Bosch Chassis Systems India Ltd., Pune V. Addl. CIT, Range-1, Pune

ITA 2039/PUN/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 72429 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 1 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 22-10-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P L PATHADE
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO.2039/PN/2012 A.Y. 2007-08 BOSCH CHASSIS SYSTEMS INDIA LTD., 3 RD FLOOR, GODREJ MILLENIUM, 9, KOREGAON PARK ROAD, PUNE-411036 PAN: AAACK7312E APPELLANT VS. ADDL. CIT, RANGE-1, PUNE RESPONDENT APPELLANT BY : SHRI NIKHIL PATHAK RESPONDENT BY : SHRI P.L . PATHADE DATE OF HEARING: 03.12.2013 DATE OF ORDER : 13.12.2013 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEAL)-I, (SHORT CI T(A)-I) PUNE, DATED 23.03.2012 FOR A.Y. 2007-08 ON THE FOLLOWING GROUNDS. ON FACTS AND IN LAW, 1. THE LEARNED CIT(A) ERRED IN CONFIRMING ADHOC DISALLOWANCE OF EXPENSES OF RS.10,00,000/- AS ATTRIBUTABLE TO EARNING OF THE EXEMPT INCOME OF RS.2,70,39,8147- U/S 14A OF THE INCOME TAX ACT, 196 1. 2. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE AS SESSEE COMPANY HAD NOT INCURRED ANY EXPENDITURE FOR EARNIN G THE EXEMPT INCOME AND HENCE, THERE WAS NO REASON TO MAKE ANY DISALLOWANCE U/S 14A OF THE ACT. 3. HE ERRED IN NOT APPRECIATING THAT THERE WAS NO DOMI NANT AND IMMEDIATE CONNECTION BETWEEN THE EXPENDITURE INCURRED AND EXEMPTED INCOME AND THEREFORE THERE 2 CANNOT BE ANY ADHOC DISALLOWANCE OUT OF GENERAL EXPENSES. 4. WITHOUT PREJUDICE TO ABOVE GROUNDS, THE ASSESSEE SUBMITS THAT THE DISALLOWANCE SUSTAINED BY THE LEAR NED CIT(A) IS VERY HIGH AND MAY BE REDUCED SUBSTANTIALL Y. 5. THE APPELLANT COMPANY CRAVES LEAVE TO ADD TO, ALTER , AMEND, MODIFY AND / OR DELETE ANY OR ALL OF THE ABO VE GROUNDS OF APPEAL. 2. THE ASSESSEE IS BEFORE US REGARDING DISALLOWANCE OF EXPENSES OF RS.10.00 LAKHS AS ATTRIBUTABLE TO EARNI NG OF THE EXEMPT INCOME OF RS.2,70,39,814/- U/S. 14A OF I.T A CT. AT THE OUTSET OF HEARING, LEARNED AUTHORIZED REPRESENTATIV E POINTED OUT THAT THIS ISSUE IS COVERED BY THE ORDER OF ITA NO.6 1/PN/2011 IN HIS OWN CASE IN A.Y. 2006-07, WHEREIN, THE TRIBUNAL HAS DECIDED THE SIMILAR ISSUE BY OBSERVING AS UNDER: 4. WE ARE UNABLE TO ACCEPT THE PLEA OF THE ASSESS EE. WE FIND THAT IN THE A.Y. 2004-05, THE ASSESSEE HAS DEC LARED THE EXEMPT DIVIDEND TO THE EXTENT OF RS.68,06,999/- AND THE AO HAS MADE THE DISALLOWANCE AT THE RATE OF 5% OF THE DIVIDEND WHICH WAS WORKED OUT AT RS.3,40,350/-. ON APPEAL, THE LD CIT(A) SUSTAINED THE DISALLOWANCE OF RS.50,000/- ON ADHOC BASIS. IN OUR OPINION, SOME REASONABLE APPROACH IS REQUIRED TO BE TAKEN. WE, ACCORDINGLY, DIRECT THE AO TO WORK OUT THE DISALLOWANCE AT 1% OF THE GROSS DIVIDE ND INCOME AS EXPENDITURE DISALLOWANCE U/S. 14A. THE A SSESSEE HAS SHOWN THE GROSS DIVIDEND INCOME AT RS.2,06,96,7 93/-, HENCE, BY TAKING 1% OF THE SAID AMOUNT AS AN EXPEND ITURE, THE DISALLOWANCE IS WORKED OUT AT RS.2,07,000/-. ACCORDINGLY, THE A.O IS DIRECTED TO DISALLOW RS.2,0 7,000/- AS AGAINST RS.13,12,708/-. 5. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALL OWED. 2.1 NOTHING CONTRARY WAS BROUGHT TO OUR KNOWLEDGE O N BEHALF OF REVENUE. FACTS BEING SIMILAR, SO FOLLOWING THE SAM E REASONING, WE DIRECT THE ASSESSING OFFICER TO WORK OUT THE DIS ALLOWANCE AT 1% ON GROSS DIVIDEND INCOME AS EXPENDITURE DISALLOW ABLE U/S.14A. 3 3. IN THE RESULT, APPEAL FILED BY ASSESSEE IS PARTL Y ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS THE DAY 13 TH OF DECEMBER, 2013. SD/- SD/- (G.S. PANNU) (SHAILENDRA KUMAR YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 13 TH DECEMBER 2013 GCVSR COPY TO:- 1) ASSESSEE 2) DEPARTMENT 3) THE CIT(A)-I, PUNE 4) THE CIT-I, PUNE 5) THE DR, A BENCH, I.T.A.T., PUNE. 6) GUARD FILE BY ORDER //TRUE COPY// SENIOR PRIVATE SECRETARY, I.T.A.T., PUNE