DCIT CIR-3(3), MUMBAI V. YANGSTE TRADING P. LTD, MUMBAI

ITA 1355/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7181 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2003-2004
• Appeal Filed On: 27-02-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AMISHA GANDHI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G, MUMBAI. BEFORE SHRI N.V. VASUDEVAN,J.M. AND SHRI J. SUDHAK AR REDDY, A.M. I.T.A. NO. 1 355/MUM/2009. ASSESSMENT YEAR : 2003-04. DY. COMMISSIONER OF M/ S YANGSTE TRADING P.LTD. INCOME TAX, CIR.3(3), VS. 84-A MITTAL COURT, MUMBAI. NARIMAN POINT, MUMBAI 400 021. PAN : AAACR2648N APPELLANT RESPONDENT APPELLANT BY : NONE RESPONDENT BY : MS. AMISHA GANDHI. O R D E R PER J. SUDHAKAR REDDY, A.M. THIS IS AN APPEAL FILED BY THE REVENUE DIRECTED AGA INST THE ORDER OF THE CIT(APPEALS)-III, MUMBAI DATED 22-01-2 009 FOR THE ASSESSMENT YEAR 2003-04. 2. NONE APPEARED ON BEHALF OF THE REVENUE. THE LEA RNED SR. DR SUBMITTED THAT HE IS NOT AUTHORISED TO ARGUE THI S CASE. IN FACT, IN LAST COUPLE OF DAYS, THE DR OF THIS BENCH HAS BEEN SUBMI TTING THAT HE HAS NO INSTRUCTIONS ON THESE CASES AND THE LEARNED COMMISS IONER WHO IS TO REPRESENT THE CASES HAS NOT PASSED ON ANY INFORMATI ON TO HIM AND IN THESE CIRCUMSTANCES, ALL THE CASES FOR WHICH HE HAS NO IN STRUCTIONS SHOULD BE ADJOURNED. WE ARE UNABLE TO ACCEDE TO SUCH REQUEST. WE REJECT THE SAME 2 AND DISPOSED OF THIS CASE EXPARTE QUA THE REVENUE A FTER HEARING THE LEARNED COUNSEL FOR THE ASSESSEE. 3. WE HAVE HEARD MS. AMISHA GANDHI, LEARNED COUNSE L FOR THE ASSESSEE. ON A CAREFUL CONSIDERATION OF THE FACTS A ND CIRCUMSTANCES OF THE CASE AND A PERUSAL OF THE PAPERS ON RECORD AND THE ORDERS OF THE AUTHORITIES BELOW, WE HOLD AS FOLLOWS. 4. THE ASSESSEE IN THIS CASE IS A PRIVATE LIMITED COMPANY AND IS IN THE BUSINESS OF TRADING AND INVESTMENT. THE SOL E GROUND OF REVENUE READS AS FOLLOWS : ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AD IN LAW, THE LEARNED CIT(A) HAS ERRED IN DELETING ADDITION OF RS .6,18,17,900/- U/S 80M NOT APPRECIATING THE PROVISIONS OF SECTION (1) OF S ECTION 115-O OF THE I.T. ACT. 5. THE AO DISALLOWED THE CLAIM ON THE FOLLOWING GR OUND : I HAVE CAREFULLY CONSIDERED THE ABOVE SUBMISSION OF THE ASSESSEE COMPANY. AS PER SECTION (1) OF SECTION 115 O OF THE INCOME-TAX ACT, 1961, IN THE CASE OF A DOMESTIC COM PANY, ANY AMOUNT DECLARED, DISTRIBUTED OR PAID BY SUCH COMPAN Y BY WAY OF DIVIDEND ON OR AFTER THE 1-4-2003, WHETHER OUT OF C URRENT OR ACCUMULATED PROFITS, SHALL BE CHARGED TO ADDITIONAL INCOME TAX (REFERRED AS TAX ON DISTRIBUTED PROFITS) AT THE RAT E OF TWELVE AND HALF PER CENT. AS PER SUB SECTION (5) OF SECTION 115O, N O DEDUCTION OR A SHAREHOLDER IN RESPECT OF THE AMOUNT WHICH HAS BEEN CHARGED TO TAX UNDER SUB