HALDYN GLASS LTD, MUMBAI V. DCIT 9(2), MUMBAI

ITA 8487/MUM/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8353 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Next Hearing Date: 29-10-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 06-12-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V KRISHNAMOORTHY
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES H MUMBAI . . , BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND , SHRI RAJENDRA, ACCOUNTANT MEMBER I.TA. NO. 8487/MUM/2010 ASSESSMENT YEAR 2007-08 M/S. HALDYN GLASS LIMITED, 9 GAYATRI COMMERCIAL COMPLEX, ANDHERI KURLA ROAD, MAROL NAKA, ANDHERI (EAST) MUMBAI 400 059. PAN: AAACH 0411 P VS. DEPUTY COMMISSIONER OF INCOME TAX 9(2), AAYAKAR BHAVAN, M.K. ROAD, MUMBAI. NOW ITO WARD 9(2)(1), MUMBAI ( / APPELLANT ) ( ! / RESPONDENT ) ' / APPELLANT BY : SHRI PIYUSH CHATURVEDI ! # ' /RESPONDENT BY : SHRI V. KRISHNAMOORTHY $ # %& / DATE OF HEARING : 29-10-2012 '() # %& / DATE OF PRONOUNCEMENT : 31-10-2012 * / O R D E R PER RAJENDRA, AM THE PRESENT APPEAL IS DIRECTED AGAINST THE ORDER D T. 23.09.2010 PASSED BY THE CIT(A)-20, MUMBAI. FOLLOWING GROUNDS OF APPEAL HAVE BEEN RAISED BY THE ASSESSEE-COMPANY : ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW: 1.THE LD. CIT (A) HAS ERRED IN SUSTAINING THE DISAL LOWANCE OF RS. 17,31,715/- U/S 14A READ WITH RULE 8D. 2.THE LD. CIT (A) HAS ERRED IN HOLDING THAT A.O. WA S JUSTIFIED TO MAKE A REASONABLE ESTIMATE BASED ON THE METHOD PRESCRIBED UNDER RULE 8D WHEN IN FACT THE RULE WAS APPLICABLE WITH EFFECT FROM 2008-09 AND NOT RETROSP ECTIVELY. 3.THAT THE APPELLANT CRAVES TO ALTER, DELETE, ADD A ND MODIFY ANY OTHER GROUNDS OF APPEAL AS STATED ABOVE. I.TA. NO. 8487/MUM/2010 M/S. HALDYN GLASS LTD. 2 2. ASSESSEE COMPANY, ENGAGED IN THE BUSINESS OF MANUFA CTURING OF GLASS BOTTLES, TRADING ON GLASS CONTAINERS AS WELL AS MANUFACTURIN G AND TRADING IN MOULDS, FILED ITS RETURN ON 30.10.2007 DECLARING A LOSS OF RS. 2,87,0 5,970/- AND THE ASSESSMENT WAS COMPLETED BY THE ASSESSING OFFICER (AO) ON 21.12.20 09 DETERMINING LOSS OF RS. 2,69,74,255/-. THE ASSESSED LOSS INCLUDED DISA LLOWANCE MADE BY THE AO U/S 14A OF THE INCOME-TAX ACT, 1961(ACT) READ WITH RULE 8D OF INCOME-TAX RULES, 1962 (RULES) AMOUNTING TO RS.17,31,715/-. 2.1. AGGRIEVED BY THE ORDER OF THE A.O. THE APPELLANT PR EFERRED AN APPEAL BEFORE THE FIRST APPEAL AUTHORITY (FAA). WHILE PASSING APPELL ATE ORDER HE REFERRED TO THE ORDER OF THE HONBLE HIGH COURT OF BOMBAY DELIVERED IN T HE CASE OF GODREJ AND BOYCE MANUFACTURING COMPANY LIMITED (GODREJ). HE HELD TH AT THERE WAS NOTHING WRONG TO MAKE A REASONABLE ESTIMATE BASED ON THE METHOD UNDE R RULE 8D.FINALLY, HE SUSTAINED THE ADDITION ON ACCOUNT OF DISALLOWANCE OF EXPENDIT URE TO THE TUNE OF RS. 17,31,715/- AS MADE BY THE A.O. 2.2. BEFORE US, AUTHORISED REPRESENTATIVE (AR) SUBMITTED THAT PROVISIONS OF RULE 8D READ WITH SECTION 14A WERE NOT APPLICABLE IN APPELL ANTS CASE, THAT THE PROVISIONS OF RULE 8D WERE APPLICABLE FROM A.Y. 2008-09, THAT BY APPLYING THE ABOVE PROVISIONS AO HAD CALCULATED THE AMOUNT OF DISALLOWANCE AT RS. 17,31,715/-, THAT NO EXPENDITURE WAS INCURRED FOR EARNING EXEMPT INCOME. DEPARTMENTA L REPRESENTATIVE (DR) RELIED UPON THE ORDERS OF THE AO AND THE FAA. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. UNDISPUTED FACTS OF THE CASE ARE THAT DURING THE YE AR RELEVANT FOR A.Y. 2007-08 THE ASSESSEE RECEIVED DIVIDEND INCOME OF RS. 32,79,000/ - WHICH WAS EXEMPT U/S. 10(34) OF ACT, THAT AO DISALLOWED RS. 17.31 LAKHS AS EXPEN DITURES INCURRED IN EARNING THE DIVIDEND INCOME, THAT PROVISIONS OF RULE 8D WERE NO T APPLICABLE IN THE AY. UNDER CONSIDERATION. IN THESE CIRCUMSTANCES WE ARE OF TH E OPINION THAT IN THE INTEREST OF JUSTICE, MATTER SHOULD BE RESTORED BACK TO THE FILE OF THE AO TO RE-ADJUDICATE THE ISSUE OF DISALLOWANCE AS PER THE PROVISIONS OF LAW. AO S HOULD AFFORD AN OPPORTUNITY OF REASONABLE HEARING TO THE ASSESSEE. AS A RESULT APPEAL FILED BY THE ASSESSEE STAND S PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST OCTOBER, 2012. SD/- SD /- ( . . / I.P. BANSAL ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI, +$ DATE: 31 ST OCTOBER, 2012 TNMM I.TA. NO. 8487/MUM/2010 M/S. HALDYN GLASS LTD. 3 * * * * # ## # %, %, %, %, -,)% -,)% -,)% -,)% / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. THE CONCERNED CIT (A) 4. THE CONCERNED CIT 5. DR H BENCH, ITAT, MUMBAI 6. GUARD FILE !,% % //TRUE COPY// *$ *$ *$ *$ / BY ORDER, . .. . / / / / / DY./ASSTT. REGISTRAR , / ITAT, MUMBAI