PRUDENTIAL SHIPPING AGENCIES P. LTD, MUMBAI v. DCIT 2(2), MUMBAI

ITA 2366/MUM/2010 | 2006-2007
Pronouncement Date: 04-03-2011 | Result: Allowed

Appeal Details

RSA Number 236619914 RSA 2010
Bench Mumbai
Appeal Number ITA 2366/MUM/2010
Duration Of Justice 11 month(s) 9 day(s)
Appellant PRUDENTIAL SHIPPING AGENCIES P. LTD, MUMBAI
Respondent DCIT 2(2), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 04-03-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 04-03-2011
Assessment Year 2006-2007
Appeal Filed On 25-03-2010
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH MUMBAI BEFORE SHRI N.V.VASUDEVAN (JM) AND SHRI RAJENDRA S INGH(AM) ITA NO.2366/M/2010 ASSESSMENT YEAR 2006-07 M/S. PRUDENTIAL SHIPPING AGENCIES P. LTD. THE DCIT CIRCLE-2(2) MUMBAI 55A/63A WALCHAND HIRACHAND MARG AAYAKAR BHAVAN M .K. MARG OPP. GPO MUMBAI 400 001. MUMBAI 400 020. PAN : AACP 3404 G APPELLANT RESPONDENT ASSESSEE BY : PHEROZE A. DHANBHOORA REVENUE BY : MISS REETAKUMARI DOKANIA O R D E R PER RAJENDRA SINGH (AM) THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 25.1.10 OF CIT(A) FOR THE ASSESSMENT YEAR 2006-07. THE ONLY DISPUTE RAISED IS REGARDING DISALLOWANCE OF EXPENSES UNDER SECTION 14 A OF THE INCOME-TAX ACT. THE AO NOTED THAT THE ASSESSEE HAD SHOWN DIVIDEND I NCOME OF RS.69 297/- WHICH WAS EXEMPT FROM TAX. THE AO THEREFORE DISALLO WED THE EXPENSES IN RELATION TO THE EXEMPT INCOME UNDER RULE 8D OF THE INCOME-TAX RULE. HE COMPUTED THE DISALLOWANCE OF INTEREST AT RS.5 80 32 2/- AND OTHER INDIRECT EXPENSES OF RS.96 228/- AGGREGATING RS.6 76 550/- U NDER THE PROVISIONS OF THE SAID RULE. IN APPEAL CIT(A) CONFIRMED THE ORDER OF AO HOLDING THAT RULE 8D HAS TO BE FOLLOWED IN VIEW OF THE DECISION OF THE SPECI AL BENCH OF THE TRIBUNAL IN 2 CASE OF DAGA CAPITAL MANAGEMENT PVT. LTD. (119 TTJ 289) AGGRIEVED BY THE SAID DECISION THE ASSESSEE IS IN APPEAL. 2. WE HAVE HEARD BOTH THE PARTIES PERUSED THE RECOR DS AND CONSIDERED THE MATTER CAREFULLY. THE DISPUTE IS REGARDING DISALLOW ANCE OF EXPENSES RELATING TO THE DIVIDEND INCOME WHICH WAS EXEMPT FROM TAX. UNDE R THE PROVISIONS OF SECTION 14(2)/ 14(3) DISALLOWANCE OF EXPENSES IN R ELATION TO EXEMPT INTO HAS TO BE MADE AS PER THE GUIDELINES NOTIFIED BY THE GOVER NMENT. THE GOVERNMENT SUBSEQUENTLY NOTIFIED THE GUIDELINES IN THE FORM OF RULE NO.8D. THE AUTHORITIES BELOW HAVE COMPUTED THE DISALLOWANCE UNDER SECTION 14A UNDER THE PROVISIONS OF THE SAID RULE FOLLOWING THE DECISION OF THE SPEC IAL BENCH OF THE TRIBUNAL IN CASE OF DAGA CAPITAL MANAGEMENT PVT. LTD. (SUPRA) I N WHICH IT WAS HELD THAT RULE 8D HAD RETROSPECTIVE APPLICATION. HOWEVER THE SAID VIEW OF THE TRIBUNAL HAS NOT BEEN ACCEPTED BY THE HONBLE HIGH COURT OF MUMB AI IN CASE OF GODREJ & BOYCE MANUFACTURING CO. LTD. (328 ITR 81) IN WHICH IT HAS BEEN HELD THAT RULE 8D WILL APPLY ONLY FROM A.Y.2008-09 AND FOR THE PRI OR PERIOD DISALLOWANCE OF EXPENSES BOTH DIRECT AND INDIRECT HAS TO BE MADE ON A REASONABLE BASIS AFTER ALLOWING OPPORTUNITY OF HEARING TO THE ASSESSEE. TH US RULE 8D IS NOT APPLICABLE AS THE ASSESSMENT YEAR INVOLVED IN THE PRESENT APPE AL IS 2006-07. 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. 3 3. IN THE RESULT APPEAL BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. 4. ORDER WAS PRONOUNCED IN THE OPEN COURT 04.03.201 1. SD/- SD/- ( N.V.VASUDEVAN ) (RAJENDR A SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE : 04.03.2011 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 C BENCH ITAT MUMBAI // TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT MUMBAI BENCHES MUMBAI ALK