ACIT, Central Circle - II, Kolkata, Kolkata V. M/s. Zenon(India) Pvt. Ltd., Kolkata

ITA 1124/KOL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92039 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2015
• Appeal Filed By: Department
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 03-08-2012
• Court: TRIBUNAL
• Department Lawyers: K K KANAK JCITLD
• Assessee Lawyers: SUBASH AGARWAL LD
• Keywords: Deemed dividend; Commercial expediency
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL , B BENCH, KOLKATA [BEFORE HON BLE SHRI MAHAVIR SINGH, JM & HON BLE SHRI B.P.JAIN , AM ] I.T.A NO . 1124/KOL/2012 A.Y 2006 - 07 A.C.I.T, C.C II, KOLKATA VS. M/S. ZENON (INDIA) PVT. LTD PAN: AAACZ 0920B ( APPELLANT) ( RESPONDENT ) FOR THE APPELLANT: S HRI K.K KANAK, JCIT/LD.DR FOR THE RESPONDENT : SHRI S UBASH AGARWAL, ADVOCATE, LD.AR DATE OF HEARING: 12 - 06 - 2015 DATE OF PRONOUNCEMENT: 29 - 06 - 2015 ORDER SHRI B.P.JAIN:AM TH IS APPEAL OF THE REVENUE ARISES FROM THE ORDER OF THE LD. CIT(A), KOLKATA DATED 01 - 05 - 2012 FOR THE ASSESSMENT YEA R 2006 - 07. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. TAT LD. CIT(A) ERRED BOTH IN FACTS AS WELL AS IN LAW IN ALLOWING THE ASSESSEE S APPEAL IN DELETING THE ADDITION BY THE AO U/S.2(22)(E) OF THE INCOME TAX ACT IN RESPECT OF M/S. PR OSAD GROUP RES OURCES PVT. LTD OF R S.90,31,676/ - AND M/S. TOLLY NIRMAN PVT. LTD OF R S.87,93,372/ - WITHOUT APPRECIATING THE TOTALITY OF FACTS OF THE CASE AND MATERIALS BROUGHT ON RECORD DURING THE COURSE OF ASSESSMENT. 2. THAT LD.CIT(A) ERRED BOTH IN FACTS AS WELL AS IN LAW IN ALLOWING THE ASSESSEE S APPEALS IN DELETING THE ADDITIONS MADE BY THE AO U/S. 2(22)(E) IN RESPECT OF M/S. P ROSAD GROUP RESOURCES PVT. LTD OF RS.90,31,676/ - AND M/S. TOLLY NIRMAN PVT. LTD OF R S.87,93,372/ - WITHOUT APPRECIATING THE FACT S THAT THE SAID COMPANIES HAVE NOT GOT THEMSELVES REGISTERED AND/OR OBTAINED LICENSE ON THE BUSINESS OF MONEY LENDING AS PER BENGAL MONEY LENDERS ACT, 1940 READ WITH RBI REPORT FOR CARRYING ON MONEY LENDING BUSINESS. 3. THAT LD.CIT(A) ERRED BOTH IN FACTS AS WELL AS LAW RESTRICTING DISALLOWANCE U/S. 14A TO 1% OF THE DIVIDEND EARNED IN THE CURRENT ASSESSMENT YEAR I.E. 2006 - 07 WHEREAS IN THE ASSESSMENT YEAR 2005 - 06 IT WAS DIRECTED TO WORK OUT THE SAID DISALLOWANCE ON THE BASIS OF RULE - 8D OF THE INCOME TAX RUL ES. 4. THAT THE DEPARTMENT CRAVES LEAVE TO ALTER/AMEND/MODIFY ANY OR THE GROUNDS OF APPEAL. 3 . GROUND NOS. 1 & 2 RELATE TO DELETION OF ADDITION MADE U/S. 2(22)(E) OF THE I.T ACT 1961. 