ECE Industries Ltd, New Delhi V. DCIT, New Delhi

ITA 1029/DEL/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 2223 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-12-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 15-12-2009
• Assessment Year: 2005-2006
• Appeal Filed On: 19-03-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANISH GUPTA
• Assessee Lawyers: PRAKASH NARAIN
• Keywords: Rule 8D

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B: NEW DELHI BEFORE SHRI G.E. VEERABHADRAPPA, VICE PRESIDENT & SHRI C.L. SETHI, JUDICIAL MEMBER ITA NO. 1029/DEL/2009 ASSESSMENT YEAR : 2005-06 ECE INDUSTRIES LTD., 28A, K.G. MARG, NEW DELHI-110001. VS. DCIT CIRCLE 11(1), NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PRAKASH NA RAIN, ADVOCATE RESPONDENT BY : SHRI MANISH GUPTA, D.R. O R D E R PER: C.L. SETHI, J.M. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER DATED 23.01.2009 PASSED BY THE LD. CIT(A) PERTAINING TO THE ASSESSMENT YEAR 2005-0 6. 2. IN THIS APPEAL, THE ASSESSEE HAS CHALLENGED THE FOLLOWING TWO ADDITIONS UPHELD BY THE LD. CIT(A):- (I) RS. 1,75,933/- BEING THE DISALLOWANCE OUT OF SALARY , PRINTING AND STATIONERY AND COMMUNICATION COST TREATING THE SAME TO HAVE BEEN INCURRED FOR EARNING THE DIVIDEND INCOME OF RS. 17, 59,330/- (II) SUM OF RS. 18,919/- BEING DISALLOWANCE OF CLUB EXPE NSES. ITA NO. 1029/DEL/2009 2 3. WE HAVE HEARD BOTH THE PARTIES AND HAVE CAREFULL Y GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. 4. IN THE ASSESSMENT, THE A.O. HAS DISALLOWED THE E XPENSES TO THE EXTENT OF 10% OF THE TOTAL DIVIDEND INCOME EARNED BY THE ASSE SSEE DURING THE YEAR UNDER CONSIDERATION BY SAYING THAT THE EXPENSES HAVE BEEN INCURRED FOR EARNING THE DIVIDEND INCOME. THE LD. CIT(A) HAS DIRECTED THE A .O. TO MAKE THE DISALLOWANCE AS PER RULE 8D. HOWEVER, IN THE COURSE OF HEARING OF THIS APPEAL, THE LD. COUNSEL FOR THE ASSESSEE POINTED OUT THAT IDENTICAL DISALLO WANCE MADE BY THE A.O. IN THE ASSESSMENT YEAR 2004-05 WAS DELETED BY THE LD. CIT( A) AGAINST WHICH DEPARTMENT DID NOT FILE ANY APPEAL, AND AS SUCH MAINTAINING TH E CONSISTENCY, NO DISALLOWANCE ON ADHOC BASIS IS CALLED FOR. AFTER GOING THROUGH THE A.O.S ORDER, WE FIND THAT THE A.O. HAS NOT BEEN ABLE TO POINT OUT ANY SPECIFI C EXPENSES WHICH HAVE BEEN INCURRED FOR EARNING AND MAKING DIVIDEND INCOME. T HEREFORE, IN THE LIGHT OF THE POSITION ACCEPTED BY THE DEPARTMENT IN THE ASSESSME NT YEAR 2004-05, WE DELETE THE ADDITION. 5. WITH REGARD TO THE DISALLOWANCE OF CLUB EXPENSES , IT IS SEEN THAT THE IDENTICAL ADDITION HAS BEEN DELETED BY THE LD. CIT( A) IN THE ASSESSMENT YEAR 2002-03 AS WELL AS IN ASSESSMENT YEAR 2004-05 BY RE LYING UPON THE TRIBUNALS DECISION IN ASSESSEES OWN CASE IN THE ASSESSMENT Y EAR 1992-93 AND ALSO IN THE LIGHT OF THE LD. CIT(A)S ORDER FOR THE ASSESSMENT YEAR 2001-02 AND 1999-2000. ITA NO. 1029/DEL/2009 3 WE, THEREFORE, DELETE THE DISALLOWANCE OF CLUB EXPE NSES AND DIRECT THE A.O. TO ALLOW THE SAME. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. 7. THIS DECISION IS PRONOUNCED IN THE OPEN COURT IM MEDIATELY AFTER THE HEARING WAS OVER ON 15TH DECEMBER, 2009. (G.E. VEERABHADRAPPA) ACCOUNTANT MEMBER (C.L. SETHI) JUDICIAL MEMBER DATED: 15 TH DECEMBER, 2009. MAMTA COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI. BY ORDER DEPUTY REGISTRAR