Income Tax Appellate Tribunal - Delhi
Amway India Enterprises Pvt. Ltd., New ... vs Department Of Income Tax on 9 April, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH : 'A' NEW DELHI
BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND
SHRI K.G. BANSAL, ACCOUNTANT MEMBER
I.T.A No. 594/Del/12
Asstt. Year - 2007-08
DCIT, Vs. Amway India Enterprises Pvt.
Ltd.
Circle-1(1), Room No. 390,
1st Floor, Elegance Tower, Plot
C.R. Building, No. 8,
New Delhi. Non Hierachical Commercial
Centre,
Jasola,
New Delhi 110 025.
AAACA5603Q
(Appellant) (Respondent)
Appellant by: Shri D.K. Gupta, CIT,DR &
Mrs. Geetmala Mohananty, CIT,DR
Respondent by: Shri Tarandeep Singh, Shri Maneesh Upneja,CA's
Date of hearing : 9-04-2012
Date of pronouncement : 09-04-2012
ORDER
PER K.G. BANSAL, AM:
The revenue has taken up two substantive grounds in this appeal to the effect that Ld. CIT(A) erred in - (1) holding that Rule 8D of the Income Tax Rules is not applicable to asstt. Year 2007-08 for making disallowance u/s 14A of the Income Tax Act, (2) deleting the addition of ` 34,67,071/- on account of expenditure on lease hold improvements. 2 ITA No. 594/Del/12
Asstt. year 2007-08
2. In regard to the ground regarding disallowance u/s 14A, the Ld. CIT(A) has referred to the decision of Hon'ble Mumbai High Court in the case of Godrej and Boyce Co. Ltd. Vs. DCIT(2010)194 Taxman 203, and following this decision it has been held that the said rule is applicable to the proceedings of asstt. Year 2008-09 and onward but it is not applicable to the proceedings of asstt. order 2007-08. Further the matter has been remitted to the file of the AO to call for the details of expenditure incurred in relation to earning the dividend income, and make disallowance of such expenditure. The assessee was also directed to furnish the necessary details of the expenditure.
2.1 Before us, Ld. CIT(DR) submits that the Ld. CIT(A) could not have restored the matter to the file of the AO as such direction is beyond his competence. In reply the Ld. Counsel relied on the decision of Hon'ble Delhi High Court in the case of Maxopp Investment and Others Ltd. Vs. CIT dated 18.11.2011 (2011) 15 Taxman.com 390, in which it has been held that provision contained in rule 8D is prospective in operation and it applies to proceedings of asstt. Year 2008-09 and onwards. In the proceedings of earlier years, the AO may examine the facts in an objective manner to find whether any expenditure has been incurred for earning income which is not includible in the total income and make disallowance accordingly.
3. We have considered the facts of the case and submissions made before us. We find that the impugned order conforms to the decision in the case of Godrej Boyce Manufacturing Pvt. Ltd. (supra) and Maxopp 3 ITA No. 594/Del/12 Asstt. year 2007-08 Investment Ltd. (Supra). However, the Ld. CIT(A) could not have remitted the matter to the file of AO for fresh adjudication. In order to overcome this lacuna in the order, we restore the matter to the file of AO to examine the expenditure incurred by the assessee in earning exempt income and make the disallowance accordingly. The assessee is also directed to furnish the requisite details to the AO in this matter. Thus, this ground is treated as dismissed for statistical purpose.
4. In respect of ground No. 2, the finding of the Ld. CIT(A) is that same issue arose in the case of the assessee in asstt. Years 2001-02 and 2002-
03. The Tribunal deleted the addition made by the AO. Following this decision, the addition made by the AO has been deleted. 4.1 Before us, the Ld. CIT(DR) relied on the findings given by the AO. On the other hand, Ld. Counsel submitted that not only the Tribunal has decided the matter in favour of the assessee in asstt. Year 2001-02 to 2003-04, and 2005-06 to 2006-07, the Hon'ble Delhi High Court has also decided the matter in favour of the assessee in asstt. Year 2001-02 and 2002-03 in ITA Nos 1344-1363/2009 dated 4.11.2011, a copy of which has been placed in the paper book on pages 1 to 5. The orders of the Tribunal for the aforesaid years have been placed in the paper book on page Nos. 16 to 49. The Hon'ble Court considered the decision in the case of CIT vs. Hi Line Pens Pvt. Ltd. (2008), 306 ITR 182, CIT vs. Escorts Finance Ltd. (2006) 205 CTR (Delhi) 574, CIT vs. David Mills Ltd. In IT reference No. 17/1950 decided by Bombay High Court on 10.10.1950, Mevor Mills Ltd. Vs. CIT and Income tax reference No. 36/1950 decided by Mumbai High 4 ITA No. 594/Del/12 Asstt. year 2007-08 Court. Having regard to principals laid down in these judgments, it has been held that the expenditure incurred on the lease premises for setting up a chain of distribution across the country is revenue in nature. 4.2 We have considered the facts of the case and submissions made before us. Ld. CIT(DR) has not able to point out in distinguishing feature in this year vis a vis the earlier years for which decisions have been rendered by the Hon'ble Delhi High Court and the Tribunal. In absence thereof, it is held that the facts are in pari materia. Therefore, following the decision of Hon'ble Delhi High Court it is held that the Ld. CIT(A) rightly held the expenditure to the revenue in nature. Thus, this ground is also dismissed.
In the result, the appeal is dismissed.
Sd/- sd/-
[R.P. TOLANI] [K.G. BANSAL]
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated:
Veena
Copy forwarded to: -
1. Appellant
2. Respondent
3. CIT
4. CIT (A)
5. DR, ITAT TRUE COPY By Order,
Deputy Registrar, ITAT