4 . BRIEF FACTS AS EMANATING FROM THE ORDER OF THE AO , F OR THE SAKE OF CONVENIENCE THE SAME ARE REPRODUCED HEREIN BELOW: - THROUGH MY REQUISITION DATED 20.6.08 THE ASSESSEE WAS ASKED TO EXPLAIN , PLEASE REFER DETAILS OF LOANS TAKEN & SUPPLY COPIES OF TAR & ACCOUNTS IN CASES OF ALL SISTER CONCERNS FROM WHOM LOANS WERE RECEIV ED DURING THE YEAR. ALSO SUBMITS SHARE HOLDING RATIO OF 10% & ABOVE IN EACH 2 ITA NO . 1124/KOL/2012 - B - BPJ(AM) M/S. ZENON (I) PV.LTD SUCH CASE. PLEASE STATE WHY THESE RECEIPTS WILL NOT FORM DEEMED DIVIDEND IN THE HANDS OF THE ASSESSEE? FROM REPLY OF THE ASSESSEE FOLLOWING OBSERVATIONS COULD BE MADE: NAME OF LOA N CREDITOR SHARE HELD BY THE ASSESSEE LOAN RECEIVED DURING THE YEAR RESERVE & SURPLUS AVAILABLE M/S. PRASAD GROUP RESOURCES PVT. LTD 45.28% RS.1,26,02,138/ - RS.90,31,676/ - M/S. TOLLY NIRMAN PVT. LTD 65.21% RS.3,39,00,000/ - RS.87,93,372/ - M/S. PRASAD O VERSEAS PVT. LTD 19% DIRECTLY AND TH R OUGH M/S. TANUJ HOLDINGS PVT. LTD 18.36% RS.78,50,000/ - RS.1,03,466/ - AS IT HAS ALREADY BEEN NOTICED THAT M/S. TANUJ HOLDING PVT. LTD A GROUP COMPANY HOLDS 21.26% OF SHARES OF THE ASSESSEE, IT CAN EASILY BE CONCLUDED THAT BOTH DIRECTLY AND INDIRECTLY THE ASSESSEE WAS ENJOYING SUBSTANTIAL INTEREST, VOTING POWER AND SHARE HOLDING IN M/S. PRASAD OVERSEAS PVT. LTD. IT IS PERTINENT TO MENTION HERE THAT THE ASSESSEE ITSELF WAS HOLDING 27% OF SHARES OF M/S. TANUJ HOLDING PVT. LTD. FROM THE ACCOUNTS OF M/S. PRASAD OVERSEAS PVT. LTD, IT WAS OBSERVED THAT THE COMPANY WAS A NON - TAX AUDIT CASE WITH COMMISSION BEING ONLY/CHIEF SOURCE OF INCOME DURING CURRENT YEAR. IT WAS ALSO NOTED THAT LAND WAS CONSIDERED AS CLOSING STOCK IN HAND . CLEARLY, THE M/S. PRASAD OVERSEAS PVT. LTD WAS NOT IN THE LENDING BUSINESS AND THE IMPUGNED LOAN/ADVANCE OF RS.78,50,000/ - WAS NOT GIVEN TO THE ASSESSEE IN THE ORDINARY COURSE OF ITS BUSINESS. EVIDENTLY, THE ACCUMULATED PROFIT WAS PASSED ON TO THE SISTER CONCERN IN THE GARB OF LOAN. AND SUCH DEVIOUS ARRANGEMENT WAS ENGINEERED TO ESCAPE INCIDENCE OF TAXATION. MISCHIEF OF SECTION 2(22) OF THE ACT IS, THEREFORE, CLEARLY ATTRACTED. THE ISSUE OF DEEMED DIVIDEND WAS RAISED BEFORE THE ASSESSEE BY REQUISITION DA TED 20.06.08 AND ALSO AT THE TIME OF HEARINGS. THE ASSESSEE IN ITS REPLIES HAD NEVER CONTESTED THE APPLICABILITY OF THE SAID SECTION. THEREFORE , IT APPEARS THAT LOAN/ADVANCES GIVEN WERE SQUARELY COVERED BY THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT. HOW EVER, IN THE PRESENT CASE DEEMED DIVIDEND INCOME OF THE ASSESSEE IS RESTRICTED TO THE AMOUNT OF RESERVE & SURPLUS AVAILABLE I.E RS.1,03,466/ - . IN THE CASE OF M/S. TOLLY NIRMAN THE ASSESSEE WAS HOLDING MORE THAN 65% OF THE SHARES. TAR DISTINGUISHED THE COM PANY AS REAL ESTATE DEVELOPER . FROM THE ACCOUNTS OF THE COMPANY IT WAS OBSERVED THAT TOTAL INTEREST INCOME FORMED A PALTRY .02% OF TOTAL RECEIPT. CLEARLY, THE M/S. T OLLY NIRMAN PVT. LTD WAS NOT IN THE LENDING BUSINESS AND THE IMPUGNED LOAN/ADVANCE OF RS. 3,39,00,000/ - WAS NOT TO THE ASSESSEE IN THE ORDINARY COURSE OF ITS BUSINESS. EVIDENTLY, THE ACCUMULATED PROFIT WAS PASSED ON TO 3 ITA NO . 