MADHU GUPTA, V. ITO 8(2)(1),

MA 266/MUM/2012

• Counselvise Citation: [2012] 123 COUNSELVISE.COM (IT) 9167 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 21 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 21-09-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 30-04-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K G KUTTY
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI . . , , ! '# ! '# ! '# ! '# , ,, , $ $ $ $ % % % % BEFORE SHRI R.S. SYAL, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER && ' . / M.A. NO.266/MUM./2012 . / ITA NO. 3731/MUM./2011 )*! + ( $' , -, / ASSESSMENT YEAR : 200708 ) MRS. MADHU GUPTA 42, IRISH PARK, JUHU MUMBAI 400 049 .. ./ / APPELLANT ' V/S INCOME TAX OFFICER WARD8(2)(1), AAYAKAR BAHVAN 101, M.K. ROAD, MUMBAI 400 020 .... 01./ / RESPONDENT . . / PERMANENT ACCOUNT NUMBER ADNPG1712D $' ,3! 4 5 / ASSESSEE BY : MR. PANKAJ R. TOPRANI 6 4 5 / REVENUE BY : MR. K.G. KUTTY ' 4 ! / DATE OF HEARING 21.09.2012 ' 78- 4 ! / DATE OF ORDER 21.09.2012 ' ' ' ' / ORDER ! '# ! '# ! '# ! '# , ,, , $ $ $ $ 9 9 9 9 / PER AMIT SHUKLA, J.M. THE PRESENT M.A. HAS BEEN PREFERRED BY THE ASSESSEE AGAINST THE ORDER DATED 20 TH MARCH 2012, PASSED BY THE TRIBUNAL, MUMBAI BENCH, IN ITA NO.3731/MUM./2011. THE ASSESSEE, IN THE M.A., STATE D THAT THE COUNSEL, WHILE ARGUING THE MATTER OF DISALLOWANCE MADE UNDER SECTION 14A OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT ) HAS PLEADED THAT NO SUCH MRS. MADHU GUPTA 2 DISALLOWANCE SHOULD BE MADE AND, IN ANY CASE, IF SO ME REASONABLE DISALLOWANCE IS CALLED FOR, THE SAME SHOULD BE REST RICTED TO ` 8,000 TO ` 10,000, INSTEAD OF DISALLOWANCE OF ` 5,10,566, MADE ON DIVIDEND INCOME OF ` 8,02,405. IT HAS BEEN FURTHER STATED THAT SUCH A RE ASONABLE DISALLOWANCE OF ` 8,000 TO ` 10,000, WAS ACCEPTED BY THE BENCH AT THE TIME OF H EARING. THE RELEVANT AVERMENTS MADE IN THE M.A. ARE REPRODUCED HEREIN BELOW: WHEN MATTER CAME UP BEFORE THE INCOME-TAX APPELLAT E TRIBUNAL THE APPLICANTS ADVOCATE, MR. PANKAJ R TOPRANI, STATED THAT THE SAID DISALLOWANCE OF RS.5,L0,566/- TO EARN EXEMPT DIVIDE ND OF RS.8,02,405/- WAS EXHORBITANT AS THE APPLICANT HAD USED HER OWN FUNDS FOR MAKING INVESTMENT. THE HONBLE BENCH ALSO HEARD THE D.R. THEREAFTER, THE HONBLE BENCH EXPRESSED THE VIEW TH AT THE ESTIMATION WHICH HAS BEEN MADE BY THE CIT(A) BY TAKING 10% OF THE INDIRECT EXPENSES DEBITED TO THE TUNE OF RS.50,81,926/- CANN OT BE HELD TO BE A REASONABLE BASIS LOOKING TO THE FACT THAT DIVIDEND INCOME EARNED IS ONLY RS. 8,02,405/- AND THEREFORE A REASONABLE DISA LLOWANCE OF ABOUT RS. 8,000/- TO RS. 10,000/- WOULD BE MADE BY THE TR IBUNAL WHICH WAS READILY AGREED TO BY THE APPLICANTS ADVOCATE MR. P ANKAJ R. TOPRANI, WHO APPEARED AT THE HEARING. HIS AFFIDAVIT EXPLAINI NG THE CORRECT FACTS IS ANNEXED HERETO AS ANNEXUREB. 2. AFTER GOING THROUGH THE MATERIAL PLACED ON RECORD A ND THE FINDINGS RECORDED BY THE TRIBUNAL, WE FIND THAT THE MAIN PLE ADING OF THE ASSESSEE WAS THAT RULE8D, WILL NOT BE APPLICABLE IN THE ASSESSM ENT YEAR 200708, IN VIEW OF THE JUDGMENT OF HON'BLE JURISDICTIONAL HIGH COUR T IN GODREJ & BOYCE MFG. CO. LTD. V/S DCIT, (2010), 328 ITR 081 (BOM.). IN T HE CONCLUDING PART, THE TRIBUNAL HAS ACCEPTED TO THE FACT THAT THE ASSESSME NT MADE BY THE LEARNED COMMISSIONER (APPEALS) BY TAKING 10% OF INDIRECT EX PENDITURE DEBITED TO THE TUNE OF ` 50,81,926, CANNOT