ORBITECH LTD, MUMBAI v. DCIT RG 8(2), MUMBAI

ITA 956/MUM/2010 | 2005-2006
Pronouncement Date: 30-12-2010 | Result: Allowed

Appeal Details

RSA Number 95619914 RSA 2010
Assessee PAN AAACC5736G
Bench Mumbai
Appeal Number ITA 956/MUM/2010
Duration Of Justice 10 month(s) 24 day(s)
Appellant ORBITECH LTD, MUMBAI
Respondent DCIT RG 8(2), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 30-12-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Date Of Final Hearing 29-12-2010
Next Hearing Date 29-12-2010
Assessment Year 2005-2006
Appeal Filed On 05-02-2010
Judgment Text
ITA. NO. 956/MUM/2010 M/S. ORBITECH LTD. IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C : MUMBAI BEFORE SHRI D. MANMOHAN VICE PRESIDENT AND SHRI B.RAMAKOTAIAH ACCOUNTANT MEMBER ITA. NO. 956/MUM/2010 ASSESSMENT YEAR 2005-2006 M/S. ORBITECH LTD. MUMBAI 400 096. PAN AAACC5736G VS. DCIT RANGE 8 (2) MUMBAI 400 020 (APPELLANT) (RESPONDENT) FOR APPELLANT : SHRI K.K. LALKAKA FOR RESPONDENT : SHRI P.N. DEVADASAN ORDER PER D. MANMOHAN V.P. 1. THIS APPEAL BY THE ASSESSEE-COMPANY IS DIRECTE D AGAINST THE ORDER DATED 10 TH NOVEMBER 2009 PASSED BY THE CIT(A)-17 MUMBAI AND IT PERTAINS TO THE ASSESSMENT YEAR 2005- 2006. THE FOLLOWING GROUNDS WERE URGED BEFORE US : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) HAS ERRED IN HOLDING THA T IN DETERMINING BOOK PROFIT UNDER SECTION 115JB : (A) CUSTODY CHARGES AND PROFESSIONAL FEES INCURRED FOR EVALUATING MONITORING AND SAFE KEEPING INVESTMENTS HAVE BEEN INCURRED IN RELATION TO EARNING OF EXEMPT INCOME. (B) THE PROVISIONS OF RULE 8D WERE APPLICABLE FOR THE A.Y. 2005-2006 ALTHOUGH THE SAID RULE WAS INSERTED ONLY WITH EFFECT FROM A.Y. 2008-09. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LEARNED CIT(A) HAS ERRED IN IGNORING THE DECISION OF THE BOMBAY HIGH COURT BEING THE JURISDICTIONAL COURT IN CASE OF SNOWCEM INDIA LTD. VS. DCIT 178 TAXMAN 478 AND IN HOLDING THAT INTEREST U /S. ITA. NO. 956/MUM/2010 M/S. ORBITECH LTD. 2 234B AND 234C OF THE INCOME TAX ACT IS LEVIABLE IN CASE O COMPANY ASSESSED ON BOOK PROFIT U/S. 115JB. 2. AT THE TIME OF HEARING BOTH THE PARTIES ADMITTE D THAT THE ISSUE INVOLVED IN THIS APPEAL ARE REQUIRES TO BE DI SPOSED OF IN LINE WITH THE VIEW TAKEN BY THE APEX COURT (REG. GROUND NO.2) AND HONBLE BOMBAY HIGH COURT (REG. GROUND NO.1). 3. THE CASE OF THE LEARNED COMMISSIONER IS THAT IN THE CASE OF A COMPANY ASSESSES BOOK PROFIT UNDER SECTION 11 5JB OF THE ACT INTEREST IS NOT LEVIABLE UNDER SECTION 234B AND 234 C OF THE ACT. RELIANCE WAS PLACED UPON THE DECISION OF HONBLE BO MBAY HIGH COURT IN THE CASE OF CIT VS. NATURAL ZEMS LIMITED (2010) 327 ITR 269 (BOM.) CONSISTENT WITH THE VIEW TAKEN THEREIN WE DIRECT T HE ASSESSING OFFICER NOT TO LEVY INTEREST UNDER SECTION 234B AND 234C OF THE ACT AND ACCORDINGLY ALLOW GROUND NO. 2 OF THE ASSESSEE. 4. VIDE GROUND NO.1 ASSESSEE CONTENDS THAT THE ASS ESSING OFFICER AS WELL AS CIT(A) ERRED IN COMPUTING THE AM OUNT DISALLOWABLE UNDER SECTION 14A OF THE ACT BY APPLYING RULE 8D OF THE I.T. RULES IN THE LIGHT OF DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ AND BOYCE MFG. CO. LTD. VS. DCIT AND ANOTHER (2010) 328 ITR 81 (BOM.) RULE 8D IS PROSPECTIVE IN OPERATION AND APPLICABLE ONLY W.E.F. ASSESSMENT YEAR 2008-2009 AND IN SO FAR AS T HE ASSESSMENT YEAR UNDER CONSIDERATION THE DISALLOWANCE IF ANY H AS TO BE MADE ON REASONABLE BASIS. THE ITAT MUMBAI BENCHES HAVE BEE N CONSISTENTLY SETTING ASIDE THE ISSUE FOR FRESH CONSIDERATION BY THE ASSESSING OFFICER IN LINE WITH THE VIEW TAKEN BY THE HONBLE HIGH COU RT (SUPRA). UNDER THESE CIRCUMSTANCES WE SET ASIDE THE ISSUE ARISING OUT OF GROUND NO.1 AND DIRECT THE ASSESSING OFFICER TO RECONSIDER THE MATTER IN ACCORDANCE WITH LAW. 5. IN THE RESULT APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ITA. NO. 956/MUM/2010 M/S. ORBITECH LTD. 3 PRONOUNCED IN THE OPEN COURT ON THIS THE 30 TH DAY OF DECEMBER 2010 SD/- SD/- (B.RAMAKOTAIAH) (D.MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI DATE 30 TH DECEMBER 2010 VBP/- COPY TO 1. M/S. ORBITECH LTD. 133/SDF 5 SEEPZ ANDHERI (E ) MUMBAI 96. PAN AAACC5736G 2. DCIT RANGE 8 (2) AAYAKAR BHAVAN MUMBAI 020. 3. CIT(A)-17 MUMBAI 4. CIT-8 MUMBAI 5. DR C BENCH 6. GUARD FILE (TRUE COPY) BY ORDER ASST. REGISTRAR ITAT MUMBAI BENCHES MUMBAI.