1124/KOL/2012 - B - BPJ(AM) M/S. ZENON (I) PV.LTD THE SISTER CONCERN IN THE GARB OF LOAN. AND SUCH DEVIOUS ARRANGEMENT WAS ENGINEERED TO ESCAPE INCIDENCE OF TAXATION. MISCHIEF OF SECTION 2(22)(E) OF THE ACT IS, THEREFORE, CLEARLY ATTRACTED. THE ISSUE OF DEEMED DIVIDEND WAS RAISED BEFORE THE ASSESSEE BY REQUISITION DATED 20.06.08 AND ALSO AT THE TIME OF HEARINGS. THE ASSESSEE IN ITS REPLIES HAD NEVER CONTESTED THE APPLICABILITY OF THE SAID SECTION. THEREFORE , IT APPEARS THAT LOAN/ADVANCES WERE SQUARELY COVERED BY THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT. HOWEVER, IN THE PRESENT CASE THE SAME IS RESTRICTED TO THE AMOUNT OF RESERVE & SURPLUS AVAILABLE I.E. RS.87,93,372/ - . SO FAR AS LOANS/ADVANCES RECEIVED FROM M/S. PRASAD GROUP RESOURCES P.LTD IS CONCERNED, IT WAS OBSERVED THAT THE ASSESSEE WAS HOLDING MORE THAN 45% OF THE SHARES. APPARENTLY. PROVISIONS OF SECTION 2(22) OF THE ACT WAS DIRECTLY ATTRACTED HERE. HENCE, BY REQUIS ITION DATED 20.06.08 AND ALSO AT THE TIME OF HEARINGS THE ASSESSEE WAS ASKED TO REBUT SUCH CONCLUSION. THE ASESSEE CONTENDED THAT THE SAME WAS EXTENDED BY M/S. PRASAD GROUP RESOURCES P.LTD IN REGULAR COURSE OF ITS BUSINESS. HOWEVER, SUCH REBUTTAL SUPPLIED BY THE ASSESSEE, HERE, APPEARS TO BE MISLEADING. FIRSTLY, TAR OF M/S. PRASAD GROUP RESOURCES P.LTD CLEARLY INDICATES THAT THE COMPANY WAS CARRYING OUT A BUSINESS OF INVESTMENT 8% SHARE TRADING , AND NOT THAT OF A FINANCE COMPANY. SECONDLY, IT WAS ALSO OBSERVED THAT THE COMPANY HAD NOT TAKEN ANY SECURED OR UNSECURED LOAN. THEREFORE, IT IS APPARENT THAT LOANS/ADVANCES EXTENDED WERE PURELY OUT OF BROUGHT FORWARD ACCUMULATED PROFIT. M/S. PRASAD GROUP RESOURCES P.LTD WAS NOT DOING ANY BUSINESS HERE. MEREL Y, INACTIVE AND BROUGHT FORWARD RESERVE PROFITS LYING WITH THE COMPANY WERE LENT. THIRDLY, AS PER SCH. 6 OF THE ACCOUNTS OF M/S. PRASAD GROUP RESOURCES P.LTD, THE COMPANY HAD ONLY RS.8,15,257/ - AS CLOSING BALANCE OF LOANS/ADVANCES GIVEN VIS - A - VIS CLOSING STOCK - IN - TRADE OF RS.1,42,44,963/ - . THUS, BY NO MEANS IMPUGNED LOAN FORWARDED TO THE ASSESSEE CAN BE CONSIDERED AS UNDERTAKEN BY THE COMPANY IN REGULAR COURSE OF ITS BUSINESS. FOURTHLY, INTEREST EARNED BY M/S. PRASAD GROUP RESOURCES P.LTD ALSO FORMED A MINISCULE PART OF ITS TOTAL INCOME. MANIFESTLY, ARGUMENT OF THE ASSESSEE THAT M/S. PRASAD GROUP RESOURCES P.LTD , HAD COMMERCIAL EXPEDIENCY BEHIND THE IMPUGNED LOAN/ADVANCE WAS MISLEADING. CONSIDERING ALL THESE, IT CLEARLY APPEAR THAT THE COMPANY, M/S. PRA SAD GROUP RESOURCES P.LTD WAS NOT CARRYING ON A BUSINESS OF FINANCE COMPANY AND, THEREFORE, IMPUGNED LOAN WAS NOT EXTENDED BY IT IN THE REGULAR COURSE OF ITS BUSINESS. CONSEQUENTLY, THE SUM SO ADVANCED IS TO BE TREATED AS DEEMED DIVIDEND IN THE HANDS OF T HE ASSESSEE. HOWEVER, DEEMED DIVIDEND SHOULD BE RESTRICTED TO R S.90,31,676/ - , AS APPEARING AT SCH. 2 OF THE ACCOUNTS OF M/S. PRASAD GROUP RESOURCES P.LTD. 5 . THE LD. CIT(A) VIDE PAGE 8 & 9 OF HIS ORDER RELYING UPON THE DECISION OF ITAT FOR A.Y 2005 - 06 D TD. 31 - 03 - 2010 IN ASSESSEE S OWN CASE IN ITA NO.1239/KOL/09 DELETED THE DISALLOWANCE MADE BY THE AO WITH A VIEW THAT THE PRINCIPAL BUSINESS OF M/S. PRASAD GROUP R ES OURCE P.LTD WAS OF GRANTING LOANS AND ADVANCES AND SECTION 2(22)E OF THE ACT WAS NOT APPL ICABLE FOR THE LOAN TAKEN BY THE ASSESSE FROM THE SAID COMPANY. SIMILARLY , 4 ITA NO . 1124/KOL/2012 - B - BPJ(AM) M/S. ZENON (I) PV.LTD LOAN TAKEN FROM M/S. TOLLY NIRMAN P.LTD ARE NOT COVERED BY SECTION 2(22)E OF THE I.T ACT. THE LD.CIT(A) WHILE ALLOWING THE RELIEF TO THE ASSESSEE HAS RELIED UPON THE DECISION OF THE H ON BLE JURISDICTIONAL CALCUTTA HIGH COURT IN THE CASE OF PRADEEP KUMAR MALHOTRA VS. CIT REPORTED IN (2011) 338 ITR 538(CAL). 6 . THE LD.DR HAS RELIED ON THE ORDERS OF THE AO. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE HAS RELIED UPON THE SUB MISSIONS MADE BEFORE THE LD.CIT(A) AND THE ORDER OF THE LD.CIT(A) IN DELETING THE ADDITION MADE BY THE AO ON THIS ISSUE. 7 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE UNDISPUTED FACT IN THE PRESENT CASE IS THAT T HE PRINCIPAL BUSINESS OF M/S. PRASAD GROUP RESOURCE PVT. LTD WAS OF GRANTING LOANS AND ADVANCES . SIMILARLY IN THE CASE OF M/S. TOLLY NIRMAN PVT. LTD THE ASSESSEE HAD ALSO TAKEN LOAN AND GIVEN LOAN AT A RATE OF INTEREST OF 9% . THIS IS A FACT ON RECORD. S UCH LOAN HAS BEEN TAKEN AS A CONSEQUENCE OF ANY FURTHER CONSIDERATION , WHICH IS BENEFICIAL TO THE COMPANY RECEIVED FROM SUCH A SHAREHOLDER, IN SUCH A CASE , SUCH ADVANCE OR LOAN CANNOT BE SAID TO BE A DEEMED DIVIDEND WITH IN THE MEANING OF SECTION 2(22) E OF THE ACT. OUR VIEW FINDS SUPPORT FROM THE DECISION OF THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF PRAD IP KUMAR MALHOTRA(SUPRA) , WHICH HAD BEEN RELIED UPON BY THE LD.CIT(A) IN DELETING THE ADDITION MADE BY THE AO. THE FACT S OF SUCH CASE [ I N THE CASE OF PRADIP KUMAR MALHOTRA] ARE REPRODUCED HEREIN BELOW FOR THE SAKE OF CONVENIENCE: - 338 ITR 538(CAL) IN THE CASE OF PRADIP KUMAR MALHOTRA THE ASSESSEE HAD SUBSTANTIAL SHAREHOLDING IN A COMPANY. HE HAD MORTGAGED HIS VALUABLE IMMOVABLE PROPER TY WITH THE BANK AS A SECURITY FOR THE LOAN FACILITY ENJOYED BY THAT COMPANY. CONSEQUENTLY, THE