UNIVERSAL FERRO & ALLIED CHEMICALS LTD, MUMBAI v. ACIT 1(3), MUMBAI

ITA 2858/MUM/2009 | 2005-2006
Pronouncement Date: 27-10-2010 | Result: Allowed

Appeal Details

RSA Number 285819914 RSA 2009
Assessee PAN AAACU1697G
Bench Mumbai
Appeal Number ITA 2858/MUM/2009
Duration Of Justice 1 year(s) 5 month(s) 22 day(s)
Appellant UNIVERSAL FERRO & ALLIED CHEMICALS LTD, MUMBAI
Respondent ACIT 1(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 27-10-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted F
Tribunal Order Date 27-10-2010
Date Of Final Hearing 15-09-2010
Next Hearing Date 15-09-2010
Assessment Year 2005-2006
Appeal Filed On 05-05-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH MUMBAI. BEFORE SHRI R.V.EASWAR PRESIDENT AND SHRI T.R. SOO D AM I.T.A.NO.2858/MUM/2009 (ASSESSMENT YEAR: 2005-06) UNIVERSAL FERRO & ALLIED CHEMICALS LTD. LIBERTY BUILDING SIR V.T.MARG N.M.LINES MUMBAI-400 020. PAN:AAACU1697G VS. THE ASSISTANT COMMISSIONER OF INCOME TAX-1(3) AAYAKAR BHAVAN M.K.ROAD MUMBAI-400 020. (APPELLANT) (RESPONDENT) APPELLANT BY : MR. AJAY I.THAKORE RESPONDENT BY : MR.CHANDRAJIT SINGH DR O R D E R PER R.V.EASWAR PRESIDENT: THIS APPEAL BY THE ASSESSEE RELATES TO THE ASSESSMENT YEAR 2005-06. THE ASSESSE E IS A COMPANY MANUFACTURING FERRO ALLOYS ANALYTICAL AND ENVIRONMENTAL POLLUTION EQUIPMENTS AND RENDERING MU D LOGGING SERVICES. THE APPEAL ARISES OUT OF THE ASSESSMENT ORDER PASSED ON THE COMPANY UNDER SECTION 143(3) OF THE INCOME T AX ACT ON 21.11.2007. 2. THOUGH AS MANY AS FOUR GROUNDS HAVE BEEN TAKEN I N THE APPEAL THE ISSUE IS THE SAME NAMELY WHETHER THE CI T(A) WAS JUSTIFIED IN DISALLOWING THE AMOUNT OF RS.57 04 735 /-UNDER SECTION 14A OF THE ACT. THE AMOUNT CONSISTS OF INTE REST OF RS.17 60 838/- AND ADMINISTRATIVE AND OTHER EXPENSE S AND FINANCIAL CHARGES OF RS.39 43 897/-. THE GROUNDS AL SO CHALLENGE THE APPLICABILITY OF RULE 8D OF THE INCOME TAX RULE S ON THE GROUND THAT IT DOES NOT APPLY TO THE ASSESSMENT YEA R PRIOR TO THE ASSESSMENT YEAR 2008-09. PARTIES BEFORE US ARE AGRE ED THAT THE QUESTION RELATING TO THE APPLICABILITY OF SECTION 1 4A AND RULE 8D NOW STANDS COVERED BY THE JUDGEMENT OF THE HONBLE BOMBAY ITA NO.2858/M/09 2 HIGH COURT IN THE CASE OF GODREJ & BOYCE MANUFACTU RING CO.LTD. VS. DCIT. (2010) 234 CTR 1. IN THIS JUD GEMENT IT WAS HELD THAT RULE 8D APPLIES ONLY FROM THE ASSESSMENT YEAR 2008- 09 AND NOT TO ANY EARLIER ASSESSMENT YEARS BUT IT W AS FURTHER HELD THAT IN ORDER TO INVOKE SECTION 14A IT IS NEC ESSARY TO SHOW THAT THERE EXISTED NEXUS BETWEEN THE EXPENDITURE AN D THE EXEMPT INCOME AND FURTHER THAT THE DISALLOWANCE SHO ULD BE DONE ON A REASONABLE BASIS. KEEPING IN VIEW THE PRI NCIPLES LAID DOWN IN THE AFORESAID JUDGEMENT AND RESPECTFULLY FO LLOWING THE SAME WE DEEM IT FIT AND PROPER TO SET ASIDE THE OR DERS OF THE DEPARTMENTAL AUTHORITIES ON THE ISSUE OF SECTION 14 A AND RESTORE THE SAID ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION THAT HE SHOULD DEAL WITH THE SAME AFRESH IN THE LIG HT OF THE PRINCIPLES LAID DOWN IN THE AFORESAID JUDGEMENT AFT ER GIVING ADEQUATE OPPORTUNITY TO THE ASSESSEE OF PUTTING FOR TH ITS CASE. IT IS CLARIFIED THAT RULE 8D CANNOT BE INVOKED FOR THE YEAR UNDER APPEAL AND THE DISALLOWANCE UNDER SECTION 14A HAS T O BE ON THE PRINCIPLES LAID DOWN IN THE AFORESAID JUDGEMENT OF THE HONBLE HIGH COURT. WITH THESE REMARKS WE RESTORE THIS ISS UE TO THE FILE OF THE ASSESSING OFFICER. THE APPEAL OF THE ASSESSE E IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 27 TH DAY OF OCTOBER 2010. SD/- ( T.R. SOOD ) SD/- ( R.V.EASWAR ) ACCOUNTANT MEMBER PRESIDENT MUMBAI DATED 27 TH OCTOBER 2010. SOMU ITA NO.2858/M/09 3 COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-1 MUMBAI. 4. THE CIT(A)-XXI MUMBAI 5. THE DR F BENCH /TRUE COPY/ BY ORDE R ASSTT. REGISTRAR I.T.A.T MUMBAI