K DAMANI SECURITIES, MUMBAI v. ACIT 4(3), MUMBAI

ITA 1308/MUM/2011 | 2007-2008
Pronouncement Date: 09-10-2013 | Result: Allowed

Appeal Details

RSA Number 130819914 RSA 2011
Assessee PAN AABCK6800C
Bench Mumbai
Appeal Number ITA 1308/MUM/2011
Duration Of Justice 2 year(s) 7 month(s) 28 day(s)
Appellant K DAMANI SECURITIES, MUMBAI
Respondent ACIT 4(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 09-10-2013
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted I
Tribunal Order Date 09-10-2013
Assessment Year 2007-2008
Appeal Filed On 11-02-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH I MUMBAI ! '# $## #% & ! ' BEFORE SHRI RAJENDRA SINGH ACCOUNTANT MEMBER AND SHRI VIVEK VARMA JUDICIAL MEMBER . : 1308 / / 2011 A.YS. 2007-08 ITA NO. : 1308/MUM/2011 (ASSESSMENT YEAR: 2007-08) M/S. K. DAMANI SECURITIES PVT. LTD. 5 SURYA MAHAL 1 ST FLOOR BURJORJI BHARUCHA MARG FORT MUMBAI -400 023 .: PAN: AABCK 6800 C VS ACIT 4(3) AAYAKAR BHAVAN MUMBAI -400 020 (APPELLANT) (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY : BHAVANA C. YASHROX /DATE OF HEARING : 03-10-2013 !' / DATE OF PRONOUNCEMENT : 09-10-2013 + O R D E R $## #% : PER VIVEK VARMA JM: THE APPEAL FILED BY THE ASSESSEE ARISES FROM THE OR DER OF CIT(A) 10 MUMBAI DATED 08.12.2010 WHEREIN THE FOLLOWING GRO UNDS HAVE BEEN TAKEN: 1. THE LD. C.I.T. (APPEALS) ERRED IN CONFIRMING TH E ACTION OF LD. A.C.I.T. OF DISALLOWING DEPRECIATION ON MEMBERSHIP CARD OF THE STOCK EXCHANGE AND FURTHER ERRED IN NOT HOLDING THE SAME AS AN INT ANGIBLE ASSET WITHIN THE MEANING OF SECTION 32 OF THE INCOME TAX ACT 19 61. 2. THE LD. C.I.T. (APPEALS) ERRED IN CONFIRMING THE ACTION OF LD. A.C.I.T. OF DISALLOWING RS. 3 02 071/- OUT OF EXPENSES ATTRIBUT ABLE THE SAME TOWARDS EARNING INCOME U/S 14A READ WITH RULE 8D. 2. AT THE TIME OF HEARING THE CASE WAS CALLED BUT NEITHER ANYBODY ATTENDED NOR THERE WAS ANY PRAYER FOR ADJOURNMENT F ROM THE SIDE OF THE M/S. K. DAMANI SECURITIES PVT. LTD. ITA NO. 1308/MUM/2011 2 ASSESSEE. WE THEREFORE DECIDED TO PROCEED WITH TH E CASE EXPARTE IN ABSENCE OF THE ASSESSEE. 3. GROUND NO. 1 PERTAINS TO DEPRECIATION ON THE MEM BERSHIP CARD OF THE STOCK EXCHANGE. 4. WE FIND THAT THE ISSUE IS COVERED BY THE DECISIO N OF HONBLE SUPREME COURT OF INDIA IN THE CASE OF CIT VS SMIFS SECURITI ES LTD. REPORTED IN 348 ITR 302 (SC) WHEREIN THE HONBLE SUPREME COURT HELD TH AT STOCK EXCHANGE MEMBERSHIP CARDS ARE ASSETS ELIGIBLE FOR DEPRECIATI ON U/S 32 . 5. THE DR PLACING RELIANCE ON THE ORDERS OF THE RE VENUE AUTHORITIES ACCEPTED THAT THE ISSUE IS RESTED BY THE HONBLE SU PREME COURT OF INDIA. SINCE THE ISSUE IS NOW DECIDED BY THE HONBLE SUPRE ME COURT OF INDIA RESPECTFULLY FOLLOWING THE SAME WE SET ASIDE THE O RDER OF THE CIT(A) AND DIRECT THE AO TO ALLOW DEPRECIATION AS CLAIMED BY THE ASSE SSEE ON MEMBERSHIP CARD OF THE STOCK EXCHANGE. 