Pankaj Investments Ltd., Kolkata V. ACIT, Circle - 5, Kolkata, Kolkata

ITA 1006/KOL/2010

• Counselvise Citation: 100623514 RSA 2010
• Duration Of Justice: 1 year(s) 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-10-2011
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 14-05-2010
• Court: TRIBUNAL
• Department Lawyers: A K PRAMANIK
• Assessee Lawyers: S L KOCHAR
• Keywords: Earning of tax free income
• Section: 148; 14A

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL, BEN CH A, KOLKATA () BEFORE , ,, , , SHRI MAHAVIR SINGH, JUDICIAL MEMBER. /AND . .. . ! ! ! !. .. . , '# SHRI C.D.RAO, ACCOUNTANT MEMBER $ $ $ $ / ITA NO . 1006/KOL/2010 %& '(/ ASSESSMENT YEAR : 2005-06 (*+ / APPELLANT ) PANKAJ INVESTMENTS LTD., KOLKATA (PAN : AACCP 9701 G) - % - - VERSUS - . (-.*+/ RESPONDENT ) A.C.I.T., CIRCLE-5, KOLKATA *+ / 0 '/ FOR THE APPELLANT: SHRI S.L.KOCHAR -.*+ / 0 '/ FOR THE RESPONDENT: SHRI A.K.PRAMANIK 1%2 / !# /DATE OF HEARING : 20.10.2011. 3' / !# /DATE OF PRONOUNCEMENT : 20.10.2011 '4 / ORDER ( (( ( . .. . ! ! ! !. .. . ) )) ), , , , '# PER SHRI C.D.RAO, AM THIS APPEAL IS FILED BY ASSESSEE AGAINST THE ORDER DATED 30.03.2010 OF THE LD. CIT(A)-VI, KOLKATA. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS O F APPEAL :- 1. FOR THAT THE LD. CIT(A) ERRED IN HOLDING THAT PROCEEDINGS U/S 148 WERE VALIDLY INITIATED BY THE AO. 2. FOR THAT THE LD. CIT(A) ERRED IN CONFIRMING DISA LLOWANCE OF RS.6,13,416/- OUT OF EXPENSES ACCOUNTS MADE BY THE AO BY INVOKING PRO VISIONS OF SEC.14A OF THE INCOME TAX ACT, 1961. 3. AT THE TIME OF HEARING, THE LD. COUNSEL APP EARING ON BEHALF OF THE ASSESSEE DID NOT PRESS GROUND. NO.1 RAISED BY ASSESSEE. THEREFOR E GROUND NO.1 IS DISMISSED AS BEING NOT PRESSED. 2 4. GROUND NO.2 RAISED BY ASSESSEE IS RELATING TO D ISALLOWANCE OF RS.6,13,416/- U/S 14A OF THE IT ACT. 5. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE ASSE SSEE HAS EARNED DIVIDEND INCOME OF RS.11,31,492/- U/S 10(34) AND LTCG U/S 10(38) OF RS .62,107/-. AS PER THE PROVISION OF SECTION 14A OF THE IT ACT NO DEDUCTION CAN BE AL LOWED FOR THE EXPENSES RELATING TO EARNING THE EXEMPTED INCOME. THE ASSESSEE WAS ASKED TO EXPLAIN AND THE ASSESSEE MADE A SUBMISSION IN THIS REGARD WHICH WAS NOT ACCE PTED BY AO. ACCORDINGLY AO DISALLOWED AN AMOUNT OF RS.6,13,416/-AS EXPENDITURE LINKED TO EARNING OF EXEMPT INCOME U/S 14A OF THE IT ACT BY APPLYING RULE 8D OF IT RULES BY FOLLOWING THE DECISION OF THE SPECIAL BENCH OF ITAT IN THE CASE O F DAGA CAPITAL LTD. 5.1. ON APPEAL LD CIT(A) CONFIRMED THE ACTION OF TH E AO. 6. THE LD.COUNSEL APPEARING ON BEHALF OF ASSESSEE HAS SUBMITTED THAT AS PER THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CA SE OF GODREJ AND BOYCE MFG. CO. LTD. VS DCIT 328 ITR 81 (BOM) RULE 8D IS NOT AP PLICABLE FOR THE ASSESSMENT YEAR INVOLVED IN THIS APPEAL. THEREFORE, HE REQUEST ED TO SET ASIDE THE MATTER TO THE FILE OF THE AO TO RECONSIDER THE ISSUE BASED ON THE FACT S AND CIRCUMSTANCES OF THE CASE. 4. ON THE OTHER HAND, THE LD. DR APPEARING ON B EHALF OF THE REVENUE RELIED ON THE ORDERS OF THE REVENUE AUTHORITIES. 5. AFTER HEARING THE RIVAL SUBMISSIONS AND ON CA REFUL PERUSAL OF THE MATERIALS AVAILABLE ON RECORD KEEPING IN VIEW OF THE FACT THA T AS PER THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ AND BOYCE M FG. PVT. LTD. (SUPRA) RELIED UPON BY THE LD. COUNSEL FOR THE ASSESSEE, RULE 8D I S NOT APPLICABLE IN THE ASSESSMENT YEAR UNDER CONSIDERATION. THE DECISION OF THE HONB LE ITAT (SPL.BENCH) MUMBAI IN THE CASE OF M/S. DAGA CAPITAL LTD. AS RELIED BY THE REVENUE AUTHORITIES IS ALSO NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. THE HO NBLE TRIBUNAL HAS BEEN TAKING A CONSISTENT VIEW OF SUSTAINING THE DISALLOWANCE U/S 14A AT 1% OF THE DIVIDEND INCOME. 3 ACCORDINGLY WE DIRECT THE AO TO DISALLOW 1% OF THE DIVIDEND INCOME AS EXPENDITURE RELEVANT TO EARNING OF DIVIDEND INCOME. WE ORDER AC CORDINGLY. 6. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20.10.2011. SD/- SD/- , , , , MAHAVIR SINGH, JUDICIAL MEMBER . .. . ! ! ! !. .. . , , , , '# '# '# '# , C.D.RAO, ACCOUNTANT MEMBER. ( (( (!# !# !# !#) )) ) DATE: 20.10..2011. '4 / -5 6'5'7- COPY OF THE ORDER FORWARDED TO: 1. PANKAJ INVESTMENTS LTD., C/O S.L.KOCHAR, ADVOCATE, 86, CANNING STREET, KOLKATA-1. 2 THE A.C.I.T.,CIRCLE-5, KOLKATA. 3. THE CIT, 4. THE CIT(A)-VI, KOLKATA. 5. DR, KOLKATA BENCHES, KOLKATA .5 -/ TRUE COPY, '4%1/ BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES R.G.(.P.S.)