ADDL CIT 6(3), MUMBAI V. LIBERTY OIL MILLS LTD, MUMBAI

ITA 846/MUM/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1788 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 08-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Earning of tax free income
• Section: 14A; 115JB

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A MUMBAI . , / BEFORE SHRI D. MANMOHAN, VICE PRESIDENT /AND !'# , ! . . SHRI RAJENDRA, ACCOUNTANT MEMBER . / ITA NO. 846/MUM/2012 % % % % / ASSESSMENT YEAR 2007-08 A .C.I.T. CIR. 6(3) R.NO. 522, 5 TH FLOOR AAYAKAR BHAVAN, M.K. ROAD, MUMBAI. VS. M/S. LIBERTY OIL MILLS LTD., 83, NARSINGHPURA COMPOUND, JAIL ROAD (SOUTH), DONGRI, MUMBAI-400 009. PAN: AAACL 08888 N ( &' / APPELLANT ) ( ()&' / RESPONDENT ) REVENUE BY : SHRI MANOJ KUMAR ASSESSEE BY : SHRI GYANESHWAR KATARAM DATE OF HEARING : 07-02-2013 DATE OF PRONOUNCEMENT : 07-02-2013 *!+ / O R D E R PER RAJENDRA, A.M. THE FOLLOWING ARE THE GROUNDS OF APPEAL FILED BY T HE ASSESSING OFFICER (AO) AGAINST THE ORDER DT. 22-11-2011 OF CIT(A)-12, MUMBAI 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO RE-COMPUTE THE DISALLOWANCE U/S. 14A ON A REASONABLE BASIS RELYING ON THE JUDGMENT OF BOMBAY HIGH COURT IN THE CASE OF M/S. GODREJ & BOYC E MFG. VS. DCIT (2010) [328 ITR 81 (BOM)] WITHOUT APPRECIATING THE FACT THE JUDGMENT OF BOMBAY HIGH COURT HAS NOT BEEN ACCEPTED BY THE REVE NUE AND SLP HAS BEEN PROPOSED. 2. THE APPELLANT PRAYS THAT THE ORDER OF THE LD. CIT( A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE R ESTORED. 3. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY G ROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. ITA NO. 846/MUM/2012 M/S. LIBERTY OIL MILLS LTD. 2 2. APPELLANT-COMPANY, ENGAGED IN THE BUSINESS OF MANUF ACTURING AND TRADING OF VANASPATI REFINED OIL ETC, FILED ITS RETURN OF INCO ME ON 24-10-2007 DECLARING TOTAL INCOME OF RS. NIL. ASSESSMENT WAS FINALISED BY THE ASSESSING OFFICER (AO) ON 11- 12-2009 U/S.143(3) OF THE INCOME TAX ACT, 1961 (ACT ) DETERMINING TOTAL INCOME OF THE ASSESSEE AT RS. NIL. COMPUTATION OF BOOK PROFI TS U/S. 115JB WAS ALSO MADE BY THE AO. 3. DURING THE ASSESSMENT PROCEEDINGS, AO FOUND THAT AS SESSEE-COMPANY HAD DECLARED DIVIDEND INCOME OF RS. 14.64 LAKHS AND SAME WAS CLA IMED AS EXEMPT INCOME U/S. 10(34) OF THE ACT. AO CONFRONTED THE ASSESSEE AS W HY THE PROVISIONS OF SECTION 14A OF THE ACT SHOULD NOT BE INVOKED FOR THE YEAR UNDER CONSIDERATION. AFTER DELIBERATING UPON THE SUBMISSION MADE BY THE ASSESSEE-COMPANY, A O DIS-ALLOWED RS. 15.71 LAKHS U/S. 14A OF THE ACT R.W. RULE 8D OF THE IT RULES 19 62. 4. ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA). RELYIN G UPON THE ORDER OF THE GODREJ & BOYCE MANUFACTURING COMPANY LTD., DELIVERED BY THE HONBLE BOMBAY HIGH COURT (328 ITR 81), HE HELD THA T RULE 8D WAS APPLICABLE FROM THE ASSESSMENT YEAR 2008-09, THAT IN EARLIER YEARS, DIS-ALLOWANCE OF EXPENDITURE HAD TO BE DETERMINED BY A REASONABLE METHOD HAVING REGARD TO ALL FACTS AND CIRCUMSTANCES. AFTER DISCUSSING THE PROVISIONS OF SECTION 14A, HE HELD THAT A CERTAIN PART OF ADMINISTRATIVE AND OTHER EXPENSES WERE LIABLE TO BE ATTRIBUTABLE AS EXPENSES INCURRED TO EARN EXEMPT INCOME, THAT ASSESSEE HAD INDIRECTLY ADMITTED THE FACT OF DIS-ALLOWANCE TO BE MADE U/S. 40A OF THE ACT. RELYING UPON THE C ASES OF GODREJ AGROVET LTD. VS. ACIT IN ITA NO. 1629/MUM/09 (ITAT MUMBAI BY ORDER D T. 17-09-2010); DUPEN LABORATORIES PVT. LTD [ITA NO. 3859/MUM/02 (ITAT-C BENCH, MUMBAI) IN ORDER DT. 20-10-2009; CHEMNIVEST LTD., VS. ITO (124 TTJ 5 77) DELHI SPECIAL BENCH; MAGANLAL CHAGGANLAL PVT. LTD., (236 ITR 456, BOMBAY ) AND GHERZI EASTERN LTD., (ITA NO. 6562/BOM/94 DT. 23-09-02 ITAT MUMBAI) HE DIRECTED THE AO TO DIS- ALLOW 10% OF THE DIVIDEND RECEIVED DURING THE AY UN DER CONSIDERATION. 5. BEFORE US DEPARTMENTAL REPRESENTATIVE (DR) RELIED U PON THE ORDER OF THE AO. AUTHORISED REPRESENTATIVE (AR) SUPPORTED THE ORDER OF THE FAA. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABL E WITH US. WE FIND THAT FAA HAS RESTRICTED THE DIS-ALLOWANCE UPTO 10% OF THE DIVIDE ND INCOME RECEIVED BY THE ASSESSEE. ASSESSEE HAS NOT CHALLENGED THE FINDING OF THE FAA BY FILING GROSS- OBJECTIONS. CONSIDERING THE FACTS AND CIRCUMSTANCE S OF THE CASE, WE ARE OF THE OPINION THAT DIS-ALLOWANCE @ 10% OF THE DIVIDEND INCOME AS VALUE OF EXPENDITURE INCURRED FOR EARNING EXEMPT INCOME IS JUSTIFIED. THEREFORE, UPHOLDING THE ORDER OF THE FAA, WE DECIDE GROUND NOS. 1 TO 3 AGAINST THE AO. AS A RESULT, APPEAL FILED BY THE REVENUE STANDS DISMISSED. , -. - / *01 2 3 45 2 6 7. ORDER PRONOUNCED IN THE OPEN COURT AT MUMBAI ON TH IS7 TH DAY OF FEBRUARY, 2013 9 : ! ' 9 7 ; , 2013 *!+ <=%6 > 3 . SD/- SD/- ( . / D. MANMOHAN) ( !'# / RAJENDRA) / VICE PRESIDENT !: *- / ACCOUNTANT MEMBER MUMBAI, >* DATE: 7 TH FEBRUARY, 2013 ITA NO. 846/MUM/2012 M/S. LIBERTY OIL MILLS LTD. 3 TNMM *!+ *!+ *!+ *!+ 2 22 2 (6= (6= (6= (6= ?!=%6 ?!=%6 ?!=%6 ?!=%6 / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. THE CONCERNED CIT (A) 4. THE CONCERNED CIT 5. DR A BENCH, ITAT, MUMBAI 6. GUARD FILE )=6 (6 //TRUE COPY// *!+ *!+ *!+ *!+ / BY ORDER, / DY./ASST. REGISTRAR , / ITAT, MUMBAI