M/S.mahabal Investments (Bombay) Private Limited v. Asstt. Commissioner Of Income Tax 10(3), Mumbai

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL (L) NO.83 OF 2013 M/s.Mahabal Investments (Bombay) Private Limited..Appellant. Versus Asstt. Commissioner of Income Tax 10(3), Mumbai..Respondent. Ms.Ritika Agarwal with Mr.Prashant More for the appellant.Mr.Suresh Kumar for the respondent. CORAM : J.P. Devadhar &M.S. Sanklecha, JJ. DATE : 6[th] March 2013 P.C. : Office objections waived. 2.In this appeal by the Revenue for assessment year 2008-09, following questions of law have been proposed for our consideration. “a)Whether the Tribunal was justified in upholding the application of Section14A read with Rule 8D in the appellant case who is a trader in shares and securities and whose income was assessed under the head “Profits and Gains of Business or Profession” and dividend income was purely incidental ?Section14A read with Rule 8D in the appellant case who is a trader in shares and securities and whose income was assessed under the head “Profits and Gains of Business or Profession” and dividend income was purely incidental ? b)Whether the Tribunal was justified in applying the provisions of Section 14A read with Rule 8D even where the expense is directly Section 14A read with Rule 8D even where the expense is directly attributable to income which is taxable ? c)Whether the Tribunal was justified in facts of the case in upholding section 14A disallowance even where the appellant had offered the dividend income for tax and hence there was no income not liable for tax ?section 14A disallowance even where the appellant had offered the dividend income for tax and hence there was no income not liable for tax ? d)Whether the Tribunal was justified in interpreting the provisions of Section 14A in a manner where disallowance of expense is nearly seven times the tax free income earned thereby leading to absurdity ?”Section 14A in a manner where disallowance of expense is nearly seven times the tax free income earned thereby leading to absurdity ?” 3.Counsel for the parties state that the issue of dis-allowance of expenditure under Section 14A of the Income Tax Act, 1961 be restored to the file of the assessing officer to pass a fresh order keeping in view the decision of this Court in the case of Godrej & Boyce Manufacturing Co. Limited V/s. DCIT reported in (2010) 328 ITR 81 (Bom). Accordingly, we set aside the order of the Tribunal to the extent it deals with dis-allowance of expenditure under Section 14A of the Income Tax Act, 1961 and restore the issue to the file of the assessing officer for fresh adjudication in the light of the decision of this Court in the case of Godrej & Boyce Manufacturing Co. Limited (supra). It is made clear that the assessing officer would also consider any other decisions which may have a bearing on the issue being re-adjudicated. 4.All contentions of both the parties are kept open to be urged before the assessing officer. 5.The appeal is accordingly disposed of in above terms with no order as to costs. (M.S. Sanklecha, J.) (J.P. Devadhar, J.)