DCIT 4(1), MUMBAI V. FOUR DIMENSIONS SECURITIES (I) LTD, MUMBAI

ITA 9042/MUM/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8979 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2002-2003
• Appeal Filed On: 27-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: NEHALALA
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH F BENCH BEFORE SHRI I.P. BANSAL, (JUDICIAL MEMBER) AND SHRI B.RAMAKOTAIAH (ACCOUNTANT MEMBER) ITA NO.9042/MUM/2010 ASSESSMENT YEAR: 2002-03 DCIT 4(1) 6 TH FLOOR, ROOM NO. 640, AAYKAR BHAVAN, MUMBAI 400 020 VS. M/S. FOUR DIMENSI ONS SECURITIES (I) LTD. K.K. CHAMBERS, SIR PURSHOTAMDAS THAKURDAS MARG, FORT, MUMBAI 400 001 PAN NO. AAACF1734F (APPELLANT) (RESPONDENT) APPELLANT BY : MR. RAJARSHI DWIVEDY RESPONDENT BY : MR. NEHALALA DATE OF HEARING : 13 .09.2012 DATE OF PRONOUNCEMENT : 21.09.2012 ORDER PER B.RAMAKOTAIAH, AM : THIS IS AN APPEAL BY REVENUE AGAINST THE ORDER OF T HE CIT(A)-8 MUMBAI DATED 20.10.2010. 2. THE ISSUE IN THIS APPEAL IS WITH REFERENCE TO TH E DISALLOWANCE OF RS.17,10,676/- U/S 14A R/W RULE 8D. THE ASSESSEE CLAIMED DIVIDEND OF RS.70,11,951/- AS EXEMPT AND ASSESSING OFFICER ATTRIBUTED AN AMOUNT OF RS.17,10,670/- INVOKING RUL E 8D. THE CIT(A) DELETED THE ADDITION SO MADE STATING THAT RU LE 8D WAS APPLICABLE ONLY FROM THE ASSESSMENT YEAR 2008-09 AS HELD BY THE HONBLE BOMBAY HIGH COURT CASE OF GODREJ & BOYCE LTD. MFG. CO. ITA NO.9042/MUM/2010 M/S. FOUR DIMENSIONS SECURITIES (I) LTD . 2 VS. DCIT [(2010) 328 ITR 81 (BOM)]. HOWEVER, SINCE THE ASSESSEE HAS MADE BOTH INVESTMENTS AND IS ALSO DEALING AS SHARE TRADER, AND SINCE, COMMON EXPENSES WERE DEBITED TO PROFIT & LOS S ACCOUNT, HE DIRECTED THE ASSESSING OFFICER BY PARA 2.3 TO ARRIV E AT REASONABLE AMOUNT ON THE FOLLOWING BASIS. AMOUNT OF EXPENDITURE ALLOCABLE TO EARNING OF EXEM PT INCOME = TOTAL EXPENDITURE DEBITED TO P & L A/C (DIRECT & IN DIRECT) X VALUE OF TRANSACTION IN SHARE YIELDING EXEMPT INCOME ___________________________________________________ _________ VALUE OF TOTAL TRANSACTIONS IN SHARE. 3. THE REVENUE IS AGGRIEVED ON THE ABOVE DIRECTION OF THE CIT(A). 4. WE HAVE HEARD THE LD.DR, LD.COUNSEL. IT WAS INFO RMED THAT ASSESSEE HAS ACCEPTED THE DIRECTION OF CIT(A) AND H AS NOT PREFERRED ANY APPEAL. AS RIGHTLY HELD BY THE CIT(A), RULE 8D CANNOT BE INVOKED IN THIS ASSESSMENT YEAR AS IT WAS APPLICABL E PROSPECTIVELY FROM ASSESSMENT YEAR 2008-09 ONLY. FOLLOWING PRINCIP LES LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF M/S . GODREJ & BOYCE MFG. CO. LTD. (SUPRA), THE DISALLOWANCE HAS T O BE MADE ON REASONABLE BASIS. IN THE ABSENCE OF ANY BIFURCATION GIVEN BY ASSESSEE ON THE EXPENDITURES INCURRED NOR ANY EXAMI NATION BY AO AT THE TIME OF ASSESSMENT, THE RATIO SUGGESTED BY C IT(A) IN ARRIVING AT REASONABLE EXPENDITURE SEEMS TO BE APPROPRIATE, GIVEN THE FACTS OF THE CASE. THEREFORE, WE DO NOT FIND ANY REASON T O DISTURB THE ORDER OF THE CIT(A) SO, WE ACCORD OUR APPROVAL. GRO UNDS RAISED BY THE REVENUE ON THIS ISSUE ARE ACCORDINGLY DISMISSED . ITA NO.9042/MUM/2010 M/S. FOUR DIMENSIONS SECURITIES (I) LTD . 3 IN THE RESULT, THE REVENUE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST SEPTEMBER, 2012 SD/- (I.P. BANSAL) JUDICIAL MEMBER SD/- (B.RAMAKOTAIAH) ACCOUNTANT MEMBER MUMBAI, DATED 21 ST SEPTEMBER, 2012 RASIKA COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE COMMISSIONER OF INCOME TAX 24, MUMBAI 4. THE COMMISSIONER OF INCOME TAX, MUMBAI 5. THE DEPARTMENTAL REPRESENTATIVE, BENCH F MUMB AI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI