AFL P. LTD, MUMBAI V. ASST CIT CEN CIR 13, MUMBAI

ITA 958/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84103 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-11-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 03-11-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 04-02-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SACHIDANAND DUBE
• Keywords: Rule of consistency; Proportionate interest
• Section: 14A; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A , MUMBAI BEFORE SHRI H.L. KARWA, PRESIDENT AND SHRI D. KARUNAKARA RAO, ACCOUNTAT MEMBER I.T.A.NO. 958/M/2013 (AY: 2009 - 2010 ) AFL P. LTD., AFL HOUSE, LOK BHARATO COMPLEX, MAROL MAROSHI ROAD, ANDHERI (E), MUMBAI 400 059. PAN: AABCA 2212P VS. ASST. CIT, CENTRAL CIRCLE - 13, 10 TH FLOOR, CGO BLDG, MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI NITESH JOSHI RESPONDENT BY : SHRI SACHIDANAND DUBE DATE OF HEARING: 3.11.2014 DATE OF ORDER: 12 .11.2014 O R D E R PER D. KARUNAKARA RAO, AM : THIS APPEAL FILED BY THE ASSESSEE ON 4.2.2013 IS AGAINST THE ORDER OF THE CIT (A) - 37, MUMBAI DATED 26.11.2012 FOR THE ASSESSMENT YEAR 2009 - 2010. 2. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. THE LD CIT (A) ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 1,20,94,631/ - MADE B THE AO UNDER SECTION 14A OF THE ACT READ WITH RULE 8D OF THE INCOME TAX RULES, 1962 . 2. THE LD CIT (A) OUGHT TO HAVE CONSIDERED THAT THE AO HAS NOT GIVEN ANY REASONS AS TO WHY HE IS NOT SATISFIED WITH THE CALCULATION OF DISALLOWANCE U/S 14A MADE BY THE APPELLANT. 3. THE LD CIT (A) ERRED IN CONFIRMING INVOKING OF RULE 8D FOR CALCULATION F OR DISALLOWANCE U/S 14A IN THE PRESENT CASE. 4. THE APPELLANT SUBMITS THAT EVEN UNDER RULE 8D THE PROPORTIONATE INTEREST IN THIS CASE IS NOT DISALLOWABLE AS THE INVESTMENT HAS BEEN MADE OUT OF NON - INTEREST BEARING FUND. 5. THE LD CIT (A) ERRED IN DISMISSIN G THE GROUND OF APPEAL REGARDING CALCULATION OF LONG TERM CAPITAL GAIN STATING THAT IT IS PREMATURE. 6. THE LD CIT (A) OUGHT TO HAVE CONSIDERED THAT THE AO HAS TAKEN SALE PRICE AS LONG TERM CAPITAL GAIN WITHOUT REDUCING THERE FROM THE INDEX COST OF PURCHASE. 3. BEFORE US, AT THE OUTSET, LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE ABOVE GROUNDS AND MENTIONED THAT GROUND NOS.5 AND 6 ARE NOT PRESSED AS THE 2 ASSESSEE ALREADY GOT RELIEF VIDE THE PROCEEDINGS U/S 154 OF THE ACT. AFTER HEARING THE LD DR IN THIS REGARD, THE SAID GROUND NOS.5 & 6 ARE DISMISSED AS NOT PRESSED. 4. GROUND NOS. 1 TO 4 RELATE TO THE DISALLOWANCE OF RS. 1,20,94,631/ - U/S 14A READ WITH RULE 8D OF THE ACT. IN THIS REGARD, LD COUNSEL FOR THE ASSESSEE FILED A COPY OF THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE AY 2008 - 2009 VIDE ITA NO.3123/MUM/2011, DATED 14.8.2013 AND READ OUT THE RELEVANT PARA 7, WHEREIN THE TRIBUNAL DEALT WITH THE IDENTICAL ISSUE AND REMANDED THE MATTER TO THE FILE OF THE AO TO DECIDE THE ISSUE AFRESH. 5. ON THE OTHER HAND, LD DR RELIED ON THE ORDERS OF THE REVENUE AUTHORITIES. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE CITED ORDER OF THE TRIBUNAL (SUPRA) DATED 14.8.2013. ON PERUSAL OF THE SAID ORDER OF THE TRIBUNAL, WE FIND, THE SIMILAR ISSUE WAS ADJUDICATED BY THE ITAT AND REMANDED THE MATTER TO THE FILE OF THE AO. PARA 7 OF THE SAID TRIBUNALS ORDER (SUPRA) IS RELEVANT IN THIS REGARD. CONSIDERING THE IMPORTANCE OF THE SAID PARA 7, THE SAME IS EXTRACTED WHICH READS AS UNDER: 7. IN OUR CLEAR VIEW, THEREFORE, THE INITIAL ONUS TO STATE ITS CASE QUA THE CLAIMED DISALLOWANCE U/S.14A IS ON THE ASSESSEE, WHICH IS TO BE MADE WITH REFERENCE TO ITS ACCOUNTS AND/OR OTHER RECORDS, WITH THE A.O. OBLIGED TO ALLOW THE ASSESSEE AN OPPORTUNITY TO PROVE THE SAME. THEN THE A.O. IS TO EXAMINE THE SAME WITH A VIEW TO SATISFY HIMSELF AS TO ITS CORRECTNESS, STATING THE REASONS FOR HIS OBJECTIVE SATISFACTION, OR NOT SO, AS THE CASE MAY BE, AND PROCEED ACCOR DINGLY. IN THE INSTANT CASE, THE SAID INITIAL ONUS HAVING BEEN CLEARLY NOT DISCHARGED BY THE ASSESSEE, WHICH FINDING HAS BEEN ENDORSED BY US, THE DISALLOWANCE CANNOT BE IMPUGNED FOR WANT OF NON - COMPLIANCE OF THE PROCEDURE LAID DOWN U/S.14A(2). AGAIN, HOWEV ER, AS WE OBSERVE, NONE OF THE PARTIES OR THEIR REPRESENTATIVES HAVE EVEN AS MUCH AS CARED TO LOOK AT THE FACTS, WHICH PRIMA FACIE REFLECT AN APPARENT CASE OF BANK BORROWINGS HAVING BEEN AVAILED FOR AND UTILIZED FOR SPECIFIED PURPOSES, SO THAT THE INTEREST THEREON COULD NOT BE SUBJECT TO APPORTIONMENT ON THE BASIS OF GENERAL POOL OF FUNDS HYPOTHESIS, WHICH WOULD OTHERWISE PREVAIL. WE CAN ONLY EXPRESS OUR ANGUISH AT THIS CLEAR DISREGARD FOR FACTS, WHICH ARE OF PRIME RELEVANCE IN DECIDING ANY CASE; ON THE CON TRARY, RAISING A HOST OF IRRELEVANT LEGAL ISSUES BEFORE US. THE MATTER MUST, THEREFORE, TRAVEL BACK TO THE FILE OF THE A.O. TO ALLOW THE ASSESSEE AN OPPORTUNITY TO STATE ITS CASE IN THE MATTER, WHO SHALL DECIDE THE SAME IN ACCORDANCE WITH THE LAW, ISSUING DEFINITE FINDINGS OF FACT. THE RELEVANT GROUNDS ARE DECIDED ACCORDINGLY. 7. CONSIDERING THE ABOVE, WE ARE OF THE OPINION THAT THE TRIBUNAL HAS RIGHTLY REMANDED THE MATTER TO THE FILE OF AO FOR FRESH ADJUDICATION AND SPEAKING ORDER. RESPECTFULLY, FOLLOWING THE SAID DECISION OF THE TRIBUNAL AS WELL AS FOLLOWING THE PRINCIPLE OF CONSISTENCY, WE REMAND THE ISSUE UNDER CONSIDERATION TO THE FILE OF AO 3 WITH IDENTICAL DIRECTIONS GIVEN IN THE SAID ORDER OF THE TRIBUNAL. ACCORDINGLY, GROUND NOS. 1 TO 4 RAISED BY TH E ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUN CED IN THE OPEN COURT ON 1 2 T H NOVEMBER, 2014. S D / - S D / - (H.L. KARWA) (D. KARUNAKARA RAO) PRESIDENT ACCOUNTANT MEMBER DATE: 1 2 .11.2014. AT :MUMBAI OKK COPY TO : 1. APPELLANT 2. RESPONDENT 3. THE CIT (A), CONCERNED. 4. THE CIT CONCERNED. 5. THE DR A, BENCH, ITAT, MUMBAI. 6. GUARD FILE. // TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI