ACIT 6(2), MUMBAI v. COSMO SYNTHETICS (I) LTD, MUMBAI

ITA 5153/MUM/2012 | 2007-2008
Pronouncement Date: 01-10-2013 | Result: Dismissed

Appeal Details

RSA Number 515319914 RSA 2012
Assessee PAN AABCC8067H
Bench Mumbai
Appeal Number ITA 5153/MUM/2012
Duration Of Justice 1 year(s) 1 month(s) 19 day(s)
Appellant ACIT 6(2), MUMBAI
Respondent COSMO SYNTHETICS (I) LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 01-10-2013
Appeal Filed By Department
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 01-10-2013
Assessment Year 2007-2008
Appeal Filed On 13-08-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C MUMBAI BEFORE SHRI H L KARWA PRESIDENT & SHRI N K BILLAIYA ACCOUNTANT MEMBER ITA NO.5153/MUM/2012 FOR ASST. YEAR: 2007-08 THE ACIT 6(2) MUMBAI. VS. M/S.COSMO SYNTHETICS (INDIA) LTD. (NOW VISHAL FURNISHING LTD.) 211 SHIV SHAKTI INDUSTRIAL COMPLEX LOWER PAREL MUMBAI- 400 011. PAN AABCC8067H (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SANJEEV JAIN RESPONDENT BY : NONE DATE OF HEARING : 01.10.2013 DATE OF PRONOUNCEMENT : 01.10.2013 O R D E R PER N.K.BILLAIYA (AM) : THIS APPEAL BY THE REVENUE IS PREFERRED AGAINST THE ORDER OF THE CIT(A)-2 MUMBAI DATED 21.05.2012 FOR A.Y.2007-08. 2. THE ONLY GRIEVANCE OF THE REVENUE IS THAT THE CI T(A) ERRED IN HOLDING THAT THE DISALLOWANCE U/S. 14A COULD NOT BE COMPUTED BY APPL YING RULE 8D. AS NO ONE APPEARED ON BEHALF OF THE ASSESSEE WE DECIDED TO P ROCEED EXPARTE. 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS RECEIVED DIVIDEND INCOME OF R S.2 17 09 350/- FROM ITS INVESTMENTS WHICH THE ASSESSEE HAS CLAIMED AS EXEMP T INCOME. THE ASSESSING 2 ITA NO.5153/MUM/2012 AY:2007-08 OFFICER FURTHER OBSERVED THAT THE ASSESSEE HAS NOT APPORTIONED ANY EXPENDITURE RELATABLE TO THE SAME. THE ASSESSING OFFICER WAS O F THE FIRM BELIEF THAT SOME PART OF THE ADMINISTRATIVE EXPENSES HAS TO BE ATTRIBUTABLE TO EARNING OF THIS EXEMPT INCOME. THE ASSESSING OFFICER WENT ON TO INVOKE PROVISIONS OF SECTION 14A READ WITH RULE 8D AND WORKED OUT THE DISALLOWANCE AT RS.32 55 495/- THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A) AND SUCCEEDED IN CONVINCING THE C IT(A) THAT RULE 8D DOES NOT APPLY TO THE ASSESSMENT YEAR UNDER CONSIDERATION. FURTHER THE CIT(A) WAS OF THE OPINION THAT A CERTAIN PART OF ADMINISTRATIVE EXPEN SES WOULD NEED TO BE COVERED AS DISALLOWANCE U/S. 14A OF THE ACT. THE CIT(A) WENT ON TO RELY ON CERTAIN JUDICIAL DECISIONS CONSIDERED BY HIM AS EXHIBITED AT PAGE 5 OF HIS ORDER AND AFTER CONSIDERING THEM THE CIT(A) HELD THAT 5% OF THE DIVIDEND INCOME EARNED CAN REASONABLY BE TREATED AS EXPENDITURE INCURRED FOR EARNING EXEMPT INCOME. AGGRIEVED BY THIS REVENUE IS BEFORE US. 4. IT IS NOW WELL SETTLED THAT RULE 8D IS APPLICABL E FROM A.Y. 2008-09 AS PER THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT I N THE CASE OF GODREJ & BOYCE MFG. CO. LTD. 328 ITR 81 . THE CIT(A) HAS RIGHTLY HELD T HAT RULE 8D IS NOT APPLICABLE FOR THE YEAR UNDER CONSIDERATION. AT THE SAME TIME WE FIND THAT THE CIT(A) HAS HELD THAT 5% OF THE DIVIDEND INCOME EARNED CAN REASONABL Y BE TREATED AS EXPENDITURE INCURRED FOR EARNING EXEMPT INCOME. THEREFORE WE DO NOT FIND ANY INFIRMITY IN THE FINDINGS OF THE CIT(A) WHICH NEED TO BE INTERFERED WITH. ACCORDINGLY THE REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST OCTOBER 2013. SD/- SD/- (H L KARWA) (N.K.BILLAIYA) PRESIDENT ACCOUNTANT MEMBER MUMBAI DT : 1 ST OCTOBER 2013 SA 3 ITA NO.5153/MUM/2012 AY:2007-08 COPY FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE C.I.T MUMBAI 4. THE CIT (A)-2 MUMBAI 5. THE DR C- BENCH ITAT MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT MUMBAI BENCHES MUMBAI