BE HELD TO BE REASONABLE BASIS L OOKING TO THE FACT THAT THE DIVIDEND EARNED IS ONLY 8,02,405. THE MATTER WAS RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER IN VIEW OF THE PRINCIPLE LAID DOWN IN GODREJ & BOYCE MFG. CO. LTD. (SUPRA), AFTER OBSERVING AND HOLDING AS UNDER: 6. AFTER GOING THROUGH THE ORDERS OF THE AUTHORITI ES BELOW AND THE CONTENTIONS OF THE RIVAL PARTIES, IT IS ABSOLUTELY CLEAR THAT THE PROVISIONS OF RULE 8D WILL NOT BE APPLICABLE IN THE ASSESSMENT YEAR 2007-08 AS HELD BY HONBLE JURISDICTIONAL HIGH COURT IN THE CA SE OF GODREJ & BOYCE MANUFACTURING COMPANY LTD. VS. DCIT (SUPRA), THE HO NBLE HIGH COURT HAS HOWEVER, HELD THAT FOR THE EARLIER YEARS PRIOR TO THE ASSESSMENT YEAR 2008-09, THE ASSESSING OFFICER CAN ADOPT A REA SONABLE BASIS FOR AFFECTING THE APPORTIONMENT AFTER CONSIDERING THE R ELEVANT ACCOUNTS AND MATERIAL HAVING BEARING ON THE FACTS AND CIRCUM STANCES OF THE MRS. MADHU GUPTA 3 CASE. THE ESTIMATION WHICH HAS BEEN MADE BY THE CIT (APPEALS) BY TAKING 10% OF INDIRECT EXPENSES DEBITED TO THE TUNE OF ` 50,81,926/- CANNOT BE HELD TO BE A REASONABLE BASIS LOOKING TO THE FACT THAT DIVIDEND INCOME EARNED IS ONLY .8,02,405/-. THE MAT TER NEEDS TO BE RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER IN VIEW OF THE PRINCIPLE LAID DOWN THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF GODREJ & BOYCE MANUFACTURING COMPANY LTD. VS. DCIT (SUPRA) AND WILL TAKE INTO CONSIDERATION THE NATURE OF EXPENSES INCU RRED IN CONNECTION WITH THE BUSINESS AND THE SOURCE OF THE FUNDS DEPLO YED FOR MAKING THE INVESTMENTS FROM WHERE THE APPELLANT HAS RECEIVED T HE EXEMPT INCOME. NEEDLESS TO SAY THAT THE ASSESSING OFFICER WILL GIVE PROPER OPPORTUNITY TO THE ASSESSEE TO PRODUCE ITS ACCOUNTS AND TO PLACE ON RECORD ALL THE RELEVANT MATERIAL IN SUPPORT OF HER CASE AND THE ASSESSING OFFICER WILL DECIDE THE ISSUE IN ACCORDAN CE WITH THE MATERIAL PLACED AND IN ACCORDANCE WITH LAW. 3. IN THE AFORESAID FINDINGS, THE MATTER HAS BEEN REST ORED TO THE FILE OF THE ASSESSING OFFICER WITH DIRECTION TO TAKE INTO CONSI DERATION THE NATURE OF EXPENDITURE INCURRED IN CONNECTION WITH THE BUSINESS AND THE SO URCES OF FUNDS DEPLOYED FOR MAKING THE INVESTMENT FROM WHERE THE ASSESSEE HAS R ECEIVED THE EXEMPT INCOME. SUCH A DIRECTION IS IN CONSONANCE WITH THE LAW LAID DOWN BY THE HON'BLE JURISDICTIONAL HIGH COURT. THUS, WE DO NOT FIND ANY INFIRMITY MUCH LESS MISTAKE APPARENT FROM RECORD IN THE FINDINGS GIVEN BY THE T RIBUNAL IN THE ORDER. CONSEQUENTLY, WE DO NOT FIND ANY MERIT IN THE MISC. APPLICATION FILED BY THE ASSESSEE AND THE SAME IS DISMISSED AS SUCH. 4. 3 !: $' ,3! 4 && ' 36 ' 6! ;< = 4. IN THE RESULT, ASSESSEES M.A. IS TREATED AS DIS MISSED. ' 4 8- > ?': 21 ST SEPTEMBER 2012 8 4 @ = ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST SEPTEMBER 2012 SD/- . . R.S. SYAL ACCOUNTANT MEMBER SD/- ! ! ! ! '# '# '# '# $ $ $ $ AMIT SHUKLA JUDICIAL MEMBER MUMBAI, ?' ?' ?' ?' DATED: 21 ST SEPTEMBER 2012 MRS. MADHU GUPTA 4 ' 4 0$! & A&-! / COPY OF THE ORDER FORWARDED TO : (1) $' ,3! / THE ASSESSEE; (2) 6 / THE REVENUE; (3) B () / THE CIT(A); (4) B / THE CIT, MUMBAI CITY CONCERNED; (5) &E@ 0$!$' , , / THE DR, ITAT, MUMBAI; (6) @F, G / GUARD FILE. 1&! 0$! / TRUE COPY '' / BY ORDER 0 6. H / PRADEEP J. CHOWDHURY 3I $'6 / SR. PRIVATE SECRETARY ) / ; 6 / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI