NARENDRAPAL GUPTA (HUF), MUMBAI v. ACIT CEN CIR 30, MUMBAI

ITA 4263/MUM/2010 | 2002-2003
Pronouncement Date: 22-07-2011

Appeal Details

RSA Number 426319914 RSA 2010
Assessee PAN AAAHN4325D
Bench Mumbai
Appeal Number ITA 4263/MUM/2010
Duration Of Justice 1 year(s) 1 month(s) 27 day(s)
Appellant NARENDRAPAL GUPTA (HUF), MUMBAI
Respondent ACIT CEN CIR 30, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 22-07-2011
Appeal Filed By Assessee
Bench Allotted H
Tribunal Order Date 22-07-2011
Assessment Year 2002-2003
Appeal Filed On 25-05-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH: MUMBAI BEFORE SHRI P.M. JAGTAP ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR JUDICIAL MEMBER ITA NOS.4263 TO 4267/MUM/2010 (ASSESSMENT YEAR: 2002-03 2004-05 TO 2007-08) NARENDRAPAL GUPTA HUF RAJA BAHADUR BUILDING 28 B.S. MARG FORT MUMBAI -400 023 ....... APPELLANT VS ACIT CENTRAL CIRCLE 30 AAYAKAR BHAVAN M.K. ROAD MUMBAI -400 020 ..... RESPONDENT PAN: AAAHN 4325 D APPELLANT BY: SHRI J.P. BAIRAGRA RESPONDENT BY: SHRI GOLI SRINIWAS RAO O R D E R PER R.S. PADVEKAR JM THIS BATCH OF FIVE APPEALS IS FILED BY THE ASSESSEE CHALLENGING THE RESPECTIVE IMPUGNED ORDERS OF THE LD. CIT (A) -37 A ND THESE APPEALS PERTAINED TO A.YS. 2002-03 2004-05 2005-06 2006- 07 AND 2007-08. THE ONLY GRIEVANCE OF THE ASSESSEE IS IN RESPECT OF THE DISALLOWANCE MADE BY THE A.O. U/S.14A OF THE I.T. ACT. THIS GRO UND IS COMMON IN ALL THESE APPEALS. 2. THE A.O. MADE THE DISALLOWANCE U/S.14A AS UNDER: - ASSESSMENT YEAR AMOUNT OF DISALLOWANCE (IN ` ) 2002-03 3 64 431 2004-05 3 49 456 2005-06 3 57 648 2006-07 5 15 959 2007-08 8 07 704 ITA 4263 TO 4267/MUM/2010 NARENDRAPAL GUPTA HUF 2 3. BRIEFLY STATED THE FACTS ARE AS UNDER. THE ASSE SSEE IS ONE OF THE ENTITIES BELONGING TO THE RNA BUILDERS (ANIL AGGARW AL AND NARENDRAPAL GUPTA GROUP OF CASES). THE ASSESSEE HAS DECLARED T HE DIVIDEND WHICH IS EXEMPT U/S.10(33) OF THE I.T. ACT. IN THE OPINI ON OF THE A.O. THE ASSESSEE SHOULD HAVE DISALLOWED EXPENDITURE ATTRIBU TABLE FOR EARNING THE EXEMPT INCOME. THE ASSESSEE CONTENDED THAT INV ESTMENT IS MADE OUT OF THE SURPLUS FUNDS. MOREOVER THE ASSESSEE H AS SUO MOTO MADE THE DISALLOWANCE TOWARDS THE EXPENDITURE ATTRIBUTAB LE FOR EARNING THE DIVIDEND INCOME. THE A.O. REJECTED THE PLEA OF THE ASSESSEE AND WORKED OUT THE ATTRIBUTABLE EXPENDITURE FOR EARNING THE DIVIDEND U/S.14A R.W. RULE 8D BY TAKING % OF THE AVERAGE VA LUE OF THE EXEMPT INCOME YIELDING INVESTMENT. AFTER CONSIDERING THE SUO MOTO DISALLOWANCE MADE BY THE ASSESSEE BALANCE ADDITION WAS MADE ALLEGED