SECTION (1) OR TAX THEREON. IN THE INSTAN T CAE, FROM TAX AUDIT REPORT IT IS OBSERVED THAT DEDUCTION CLAIMED U/S 80M INCLUDED RS.6,00,56,250/- INTERIM DIVIDEND AND RS.1 7,61,650/- FINAL DIVIDEND. TAX ON DISTRIBUTED PROFIT AMOUNTING TO RS.76,94,707/- ON INTERIM DIVIDEND WAS PAID ON 1-7- 2003 AND TAX OF RS.2,25,711/- ON FINAL DIVIDEND WAS PAID ON 03-1 0-2003. IT MAY BE NOTED THAT THE FACT REMAINS THAT THE ASSESSEE HA D DISTRIBUTED DIVIDEND ON 01/07/2003 AND 03-10-2003 WHICH IS AFTE R DUE DATE OF 1.4.2003. HENCE, DEDUCTION U/S 80-M IS NOT ADMISSIB LE TO THE ASSESSEE COMPANY. FURTHER, SECTION 115-O WAS VERY M UCH 3 OPERATIONAL DURING A.Y. 2003-04 AS AMENDED VIDE FIN ANCE ACT, 2003 W.E.F. 1.4.2003. NOW THE SUB SECTION 5 OF SECT ION 115-O IS SPECIFIC THAT IN RESPECT OF DIVIDEND DECLARED, DIST RIBUTED OR PAID BY DOMESTIC COMPANY AFTER 1.4.2003, NO DEDUCTION UNDER ANY OTHER PROVISION SHALL BE ALLOWED TO THE COMPANY OR SHAREH OLDER IN RESPECT TO THE DIVIDEND SPECIFIED IN SUB SECTION 1. THUS IT IS OBSERVED THAT THE DIVIDEND INCOME OF RS.6,18,17,900/- CLAIMED EXE MPTED U/S 80- M WAS REQUIRED TO BE DISALLOWED. THEREFORE THE DEDU CTION CLAIMED U/S 80M IS HEREBY DISALLOWED. 6. THE FIRST APPELLATE AUTHORITY AT PARA 2.3 AND 2 .4 OBSERVED AS FOLLOWS : 2.3 LEARNED COUNSEL OF APPELLANT HAS ALSO DRAWN M Y ATTENTION TO THE DECISION OF C.I.T.[A]-XXIX IN THE CASE OF SUNBRIGHT CEMENT AGENCIES PVT. LTD. FOR ASSESSMENT YEAR 2003- 04 WHERE IN ORDER DATED 2/4/2007, SIMILAR ISSUE HAS BEEN DECIDED IN FAVOUR OF APPELLANT. A COPY OF THE ORDER HAS BEEN F ILED AND PLACED ON RECORD. RELIANCE HAS ALSOS BEEN PLACED UPON THE C.B.D.T. CIRCULAR NO. 8 OF 2002 PARA 52.1 TO 52.3 AND THE DE CISION OF MUMBAI ITAT IN THE CASE OF BEHRAM DUBASH PROPERTIES (P) LTD. IN ITA NO. 405 OF 2003 WHERE IDENTICAL ISSUE HAS BEEN DECIDED IN FAVOUR OF APPELLANT. I HAVE PERUSED THE FACTS OF THE CASE. THE PROVISION S OF SECTION 115-O AS STOOD PRIOR TO SUBSTITUTION OF FIN ANCE ACT, 2003 CATEGORICALLY TALK OF DIVIDEND DISTRIBUTED OR PAID BEFORE 31/03/2002. THEREFORE, IN THE PRESENT FACTS OF THE CASE SECTION 115- O AS IT THEN EXISTED, IS NOT ATTRACTED. CONSEQUENTL Y SUB-SECTION 5 IS ALSO NOT ATTRACTED. 2.4 AS FAR AS THE POSITION OF SECTION 115-O AS SUB STITUTED BY FINANCE ACT, 2003 IS CONCERNED, IT IS TRUE THAT IT HAS BEEN MADE EFFECTIVE FROM 01//04/2003. THEREFORE, APPARENTLY T HIS SUBSTITUTION IS APPLICABLE TO ASSESSMENT YEAR 2003-04 UNDER CONS IDERATION. AT THE SAME TIME, IT IS ALSO A FACT THAT IF THE ARGUME NT OF ASSESSING OFFICER IS ACCEPTED, ONE LIMB OF SECTION 80M BECOME S REDUNDANT. THIS IS BECAUSE THE CLAIM OF DEDUCTION U/S 80M IS M ADE ON THE GROUND THAT DIVIDEND IS PAID AFTER CLOSE OF FINANCI AL YEAR 2003-04 ITSELF, THERE IS NO PROBLEM. HOWEVER, IF DIVIDEND I S PAID AFTER CLOSE OF THE FINANCIAL YEAR 2002-03 ON OR BEFORE DUE DATE OF FILING OF RETURN FOR ASSESSMENT YEAR 2003-04, TAX U/S. 115-O IS ATTRACTED AS HAS BEEN PAID BY APPELLANT. BUT IN SUCH A CASE, THE LIMB OF SECTION 4 80M PERMITTING DEDUCTION EVEN IN A SITUATION WHERE DIVIDEND HAS BEEN PAID OR DECLARED AFTER 31/03/2003 BUT BEFORE T HE DUE DATE OF FILING OF RETURN OF INCOME BECOMES ABSOLUTELY REDUN DANT. THE REDUNDANCY CANNOT BE ACCEPTED. THE PARTICULAR THING TO BE NOTED IS THAT SECTION 80M WAS IN THE STATUTES ONLY FOR ONE A SSESSMENT YEAR BEING ASSESSMENT YEAR 2003-04 FOR WHICH DEDUCTION W AS PERMITTED EVEN IF DIVIDEND IS PAID AFTER 31/03/2003 BUT BEFORE THE DUE DATE AND IF SECTION 115-O AS SUBSTITUTED IN FIN ANCE ACT 2003 IS HELD APPLICABLE TO ASSESSMENT YEAR 2003-04 THEN THE RE CAN NEVER BE SUCH SITUATION, WHERE AN ASSESSEE CAN CLAIM DEDU CTION U/S 80M FOR DIVIDEND DECLARED AFTER 31/03/2003. IN THIS SIT UATION, I AM OF THE VIEW THAT SECTION 115-O CANNOT HELD TO BE PROHIBITI NG DEDUCTION U/S. 80M FOR DIVIDEND DECLARED AFTER 31/03/2003 BUT BEFORE THE DUE DATE. IN THE FACTS OF APPELLANTS CASE THEN APPELLA NT BECOMES ENTITLED TO DEDUCTION U/S 80M. 7. IN PARA 2.5 THE LEARNED CIT(APPEALS) HELD AS FO LLOWS: 2.5 I HAVE ALSO PERUSED THE ORDER OF CIT[A]-XXIX I N THE CASE OF SUN BRIGHT CEMENT AGENCIES PVT. LTD. THE APPELLATE AUTHORITY HAS ANALYZED IN DETAILS THE LEGISLATURE HISTORY OF TAXA TION OF DIVIDEND AND THE VARIOUS PROVISIONS INVOLVED INCLUDING SECTI ON 10(33). THE FACTS AND SITUATION IS IDENTICAL TO THAT OF APPELLA NT UNDER CONSIDERATION HERE. IN THAT ORDER THE INTENT OF ASS ESSING OFFICER IN THE PRESENT CASE HAS BEEN DISMISSED AND APPELLANT H AS BEEN ALLOWED RELIEF. 8. THIS DECISION IS IN LINE WITH THE ORDER OF THE C-BENCH OF THE MUMBAI TRIBUNAL IN ITA NO. 3515/MUM/2008 IN THE CAS E OF M/S CHARISHMA INVESTMENTS PVT. LTD. VS. ITO ORDER DATED 9 TH JULY, 2009 WHEREIN THE BENCH HAS FOLLOWED A COORDINATE BENCH O RDER IN THE CASE OF M/S CASTLE INVESTMENT & INDUSTRIES PVT. LTD. VS. IT O, ORDER DATED 18 TH JULY, 2007 REPORTED IN 2007-TIOL-307-ITAT-MUM IN IT A NO. 1713/MUM/2006 FOR THE ASSESSMENT YEAR 2003-04. SIMI LARLY, NUMBER OF OTHER BENCHES HAVE FOLLOWED THIS ORDER. CONSISTENT WITH THE VIEW TAKEN THEREIN, WE UPHOLD THE ORDER OF THE FIRST APPELLATE AUTHORITY AND DISMISS THIS APPEAL OF THE REVENUE. 5 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED ON THIS 30 TH DAY OF MARCH, 2010. SD/- SD/- (N.V.VASUDEVAN) (J. SUDHAKAR REDDY) JUDICIAL MEMBER. ACCOUNTANT MEMBER. MUMBAI, DATED : 30 TH MARCH, 2010. COPY FORWARDED TO : 1. APPELLANT. 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, G-BENCH. (TRUE COPY) BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI BENCHES, MUMBAI. WAKODE