N. BHAU ( JEWELLERS) P.LTD, MUMBAI v. ITO 5(2)(1), MUMBAI

ITA 2249/MUM/2010 | 2006-2007
Pronouncement Date: 28-02-2011 | Result: Allowed

Appeal Details

RSA Number 224919914 RSA 2010
Assessee PAN AAACN1168P
Bench Mumbai
Appeal Number ITA 2249/MUM/2010
Duration Of Justice 11 month(s) 6 day(s)
Appellant N. BHAU ( JEWELLERS) P.LTD, MUMBAI
Respondent ITO 5(2)(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 28-02-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted G
Tribunal Order Date 28-02-2011
Assessment Year 2006-2007
Appeal Filed On 22-03-2010
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH MUMBAI BEFORE SHRI RAJENDRA SINGH(AM) AND SHRI V.D.RAO (JM) ITA NO.2249/M/2010 ASSESSMENT YEAR 2006-07 M/S. N. BHAU (JEWELLERS) PVT. LTD. THE ITO 5(2)(1 ) BHASKAR MANSION AAYAKAR BHAVAN 437 DR. DADASAHEB BHDKAMKAR MARG M.K.ROAD MUMBAI 400 020. LAMINGTON ROAD OPERA HOUSE MUMBAI 400 004. PAN : AAACN 1168 P APPELLANT RESPONDENT ASSESSEE BY : SHRI HITESH TRIVEDI REVENUE BY : SHRI A.K. NAYAK O R D E R PER RAJENDRA SINGH (AM) THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 15.1.10 OF CIT(A) FOR THE ASSESSMENT YEAR 2006-07. THE ASSE SSEE IN THIS APPEAL HAS RAISED DISPUTES ON TWO DIFFERENT GROUNDS. 2. THE FIRST DISPUTE IS REGARDING DISALLOWANCE OUT OF MISCELLANEOUS EXPENSES. THE ASSESSEE HAD SHOWN MISCELLANEOUS EXPE NSES OF RS.14 487/-. THE AO OBSERVED THAT EXPENSES WERE PETTY IN NATURE AND WERE NOT VERIFIABLE. HE THEREFORE DISALLOWED 20% OF SUCH EXPENDITURE WHI CH IN APPEAL WAS REDUCED TO 10% AGGRIEVED BY WHICH THE ASSESSEE IS IN APPEAL . 2 2.1 WE HAVE HEARD BOTH THE PARTIES IN THE MATTER. T HE LEARNED AR FOR THE ASSESSEE SUBMITTED THAT THE ISSUE WAS COVERED IN FA VOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE IN A.Y.2005-06 IN ITA NO.5488/M/2009. WE HAVE GONE THROUGH THE SAID DECIS ION OF THE TRIBUNAL. IT IS FOUND THAT IN THAT YEAR ALSO THE ASSESSEE HAD CLAIM ED MISCELLANEOUS EXPENSES OF RS.73 659/- AND THE AO HAD DISALLOWED 30% WHICH IN APPEAL WAS REDUCED TO 10% BY THE CIT(A). THE TRIBUNAL HOWEVER DID NOT UPH ELD ADDITION ON ADHOC BASIS AND DELETED THE SAME. THE FACTS THIS YEAR ARE IDENTICAL. THE DISALLOWANCE HAS BEEN MADE ON THE GROUND THAT EXPENSES ARE NOT V ERIFIABLE WITHOUT GIVING ANY DETAILS IN SUPPORT OF THE OBSERVATION. WE THERE FORE RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL IN A.Y. 2005-06 (SUPRA ) SET ASIDE THE ORDER OF CIT(A) AND DELETE THE ADDITION MADE. 3. THE SECOND DISPUTE IS REGARDING DISALLOWANCE OF EXPENSES UNDER SECTION 14A OF THE INCOME-TAX ACT. THE AO NOTED THAT THE AS SESSEE HAD EARNED TAX FREE INCOME OF RS.39 80 391/- FROM BOND AND UNITS OF MUT UAL FUNDS. THE AO THEREFORE DISALLOWED A SUM OF RS.2 22 840/- UNDER T HE PROVISIONS OF RULE 8D. IN APPEAL CIT(A) AGREED WITH THE AO THAT DISALLOWANCE HAD TO BE MADE UNDER RULE 8D IN VIEW OF THE DECISION OF THE TRIBUNAL IN CASE OF DAGA CAPITAL MANAGEMENT (26 SOT 603). HE THEREFORE CONFIRMED THE DISALLOWAN CE AGGRIEVED BY WHICH THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3.1 WE HAVE HEARD BOTH THE PARTIES PERUSED THE REC ORDS AND CONSIDERED THE MATTER CAREFULLY. THE DISPUTE IS REGARDING DISALLOW ANCE OF EXPENSES UNDER SECTION 14A IN RELATION TO THE EXEMPT INCOME. THE A UTHORITIES BELOW HAVE COMPUTED THE DISALLOWANCE UNDER RULE 8D. HOWEVER H ONBLE HIGH COURT OF MUMBAI IN CASE OF GODREJ & BOYCE MANUFACTURING CO. LTD. (328 ITR 81) HAVE 3 HELD THAT RULE 8D IS APPLICABLE ONLY FROM A.Y.2008- 09 AND THAT FOR THE PRIOR PERIOD THE EXPENSES RELATING TO THE EXEMPT INCOME B OTH DIRECT AND INDIRECT HAVE TO BE DISALLOWED ON REASONABLE BASIS AFTER ALL OWING OPPORTUNITY OF HEARING TO THE ASSESSEE. THUS RULE 8D IS NOT APPLICABLE FOR THE YEAR UNDER REFERENCE. WE THEREFORE SET ASIDE THE ORDER OF CIT(A) AND RESTORE THE MATTER TO THE FILE OF AO FOR PASSING A FRESH ORDER AFTER NECESSARY EXAMINATI ON IN THE LIGHT OF JUDGMENT OF HONBLE HIGH COURT OF MUMBAI IN CASE OF GODREJ & BOYCE MANUFACTURING CO. LTD. (SUPRA) AND AFTER ALLOWING OPPORTUNITY OF HEAR ING TO THE ASSESSEE. 4. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED IN THE TERMS INDICATED ABOVE. 5. THE DECISION WAS PRONOUNCED IN THE OPEN COURT ON 28.02.2011. SD/- SD/- ( V.D. RAO ) (RAJENDRA SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE : 28.02.2011 AT :MUMBAI COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) MUMBAI CONCERNED 4. THE CIT MUMBAI CITY CONCERNED 5. THE DR G BENCH ITAT MUMBAI // TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT MUMBAI BENCHES MUMBAI ALK