MEHRA CAPITAL SERVICES P. LTD, MUMBAI v. ACIT (OSD) CIR 2(2), MUMBAI

ITA 1073/MUM/2010 | 2006-2007
Pronouncement Date: 30-03-2011 | Result: Partly Allowed

Appeal Details

RSA Number 107319914 RSA 2010
Assessee PAN AAACM6607N
Bench Mumbai
Appeal Number ITA 1073/MUM/2010
Duration Of Justice 1 year(s) 1 month(s) 19 day(s)
Appellant MEHRA CAPITAL SERVICES P. LTD, MUMBAI
Respondent ACIT (OSD) CIR 2(2), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 30-03-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted J
Tribunal Order Date 30-03-2011
Date Of Final Hearing 22-03-2011
Next Hearing Date 22-03-2011
Assessment Year 2006-2007
Appeal Filed On 10-02-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES J MUMBAI BEFORE SHRI D.K. AGARWAL (J.M.) AND SHRI PRAMOD KUM AR (A.M.) ITA NO. 1073/MUM /2010 ASSESSMENT YEAR : 2006-07 M/S MEHRA CAPITAL SERVICES PVT. LTD. 2 ND FLOOR K.K. CHAMBERS SIR P.T. MARG P.M. ROAD FORT MUMBAI 400 001. PAN : AAACM6607 N VS. A SST. COMMISSIONER OF INCOME - TAX (OSD) CIRCLE 2(2) MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI HARESH P. SHAH RESPONDENT BY : SHRI C.P. PATHAK O R D E R PER D.K. AGARWAL J.M. THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED A GAINST THE ORDER DATED 15.12.2009 PASSED BY THE LD. CIT (A) FOR TH E A.Y 2006-07. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE COMPANY IS ENGAGED IN THE BUSINESS OF INVESTMENT IN SHARES AND CAPITAL MARKET OPERATION AND INCOME AND OTHER FINANCIAL ACTIVITIES FILED RETURN DECLARING TOTAL INCOME OF ` 44 31 378/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE A.O. NOTED THAT THE ASSESSEE HAS S HOWN DIVIDEND INCOME OF ` 16 46 279/- AND LONG TERM CAPITAL GAIN OF ` 11 02 631/- WHICH WERE CLAIMED AS EXEMPT. HOWEVER NO EXPENSES ATTRIBUTABLE SUCH INCOME WERE DISALLOWED BY THE ASSESSEE. ACCORDINGL Y THE A.O. AFTER CONSIDERING THE ASSESSES SUBMISSION THAT THE ASSES SEE HAS NOT INCURRED ITA NO. 10 73/MUM/2010 M/S MEHRA CAPITAL SER VICES PVT. LTD. 2 ANY INTEREST COST DURING THE YEAR UNDER CONSIDERATI ON WORKED OUT THE DISALLOWANCE BY APPLYING RULE 8D R.W.S. 14A OF THE INCOME TAX ACT 1961 (THE ACT) AND THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF DAGA CAPITAL MANAGEMENT PVT. LTD. 117 ITD 169 (M UM) [S.B.] AMOUNTING ` 2 84 608/- AS PER THE WORKING GIVEN AT PAGE NO. 4 OF THE ASSESSMENT ORDER AND ADDED THE SAME TO THE INCOME O F THE ASSESSEE. ON APPEAL THE LD. CIT(A) WHILE AGREEING WITH THE VIEW OF THE A.O. UPHELD THE ADDITION MADE BY THE A.O. 3. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US CHALLENGING IN ALL THE GROUNDS THE SUSTENANCE OF ADDITION OF ` 2 84 608/- BY APPLYING THE PROVISIONS OF SECTION 1 4 READ WITH RULE 8D. 4. AT THE TIME OF HEARING BOTH THE PARTIES HAVE AG REED THAT THIS ISSUE STANDS COVERED BY THE JUDGMENT OF HON'BLE JURISDICT IONAL HIGH COURT IN GODREJ & BOYCE MFG. CO. LTD. VS. DCIT THEREFORE THE ISSUE MAY BE SET ASIDE TO THE FILE OF THE ASSESSING OFFICER. 5. HAVING CAREFULLY HEARD THE SUBMISSIONS OF THE RI VAL PARTIES AND PERUSING THE MATERIAL AVAILABLE ON RECORD WE FIND MERIT IN PLEA OF THE PARTIES THAT THE ISSUE STANDS COVERED BY THE RECENT JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN GODREJ & BOYCE MFG. CO. LTD. VS. DCIT IN INCOME TAX APPEAL NO.626 OF 2010 AND WRIT PETITION NO.758 OF 2010 DATED 12.8.2010 SINCE REPORTED IN (2010) 328 ITR 81 (BOM.) WHEREIN THEIR LORDSHIPS AFTER CONSIDERING THE DECIS ION OF THE TRIBUNAL IN DAGA CAPITAL MANAGEMENT PVT. LTD. (117 ITD 169 (MUM )(SB) WHILE HOLDING THAT THE PROVISIONS OF SUB SECTIONS (2) AND (3) OF SEC.14A OF THE ACT ARE CONSTITUTIONALLY VALID HAVE HELD VIDE PLAC ITUM 88(VI) APPEARING AT PAGE 138 OF THE ITR AS UNDER : ITA NO. 10 73/MUM/2010 M/S MEHRA CAPITAL SER VICES PVT. LTD. 3 (VI) EVEN PRIOR TO ASSESSMENT YEAR 2008-09 WHEN RULE 8D WAS NOT APPLICABLE THE ASSESSING OFFICER H AS TO ENFORCE THE PROVISIONS OF SUB SECTION (1) OF SECTIO N 14A. FOR THAT PURPOSE THE ASSESSING OFFICER IS DUTY BOUND T O DETERMINE THE EXPENDITURE WHICH HAS BEEN INCURRED I N RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THE ACT. THE ASSESSING OFFICER MUST A DOPT A REASONABLE BASIS OR METHOD CONSISTENT WITH ALL THE RELEVANT FACTS AND CIRCUMSTANCES AFTER FURNISHING A REASONAB LE OPPORTUNITY TO THE ASSESSEE TO PLACE ALL GERMANE MA TERIAL ON THE RECORD; RESPECTFULLY FOLLOWING THE ABOVE JUDGMENT WE SET AS IDE THE ORDERS PASSED BY THE REVENUE AUTHORITIES ON THIS ACCOUNT AND SEND BACK THE MATTER TO THE FILE OF THE ASSESSING OFFICER WHO SHALL DECIDE THE SAME AFRESH IN THE LIGHT OF THE DIRECTIONS OF THE HON'BLE JURISDICTION AL HIGH COURT IN THE ABOVE CITED CASE AFTER PROVIDING REASONABLE OPPORTU NITY OF BEING HEARD TO THE ASSESSEE AND ACCORDINGLY THE GROUNDS TAKEN BY T HE ASSESSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. 6. IN THE RESULT ASSESSEES APPEAL STANDS PARTLY A LLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 30.03.2011 SD/- (PRAMOD KUMAR) ACCOUNTANT MEMBER SD/- (D.K. AGARWAL) JUDICIAL MEMBER MUMBAI DATED 30.3.2011 RK ITA NO. 10 73/MUM/2010 M/S MEHRA CAPITAL SER VICES PVT. LTD. 4 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS)- 5 MUMBAI 4. COMMISSIONER OF INCOME TAX 2 MUMBAI 5. DEPARTMENTAL REPRESENTATIVE BENCH F MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR ITAT MUMBAI ITA NO. 10 73/MUM/2010 M/S MEHRA CAPITAL SER VICES PVT. LTD. 5 1 DRAFT DICTATED ON 22.3.11 SR PS 2 DRAFT PLACED BEFORE AUTHOR ON 2 2 .3.11 SR PS 3 DRAFT PROPOSED & PLACE BEFORE THE 2 ND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY 2 ND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR PS SR.PS 6 KEPT FOR PRONOUNCEMENT ON SR PS 7 FILE SENT TO THE BENCH CLERK SR PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE ON WHICH FILE GOES TO THE AR 10 DATE OF DESPATCH SR PS