Mulberry Projects (Pvt.) Ltd., New ... vs Assessee
- CitationI.T.A .No.-2391/Del/2011
Ratio decidendi
The rule this decision rests on
The Tribunal, having noted that the Special Bench decision relied upon by the authorities had been overruled by the Bombay High Court on a retrospective point, and that the jurisdictional High Court in Maxopp Investment Ltd. v. CIT had since addressed the applicability of Rule 8D for the year under consideration, held that where the lower authorities did not have the benefit of a binding jurisdictional High Court decision rendered after their orders, it is appropriate to set aside the order of the first appellate authority and restore the issue to the Assessing Officer to decide afresh in accordance with law after affording the assessee a reasonable opportunity of being heard. Consequential to that restoration, the Tribunal held that the assessee's challenge to the enhancement of the disallowance under section 14A does not require adjudication on merits, since the Assessing Officer is free to determine the issue afresh.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
I.T.A .No.-2391/Del/2011 (ASSESSMENT YEAR-2007-08) M/s.Mulberry Projects (P.) Ltd., vs ACIT, C-120, Naraina Industrial Area, Circle-5(1), C.R. Building, Phase-1, New Delhi-110028. I.P.Estate, New Delhi PAN-AADCM8776D (APPELLANT) (RESPONDENT)
Appellant by Sh. Anil Bhalla, CA Respondent by Sh.P.DAM.Kanunjna, Sr.DR
Date of Hearing 27.05.2015 Date of Pronouncement 29.05.2015
ORDER PER DIVA SINGH, JM
The present appeal has been filed by the assessee assailing the correctness of the order dated 30.03.2011 of CIT(A)-VIII, New Delhi pertaining to 2007-08 assessment year on the following grounds:-
1) "The learned Commissioner of Income Tax (Appeals) has erred both on facts and in law in confirming and further enhancing the disallowance of expenses u/ s 14A from Rs.6,59,153/ - to Rs.15,56,514/ - allegedly on the ground that interest bearing funds have been invested for earning exempt income.
2) The learned Commissioner of Income Tax (Appeals) has erred both on facts and in law in disallowing interest paid amounting to Rs.31,46,532/ - and thereby enhancing the income by Rs.31,46,532/ -
allegedly on the ground that the same has not been incurred for the purposes of business of the appellant company.
3) The learned Commissioner of Income Tax (Appeals) has erred both on facts and in law in disallowing personnel, operating and administrative expenses amounting to Rs.51,15,476/ - and thereby enhancing the income by Rs.51,15,476/ - allegedly on the ground that the same has been incurred in connection with earning of income from house property.
4) The appellant craves leave to add, alter or amend the ground of appeal at a later stage."
2. The record shows that the assessee's source of income as per the assessment order was from the business of letting out and leasing of properties I.T.A .No.-2391/Del/2011
and maintenance of building. Return declaring an income of Rs. 3,21,88,030/- was filed which was subjected to scrutiny assessment by way of issuance of notices u/s 143(2) & 142(1). The Assessing Officer required the assessee to show why disallowance u/s 14A in terms of Rule 8D should not be made in view of the fact that income of Rs.6,85,608/- had been earned from dividend on mutual funds which was exempt u/s 10(34) of the Income Tax Act. Reliance was placed on the decision of the Special Bench in the case of Daga Capital Management P. Ltd. [2008] 26 SOT 603 (Mum.) (SB) and certain others decisions of the ITAT. Not convinced with the explanation offered addition of Rs.6,59,153/- was made by him.
3. The assessee challenged the issue in appeal before the CIT(A. Considering the facts, the CIT(A) enhanced the disallowance made. Aggrieved by this the assessee is in appeal before the Tribunal.
4. Considering the fact that the decision of the Special Bench has been over- ruled by the Hon'ble Bombay High Court in Godrej and Boyce on the issue of retrospectively; and the fact that the Jurisdictional High Court in the case of Maxopp Investment Ltd. vs CIT [2010] 347 ITR 272 (Del) has addressed the issue considering the applicability of the Rules which in the year under consideration would fully apply. Accordingly after hearing both the Ld. AR and the ld. CIT DR on facts where it is evident that both the authorities did not have the benefit of the judgement rendered by the Jurisdictional High Court on 18.11.2011 in the case of Maxopp Investments, accordingly, it is considered appropriate to set aside the impugned order and restore the issue back to the file of the AO to decide the same de-novo. The issue of enhancement challenged by the assessee consequently does not require any adjudication as the Ld. AO is free within the corners of law to decide the issue afresh in accordance with law after giving the assessee a reasonable opportunity of being heard. The order was pronounced on the date of hearing itself in the presence of the parties.
5. In the result the appeal of the assessee is allowed for statistical purposes.
The order is pronounced in the open court on 29th of May, 2015.
Sd/- Sd/- (N.K.SAINI) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 29/05/2015 *Amit Kumar* Page 2 of 3 I.T.A .No.-2391/Del/2011
Copy forwarded to:
1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI
Page 3 of 3
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