COMPANY PASSED A RESOLUTION AUTHORI S ING THE ASSESSEE TO OBTAIN INTEREST FREE DEPOSIT UPTO R RS. 50 LAKHS AS AND WHEN REQUIRED FROM IT. WHEN THE ASSESSEE REQUIRE D FUNDS FOR HIS PERSONAL NEEDS, HE REQUESTED THE SAID COMPANY TO PURCHASE THE SAID PROPERTY OR TO RELEASE THE SAME SO THAT HE COULD SELL IT TO SOME OTHER PERSON. THE COMPANY WAS UNABLE TO PURCHASE THE PROPERTY OR TO RELEASE SAME FROM MORTGAGE. IT, THERE FORE, GAVE A SUM OF RS.20,75,000 TO THE ASSESSEE AS SECURITY DEPOSIT. WHILE MAKING ASSESSMENT, THE ASSESSING OFFICER ADDED SAID SUM TO THE ASSESSEE S INCOME AS DEEMED DIVIDEND. ON APPEAL, THE COMMISSIONER (APPEALS) DELETED SAID ADDITION HOWEVER, ON THE RE VENUE S APPEAL, THE TRIBUNAL UPHELD THE ASSESSING OFFICER S ORDER. 7. 1 THE HON BLE JURISDICTIONAL CALCUTTA HIGH COURT IN THE CASE OF PRADIP KUMAR MALHOTRA(SUPRA) HAS HELD AS UNDER: - THE PHRASE BY WAY OF ADVANCE OR LOAN APPEARING TO SUB - CLAUSE (E) OF SECTION 2(22) MUST BE CONSTRUED TO MEAN THOSE ADVANCES OR LOANS WHICH A 5 ITA NO . 1124/KOL/2012 - B - BPJ(AM) M/S. ZENON (I) PV.LTD SHAREHOLDER ENJOYS FOR SIMPLY ON ACCOUNT OF BEING A PERSON WHO IS THE BENEFICIAL OWNER OF SHARES (NOT BEING SHARES ENTITLED TO A FIXED RATE OF DIVIDEND WHETHER WITH OR WITHOUT A RIGHT TO PARTICIPATE IN PROFITS) HOLDING NOT LESS THAN 10 PER CENT OF THE VOTING POWER; BUT IF SUCH LOAN OR ADVANCE IS GIVEN TO SUCH SHARE HOLDER AS A CONSEQUENCE OF ANY FURTHER CONSIDERATION WHICH IS BENEFICIAL TO THE COMPANY RECEIVED FROM SUCH A SHAREHOLDE R, IN SUCH CASE, SUCH ADVANCE OR LOAN CANNOT BE SAID TO A DEEMED DIVIDEND WITHIN THE MEANING OF THE A CT. THUS, FOR GRATUITOUS LOAN OR ADVANCE GIVEN BY A COMPANY TO THOSE CLASSES OF SHAREHOLDERS WOULD COME WITHIN THE PURVIEW OF SECTION 2(22) BUT NOT TO T HE CASES WHERE THE LOAN OR ADVANCE IS GIVEN IN RETURN TO AN ADVANTAGE CONFERRED UPON THE COMPANY BY SUCH SHAREHOLDER. [PARA 10] IN THE INSTANT CASE, THE ASSESSEE PERMITTED HIS PROPERTY TO BE MORTGAGED TO THE BANK FOR ENABLING THE COMPANY TO TAKE THE BE NEFIT OF LOAN AND IN SPITE OF REQUEST OF THE ASSESSEE, THE COMPANY WAS UNABLE TO RELEASE THE PROPERTY FROM THE MORTGAGE. IN SUCH A SITUATION, FOR RETAINING THE BENEFIT OF LOAN AVAILED FROM THE BANK IF DECISION WAS TAKEN TO GIVE ADVANCE TO THE ASSESSEE SU CH DECISION WAS NOT TO GIVE GRATUITOUS ADVANCE TO ITS SHAREHOLDER BUT TO PROTECT THE BUSINESS INTEREST OF THE COMPANY. [PARA 11] THEREFORE, THE AUTHORITIES BELOW ERRED IN LAW IN TREATING THE ADVANCE GIVEN BY THE COMPANY TO THE ASSESSEE BY WAY OF COMPENSA TION FOR KEEPING ITS PROPERTY AS MORTGAGE ON BEHALF OF THE COMPANY TO REAP THE BENEFIT OF LOAN AS DEEMED DIVIDEND WITHIN THE MEANING OF SECTION 2(22)E. [ PARA 13] CONSEQUENTLY, THE ORDER OF THE TRIBUNAL BELOW WAS TO BE SET ASIDE DIRECTING THE ASSESSING OFFICER NOT TO TREAT THE ADVANCE IN QUESTION AS A DEEMED DIVIDEND. [PARA 14] 7. 