DCIT, Circle - 4, Kolkata, Kolkata V. M/s. M. Prasad & Co. Ltd., Kolkata

ITA 1276/KOL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59619 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-02-2012
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 28-09-2011
• Court: TRIBUNAL
• Department Lawyers: S K ROY LD
• Assessee Lawyers: P J BHIDE LD

Judgement Text

, A , , IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH- A CALCUTTA () BEFORE , SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER /AND ! '# ! , SHRI N. VIJAYA KUMARAN, JUDICIAL MEMBER $ / ITA NO. 1276/KOL/2011 %!& '(/ ASSESSMENT YEARS: 2008-09 D.C.I.T, CIRCLE-4, KOLKATA M/S. M.PRASAD & CO. LTD PAN:AACCM 1798E (*+ / APPELLANT ) - ! - - VERSUS - . (-*+/ RESPONDENT ) *+ . / / FOR THE APPELLANT: / SHRI S.K.ROY, LD.DR -*+ . / / FOR THE RESPONDENT: / SHRI P.J. BHIDE, LD.AR . !0 . 1 /DATE OF HEARING : 0 8 -02-2012 3' . 1 /DATE OF PRONOUNCEMENT: 29-02-2012 4 / ORDER ! '# ! , SHRI N. VIJAYA KUMARAN, JUDICIAL MEMBER THIS APPEAL BY THE DEPARTMENT IS FOR THE ASSESSMENT YEAR 2008-09. IT IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS), IV, KOLKATA DATED 11-04- 2011. 2. GROUND OF APPEAL IS AS UNDER:- THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, L D.CIT(A) ERRED IN LAW IN DELETING THE DISALLOWANCE OF RS.12,24,133/- UNDE R RULE-8D(2)(II) BEING A PART OF TOTAL DISALLOWANCE U/S.14A SINCE HE OPIN ED IN THE INSTANT CASE THAT THERE CANNOT BE ANY INTEREST EXPENDITURE LEFT WHERE INTEREST INCOME IS MORE THAN INTEREST EXPENDITURE AND INTEREST EXPEND ITURE IS DIRECTLY ATTRIBUTABLE TO THE TRADING IN SHARES. 3. FACTS RELEVANT ARE THAT THE ASSESSEE IS A PUBLIC LIMITED COMPANY AND MEMBER OF CALCUTTA STOCK EXCHANGE AND BOMBAY STOCK EXCHANGE. THE ASSES SEE DERIVES INCOME FROM SHARE TRADING, CAPITAL GAINS AND DIVIDEND. BOOKS ARE MAIN TAINED REGULARLY AND THEY ARE DULY AUDITED. ITA NO.1276/KOL/2011 -A_NVK 2 THE ASSESSEE HAS ALSO FILED 44AB REPORT ON THE ISSU E OF APPLICATION OF RULE 8D. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) FOUND THAT CLA USE (II) OF SUB RULE 2 OF RULE 8D CANNOT BE INVOKED AS AN ADMITTED FACT THAT ASSESSEE HAS SHOWN NET INTEREST INCOME. IN OTHER WORDS, AFTER NETTING, THE INTEREST INCOME IS MERELY MORE T HAN THE INTEREST EXPENDITURE. FURTHER, THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS) FINDING THAT INTEREST EXPENDITURE IS DIRECTLY ATTRIBUTABLE TO THE TRADING IN SHARES. THEREFORE, H E WAS OF THE VIEW THE DISALLOWANCE IS NOT JUSTIFIED. 4. FROM THE COPY OF THE PROFIT & LOSS ACCOUNT, IT WILL BE SEEN THAT THE ASSESSEE EARNED INTEREST OF RS. 48,66,452/- AND IN INCURRED EXPENSE OF RS.27,08,526/-. THUS THE ASSESSEE EARNED INTEREST INCOME OF RS.21,57,926/-. THE DETAILS OF INTEREST EXPENSES ARE THAT A SUM OF RS.22,15,184/- WAS PAID BY THE ASSESSEE ON ACCOUNT OF INTEREST TO DSP MERRILL LYNCH. THE SAID AMOUNT OF INTEREST WAS PAID BY THE ASSESSEE ON ACC OUNT OF AMOUNT BORROWED FROM THEM FOR MAKING APPLICATION FOR SHARES OF RELIANCE POWER LTD WHICH WAS HELD BY THE ASSESSEE IN TRADING ACCOUNT AND NOT ON INVESTMENT ACCOUNT. IT M AY BE MENTIONED THAT NO DIVIDEND WAS RECEIVED BY THE ASSESSEE ON ACCOUNT OF THE SAID SHA RES OF RELIANCE POWER LTD. AGAINST THE APPLICATION MADE BY THE ASSESSEE ON ACCOUNT OF THE SHARES OF THE RELIANCE POWER LTD, THE ASSESSEE RECEIVED ALLOTMENT OF 18802 SHARES @RS.450 /- PER SHARE AMOUNTING TO RS.84,60,900/- AND THE CLOSING BALANCE ON ACCOUNT OF THESE SHARES HELD BY THE ASSESSEE IN TRADING ACCOUNT WAS RS.59,70,575/-. ACCORDINGLY A CERTIFICATE FROM DSP MERRILL LYNCH IS SUBMITTED IN RESPECT OF LOAN TAKEN BY THE ASSESSEE FOR THE ABOVE PURPOSE AN D THE AMOUNT OF INTEREST PAID BY THE ASSESSEE. 5. THE OBSERVATION OF THE LEARNED COMMISSIONER OF I NCOME-TAX (APPEALS) COULD NOT BE CONTROVERTED BY THE LD.DR BEFORE US. HENCE, WE ARE OF THE CONSIDERED VIEW THAT THERE IS NO JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE L EARNED COMMISSIONER OF INCOME-TAX (APPEALS) IN DELETING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. THE GROUND TAKEN BY THE DEPARTMENT IS DISMISSED. ITA NO.1276/KOL/2011 -A_NVK 3 6. IN THE RESULT, ABOVE DEPARTMENTAL APPEAL IS DI SMISSED. 5 4 6 ! 7 58 THIS ORDER IS PRONOUNCED IN OPEN COURT ON DT. 29 -02-2012 SD/- SD/- ( , ) ( PRAMOD KUMAR, ACCOUNTANT MEMBER) ( ! '# ! , ) (N. VIJAYA KUMARAN, JUDICIAL MEMBER ) DATED: 29-02-2012 ORDER PRONOUNCED ON SD/- SD/- [JM] [AM] 29/2/12 *PP SR.PS 4 . %%' 9''/ COPY OF THE ORDER FORWARDED TO: 1. *+ /APPELLANT- D.C.I.T, CIRCLE-4, P-7 CHOWRINGHEE SQ , 8 TH FL., KOL-69. 2 -*+ / RESPONDENT :1) M/S. M.PRASAD & CO. LTD 7 LYONS RA NGE, 3 RD FL., ROOM NO.7, KOL-1. 3. %4!/ CIT, 4. %4! ()/ CIT(A), 5. @%7 %!/ DR, KOLKATA BENCHES, KOLKATA [-' %/ TRUE COPY] 4!/ BY ORDER, 5 # /ASSTT REGISTRAR