RAMNORD RESEARCH LABORATORIES P. LTD,MUMBAI vs. ADDL CIT RG 11(1), MUMBAI

At the time of hearing, the Ld. AR did not press ground no. 1 and hence the same is dismissed as not pressed.

The Ld. AR first argued on the additional ground filed by the assessee, which relates to assessment of notional rent in respect of ground floor of a building which remained vacant throughout the year.

The Ld. AR submitted that the assessee had let out a multi- storeyed building named „Ramnord House‟ located at Worli. During the year under consideration, the entire ground floor of the building remained vacant. The Ld. AR submitted that, since the entire property had been let out by the assessee, the annual letting out value of the ground floor of the building, which remained vacant throughout the year, should be taken as Nil as per the provisions of Sec. 23(1)(c) of the Act.

The Ld. DR, however, submitted that the provisions of Sec. 23(1)(c) of the Act shall apply only if the property had been let by the assessee. He submitted that the claim of the assessee that the ground floor of the property was let in the earlier years requires verification.

Having heard the rival submissions, we are of the view that the issue regarding applicability of provisions of Sec. 23(1)(c) of the Act to the ground floor of the property requires examination at the end of the AO, since the facts relating to letting out of ground floor of the building in the earlier years are not available on record. Accordingly, we set aside the order of the Ld. CIT(A) on this issue and restore the same to the file of the AO with the direction to examine the claim of the assessee afresh by giving adequate opportunity of hearing to the assessee.

The next issue relates to disallowance made u/s. 14A of the Act. The Ld. AR submitted that an identical issue was considered by the Tribunal in the immediately preceding year and the Tribunal, vide its order dt. 23.3.2011 passed in in assessee‟s own case, has restored the matter to the file of the AO. The Ld. AR further submitted that the AO, while giving effect to the order of the Tribunal, examined the submissions of the assessee and accepted that there is no requirement of disallowing any part of interest expenditure. Accordingly, the AO disallowed only a part of administrative expenses to the tune of Rs.1,24,607/-. The Ld. AR also submitted that the present year, being Assessment Year 2007-08, the provisions of Rule 8D shall not be applicable as per the decision of the jurisdictional Bombay High Court in the case of Godrej & Boyce Mfg. Co. Ltd. (328 ITR 81). The Ld. AR also submitted that, in the year under consideration also, the own funds available with the assessee was in far excess of the investments and hence no disallowance out of interest expenditure is called for as per the decision of the jurisdictional High Court in the case of Reliance Utilities and Power Ltd. (221 CTR 435).

We heard the Ld. DR on this issue and perused the record. We noticed that the facts prevailing in the year under consideration appear to be identical to the facts that prevailed in Assessment Year 2006-07. Accordingly, we set aside this issue to the file of the AO, consistent with the view taken by the coordinate Bench of the Tribunal in Assessment Year 2006-07. In the set aside proceedings, the AO is directed to examine all the claims of the assessee including the availability of own funds, assessment order passed for AY 2006-07

In the result, the appeal filed by the assessee is treated as partly allowed for statistical purposes.