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Disallowance can be made under sec 14A and Rule 8D only after giving opportunity of being heard to the asseessee

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Court :
INCOME TAX APPELLATE TRIBUNAL

Brief :
The facts are that against the assessment order, the assessee filed an appeal before the CIT(A), wherein CIT(A) in order bearing no. CIT(A)/41/DCCC-38/IT 257/09-10 dated 14/12/2009 gave directions to the AO, saying, “ ......In view of the fact, the AO is directed to work out the disallowance u/s 14A r.w. Rule 8D and add back to the income of the assessee after allowing opportunity to the assessee of being heard and income of the appellant may be enhanced accordingly as per law” (relevant portion only extracted from order giving effect, dated 05/04/2010)

Citation :
DCIT, CC-38,R.No.32(1), Gr.floor, Aaykar Bhavan,M.K.Road, Mumbai-400 020.Appellant Vs.Shri Shanti Sarup Reniwal,302, Sylverton,102, Wodehouse Rd., Colaba,Mumbai-400 005.PAN: ADMPR3332D Respondent

IN THE INCOME TAX APPELLATE TRIBUNAL,

MUMBAI BENCH “E”, MUMBAI

BEFORE SHRI P.M. JAGTAP (AM) & SHRI VIVEK VARMA (JM)

I.T.A. No.4346/Mum/2011

(A.Y. 2007-08)

DCIT, CC-38,

R.No.32(1), Gr.floor, Aaykar Bhavan,

M.K.Road, Mumbai-400 020.

Appellant

Vs.

Shri Shanti Sarup Reniwal,

302, Sylverton,

102, Wodehouse Rd., Colaba,

Mumbai-400 005.

PAN: ADMPR3332D

Respondent

Appellant by:  Sh i B . Jaya Kumar.

Respondent by:  Shri Reepal G. Tralshawala.

Date of hearing:  02-04-2012

Date of pronouncement:  09-04-2012

O R D E R

PER VIVEK VARMA , JM:

The appeal has been filed by the revenue against the order of the CIT(A) 41, Mumbai, dated 19/04/2011. The revenue has taken the ground whether CIT(A) is justified in changing the directions given by the predecessor CIT(A) in the effect giving order.

2. The facts are that against the assessment order, the assessee filed an appeal before the CIT(A), wherein CIT(A) in order bearing no. CIT(A)/41/DCCC-38/IT 257/09-10 dated 14/12/2009 gave directions to the AO, saying, “ ......In view of the  fact, the AO is directed to work out the disallowance u/s 14A r.w. Rule 8D and add back to the income of the assessee after allowing opportunity to the assessee of being heard and income of the appellant may be enhanced accordingly as per law” (relevant portion only extracted from order giving effect, dated 05/04/2010) .

3. The AO giving effect to the direction applied the formula as prescribed under Rule 8D and relying on the Special Bench decision in Daga Management (P) Ltd., which was available with the AO. At that point of time, the decision of Bombay High Court in Godrej & Boyce Manufacturing Co. Ltd. was not there.

4. The matter came up in appeal before ITAT in the assessee’s own case and other cases in ITAs No. 453,454,456/M/2010 & 458 & 455/M/2010. During the continuance of these appeals, Hon’ble Bombay High Court came up with the decision in Godrej & Boyce Manufacturing Co. Ltd. V/s DCIT, reported in 328 ITR 81 (Bom), wherein the Hon’ble Bombay High Court held that the operation of Rule 8D shall only be from 2008-09 onwards, and not being retrospective.

5. Since the issue is now settled by the Hon’ble Bombay High Court, the CIT(A) has given new directions to the AO, based on the decision of Hon’ble Bombay High Court. At this moment we do not feel necessary to disturb the present findings and directions as given by the CIT(A) in the impugned order. We therefore, uphold the same.

6. The appeal filed by the revenue is dismissed.

Order pronounced on the 09th day of April, 2012.

                                                    Sd/-                                        Sd/-

                                           (P.M. JAGTAP )                (VIVEK VARMA)

                                  ACCOUNTANT MEMBER    JUDICIAL MEMBER

Mumbai: 09th April, 2012.

NG:

Copy to:

1. Department.

2. Assessee.

3. CIT(A)-41,Mumbai.

4. CIT,Central –III, Mumbai.

5. DR,”E” Bench,Mumbai.

6. Master file.

(TRUE COPY)

BY ORDER,

Asst.Registrar, ITAT, Mumbai.

Details

Date

Initials

Designation

1

Draft dictated on

02-04-2012

Sr.PS/

2

Draft Placed before author

03-04-2012

Sr.PS/

3

Draft proposed & placed before the

Second Member

JM/AM

4

Draft discussed/approved by Second

Member

JM/AM

5

Approved Draft comes to the Sr.PS/PS

Sr.PS/

6

Kept for pronouncement on

Sr.PS/

7

File sent to the Bench Clerk

Sr.PS/

8

Date on which the file goes to the Head

clerk

9

Date on which file goes to the AR

10

Date of dispatch of order

 

CS Bijoy
on 18 April 2012
Published in Income Tax
Views : 1648
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