AHURA MAZDA MANUFACTURING COMPANY P. LTD, MUMBAI v. DCIT 10(2), MUMBAI

ITA 2330/MUM/2010 | 2006-2007
Pronouncement Date: 25-02-2011 | Result: Allowed

Appeal Details

RSA Number 233019914 RSA 2010
Assessee PAN AABCA8284E
Bench Mumbai
Appeal Number ITA 2330/MUM/2010
Duration Of Justice 11 month(s) 1 day(s)
Appellant AHURA MAZDA MANUFACTURING COMPANY P. LTD, MUMBAI
Respondent DCIT 10(2), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 25-02-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 25-02-2011
Assessment Year 2006-2007
Appeal Filed On 24-03-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A MUMBAI BEFORE SHRI P.M. JAGTAP AM AND SMT. ASHA VIJAYAR AGHAVAN JM I.T.A.NO. 2330/MUM/2010 ASSESSMENT YEAR : 2006-07 M/S. AHURA MAZDA MANUFACTURING CO. PRIVATE LIMITED. MAZDA HOUSE BEHIND C.I.D. OFFICE L.B.S. MARG GHATKOPAR (W) MUMBAI 400 086 PAN: AABCA 8284 E VS. DY. COMMISSIONER OF INCOME-TAX- 10(2) AAYAKAR BHAVAN MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI C.N. VAZE RESPONDENT BY : SHRI R. S. SRIVASTAVA O R D E R PER P.M. JAGTAP AM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-21 MUMBAI DA TED 08.01.2010 FOR THE ASSESSMENT YEAR 2006-07 AND THE SOLITARY ISSUE ARI SING OUT OF THE SAME RELATES TO THE DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDE R SECTION 14A OF THE ACT AND CONFIRMED BY THE LEARNED CIT(A). 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY WH ICH IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF FURNITURE AND OFFICE A PPLIANCES ETC. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED B Y IT ON 28.11.2006 DECLARING TOTAL INCOME OF RS. 26 93 940/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE ASSES SEE HAS INVESTED SUBSTANTIAL AMOUNT IN THE CAPITAL OF A FIRM M/S. AHURA MAZDA M ETAL FORMING AND FINISHING WHERE IT WAS A PARTNER. HE ALSO NOTICED THAT THE S AID AMOUNT WAS INVESTED BY THE ASSESSEE COMPANY FORM THE FUNDS BORROWED FROM THE B ANK IN THE FORM OF OVERDRAFT. AS THE INCOME OF THE ASSESSEE COMPANY F ROM THE SAID PARTNERSHIP FIRM WAS ELIGIBLE FOR EXEMPTION UNDER SECTION 10(2A) OF THE ACT THE ASSESSING OFFICER ITA NO.2330/M/2010 M/S. AHURA MAZDA MFG. CO. P.LTD. 2 HELD THAT INTEREST ATTRIBUTABLE TO THE BORROWED FUN DS TO THE EXTENT UTILIZED FOR MAKING INVESTMENT IN THE CAPITAL OF THE SAID PARTNE RSHIP FIRM WAS LIABLE TO THE DISALLOWED AS PER THE PROVISIONS OF SECTION 14A. A CCORDINGLY HE WORKED OUT THE QUANTUM OF INTEREST SO ATTRIBUTABLE AT RS.17 80 732 /- AND DISALLOWED THE SAME U/S.14A. 3. ON APPEAL THE LEARNED CIT(A) UPHELD THE ACTION OF THE ASSESSING OFFICER IN INVOKING THE PROVISIONS OF SECTION 14A TO MAKE T HE DISALLOWANCE ON ACCOUNT OF INTEREST EXPENDITURE. HE HOWEVER DIRECTED THE AS SESSING OFFICER TO DETERMINE THE QUANTUM OF SUCH DISALLOWANCE BY APPLYING RULE 8D OF THE INCOME-TAX RULES 1962 INSERTED SUBSEQUENTLY. AGGRIEVED BY THE ORDER OF TH E LEARNED CIT(A) THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. WHILE DEALING WITH A SIMILAR ISSUE INVOLVED IN THE CASE OF GODREJ AND BOYCE MFG. CO. LTD. V. DCIT (328 IT R 81) THE HONBLE BOMBAY HIGH COURT HAS HELD THAT RULE 8D OF THE INCOME-TAX RULES 1962 IS APPLICABLE ONLY PROSPECTIVELY I.E. FROM THE ASSESSMENT YEAR 2008-09 . THE HONBLE BOMBAY HIGH COURT HAS FURTHER HELD THAT THE QUANTUM OF DISALLOW ANCE U/S.14A FOR THE YEARS EARLIER TO THE ASSESSMENT YEAR 2008-09 HAS TO BE W ORKED OUT BY ADOPTING SOME REASONABLE METHOD. KEEPING IN VIEW OF THE SAID JUDG MENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ AND BOYCE MFG. CO . LTD. V. DCIT (SUPRA) WE SET ASIDE THE IMPUGNED ORDER OF THE LEARNED CIT(A) AND RESTORE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO DETERMINE THE AMOUNT OF INTEREST EXPENDITURE LIABLE TO BE DISALLOWED UNDER SECTION 1 4A BY ADOPTING SOME REASONABLE METHOD. THE ASSESSING OFFICER IS ALSO D IRECTED TO GIVE PROPER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ITA NO.2330/M/2010 M/S. AHURA MAZDA MFG. CO. P.LTD. 3 5. IN THE RESULT THE APPEAL OF THE ASSESSEE IS TRE ATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 25 TH DAY OF FEBRUARY 2011. SD. SD. (ASHA VIJAYARAGHAVAN) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI DATED THE 25 TH FEBRUARY 2011. KN COPY TO: 1. THE ASSESSEE 2. THE REVENUE 3. THE CIT M.C. X MUMBAI 4. THE CIT(A)-21 MUMBAI 5. THE DR A BENCH MUMBAI BY ORDER /TRUE COPY/ ASST. REGISTRAR ITAT MUMBAI