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Darashaw and Company Pvt. Ltd. Versus The Deputy Commissioner of Income Tax

2017 (9) TMI 583 - BOMBAY HIGH COURT

Disallowance u/s 14A - Held that:- If the jurisdictional High Court Judgment in the case of Reliance Utilities and Power Ltd. (2009 (1) TMI 4 - BOMBAY HIGH COURT ) was held to be binding on the Tribunal, why the Tribunal had to fall back on alternative disallowance computed by the assessee and that too without prejudice has not been clarified at all. In the initial order as well as in the order on the Miscellaneous Application for rectification the Tribunal has assigned the same reasons. We do n .....

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ly. We restore Income Tax Appeal to the file of the Tribunal and direct the Tribunal that the same shall be decided on its own merits and in accordance with law. While deciding the appeal afresh Tribunal should allow the assessee to contend that the disallowance worked by the Assessing Officer, particularly the assessee's without prejudice and alternative submission should not influence its final decision. Equally all contentions of the Revenue should also be considered while disposing of the ap .....

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me Tax Appellate Tribunal Bench at Mumbai dated 12th June, 2013. 4. The facts and circumstances in which this order is challenged can be briefly set out. The Assessment order was passed for the Assessment year 2008-09. The Assessing Officer in the order dated 10th May, 2010 considered the returns filed on 29th September, 2008 declaring a total loss at ₹ 11,44,66,190/under normal provisions. Tax payable has been calculated at the rate of ₹ 34,60,805/under section 115JB of the Income T .....

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e investments in shares and debt securities. The Assessing Officer summarized the issues interalia for his consideration. One of which was expenditure attributable to earn exempt income. The Assessing Officer observed that the assessee has received dividend income of ₹ 44,91,580/. This claim is exempt under section 10(34) of the Income Tax Act, 1961. It was also observed that the assessee has allocated an amount of ₹ 1,75,583/only in earning the dividend income. The assessee was aske .....

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s and which were utilized for making investment in shares and that is how dividend income was earned, then, no expenditure should be attributed and apportioned for this dividend income. This argument was based on the judgment of this Court and which has been delivered in ITXA/4117/2010 and Commissioner of Income Tax vs Reliance Utilities and Power Ltd. [2009]313 ITR 340 . 6. The Tribunal in considering this issue did not agree with the Assessing Officer in the initial order but still came to the .....

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e Utilities and Power Ltd. (supra) the disallowance as computed by the assessee under Rule 8D at ₹ 39,19,175/which was over and above the disallowance as done by the Assessing Officer but adjusting that amount of ₹ 1,75,883/, the Tribunal made a disallowance. 7. From the record it appears that being aggrieved and dissatisfied with this part of the order a Rectification Application was made invoking section 254(2) of the Income Tax Act, 1961. The Rectification Applications styled as M .....

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consequences ought to be borne in mind. There is therefore no admission. When such is the submission of the assessee's representative, it cannot be construed as a concession of the assessee either. The Tribunal relied upon it and without assigning any independent reasons, worked out the disallowance. That is despite the Tribunal referring to the binding judgment of this Court in the case of Reliance Utilities and Power Ltd. (supra). 9. On the other hand Mr. Suresh Kumar would submit that th .....

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e learned Senior Counsel perused the entire petition and that part of the order of the Tribunal which was covered by the Miscellaneous Application, we find that if the jurisdictional High Court Judgment in the case of Reliance Utilities and Power Ltd. (supra) was held to be binding on the Tribunal, why the Tribunal had to fall back on alternative disallowance computed by the assessee and that too without prejudice has not been clarified at all. In the initial order as well as in the order on the .....

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