WATCO ENGINEERING CO. P. LTD, MUMBAI v. ACIT 2(3), MUMBAI

ITA 6898/MUM/2012 | 2006-2007
Pronouncement Date: 23-04-2014 | Result: Allowed

Appeal Details

RSA Number 689819914 RSA 2012
Assessee PAN AAACW0469Q
Bench Mumbai
Appeal Number ITA 6898/MUM/2012
Duration Of Justice 1 year(s) 5 month(s) 11 day(s)
Appellant WATCO ENGINEERING CO. P. LTD, MUMBAI
Respondent ACIT 2(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 23-04-2014
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted G
Tribunal Order Date 23-04-2014
Date Of Final Hearing 09-04-2014
Next Hearing Date 09-04-2014
Assessment Year 2006-2007
Appeal Filed On 12-11-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH MUMBAI . . BEFORE SHRI N.K. BILLAIYA ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA JUDICIA L MEMBER . / ITA NO. 6898 / MUM./ 2012 ( / ASSESSMENT YEAR : 20 0 6 07 ) WATCO ENGINEERING CO. PVT. LTD. RECONDO COMPOUND INSIDE MUNICIPAL COMPOUND S.K. AHIRE MARG WORLI MUMBAI 400 030 .. / APPELLANT V/S ASST T. COMMISSIONER OF INCOME TAX CIRCLE 2(3) MUMBAI .... / RESPONDENT . / PERMANENT ACCOUNT NUMBER AAACW0469Q / ASSESSEE BY : MR. VIMAL PUNMIYA / REV ENUE BY : MR. R.K. SAHU / DATE OF HEARING 09 . 0 4 .201 4 / DATE OF ORDER 23.04.2014 / ORDER / PER AMIT SHUKLA J.M. THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESSEE CHALLENGING TH E IMPUGNED ORDER DATED 23 RD FEBRUARY 2010 PASSED BY THE LEARNED COMMISSIONER (APPEALS) V I MUMBAI FOR THE QUANTUM OF WATCO ENGINEERING CO. PVT. LTD. 2 ASSESSMENT PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT 1961 (FOR SHORT 'THE ACT' ) FOR THE ASSESSMENT YEAR 20 06 07 . THE SOLE DISPUT E IN THIS APPEAL IS WHETHER OR NOT THE LEARNED COMMISSIONER (APPEALS) WAS JUSTIFIED IN DISALLOWING ` 11 98 326 UNDER SECTION 14A BY APPLYING THE PROVISIONS OF RULE 8D IN THE ASSESSMENT YEAR 2006 07. 2 . FACTS IN BRIEF : THE ASSESSING OFFICER NOTED THAT THE A SSESSEE HAS EARNED EXEMPT INCOME BY WAY OF DIVIDEND AND INCOME FROM SALE OF SHARES OF MUTUAL FUNDS AND T HE ASSESSEE HAS NOT OFFERED ANY DISALLOWANCE UNDER SECTION 14A. THE ASSESSING OFFICER AFTER RELYING UPON THE SPECIAL BENCH DECISION OF THE TRIBUNAL IN DAGA MANAGEMENT PVT. LTD. [2008] 119 TTJ (MUM.) 289 (SB) HELD THAT PROVISIONS OF RULE 8D SHOULD BE MADE APPLICABLE AND ACCORDINGLY HE WORKED OUT THE DISALLOWANCE OF ` 11 98 326 UNDER THE FORMULA GIVEN IN RULE 8D. THIS DISALLOWANCE HAS ALSO BEEN CONFIRME D BY THE LEARNED COMMISSIONER (APPEALS). 3 . BEFORE US THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT FIRST OF ALL THE PROVISIONS OF RULE 8D CANNOT BE MADE APPLICABLE IN THE ASSESSMENT YEAR 2006 07 IN VIEW OF THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN GODREJ & BOYCE MFG. CO. LTD. V/S DCIT [2010] 328 ITR 081 (BOM.) ; SECONDLY HE SUBMITTED THAT THE MAJOR EXPENDITURE WHICH HAS BEEN DEBITED ARE MOSTLY EXPENDITURE ON PROPERTY TAX AND INTEREST ON HOUSING LOAN AND ALL THESE EXPENSES ARE IN REL ATION TO INCOME FROM HOUSE PROPERTY AND THE SAME CANNOT BE HELD TO BE ATTRIBUTABLE FOR THE PAYMENT OF DISALLOWANCE UNDER SECTION 14A BECAUSE THE DIVIDEND INCOME HAS ARISEN OUT OF THE INVESTMENT MADE IN THE NORMAL COURSE. THE LEARNED DEPARTMENTAL REPRESENT ATIVE ON THE WATCO ENGINEERING CO. PVT. LTD. 3 OTHER HAND RELIED UPON THE ORDER OF THE LEARNED COMMISSIONER (APPEALS). 4 . WE HAVE HEARD THE RIVAL CONTENTIONS AND ALSO PERUSED THE RELEVANT FINDINGS OF THE LEARNED COMMISSIONER (APPEALS) AND THE ASSESSING OFFICER. ADMITTEDLY IN THE IMPUGNED A SSESSMENT YEAR PROVISIONS OF RULE 8D CANNOT BE HELD TO BE APPLICABLE IN VIEW OF THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT CITED SUPRA. THEREFORE WE ARE OF THE CONSIDERED OPINION THAT THIS ISSUE NEEDS TO BE RESTORED TO THE FILE OF THE ASSESSING OF FICER. CONSEQUENTLY WE SET ASIDE THE IMPUGNED ORDER PASSED BY THE LEARNED COMMISSIONER (APPEALS) AND RESTORE THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER AND DIRECT HIM TO EXAMINE THE ACCOUNTS OF THE ASSESSEE AND ALSO THE NATURE OF EXPENDITURE INCU RRED AND THEN ONLY HE SHALL PROCEED TO EXAMINE THE DISALLOWAN CE ON SOME REASONABLE BASIS AND IN ACCORDANCE WITH THE PROVISIONS OF LAW. THUS THE GROUND RAISED BY THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 5 . 5. IN THE RESULT ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 23 RD APRIL 2014 ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD APRIL 2014 SD / - . . N.K. BILLAIYA ACCOUNTANT MEMBER SD / - AMIT SHUKLA JUDICIAL MEMBER MUMBAI DATED : 23 RD APRIL 2014 WATCO ENGINEERING CO. PVT. LTD. 4 / COPY OF THE ORDER FORWARDED TO : ( 1 ) / THE ASSESSEE ; ( 2 ) / THE REVENU E; ( 3 ) ( ) / THE CIT(A ) ; ( 4 ) / THE CIT MUMBAI CITY CONCERNED ; ( 5 ) / THE DR ITAT MUMBAI ; ( 6 ) / GUARD FILE . / TRUE COPY / BY ORDER . / PRADEEP J. CHOWDHURY / SR. PRIVATE SECRETARY / / (DY./ASSTT. REGISTRAR) / ITAT MUMBAI