2 IN VIEW OF THE SAID DECISION OF THE HON BLE CALCUTTA HIGH COURT IN THE CASE OF PRADIP KUMAR MALHOTRA (SUPRA) , WE FIND NO INFIRMITY IN THE IMPUGNED ORDER OF THE LD.CIT(A), WH O HAS RIGHTLY DELETED THE ADDITION MADE BY THE AO. WE UPHOLD THE SAME. GROUND NOS. 1 & 2 S OF REVENUE S APPEAL ARE DISMISSED. 8. GROUND NO.3 IS RELATING TO RESTRICTION OF DISALLOWANCE U/S. 14A TO 1% OF THE DIVIDEND INCOME. 9 . BRIEF FACTS AS EMANATING FR OM THE ORDER OF THE AO , F OR THE SAKE OF CONVENIENCE THE SAME ARE REPRODUCED HEREIN BELOW: - IN THIS CONNECTION THE ASSESSEE WAS SPECIFICALLY ASKED TO EXPLAIN THE SOURCES AND TO ENUMERATE EXPENSES ATTRIBUTABLE TO SUCH INVESTMENT S MADE. FROM ITS REPLY IT WAS OBSERVED THAT INVESTMENTS IN M/S. LINDSAY DEVELOPERS P.LTD AND M/S. TANUJ HOLDING PVT. LTD WERE DIRECTLY MADE OUT OF INTEREST BEARING LOAN FUNDS RECEIVED FROM M/S. PRASAD GROUP R ESOURCES PVT. LTD FOR THE REST OF CURRENT INVESTMENT NO COPY OF BANK STA TEMENT PRODUCED FOR VERIFICATION AS ALREADY NOTED EARLIER. SOURCES OF OTHER BROUGHT FORWARD INVESTMENTS WERE ALSO NOT DIVULGED. CONSIDERING, THE FACT THAT TOTAL INVESTMENTS IN SHARES & SECURITIES WERE 19% OF TOTAL VALUE OF ASSETS A 6 ITA NO . 1124/KOL/2012 - B - BPJ(AM) M/S. ZENON (I) PV.LTD REASONABLE ESTIMATE OF 19% OF TOTAL EXPENSES, I.E RS.5,80,530/ - IS BEING DISALLOWED U/S. 14A OF THE ACT. 10. THE LD.CIT(A) HAS RESTRICTED THE DISALLOWANCE AT 1% BY FOLLOWING THE VARIOUS DECISIONS OF THE ITAT. 11. THE LD. DR HAS RELIED ON THE ORDER OF THE AO WHEREAS THE LD. COUNSEL FOR THE ASSESSEE HAS RELIED ON THE ORDER OF THE LD. CIT(A). 12. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD . WE FIND THAT THE LD.CIT(A) HAS RESTRICTED THE DISALLOWANCE TO 1% OF THE DIVIDEND INCOME BY FOL LOWING THE VARIOUS DECISIONS OF THE ITAT. THEREFORE, WE FIND NO INFIRMITY IN THE IMPUGNED ORDER OF THE LD.CIT(A) IN DOING SO. THE LD.CIT(A) HAS RIGHTLY RESTRICTED THE ADDITION U/S. 14 A OF THE ACT TO 1% OF THE DIVIDEND EARNED. THUS, GROUND NO.3 OF THE RE VENUE S APPEAL IS DISMISSED. 13. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED AS STATED ABOVE. ORDER IS PRONOUNCED IN THE OPEN COURT ON 29 - 06 - 2015 SD/ - SD/ - ( MAHAVIR SINGH ) ( B.P.JAIN ) JUDICIAL MEMBER A CCOUNTANT MEMBER DATED : 29 - 06 - 2015 **PRA DIP (SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT - ACIT, CC - II, KOLKATA 18 RABINDRA SARANI, KOL - 1. 2 RESPONDENT M/S. ZENON (INDIA) PVT. LTD. 32A, C.R AVENUE, KOL - 12. 3 . THE CIT(A) CONCERNED 4. 5. THE CIT CONCERNED THE D . R 6. GUAR D FILE TRUE COPY, BY ORDER ASSTT. REGISTRAR