James Mackintosh & Co. P.Ltd, Mumbai vs Assessee

ी िवजय पाल राव, याियक सद य, एवं ी डी. क णाकर राव, लेखा सद य के सम । BEFORE SHRI VIJAY PAL RAO , JM AND SHRI D. KARUNAKARA RAO, AM

आयकर अपील सं./I.T.A. No.1174/Mum/2013 ( िनधा रण वष / Assessment Year : 2009-10 )

M/s. James बनाम/ बनाम Jt. CIT(OSD) Mackintosh & Co.Pvt. Vs. Range-2(2) Ltd. Mumbai. Darabshaw House Ballard Estate Mumbai-400 001. थायी ले खा सं . /जीआइआर सं . /PAN/GIR No. : AAACJ 0988 P (अपीलाथ /Appellant) ... ( यथ / Respondent)

अपीलाथ ओर से / Appellant by : Shri Naresh Kumar यथ क! ओर से/Respondent by : Shri Premanand J.

सुनवाई क! तारीख / Date of Hearing : 04/02/2015 घोषणा क! तारीख /Date of 13/02/2015 Pronouncement :

आदेश / O R D E R

PER VIJAY PAL RAO, JM:

This appeal by the assessee is directed against the order dated 23/11/2012 for the assessment year 2009-10. The assessee has raised the following grounds in this appeal.

"1. The Hon'ble Commissioner of Income Tax (Appeal) has erred confirming order of the learned assessing officer of taxing Interest Income to the extent of Rs.34,87,215/- as Income from other Sources instead of Business Income. It is submitted that such Interest Income are arising from the business operations and accordingly, the same should be taxed as business Income. Accordingly, the necessary direction should be given in this regard.

2. The Hon'ble Commissioner of Income Tax (Appeal) has erred in confirming order of the learned assessing officer making the disallowance of Rs.25,53,915/- as against Rs.20,47,676/- made by appellant under Section 2 ITA No.1174/M/13

14A of Income Tax Act, 1961 based on erroneous figures taken in respect of total assets for the purpose of calculation of disallowance u/s 14A r.w. Rule 8D of Income Tax Act, 1961. It is submitted that such additional disallowed of Rs.5,06,239/- is unjustified. Hence, we pray your honour to delete the said addition made by the learned assessing officer."

2. Ground No.1 regarding interest income assessed as 'income from other sources' instead of 'business income'. At the time of hearing the ld. AR has submitted that the assessee does not want to press ground No.1 and the same may be dismissed as not pressed. The ld DR has raised no objection if the Ground No.1 of the assessee is dismissed as not pressed. Accordingly Ground No.1 of the assessee's appeal is dismissed being not pressed.

3. Ground No.2 regarding disallowance under section 14A r.w. Rule 8D.

3.1 We have heard the ld. AR as well as ld. DR and considered the relevant material on record. As far as applicability of Rule 8D for the year under consideration the ld. AR has not raised any objection in view of judgment of the Hon'ble Jurisdictional High Court in case of Godrej & Boyce 328 ITR 81 (Bom.). The only grievance of the assessee in respect of disallowance under section 14A is working of average value of total asset. The ld. AR has submitted that the assessee has worked out average value of total asset at Rs.55,14,33,421/-. Whereas the AO has worked out the average value of total asset at Rs.37,33,24,923/- and thereby increase the disallowance on account of interest expenditure from Rs.10,61,105 to Rs.15,67,344/-. He has contended that the AO has recomputed the average value of the asset without giving opportunity to the assessee and it is not clear from the assessment order as to how the AO has arrived to the said figure of average value of the total asset.

3.2 Having considered the rival submissions as well as the relevant material on record we note that the assessee has worked out the disallowance under section 14A by taking the average value of total asset at Rs.55,14,33,421/- which was found by the AO as not correct and accordingly the AO has computed the average value of total asset at Rs.37,33,24,923/- resulting in enhancement of disallowance under section 14A 3 ITA No.1174/M/13

to the tune of Rs.5,06,239/-. The assessee raised the ground of disallowance under section 14A before CIT(A) alongwith disallowance under section 36(1)(iii) being a double disallowance on account of interest regarding interest free advance given to sister concern. CIT(A) has deleted the disallowance made under section 36(1)(iii) by holding that no separate further disallowance under section 36(1)(iii) is called for and accordingly confirmed the disallowance made under section 14A. Thus, it is clear that neither the AO has discussed in the assessment order as to how the average value of total asset was worked out nor CIT(A) has gone into this issue. Accordingly, in the facts and circumstances of the case, we set aside this issue to the record of the AO, for a limited purpose, to give the assessee an opportunity of hearing as how the average value of asset worked out by the AO. Hence, the AO has to redo the working of disallowance under section 14A after giving opportunity to the assessee.

4. In the result, appeal is partly allowed for statistical purposes.

Order pronounced in the open court on 13/02/2015.

आदेश क! घोषणा खुले यायालय म+ ,दनांकः 13/02/2015 को क! गई ।

Sd/- Sd/- (D. Karunakara Rao) (Vijay Pal Rao ) लेखा सद य / ACCOUNTANT MEMBER याियक सद य / JUDICIAL MEMBER मुंबई Mumbai; ,दनांक Dated 13/02/2015 व.िन.स./ Jv, Sr. PS 4

ITA No.1174/M/13

आदेश क ितिलिप अ िे षत/Copy षत of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. आयकर आयु0(अपील) / The CIT(A)- 4. आयकर आयु0 / CIT

5. िवभागीय ितिनिध, आयकर अपीलीय अिधकरण, मुंबई / DR, ITAT, Mumbai

6. गाड3 फाईल / Guard file.

आदेशानुसार/ ार BY ORDER,

स यािपत ित //True Copy//

उप/सहायक उप सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, अिधकरण मुंबई / ITAT, Mumbai.