KOHINOOR PROJECTS P. LTD, MUMBAI v. DCIT 6(2), MUMBAI

ITA 3140/MUM/2010 | 2006-2007
Pronouncement Date: 29-03-2011 | Result: Allowed

Appeal Details

RSA Number 314019914 RSA 2010
Assessee PAN AACCK6164C
Bench Mumbai
Appeal Number ITA 3140/MUM/2010
Duration Of Justice 11 month(s) 7 day(s)
Appellant KOHINOOR PROJECTS P. LTD, MUMBAI
Respondent DCIT 6(2), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 29-03-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted G
Tribunal Order Date 29-03-2011
Assessment Year 2006-2007
Appeal Filed On 22-04-2010
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH MUMBAI BEFORE SHRI R. V. EASWAR PRESIDENT AND SHRI RAJEN DRA SINGH(AM) ITA NO.3140/M/2010 ASSESSMENT YEAR 2006-07 M/S. KOHINOOR PROJECTS PVT.LTD. THE DCIT 6(2) 5 TH FLOOR KOHINOOR CORPORATE OFFICE AAYAKAR BHAVAN M.K.MA RG SENAPATI BAPAT MARG DADAR (W) MUMBAI 400 020. MUMBAI 400 028. PAN : AACCK6164C APPELLANT RESPONDENT ASSESSEE BY : SHRI JAYESH DADHIA REVENUE BY : SHRI S.K.SINGH O R D E R PER RAJENDRA SINGH (AM) THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 28.1.2010 OF CIT(A) FOR THE ASSESSMENT YEAR 2006-07 . THE ONLY DISPUTE RAISED BY THE ASSESSEE IN THIS APPEAL IS REGARDING DISALLO WANCE OF EXPENSES INCURRED IN RELATION TO EXEMPT INCOME. THE FACTS OF THE CASE AR E THAT THE AO DURING THE ASSESSMENT PROCEEDINGS NOTED THAT THE ASSESSEE HAD MADE SUBSTANTIAL INVESTMENT IN KOHINOOR CTNL INFRASTRUCTURE CO. LTD. INCOME FROM WHICH WAS EXEMPT FROM TAX. THE AO ALSO NOTED THAT THE ASSESSE E HAD CLAIMED SUBSTANTIAL EXPENDITURE RUNNING INTO CRORES WHICH INCLUDED INTE REST PAYMENT ALSO. THE AO THEREFORE APPLIED THE PROVISIONS OF RULE 8D TO COMP UTE THE EXPENSES RELATABLE TO THE EXEMPT INCOME WHICH WAS COMPUTED AT RS.1 48 15 667/- WHICH WAS 2 DISALLOWED BY HIM. IN APPEAL CIT(A) FOLLOWING THE D ECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN CASE OF DAGA CAPITAL MANAGEMENT PVT. LTD. (119 TTJ 289) HELD THAT RULE 8D HAD RETROSPECTIVE APPLICATION AND WAS THEREFORE APPLICABLE FOR THE RELEVANT YEAR AND ACCORDINGLY CONFIRMED THE DIS ALLOWANCE MADE BY THE AO. AGGRIEVED BY THE SAID DECISION OF THE CIT(A) THE A SSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 2. WE HAVE HEARD BOTH THE PARTIES PERUSED THE RECOR DS AND CONSIDERED THE MATTER CAREFULLY. THE DISPUTE IS REGARDING DISALLOW ANCE OF EXPENDITURE IN RELATION TO THE INCOME WHICH IS EXEMPT FROM TAX. UN DER THE PROVISIONS OF SECTION 14(2) AND 14(3) THE EXPENDITURE RELATABLE TO THE EXEMPT INCOME HAS TO BE COMPUTED AS PER THE METHOD PRESCRIBED BY THE GOV ERNMENT. THE GOVERNMENT HAVE SINCE NOTIFIED THE METHOD IN THE FO RM OF RULE 8D FOR COMPUTATION OF DISALLOWABLE EXPENDITURE. THE AUTHOR ITIES BELOW HAVE COMPUTED THE DISALLOWANCE AS PER RULE 8D HOLDING THAT THE SA ME HAD RETROSPECTIVE APPLICATION. HOWEVER RECENTLY THE HONBLE HIGH COU RT OF MUMBAI IN CASE OF GODREJ & BOYCE MANUFACTURING CO. (328 ITR 81) HAVE HELD THAT RULE 8D IS APPLICABLE ONLY FROM ASSESSMENT YEAR 2008-09 AND FO R THE PRIOR PERIOD THE EXPENSES RELATING TO EXEMPT INCOME BOTH DIRECT AND INDIRECT HAVE TO BE COMPUTED ON A REASONABLE BASIS AFTER ALLOWING OPPOR TUNITY OF HEARING TO THE ASSESSEE. THE ASSESSMENT YEAR INVOLVED IN THE PRESE NT APPEAL IS A.Y.2006-07 AND THEREFORE RULE 8D IS NOT APPLICABLE. WE ACCORDI NGLY SET ASIDE THE ORDER OF CIT(A) AND RESTORE THE MATTER TO THE FILE OF AO FOR PASSING A FRESH ORDER AFTER NECESSARY EXAMINATION IN THE LIGHT OF JUDGMENT OF H ONBLE SUPREME COURT IN CASE OF GODREJ & BOYCE MANUFACTURING CO. (SUPRA) AN D AFTER ALLOWING OPPORTUNITY OF HEARING TO THE ASSESSEE. 3 3. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. 5. ORDER WAS PRONOUNCED IN THE OPEN COURT 29.03.201 1. SD/- SD/- ( R. V. EASWAR ) (RAJENDR A SINGH) PRESIDENT ACCOUNTANT MEMBER DATE : 29.03.2011 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 G BENCH ITAT MUMBAI // TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT MUMBAI BENCHES MUMBAI ALK