ARCHWAY INVESTMENT COMPANY LTD, MUMBAI v. ITO 2(1)(1), MUMBAI

ITA 3080/MUM/2010 | 2006-2007
Pronouncement Date: 17-03-2011 | Result: Allowed

Appeal Details

RSA Number 308019914 RSA 2010
Assessee PAN AAACA5507H
Bench Mumbai
Appeal Number ITA 3080/MUM/2010
Duration Of Justice 10 month(s) 27 day(s)
Appellant ARCHWAY INVESTMENT COMPANY LTD, MUMBAI
Respondent ITO 2(1)(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 17-03-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted G
Tribunal Order Date 17-03-2011
Assessment Year 2006-2007
Appeal Filed On 20-04-2010
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH MUMBAI. BEFORE SHRI R.V.EASWAR PRESIDENT AND SHRI PRAMOD KUMAR ACCOUNTANT MEMBER I.T.A NO.3080/ MUM/2010 ASSESSMENT YEAR: 2006-07 ARCHWAY INVESTMENT CO. LTD. .. APPELLANT NEVILLE HOUSE J.N. HEREDIA MARG BALLARD ESTATE MUMBAI-001. PA NO.AAACA 5507 H VS INCOME TAX OFFICER 2(1)(1) . RESPONDENT AAYAKAR BHAVAN M.K. ROAD MUMBAI. APPEARANCES: M.D.INAMDAR FOR THE APPELLANT A.K.NAYAK FOR THE RESPONDENT O R D E R PER PRAMOD KUMAR: 1. BY WAY OF THIS APPEAL THE ASSESSEE HAS CALLED INTO QUESTION CORRECTNESS OF CIT(A)S ORDER DATED 18 TH MARCH 2010 IN THE MATTER OF ASSESSMENT UNDER SEC TION 143(3) OF THE INCOME TAX ACT 1961 FOR THE ASSESSMENT YEAR 2006 -07ON THE FOLLOWING GROUND: THE LD CIT (A) HAS ERRED IN CONFIRMING THE DISALLO WANCE OF INTEREST OF RS.27 12 703 U/S.14A BY APPLYING RULE 8D AS BEING ATTRIBUTABLE TO THE DIVIDEND INCOME CLAIMED EXEMPT U/S.10(34) OF THE IN COME TAX ACT 1961. 2. BRIEFLY STATED THE MATERIAL FACTS ARE LIKE THIS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTED THAT THE A SSESSEE HAS SHOWN DIVIDEND INCOME AMOUNTING TO RS.1 42 01 878. AGAINST THIS THE ASS ESSEE HAS CLAIMED INTEREST EXPENSES LEGAL AND PROFESSIONAL FEE AND MISCELLANEOUS EXPENSES. T HE AO NOTICED THAT THE ASSESSEE HAS NOT DISALLOWED ANY EXPENDITURE FOR EARNING THE EXEMPT I NCOME OF DIVIDEND. IN THIS BACKDROP THE ASSESSING OFFICER APPLIED RULE 8D AND COMPUTED THE DISALLOWANCE OF RS.27 12 703 U/S.14A R.W. RULE 8D. AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT (A) WHO 2 FOLLOWING THE DECISION OF THE ITAT MUMBAI IN THE CA SE OF DAGA CAPITAL AND MANAGEMENT(119 TTJ 289) WHEREIN IT WAS HELD THAT RULE 8D IS RETR OSPECTIVE APPROVED THE ACTION OF THE AO DISALLOWING A SUM OF RS. 27 12 703. THE ASSESSEE I S NOT SATISFIED AND IS IN FURTHER APPEAL BEFORE US. 3. WE HAVE HEARD THE RIVAL CONTENTIONS PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED THE FACTUAL MATRIX OF THE CASE AS ALSO T HE APPLICABLE LEGAL POSITION. 4. LEARNED REPRESENTATIVES AGREE THAT SO FAR AS THE QUESTION OF RULE 8D IS CONCERNED THE ISSUE IS NOW COVERED IN FAVOUR OF THE ASSESEE B Y THE HONBLE JURISDICTIONAL HIGH COURTS JUDGEMENT IN THE CASE OF GODREJ & BOYCE MFG CO LTD VS DCIT (328 ITR 81) WHEREIN IT HAS BEEN HELD THAT RULE 8D OF THE INCOME TAX RULES 19 62 IS APPLICABLE ONLY PROSPECTIVELY I.E. FROM A.Y. 2008-09. THE ASSESSMENT YEAR INVOLVED IN THE PRESENT CASE IS 2006-07. THE HONBLE HIGH COURT HAS HELD THAT A REASONABLE DISALLOWANCE FOR EXPENSES INCURRED IN EARNING DIVIDEND INCOME IS NEVERTHELESS TO BE COMPUTED BY T HE AO. IN VIEW OF THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF GO DREJ BOYCE MFG CO. LTD (SUPRA) AND AS AGREED TO BY THE PARTIES WE REMIT THE ISSUE TO THE FILE OF THE AO TO RE-COMPUTE THE DISALLOWANCE U/S.14A IN THE LIGHT OF THE LAW LAID D OWN BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF GODREJ BOYCE MFG CO. LTD (SUPR A). 5. IN THE RESULT APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 17 TH MARCH 2011 SD/- (R.V.EASWAR) PRESIDENT SD/- (PRAMOD KUMAR) (ACCOUNTANT MEMBER) MUMBAI DATED 17 TH MARCH 2011 PARIDA COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS) 4 MUMBAI 4. COMMISSIONER OF INCOME TAX 2 MUMBAI 5. DEPARTMENTAL REPRESENTATIVE BENCH H MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR ITAT MUMBAI 3 4