S.B. Billimoria & Co , Mumbai vs Assessee

सर्वश्री आय.सी.शभमव, रेखम सदस्म एवुं श्री संजम गगव, न्ममयमक सदस्म BEFORE SHRI R.C.SHARMA, AM & SHRI SANJAY GARG, JM आमकय अऩीर सं./ITA No.297/Mum/2012 ( नििाारण वषा / Assessment Year :2007-08) M/s S.B.Billiomoria & Co., Vs. ADCIT-11(3), Mumbai Mumbai, Meher Chambers, R.Kamani Road, Ballard Estate, Mumbai-400001 स्थममी रेखम सं ./ जीआइआय सं ./ PAN/GIR No. : AAAFS 7376 P (अऩीरमथी /Appellant) .. (प्रत्मथी / Respondent)

यनधमवरयती की ओर से /Assessee by : Shri K.K.Ved & Sh.N.A.Patade यमजस्र् की ओर से /Revenue by : Shri Neil Philip

सन ु र्मई की तमयीख / Date of Hearing : 26/03/2015 घोषणम की तमयीख/Date of Pronouncement 17/04/2015

आदे श / O R D E R

PER R.C.SHARMA (A.M):

This is an appeal filed by the assessee against the order of CIT(A)

dated 23-11-2011, for the A.Y.2007-08 in the matter of order passed

u/s.250(6) of the I.T.Act, wherein following grounds have been taken by

the assessee :-

The appellant objects to the order dated November 23, 2011 passed by the learned Commissioner of Income tax -2, Mumbai on the following among other grounds:

Payment to retired partners

1. The Commissioner of Income-tax (Appeals) [hereinafter referred to as CIT(A)] erred in holding that the sum of Rs.l,63,26,270 paid to 2 ITA No.297/12

retired Partners was not excludible/deductible in computing the taxable income of the Appellant.

Disallowance under section 14A

2. The CIT(A) erred in confirming disallowance of interest expenses of Rs.3,51 ,078 under section 14A read with Rule 8D.

3. The CIT(A) erred in confirming disallowance of other expenses of Rs.l,74,591 under section 14A read with Rule 8D.

Alleged undisclosed professional receipts

4. The CIT(A) erred in confirming addition of Rs.85,619 as alleged undisclosed professional receipts on the basis of the Annual Information Return (AIR).

General

5. The appellant prays for relief as per the grounds of appeal.

6. Each one of the above grounds of appeal is without prejudice to the other.

7. The appellant reserves the right to amend, alter or add to the grounds of appeal."

2. At the outset, it was submitted by ld. AR that ground No.1 with

regard to disallowance of payment made to partner amounting to

Rs.1,63,26,270/- has already been decided against the assessee and the

assessee has also filed appeal before the Hon'ble High Court wherein

substantial question of law has been accepted by the Hon'ble High Court

vide order dated 28-7-2009. In this respect assessee has filed Form No.8

being declaration u/s.158A(1) of the ITAT claiming that identical question

of law is pending before the High Court.

3. As the assessee has already filed declaration u/s.158A(1), the

assessee needs not to file appeal to the Hon'ble High Court on this issue,

and he is bound by the decision of the Hon'ble High Court in respect of

appeal filed for preceding year. We direct accordingly. 3 ITA No.297/12

4. The assessee is also aggrieved for disallowance of interest u/s.14A

read with Rule 8D amounting to Rs.3,51,078/- and also other expenses of

Rs.1,74,591/-.

5. It was submitted by ld. AR that no satisfaction was recorded by the

AO before invoking Section 14A. Furthermore, it was contended that the

relevant assessment year under consideration is 2007-08, wherein Rule

8D is not applicable as per the decision of the jurisdictional High Court in

the case of Godrej & Boyce Mfg. Co. Ltd., 328 ITR 81.

6. We have considered rival contention and found that assessee has

received tax free dividend from the investment in preference shares and

mutual fund, which was claimed as exempt u/s.10. However, in the return

of income no disallowance was made by the assessee u/s.14A. The AO

applied rule 8D and worked out disallowance. The contention of ld. AR

was that assessee was having own funds much more than the borrowed

funds and the investment was made out of own funds and not borrowed

funds. Accordingly, no disallowance of interest is warranted. Reliance was

placed on the decision of the Hon'ble jurisdictional High Court in the case

of HDFC Bank Ltd. and Reliance Utilities, wherein it was held that in case

own funds are available with the assessee, it is presumed that investment

has been made out of the own funds. It is also a matter of record that rule

8D Is not applicable for the relevant assessment year 2007-08 under

consideration, however, reasonable disallowance is warranted as per

verdict of Hon'ble High Court in case of Godrej & Boyce Mfg. Co. (supra).

In the interest of justice and fairplay, we restore this issue back to the file 4 ITA No.297/12

of AO for deciding afresh after considering assessee's contention

regarding interest free funds available to it more than the borrowed funds.

We direct accordingly.

7. The AO has also made an addition of Rs.85,619/- as undisclosed

professional receipts on the basis of Annual Information Return (AIR). The

contention of the assessee was that as against professional fees as per

AIR of Rs.28,33,14,309/-, the assessee has offered professional fees in

the return of income at Rs.67,08,97,552/-. The professional fee offered in

the return of income was much more than the professional receipt shown

in the AIR. Further the contention of the ld. AR was that minor difference

of Rs.85,619/- may be due to the accounting system being followed by the

assessee which is cash.

8. We have considered rival contentions and found that assessee has

offered much more professional receipts than the professional receipts

shown in the AIR. Accordingly, we do not find any merit in the addition so

made by the AO amounting to Rs.85,619/-, which may be due to different

accounting system being followed by payer of such fees.

9. In the result, appeal of the assessee is allowed in part in terms indicated hereinabove.

Order pronounced in the open court on this 17/04/2015.

Sd/- Sd/- (संजम गगव) (आय.सी.शभमव) (SANJAY GARG) (R.C.SHARMA) न्यानयक सदस्य / JUDICIAL MEMBER ऱेखा सदस्य / ACCOUNTANT MEMBER भुंफई Mumbai; ददनमंक Dated 17/04/2015 प्र.कु.मभ/pkm, यन.स/ PS 5 ITA No.297/12

आदे श की प्रनिलऱपप अग्रेपषि/Copy of the Order forwarded to :

1. अऩीरमथी / The Appellant

2. प्रत्मथी / The Respondent.

3. आमकय आमक् ु त(अऩीर) / The CIT(A), Mumbai.

4. आमकय आमुक्त / CIT आदे शािसार/ BY ORDER,

5. वर्बमगीम प्रयतयनधध, आमकय अऩीरीम अधधकयण, भुंफई / DR, ITAT, Mumbai

6. गमर्व पमईर / Guard file.

उप/सहायक पुंजीकार सत्ममवऩत प्रयत //True Copy// (Asstt. Registrar) आयकर अपीऱीय अधिकरण, भुंफई / ITAT, Mumbai