BOMBAY RAYON FASHIONS LTD, MUMBAI v. DCIT 8(2), MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G MUMBAI BEFORE SHRI A.L. GEHLOT A.M. AND SHRI R.S. PADVEKA R J.M. ITA NO. 5857/M/2009 ASSESSMENT YEAR: 2007-08 BOMBAY RAYON FASHIONS LTD. APPELLANT D-WING OBEROI GARDEN ESTATE CHANDIVALI FARMS ROAD CHANDIVALI ANDHERI (E) MUMBAI 400 072 [PAN AAACM3447J) VS. DY. COMMISSIONER OF INCOME TAX8(2) RESPONDENT AAYAKAR BHAVAN 2 ND FLOOR M.K. ROAD MUMBAI 400 020 APPELLANT BY : MR. VIJAY MEHTA RESPONDENT BY : MR. A.K. NAYAK ORDER PER A.L. GEHLOT A.M.: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF CIT(A)- 16 MUMBAI PASSED ON 16/10/2009 FO R THE ASSESSMENT YEAR 2007-08 WHEREIN THE ASSESSEE HAS RA ISED THE FOLLOWING GROUND OF APPEAL:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEA RNED CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 1 64 11 022/- ON THE BASIS OF SPECIAL BENCH JUDGMENT OF DAGA CAPITAL MANAGEMENT PVT. LTD. WHICH IS UNDER REVIEW. 2. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTICED THAT THE ASSESSEE COMPANY HAD CREDITED CERTAIN AMOU NT AS DIVIDEND INCOME AND CLAIMED IT AS EXEMPT U/S 10(34). ON BEIN G ASKED TO EXPLAIN AS TO WHY DISALLOWANCE OF EXPENDITURE SHOUL D NOT BE MADE U/S 14A IN ACCORDANCE WITH THE COMPUTATION PRESCRIB ED UNDER RULE 8D THE ASSESSEE COMPANY CONTENDED THAT NO DISALLOW ANCE IS WARRANTED U/S 14A AS THEY HAVE RESERVES AND SURPLUS OF FUNDS WHICH WERE USED FOR MAKING INVESTMENTS IN MUTUAL FU NDS GENERATING THE DIVIDEND INCOME. AFTER CONSIDERING T HE SUBMISSIONS OF THE ASSESSEE THE AO COMPUTED THE DISALLOWANCE T O BE MADE U/S ITA NO. 5857/M/09 BOMBAY RAYON FASHIONS LTD. 2 14A AND DISALLOWED THE SAME AFTER PLACING RELIANCE ON THE DECISION OF ITAT SPECIAL BENCH MUMBAI IN THE CASE OF ITO VS . DAGA CAPITAL MANAGEMENT PVT. LTD. 26 SOT 603 (BOM) (SPEICAL BEN CH). THE CIT(A) CONFIRMED THE ACTION OF THE AO. 3. THE LEARNED AR HAS CANVASSED THAT THE ISSUE UNDE R CONSIDERATION IS COVERED BY THE JUDGMENT OF THE HON BLE JURISDICTIONAL HIGH COURT VIDE INCOME TAX APPEAL NO . 626 OF 2010 AND WRIT PETITION NO. 758 OF 2010 IN THE CASE OF G ODREJ & BOYCE MFG. CO.LTD. ORDER DATED AUGUST 12 2010 WHEREIN THE HONBLE COURT HAS CONSIDERED THE SPECIAL BENCH DECISION OF ITAT MUMBAI IN THE CASE OF DAGA CAPITAL MANAGEMENT PVT. LTD. CI TED SUPRA. THEREFORE HE PLEADED THAT THE MATTER MAY BE REMITT ED TO THE FILE OF THE AO TO DECIDE THE ISSUE IN THE LIGHT OF JUDGMENT OF HONBLE HIGH COURT CITED SUPRA. THE LEARNED DEPARTMENTAL REPRESE NTATIVE HAS NOT OBJECTED TO THE SAME. 4. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF THE PARTIES AND PERUSED THE RECORD. IN VIEW OF THE LATEST JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF GODREJ & B OYCE MFG. CO. LTD. (SUPRA) CERTAIN FACTS ARE REQUIRED VERIFICATIO N WE THEREFORE REMIT THE MATTER TO THE FILE OF THE AO WITH A DIREC TION TO DECIDE THE ISSUE IN THE LIGHT OF JUDGMENT OF HONBLE JURISDICT IONAL HIGH COURT CITED SUPRA AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 5. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF AUGUST 2010. SD/- SD/- (R.S. PADVEKAR) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTAN T MEMBER ITA NO. 5857/M/09 BOMBAY RAYON FASHIONS LTD. 3 DATED: 30 TH AUGUST 2010 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE BENCH I.T. A.T. MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR I.T.A.T. MUMBAI. KV