6. GROUND NO. 1 IS THEREFORE ALLOWED. 7. GROUND NO. 2 PERTAINS TO DISALLOWANCE OF RS. 3 0 2 071/- COMPUTED U/S 14A. 8. THE FACTS ARE THAT THE ASSESSEE HAS DECLARED DIV IDEND INCOME OF RS. 13 35 138/- AND CLAIMED THE SAME TO BE EXEMPT U/S 1 0(34). THE AO APPLYING THE RATIO LAID DOWN IN DAGA CAPITAL MANAGE MENT PVT. LTD. APPLIED RULE 8D COMPUTED THE DISALLOWANCE OF RS. 3 02 071/ -. AGGRIEVED THE ASSESSEE APPROACHED THE CIT(A). 9. BEFORE THE CIT(A) THE ASSESSEE REITERATED ITS S UBMISSIONS MADE BEFORE THE AO THAT NO SPECIFIC EXPENSES WERE INCURRED ON E ARNING THE DIVIDEND INCOME. THE ASSESSEE ALSO CITED THE CASE OF GODREJ & BOYCE MANUFACTURING CO LTD VS DCIT REPORTED IN 321 ITR 81 AND SUBMITTED T HAT APPLICATION OF RULE 8D IS FROM ASSESSMENT YEAR 2008-09 AND ONWARDS SIN CE THE CASE OF THE ASSESSEE PERTAINED TO ASSESSMENT YEAR 2007-08 RULE 8D COULD NOT BE APPLIED. M/S. K. DAMANI SECURITIES PVT. LTD. ITA NO. 1308/MUM/2011 3 10. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS O F THE ASSESSEE DID NOT RELY ON RULE 8D BUT SUSTAINED THE QUANTUM OF DISALL OWANCE COMPUTED BY THE AO. 11. AGGRIEVED THE ASSESSEE IS NOW BEFORE THE ITAT. 12. SINCE WE ARE PROCEEDING EXPARTE WE FIND FROM THE ORDERS OF THE REVENUE AUTHORITIES THAT THE AO HAS APPLIED RULE 8D AND ARRIVED AT THE FIGURE OF DISALLOWANCE AND THE CIT(A) ALSO SUSTAINED THE Q UANTUM ARRIVED AT BY THE AO. 13. WE ARE AWARE THAT THE INSTANT CASE PERTAINS TO ASSESSMENT YEAR 2007- 08 WHICH BY VIRTUE OF THE HONBLE BOMBAY HIGH COU RT DECISION IN GODREJ & BOYCE MFG. CO. LTD. ( SUPRA ) REMAINS OUTSIDE THE PURVIEW OF RULE 8D & ITS COMPUTATION. HOWEVER CERTAIN DISALLOWANCE IS CALLE D FOR. IN THESE CIRCUMSTANCES WE SET ASIDE THE ORDER OF THE CIT(A) ON THIS ISSUE AND DIRECT THE AO TO COMPUTE THE DISALLOWANCE AS PER LAW ON SO ME REASONABLE BASIS. 14. GROUND NO. 2 IS THEREFORE ALLOWED FOR STATISTI CAL PURPOSES. 15. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH OCTOBER 2013. SD/- SD/- ( ) ( $## #% ) ! ! (RAJENDRA SINGH) (VIVEK VARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATE: 9 TH OCTOBER 2013 / COPY TO:- 1) / THE APPELLANT. 2) / THE RESPONDENT. 3) & & ' ( ) - 10 MUMBAI / THE CIT (A)-10 MUMBAI. 4) & & ' CITY -4 MUMBAI / THE CIT CITY -4 MUMBAI 5) )*+ & & -. / M/S. K. DAMANI SECURITIES PVT. LTD. ITA NO. 1308/MUM/2011 4 THE D.R. I BENCH MUMBAI. 6) +/ 0 COPY TO GUARD FILE. &12 / BY ORDER / / TRUE COPY / / [ 3 / 4 5 & -. DY. / ASSTT. REGISTRAR I.T.A.T. MUMBAI *784 . . * CHAVAN SR. PS