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Income Tax Appellate Tribunal, “H” BENCH, MUMBAI
Before: SHRI D. KARUNAKARA RAO & SHRI AMARJIT SINGH
सुनवाई की तायीख / Date of Hearing : 25.04.2016 घोषणा की तायीख /Date of Pronouncement : 25.04.2016 आदेश / O R D E R PER D. KARUNAKARA RAO, AM: There are two appeals under consideration. Both these appeals are filed by the assessee against the different orders of the CIT (A)-6, Mumbai dated 10.12.2010 for the assessment years 2005-06 and 2006-07. Since, the issues raised in both these appeals are identical, the only difference is in figures, and therefore, they are clubbed, heard together and disposed of in this consolidated order. Appeal wise adjudication is given in the following paragraphs of this order.
Firstly, we shall take up the appeal for the AY 2005- 2006. In this appeal, assessee raised three grounds in toto. Ground no.1 relates to disallowance of expenses on the ground that the assessee was not engaged in any business during the year; Ground no.2 relates to computation of income under the head „income from other sources‟ against the assessee‟s treatment of „profits or grains of business or profession‟ and Ground no.3 relates to the disallowance u/s 14A of the Act. These issues are common to the other appeal ITA No.1553/M/2011 raised by the assessee for the AY 2006-07.
At the outset, Ld Counsel for the assessee mentioned that there is a dispute on an issue relating to the „head of income‟ qua the allowability of expenses. So far as the head of income issue is concerned, Ld Counsel for the assessee mentioned that an identical issue was decided by the Tribunal. In support of the same, he filed a copy of the order of the Tribunal in assessee‟s own case for AY 2001-2002 in ITA No.3218/M/2006, dated 19.3.2009. Further, Ld Counsel for the assessee fairly submitted that the issue raised in Ground nos. 1 has to be decided in line with the ratio laid down by the Tribunal vide its order dated 19.3.2009 (supra). He also mentioned that Ground no.2 becomes infructuous, if the expenses are allowed as „business expenses‟, which is a likely outcome if the said order of the Tribunal by the AO.
After hearing both the parties and on perusal of the said order of the Tribunal (supra) dated 19.3.2009, we remand Ground nos. 1 and 2 to the file of the AO for appropriate decision after following strictly the ratio laid down by the Tribunal in the assessee‟s own case for the AY 2001-2002 (supra). Accordingly we order.
Ground no.3 relates to disallowance u/s 14A of the Act. In this regard, Ld Counsel for the assessee demonstrated that the assessment years under consideration being the ones prior to the amendment to Rule 8D of the IT Rules, 1962, Ld Counsel for the assessee mentioned that this issue may be remanded to the file of the AO for strictly following the ratio laid down in the judgement of the Hon‟ble Bombay High Court in the case of CIT vs. M/s. Godrej Agrovet Ltd vide Income Tax Appeal No. 934 of 2011, dated 8.1.2013.
We heard both the parties and perused the orders of the Revenue. It is a fact that the relevant assessment year is 2007-08 under consideration is outside the scope of provisions of Rule 8D. The said provisions cannot be treated as applicable to the A.Y.2007-08 under consideration indirectly when the same is precluded by the Hon‟ble Bombay High Court in the case of Godrej & Boyce Mfg. Co. Ltd. Vs. DCIT, reported in (2010) 328 ITR 81(Bom). The Hon‟ble Bombay High Court also in the case of CIT vs. M/s. Godrej Agrovet Ltd vide Income Tax Appeal No. 934 of 2011, dated 8.1.2013, has held that percentage of the exempt income can constitute a reasonable estimate for making disallowance in the years