DCIT, Cir. 11(1), Pune V. KRA Holding & Trading Pvt. Ltd., Pune

ITA 1058/PUN/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 7660 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-01-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2003-2004
• Appeal Filed On: 04-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HARESHWAR SHARMA
• Assessee Lawyers: R D ONKAR
• Section: 143(3); 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI I.C. SUDHIR AND SHRI D. KARUNAKARA RAO ITA NO. 1058/PN/09 (ASSTT. YEAR 2003-04) THE DY. CIT, CIRCLE 11(1), PUNE .... APPELLANT VS. KRA HOLDING & TRADING PVT. LTD. 12, BOAT CLUB ROAD, RIVERSIDE ESTATES, PUNE PAN NO. AAACK7301F . RESPONDENT APPELLANT BY : SHRI HARESHWAR SHARMA RESPONDENT BY : SHRI R.D. ONKAR ORDER PER D. KARUNAKARA RAO AM THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A)-I, PUNE DATED 12/06/2009 FOR THE ASSESSMENT YEAR 2003-04 . 2. GROUNDS RELATE TO THE CLAIM OF DEDUCTION U/S 80M O F THE ACT AMOUNTING TO RS. 2,18,94,555/- IN RESPECT OF THE CORPORATE DIVIDEND RECEIVED BY THE ASSESSEE DURING THE PREVIOUS YEAR ENDED 31-03-2003. RELEVANT F ACTS OF THE CASED ARE THAT THE ASSESSEE IS ENGAGED IN INVESTMENT OF SECURI TIES AND IS AN INVESTMENT COMPANY. THE ASSESSEE RECEIVED CORPORATE DIVIDEND RS. 2,20,34,535/- DURING THE PREVIOUS YEAR 2002-03. THE APPELLANT DECLARED DIVIDEND ON 9 TH AUGUST, 2003. RS. 2,24,72,184/- AND PAID DIVIDEND TAX THEREON RS. 28,7 9,249/- ON 20 TH AUG., 2003. ACCORDINGLY DEDUCTION HAS BEEN CLAIMED AND ALLOWED U /S. 80M IN RESPECT OF CORPORATE DIV. RECD. RS. 2,18,94,555/-. THE LEARNED CI T PASSED ORDER U/S. 263 HOLDING THAT THE A.O HAS ALLOWED DEDUCTION CLAIMED U/S. 80M WITHOUT CONSIDERING THE PROVISIONS OF SECTION 115 O AND SUB SECTION 15 T HEREOF. THE CIT HELD THAT THE ASSESSEE ORDER WAS ERRONEOUS IN SO FAR AS IT AS PREJU DICIAL TO THE REVENUE. THE LEARNED A.O HAS PASSED ORDER DT. 11 TH DEC. 2008 U/S. 143(3) R.W.S. 263 ITA NO. 1058/PN/09 A.Y: 2003-04 PAGE 2 OF 3 DENYING DEDUCTION CLAIMED U/S. 80M. DEDUCTION IS NO T CLAIMED IN RESPECT OF AMOUNT OF DIVIDEND CHARGED TO TAX OR TAX PAID THEREON U/S. 115 O. DEDUCTION IS CLAIMED BY THE ASSESSEE IN RESPECT OF CORPORATE DIVID END RECEIVED RESTRICTED TO THE DIVIDEND DISTRIBUTED. AS PER THE COUNSEL FOR THE A SSESSEE, THE ISSUE IS FULLY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HONOURABLE ITAT MUMBAI IN THE CASE OF CASTLE INVESTMENT AND INDUSTRI ES PRIVATE LIMITED ITA NO. 1713/MUM/2006 A.Y. 2003-04 AND ALSO DECISION OF THE HONOURABLE BOMBAY HIGH COURT IN THE CASE OF GODREJ AGROVET LTD. ON IDENTICAL ISSUE (2010-TIOL-172-HC- MUM-IT) AND WHEREIN THE HONBLE HIGH COURT HAS OBSERVE D ON PAGE 4 PARA 10 THAT THE DECISION OF ITAT IN THE CASE OF CASTLE INV ESTMENTS AND INDUSTRIES PRIVATE LIMITED HAS BEEN AFFIRMED BY THE DIVISION BENCH OF HONBLE BOMBAY HIGH COURT IN FAVOUR OF THE ASSESSEE ALLOWING DEDUCTION U/S. 80 M . 