUR E AT RS.14,06,325.00 , AND ADDED TO THE INCOME OF THE ASSESSEE . 5. THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT[A ] BUT WITHOUT ANY SUCCESS. THE CIT[A] CONFIRMED THE DISALLOWABLE EXPE NDITURE AS CALCULATED BY THE AO ON THE GROUND THAT SUCH DISALL OWANCE IS SUPPORTED BY THE DECISION OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF GODREJ & BOYCE 328 ITR 81 . 6. ASSESSEE IS AGGRIEVED BY THIS FINDING OF THE CIT [A] AND IS BEFORE US. THE COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ORDER OF THE CIT[A] IS AGAINST THE FACTS OF THE CASE AND PROVISIONS OF SEC .14A[2] . THE COUNSEL ARGUED THAT THE AO GROSSLY ERRED IN NOT ACCEPTING T HE COMPUTATION OF DISALLOWABLE EXPENDITURE AS SUBMITTED BY THE ASSESS EE DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS. THE COUNSEL DREW OUR ATTENTION TO THE WORKING EXHIBITED AT PAGE 2 OF THE PAPER BOOK SUBMI TTED DURING THE COURSE OF THIS APPELLATE PROCEEDING AND SUBMITTED T HAT THE TOTAL DISALLOWABLE EXPENSE COMES TO ONLY RS. 2,200.00. ITA NO. 8187/MUM/2011 3 7. PER CONTRA LD. DR RELIED UPON THE FINDINGS OF TH E LOWER AUTHORITIES. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND ALSO THE 3 PAGES PAPER BOOK S UBMITTED BY THE COUNSEL BEFORE US. THE UNDISPUTED FACT IS THAT THE ASSESSEE HAS EARNED DIVIDEND INCOME WHICH IT CLAIMED TO BE EXEMPT FROM TAX. IT IS ALSO NOT IN DISPUTE THAT PROPORTIONATE EXPENSES ARE TO BE DISAL LOWED FOR EARNING EXEMPT INCOME AS PER THE PROVISIONS OF SEC.14A R.W RULE 8D OF THE ACT. HOWEVER, AT THE SAME TIME IT IS INCUMBENT UPON THE AO TO FIRST VERIFY THE DISALLOWABLE EXPENDITURE AS CALCULATED BY THE ASSES SEE IN THE LIGHT OF THE PROVISIONS OF SEC.14A[2] OF THE ACT, WHICH IS AS UN DER: 2) THE ASSESSING OFFICER SHALL DETERMINE THE AMOUN T OF EXPENDITURE INCURRED IN RELATION TO SUCH INCOME WHI CH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THIS ACT IN ACC ORDANCE WITH SUCH METHOD AS MAY BE PRESCRIBED , IF THE ASSESSING OFFICER, HAVING REGARD TO THE ACCOUNTS OF THE ASSESSEE, IS N OT SATISFIED WITH THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE IN RES PECT OF SUCH EXPENDITURE IN RELATION TO INCOME WHICH DOES NOT FO RM PART OF THE TOTAL INCOME UNDER THIS ACT . 9. AS THE ASSESSEE HAS GIVEN A CALCULATION OF DISAL LOWABLE EXPENDITURE DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS ITS ELF WHICH THE AO OUGHT TO HAVE CONSIDERED BEFORE PROCEEDING FURTHER AND THE SAME HAS ALSO NOT BEEN ACCEPTED BY THE CIT[A] , WE HAVE NO HESITA TION TO HOLD THAT BOTH THE LOWER AUTHORITIES HAVE ERRED . 10. IN THE INTEREST OF JUSTICE AND FAIR PLAY, WE RE STORE THIS ISSUE BACK TO THE FILES OF THE AO . THE AO IS DIRECTED TO CONSIDE R THE CALCULATION OF THE ASSESSEE FOR DISALLOWABLE EXPENDITURE IN THE LIGHT OF THE FACTS OF THE CASE. THE AO IS ALSO DIRECTED TO VERIFY THE INVESTMENTS V IS-A-VIS BORROWED FUNDS, WHETHER THE ASSESSEE HAS INCURRED ANY FINANC E COST, AFTER GIVING A ITA NO. 8187/MUM/2011 4 REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. GROUND NO.1 IS ALLOWED FOR STATISTICAL PURPOSE. 11. ISSUES INVOLVED IN GROUND NO. 2 ARE COVERED BY THE DECISIONS FOR GROUND NO. 1 AND ARE THEREFORE RESTORED BACK TO THE FILES OF THE AO TO BE DECIDED IN LINE WITH THE DIRECTIONS GIVEN FOR GROUN D NO.1 HEREIN ABOVE. GROUND NO.2 IS ALSO ALLOWED FOR STATISTICAL PURPOSE . 12. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATIS TICAL PURPOSES. 6 17 61 0 8 90 :;< '=1 0 *1 ># . ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD NOVEMBER, 2012 &5 0 4( % 8 ?&7 23.11.2012 4 0 @ SD/- SD/- (H.L. KARWA) (N.K. BILLAIYA) /PRESIDENT % &' / ACCOUNTANT MEMBER MUMBAI; ?& DATED / /2012 . . ./ RJ , SR. PS &5 &5 &5 &5 0 00 0 -1! -1! -1! -1! A!(1 A!(1 A!(1 A!(1 / COPY OF THE ORDER FORWARDED TO : 1. ), / THE APPELLANT 2. -.), / THE RESPONDENT. 3. B ( ) / THE CIT(A)- 4. B / CIT 5. !C@ -1 , , / DR, ITAT, MUMBAI 6. @D / GUARD FILE. &5 &5 &5 &5 / BY ORDER, .!1 -1 //TRUE COPY// : :: : / > > > > * * * * (DY./ASSTT. REGISTRAR)