Oberoi Buildings & Investments Pvt. Ltd., Kolkata V. ITO, Ward - 6(3), Kolkata

ITA 1289/KOL/2009

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5094 (ITAT-KOLKATA)
• Duration Of Justice: 6 year(s) 7 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-02-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 16-02-2016
• Assessment Year: 2002-2003
• Appeal Filed On: 28-07-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ASHOK KUMAR J
• Assessee Lawyers: A K GUPTA
• Section: 14A; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH C KOLKATA BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO. 1288 - 1290 / KOL / 2009 ASSESSMENT YEARS:2001-02-2002-03 & 2004-05 OBEROI BUILDINGS & INVESTMENTS PVT. LTD., 4, MANGOE LANE, KOLKTA-700 001 [ PAN NO.AAACO 2860 R ] V/S . ITO, WARD-6(3), AAYAKAR BHAVAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 /APPELLANT .. / RESPONDENT /BY ASSESSEE SHRI A.K. GUPTA, FCA /BY RESPONDENT SHRI ASHOK KUMAR, JCIT-DR /DATE OF HEARING 16-02-2016 ! /DATE OF PRONOUNCEMENT 29-02-2016 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THESE THREE APPEALS BY THE SAME ASSESSEE ARE ARISI NG OUT OF ORDERS OF COMMISSIONER OF INCOME TAX (APPEALS)-VI, KOLKATA DA TED 11.05.2009 AND 11.05.2009. ASSESSMENTS WERE FRAMED BY ITO WARD-6(3 ), KOLKATA U/S 143(1)/147/143(3) OF THE INCOME TAX ACT, 1961 (HERE INAFTER REFERRED TO AS THE ACT) VIDE HIS ORDERS DATED 01.08.2008 FOR ASSESSME NT YEARS 2001-02, 2002- 03 & 2004-05 RESPECTIVELY. ITA NO.1288-1290/KOL/2009 A.YS. 01-02-02-0 3 & 04-05 OBEROI BULDGS & INVTS. PVT.LTD. V. ITO WD-6(3), KOL. PAGE 2 SHRI A.K GUPTA, LD. AUTHORIZED REPRESENTATIVE APPEA RING ON BEHALF OF ASSESSEE AND SHRI ASHOK KUMAR, LD. DEPARTMENTAL REP RESENTATIVE APPEARING ON BEHALF OF REVENUE. 2. SINCE COMMON GROUNDS ARE INVOLVED IN ALL THESE A PPEALS, THEREFORE THEY WERE HEARD TOGETHER AND WE DEEM IT APPROPRIATE TO D ISPOSE THEM BY THIS COMMON ORDER. AT THE TIME OF HEARING LD. AR HAS SUB MITTED THAT ASSESSEE HAS NOT RAISED THE GROUND NO. 1, IN ALL THE APPEALS, RE GARDING RE-ASSESSMENT PROCEEDINGS U/S. 147 OF THE ACT. HENCE, GROUND NO. 1 IN ALL THE ASSESSEES APPEALS ARE DISMISSED AS NOT PRESSED. 3. EXCEPT FIGURE, ALL THE FACTS IN ALL THE APPEALS ARE SAME THEREFORE WE ARE TAKING THE FACTS OF THE CASE FOR THE AY 2001-02 AS A LEAD CASE FOR THE SAKE OF CONVENIENCE AND PASSING A CONSOLIDATED ORDER FOR AL L THE APPEALS. 4. THE ISSUE RAISED IN GROUND NO. 2 IN THIS APPEAL BY ASSESSEE IS THAT LD. CIT(A) ERRED IN CONFIRMING THE ADDITION MADE BY ASS ESSING OFFICER U/S 14A OF THE ACT FOR AN AMOUNT OF 3,33,842/-. 4.1 THE FACTS ARE THAT ASSESSEE IN THE PRESENT CASE IS A PRIVATE LIMITED COMPANY AND ENGAGED IN BUSINESS OF REAL ESTATE AND INVESTMENT IN SHARES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO OBS ERVED THAT ASSESSEE HAS EARNED DIVIDEND INCOME AT 1,35,67,570/- WHICH WAS CLAIMED AS EXEMPTED INCOME U/S 10(33) OF THE ACT. THE AO FURTH ER OBSERVED THAT ASSESSEE HAS NOT DISALLOWED ANY EXPENSE IN RELATION TO EXEMPTED INCOME BY VIRTUE OF SEC. 14A OF THE ACT. ON QUESTION BY AO, A SSESSEE SUBMITTED THAT IT HAS NOT INCURRED ANY EXPENSE IN EARNING OF DIVIDEND INCOME. SO THE QUESTION OF DISALLOWANCE OF EXPENSE U/S 14A OF THE ACT DOES NOT ARISE. HOWEVER, AO DISREGARDED THE CLAIM OF ASSESSEE BY OBSERVING THAT FOR EARNING OF DIVIDEND INCOME VARIOUS EXPENSES ARE INCURRED DIRECTLY AND I NDIRECTLY SUCH AS THE COMMON FUND, COMMON ESTABLISH AND COMMON ACCOUNTING EXPENSES ETC. ITA NO.1288-1290/KOL/2009 A.YS. 01-02-02-0 3 & 04-05 OBEROI BULDGS & INVTS. PVT.LTD. V. ITO WD-6(3), KOL. PAGE 3 ACCORDINGLY, AO DISALLOWED THE EXPENSES UNDER SECTI ON 14A OF THE ACT ON PRO RATA BASIS. 5. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A) WHO CONFIRMED THE ACTION OF AO BY OBSERVING AS UNDER:- 7. THE PLEA OF THE APPELLANT THAT HE HAS NOT INCUR RED ANY EXPENDITURE FOR EARNING DIVIDEND INCOME CANNOT BE ACCEPTED. I D IRECT THE ASSESSING OFFICER TO APPLY PROVISIONS OF SECTION 14A READ WIT H RULE 8D FOLLOWING THE DECISION OF SPECIAL BENCH OF MUMBAI TRIBUNAL IN THE CASE OF DAGA CAPITAL MANAGEMENT PVT LTD IN I.T.A NO. 8057/MUM/0 3: ASSESSMENT YEAR 2001-02 TO CALCULATE THE DISALLOWANCE. THE GRO UNDS OF APPEAL ARE PARTLY ALLOWED . BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) ASSESSE E PREFERRED SECOND APPEAL BEFORE US. 6. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. LD. AR SUBMITTED PAPER BOOK WHICH IS RUNNIN G PAGES FROM 1 TO 58 . ON PERUSAL OF APPELLATE ORDER, WE FIND THAT DIRECTION HAS BEEN ISSUED TO ASSESSING OFFICER FOR MAKING DISALLOWANCE IN TERMS OF PROVISI ON OF SEC. 14A R.W.S. 8D OF THE IT RULES, 1962. HOWEVER WE UNDERSTAND THAT THE RULE 8D OF THE IT RULES CAME INTO EFFECT FROM 24.03.2008 AND THE INSTANT CA SE BEFORE US IS FOR AY 2001-02. THEREFORE, THE PROVISIONS OF RULE 8D OF TH E IT RULES IS NOT APPLICABLE IN ASSESSEES PRESENT CASE. WE FURTHER FIND THAT PR IOR TO INSERTION OF RULE 8D OF THE IT RULES VARIOUS COURTS HAVE HELD THAT THE DISA LLOWANCE IN TERMS OF PROVISION OF SEC. 14A OF THE ACT SHOULD BE RESTRICT ED @ 1% OF DIVIDEND INCOME. ON THE OTHER HAND THE LD. DR VEHEMENTLY SUP PORTED THE ORDER OF AUTHORITIES BELOW. HOWEVER WE DISAGREE WITH THE ORD ER OF THE LOWER AUTHORITIES BELOW AND PUT OUR RELIANCE IN GA NO. 3019 OF 2012 IN ITAT NO. 243 OF 2012 OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. M/S R.R.SEN & BROTHERS (P) LTD., WHERE THE HON'BLE COURT HAS HELD: THE ASSESSEE DID NOT SHOW ANY EXPENDITURE INCURRED BY HIM FOR THE PURPOSE OF EARNING THE MONEY WHICH IS EXEMPTED UNDE R THE INCOME TAX. THE TRIBUNAL HAS COMPUTED EXPENDITURE AT 1 PER CENT OF SUCH DIVIDEND ITA NO.1288-1290/KOL/2009 A.YS. 01-02-02-0 3 & 04-05 OBEROI BULDGS & INVTS. PVT.LTD. V. ITO WD-6(3), KOL. PAGE 4 INCOME WHICH, ACCORDING TO THEM, IS THE THUMB RULE APPLIED CONSISTENTLY. WE FIND NO REASON TO INTERFERE. THE APPEAL IS DISMI SSED. IN THIS VIEW OF THE MATTER, WE REVERSE THE ORDERS O F AUTHORITIES BELOW AND DIRECTED THE ASSESSING OFFICER TO MAKE DISALLOWANCE @ 1% OF DIVIDEND INCOME. ACCORDINGLY, THIS GROUND OF ASSESSEES APPE AL IS PARTLY ALLOWED IN TERMS OF ABOVE. 7. IN THE REMAINING APPEALS, SINCE THE FACTS ARE EX ACTLY IDENTICAL, BOTH THE PARTIES ARE AGREED WHATEVER VIEW TAKEN IN THE ABOVE APPEAL MAY BE TAKEN IN THOSE APPEALS ALSO, WE HOLD ACCORDINGLY. 8. IN THE RESULT, ASSESSEES APPEALS ARE PARTLY ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT 29/ 02/2016 SD/- SD/- (MAHAVIR SINGH) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP '#$- 29 / 02 /201 6 / COPY OF ORDER FORWARDED TO:- 1. /ASSESSEE-OBEROI BUILDINGS & INVESTMENTS PVT. LTD. 4, MANGOE LANE, KOL-01 2. / REVENUE-ITO WARD-6(3), AAYAKAR BHAVAN,P-7 CHOWRI GHEE SQUARE, KOL-69 3. #,#-. / / CONCERNED CIT KOLKATA 4. /- / CIT (A) KOLKATA 5. 234 55-., -.!, / DR, ITAT, KOLKATA 6. 489 :; / GUARD FILE. BY ORDER/ , /TRUE COPY/ / # -.!,