PRAKASH SECURITIES P. LTD, MUMBAI v. ADDL CIT RG 2(2), MUMBAI

ITA 6334/MUM/2010 | 2007-2008
Pronouncement Date: 07-02-2012 | Result: Allowed

Appeal Details

RSA Number 633419914 RSA 2010
Assessee PAN AAACP2401K
Bench Mumbai
Appeal Number ITA 6334/MUM/2010
Duration Of Justice 1 year(s) 5 month(s) 11 day(s)
Appellant PRAKASH SECURITIES P. LTD, MUMBAI
Respondent ADDL CIT RG 2(2), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 07-02-2012
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 07-02-2012
Date Of Final Hearing 07-02-2012
Next Hearing Date 07-02-2012
Assessment Year 2007-2008
Appeal Filed On 26-08-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C MUMBAI BEFORE SHIRI D. MANMOHAN V.P.(MZ) AND SHRI RAJENDRA SINGH A.M. ITA NO. : 6334/MUM/2010 ASSESSMENT YEAR : 2007-08 M/S. PRAKASH SECURITIES PRIVATE LIMITED 2 VIVEK TILAK ROAD GHATKOPAR (E) MUMBAI-400 077 PAN NO: AAACP 2401 K ASST. COMM. OF INCOME TAX- RANGE 2 (2) MUMBAI (APPELLANT) VS. (RESPONDENT) APPELLANT BY : SHRI JAYANT R. BHATT RESPONDENT BY : SHRI AJAY DATE OF HEARING : 07.02.2012 DATE OF PRONOUNCEMENT : 07.02.2012. ORDE R PER RAJENDRA SINGH (AM) : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 29.6.10 FOR THE CIT(A) FOR THE ASSESSMENT YEAR 2007 -08. THE ONLY DISPUTE RAISED IN THIS APPEAL IS REGARDING DISALLOW ANCE OF EXPENSES UNDER SECTION 14A RELATING TO EXEMPT INCOME. ITA NO. 6334/MUM/2010 M/S. PRAKASH SECURITIES PRIVATE LIMITED 2 2. FACTS IN BRIEF ARE THAT THE AO DURING THE ASSESS MENT PROCEEDINGS NOTICED THAT THE ASSESSEE HAD EARNED DIVIDEND INCOM E OF RS.14 16 221/- WHICH WAS EXEMPT FROM TAX BUT THE ASSESSEE HAD NOT DISALLOWED ANY EXPENSES RELATING TO SAID INCOME. HE THEREFORE CO MPUTED DISALLOWANCE RELATING TO EXEMPT INCOME UNDER RULE 8D AT RS.3 01 337/- WHICH IN APPEAL WAS CONFIRMED BY THE CIT(A) AGGRIEVED BY WHICH ASSE SSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3. WE HAVE HEARD BOTH THE PARTIES PERUSED THE RECO RDS AND CONSIDERED THE MATTER CAREFULLY. THE DISPUTE IS RE GARDING DISALLOWANCE OF EXPENSES RELATING TO EXEMPT INCOME UNDER SECTION 14 A OF THE IT ACT. UNDER THE PROVISIONS OF SECTION 14(2) AND 14(3) EX PENSES RELATING TO EXEMPT INCOME ARE REQUIRED TO BE COMPUTED AS PER ME THOD PRESCRIBED BY THE GOVERNMENT. THE GOVERNMENT HAS SINCE NOTIFIED THE METHOD IN THE FORM OF RULE 8D W.E.F. 1.4.2008. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ AND BOYCE MFG. CO. VS. DCIT (328 ITR 81) HAVE HELD THAT RULE 8D IS APPLICABLE ONLY FROM ASSESSMENT YEAR 200 8-09 AND IN RESPECT OF PRIOR YEARS DISALLOWANCE HAS TO BE MADE ON A RE ASONABLE BASIS OF BOTH DIRECT AND INDIRECT EXPENSES AFTER ALLOWING OPPORT UNITY OF HEARING TO THE ASSESSEE. THEREFORE ORDER OF CIT(A) CONFIRMING THE DISALLOWANCE FOLLOWING RULE 8D CANNOT BE UPHELD AS ASSESSMENT YEAR INVOLVE D IS 2007-08. WE THEREFORE SET ASIDE THE ORDER OF CIT(A) AND RESTOR E THE MATTER TO THE FILE OF AO FOR PASSING A FRESH ORDER AFTER NECESSARY EXA MINATION IN THE LIGHT OF THE DECISION OF HONBLE BOMBAY HIGH COURT IN CASE OF GODREJ AND BOYCE ITA NO. 6334/MUM/2010 M/S. PRAKASH SECURITIES PRIVATE LIMITED 3 MFG. CO. VS. DCIT (SUPRA) AFTER ALLOWING OPPORTUNI TY OF HEARING TO THE ASSESSEE. 4. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 7.2.2012. SD/- SD/- ( D. MANMOHAN) ( RAJENDRA SINGH ) VICE PRESIDENT ACCOUNTANT MEMBER MUMBAI DT: 07/02/2012 JV. COPY FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE C.I.T. 4. CIT (A) 5. THE DR C - BENCH ITAT MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT MUMBAI BENCHES MUMBAI