3. FROM THE ORDER OF THE REVENUE IT IS EVIDENT THAT THE RE IS REFERENCE TO THE ORDER OF THE TRIBUNAL IN THE CASE OF CASTLE INVESTMENT S AND INDUSTRIES PVT. LTD. ITA NO. 1713/MUM/2006 AND PARA 3.3 OF THE IMPUGNED O RDER IS RELEVANT AND THE SAME READS AS UNDER:- 3.3 I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE APPELLANT AND PERUSED MATERIAL ON RECORD. THE ISSUE IS SQUARELY C OVERED BY THE RATIO DECENDI OF HONBLE ITAT, MUMBAIS DECISION IN CASE OF CASTLE INVESTMENT & INDS. PVT. LTD. QUOTED SUPRA. THE DEDUCTION U/S. 80M OF THE INCOME TAX ACT, 1961 IS IN RESPECT OF ANY INCOME RECEIVED BY W AY OF DIVIDEND FROM ANOTHER DOMESTIC COMPANY INCLUDED IN THE GROSS TOTA L INCOME OF THE RECIPIENT COMPANY BUT SUCH DEDUCTION HAS TO BE REST RICTED TO THE DIVIDEND DISTRIBUTED BY THE RECIPIENT COMPANY ON OR BEFORE T HE DUE DATE OF FILING OF THE RETURN. IN OTHER WORDS, IN CASE THE GROSS TOTAL INCOME OF THE DOMESTIC COMPANY INCLUDES ANY SUM ON ACCOUNT OF DIVIDEND REC EIVED FROM ANOTHER DOMESTIC COMPANY, THEN STATUTE PROVIDES A DEDUCTION WHICH SHALL BE LIMITED TO THE AMOUNT DISTRIBUTED BY WAY OF DIVIDEN D BY THE RECIPIENT COMPANY. IN VIEW OF THIS, RESPECTFULLY FOLLOWING TH E DECISION OF THE ITAT MUMBAI QUOTED SUPRA, IT IS HELD THAT THE APPELLANT IS ENTITLED TO CLAIM DEDUCTION U/S. 80M OF THE INCOME TAX ACT, 1961 AGAI NST THE DIVIDEND INCOME RECEIVED DURING THE ASSESSMENT YEAR UNDER AP PEAL. APPELLANT GETS CONSEQUENTIAL RELIEF. 4. THIS DECISION OF THE MUMBAI BENCH IN THE CASE OF CASTLE INVESTMENTS AND INDUSTRIES PVT. LTD (SUPRA) IS FOUND APPROVED BY THE J URISDICTIONAL HIGH COURT IN THE CASE OF GODREJ AGROVET LTD. 2010-TIOL-172-HC-MUM- IT VIDE PARA 10 AND SAME READS AS UNDER:- ITA NO. 1058/PN/09 A.Y: 2003-04 PAGE 3 OF 3 10. ON THESE FACTS AS THEY STAND, IT IS IMPOSSIBLE TO CONTEND THAT THE ASSESSEE WAS NOT ENTITLED TO A DEDUCTION UNDER SECT ION 80M. SIGNIFICANTLY, THE VIEW OF THE ASSESSING OFFICER WAS CONSISTENT WI TH THE DECISION OF THE TRIBUNAL IN THE CASE OF CASTLE INVESTMENT (SUPRA). THE JUDGEMENT IN CASTLE INVESTMENT INSOFAR AS IS MATERIAL HELD THAT SECTION 1150(5) DOES NOT IN ANY WAY RESTRICT THE ALLOWABILITY OF THE CLA IM UNDER SECTION 80M. UNDER SECTION 80M WHAT IS CLAIMED AS A DEDUCTION IS THE DIVIDEND RECEIVED BY THE COMPANY. DIVIDENDS DECLARED, DISTRIBUTED OR PAID ARE NOT CLAIMED AS DEDUCTION UNDER SECTION 80M THOUGH THEY CONSTITU TE AN OUTFLOW OF FUNDS FROM THE COMPANY. SECTION 80M IMPOSES A MONET ARY RESTRICTION ON THE AMOUNT THAT MAY BE CLAIMED BY WAY OF A DEDUCTIO N BY PROVIDING THAT THE AMOUNT OF CLAIM CANNOT EXCEED THE DIVIDEND DIST RIBUTED BY THE ASSESSEE BY THE DUE DATE. THOUGH THE JUDGEMENT OF T HE TRIBUNAL IN CASTLE INVESTMENT WAS DATED 18 TH JULY, 2007 (THE ORDER OF ASSESSMENT BEING DATED 28 TH FEBRUARY, 2006) IT IS NECESSARY TO NOTE THAT THE D ECISION FOLLOWED THE EARLIER DECISION OF THE TRIBUNAL DATED 10 TH MAY, 2002 IN THE CASE OF SILVASSA INDUSTRIES AND THE DECISION DATED 7 TH OCTOBER, 2004 IN M/S. KAIKOBAD BYRAMJEE (SUPRA). THE DECISION OF THE TRIBUNAL IN CASTLE INVESTMENT (SUPRA) WAS AFFIRMED BY A DIVISION BENCH OF THIS COURT ON 22 ND JULY, 2008 IN ITA 1557 OF 2007. 5. THUS, IT IS BINDING THAT THE DECISION OF THE TRIB UNAL IN CASTLE INVESTMENT (SUPRA) WAS AFFIRMED BY THE JURISDICTIONAL HIGH COURT AS DISCUSSED ABOVE. THEREFORE, WE ARE OF THE OPINION, THE ORDER OF THE CIT( A) DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, THE GROUNDS RAISED IN THIS AP PEAL BY THE REVENUE ARE DISMISSED. 6. IN THE RESULT APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH DAY OF JANUARY, 2011. SD/- SD/- (I.C. SUDHIR) (D.KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBE R PUNE DATED THE 19 TH JANUARY, 2011 R COPY OF THE ORDER IS FORWARDED TO : 1. DCIT, CIRCLE 11(1), PUNE 2. ASSESSEE 3. CIT(A)-I, PUNE 4. CIT-I,PUNE 5. D.R. ITAT A BENCH BY ORDER ASSISTANT REGISTRAR I.T.A.T PUNE