TO BE ATTRIBUTABLE FOR EARNING THE DIVIDEND INCOME. THE A.O. ALSO REFERRED TO THE DECISION OF THE ITAT SPECIAL B ENCH IN THE CASE OF M/S. DAGA CAPITAL MANAGEMENT PVT. LTD. 117 ITD 169. THE LD. CIT (A) CONFIRMED THE DISALLOWANCE MADE BY THE A.O. 4. WE HAVE HEARD THE PARTIES AND PERUSED RECORDS. THE LD. COUNSEL SUBMITS THAT NOW THE LAW IS WELL SETTLED BY THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF DCIT VS. G ODREJ AND BOYCEE MFG. CO. LTD. 328 ITR 81 (BOM) THAT RULE 8D HAS NO RETROSPECTIVE APPLICATION HENCE RULE 8D CANNOT BE INVOKED IN TH E ASSESSEES CASE. HE FURTHER SUBMITS THAT THE ENTIRE INVESTMENT IS MA DE OUT OF THE SURPLUS FUNDS AND NO DISALLOWANCE IS JUSTIFIED. HE FURTHER PLEADED THAT IN VIEW OF THE DECISION OF THE HONBLE JURISDI CTIONAL HIGH COURT IN THE CASE OF GODREJ AND BOYCEE MFG. CO. LTD. (SUPRA) THE MATTER MAY BE RESTORED BACK TO THE FILE OF THE A.O. TO REWORK THE DISALLOWANCE. HE FURTHER SUBMITS THAT THE ISSUE OF SURPLUS FUND MAY BE KEPT OPEN AND ALSO THE A.O. MAY BE DIRECTED TO CONSIDER THE SUO MOTO DISALLOWANCE MADE BY THE ASSESSEE. THE LD. D.R. HAS NO OBJECTIO N FOR SENDING THIS ISSUE IN ALL THE APPEALS TO THE FILE OF THE A.O. W E ACCORDINGLY SET ASIDE THE ORDERS OF THE LD. CIT (A) IN ALL THESE AP PEALS AND REMIT THE ITA 4263 TO 4267/MUM/2010 NARENDRAPAL GUPTA HUF 3 ISSUE OF DISALLOWANCE U/S.14A TO THE FILE OF THE A. O. FOR FRESH ADJUDICATION DE NOVO . THE A.O. IS DIRECTED TO CONSIDER THE PRINCIPLES LAID DOWN BY THE HONBLE HIGH COURT OF BOMBAY IN TH E CASE OF GODREJ AND BOYCEE MFG. CO. LTD. (SUPRA). THE A.O. IS ALSO DIRECTED TO CONSIDER THE SUO MOTO DISALLOWANCE MADE BY THE ASSESSEE IS REASONABLE OR NOT. THE A.O. IS FURTHER DIRECTED TO CONSIDER WHETHER TH E ASSESSEE HAS MADE THE INVESTMENT OUT OF THE SURPLUS FUNDS. NEED LESS TO SAY THAT THE A.O. SHOULD GIVE REASONABLE OPPORTUNITY OF BEIN G HEARD TO THE ASSESSEE. 5. IN THE RESULT ALL THE APPEALS ARE ALLOWED FOR T HE STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 2 2ND JULY 2011. SD/- SD/- ( P.M. JAGTAP ) ACCOUNTANT MEMBER ( R.S. PADVEKAR ) JUDICIAL MEMBER MUMBAI DATE : 22ND JULY 2011 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A)39 MUMBAI. 4) THE CIT-CENTRAL-II MUMBAI. 5) THE D.R. H BENCH MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T. MUMBAI *CHAVAN ITA 4263 TO 4267/MUM/2010 NARENDRAPAL GUPTA HUF 4 SR.N. EPISODE OF AN ORDER DATE INITIALS CONCERNED 1 DRAFT DICTATED ON 14.07.2011 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 15.07.2011 SR.PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER