GNB Credit Pvt. Ltd., Kolkata V. DCIT, CC - XXI, Kolkata, Kolkata

ITA 219/KOL/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54465 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2011
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 10-02-2011
• Court: TRIBUNAL
• Department Lawyers: P K CHAKRABORTY
• Assessee Lawyers: SAJAL BANERJEE
• Section: 14A

Judgement Text

1 , A , , IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH- A , KO LKATA [ . . . . . .. . , ,, , . . . . . .. . !' !' !' !', , , , # ] BEFORE SHRI B.R.MITTAL, JUDICIAL MEMBER & SRI S.V.MEHROTRA, ACCOUNTANT MEMBER $ $ $ $ / ITA NO. 219 (KOL) OF 2011 %& '( / ASSESSMENT YEAR 2007-08 M/S. GNB CREDIT PVT. LTD., KOLKATA. (PAN-AAACG9152E) DY.COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-XXI, KOLKATA. (+, / APPELLANT ) - % - - VERSUS - (/0+,/ RESPONDENT ) +, 1 2 / FOR THE APPELLANT: / SRI SAJAL BANERJEE /0+, 1 2 / FOR THE RESPONDENT: / SRI P.K.CHAKRABORTY 3 / ORDER ( . . . . . .. . ), (B.R.MITTAL), JUDICIAL MEMBER : THE ASSESSEE HAS FILED THIS APPEAL FOR ASSESSMENT YEAR 2007-08 AGAINST THE ORDER OF LD. C.I.T.(A), CENTRAL-II, KOLKATA DATED 30/11/2 010 ON THE FOLLOWING GROUNDS :- 1. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN UPHOLDING DISALLOWANCE OF RS.526728/- AS INTEREST U /S. 14A READ WITH RULE 8D. THE OBSERVATION MADE IN THIS REGARD IS WRONG AND INCORR ECT. ON A PROPER CONSIDERATION OF THE FACTS OF THE CASE HE SHOULD HAVE FOUND THAT NO PART OF INTEREST PAID IS ATTRIBUTABLE TO ACQUIRE SHARES ON WHICH DIVIDEND WA S EARNED. 2. FOR THAT ON THE FACTS AND IN THE CIRCUMST ANCES OF THE CASE THE LD. CIT(A) WAS WRONG IN UPHOLDING THE DISALLOWANCE OF RS.12847/- BEING A LLEGED INDIRECT EXPENSES TO EARN DIVIDEND INCOME. THE DISALLOWANCE IN ANY EVENT IS UNJUSTIFIED AND HIGHLY EXCESSIVE. 2. BOTH THE PARTIES REQUESTED FOR ADJOURNMENT OF T HE HEARING VIDE THEIR RESPECTIVE PETITIONS PLACED ON RECORD. BUT, HOWEVER, CONSIDER ING THE ISSUE INVOLVED AND THE FACTS ON RECORD, ADJOURNMENT SOUGHT FOR IS REJECTED AND T HE APPEAL WAS HEARD ACCORDINGLY. 3. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF TH E PARTIES AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. DURING THE COURSE OF HEA RING, LD. A/R SUBMITTED THAT RULE 8D OF THE RULES IS NOT APPLICABLE TO THE ASSESSMENT YE AR UNDER CONSIDERATION IN VIEW OF 2 DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE O F GODREJ & BOYCE MANUFACTURING CO. LTD. VS. DCIT [328 ITR 81 (BOM)]. WE AGREE WIT H LD. A/R THAT IN VIEW OF DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE CITED SUPR A, RULE 8D OF THE RULES IS NOT APPLICABLE TO ASSESSMENT YEAR 2007-08 AS THE HONBL E BOMBAY HIGH COURT HAS HELD THAT RULE 8D IS PROSPECTIVE IN NATURE AND IS APPLICABLE FROM ASSESSMENT YEAR 2008-09 ONWARDS. WE OBSERVE THAT THE A.O. WHILE MAKING THE DISALLOWANCE OF INTEREST AND CONSIDERING TO DISALLOW ADMINISTRATIVE EXPENSES IN VIEW OF SEC. 14A OF THE ACT, HAS APPLIED RULE 8D. WE OBSERVE THAT LD. C.I.T.(A) HAS STATED THAT RULE 8D IS NOT APPLICABLE, BUT HE HAS CONFIRMED THE ACTION OF THE A.O. FOR MAKING THE DISALLOWANCE OF INTEREST ON THE PRESUMPTION THAT THE ASSESSEE HAS A PPLIED INTEREST-BEARING LOANS IN ACQUIRING SHARES AND SECURITIES AND TO EARN DIVIDEN D INCOME. WE FURTHER OBSERVE THAT THE LD. C.I.T.(A) HAS ALSO MADE A DISALLOWANCE OF 1% OF THE EXEMPTED INCOME. CONSIDERING THE ABOVE FACTS AND THE FACT THAT THE A.O. HAS MADE DISALLOWANCE OF RS.5,69,536/- BY APPLYING RULE 8D, WHICH ULTIMATELY IS NOT APPLICABL E TO THE ASSESSMENT YEAR UNDER CONSIDERATION, AND IN THE ABSENCE OF ANY MATERIAL O N RECORD BEFORE US, WE CONSIDER IT PRUDENT TO SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND RESTORE THE MATTER TO THE FILE OF A.O. WITH A DIRECTION TO REDECIDE THE DISALLOWAN CE, IF ANY, IS REQUIRED TO BE MADE ON THE BASIS OF THE EVIDENCE AS MAY BE FURNISHED BY TH E ASSESSEE AND AFTER GIVING DUE OPPORTUNITY OF HEARING TO THE ASSESSEE AS PER LAW. HENCE GROUNDS OF APPEAL TAKEN BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 09/8/2011. SD/- SD/- . . . . . .. . !' !' !' !' ) # ( . . . . . .. . ) ( S.V.MEHROTRA) , ACCOUNTANT MEMBER (B.R.MITTAL) , JUDICIAL MEMBER ( (( (4# 4# 4# 4#) )) ) DATE: 09-08-2011 3 $ $ $ $ / ITA NO. 219 (KOL) OF 2011 3 1 /5 6 5'7- COPY OF THE ORDER FORWARDED TO : 1. +, / THE APPELLANT : M/S.GNB CREDIT PVT. LTD., 686, ANANDAPUR, SHRACH I TOWERS, E.M .BYPASS, KOLKATA 700 107. 2 /0+, / THE RESPONDENT : D.C.I.T., CENTRAL CIRCLE-XXI, KOLKATA. 3. 3% () : THE CIT(A), CENTRAL-II, KOLKATA. 4. 3%/ THE CIT, KOL- 5 ;< /% / DR, ITAT, KOLKATA BENCHES, KOLKATA 6 GUARD FILE . 05 // TRUE COPY, 3%=/ BY ORDER, (DKP) > ? / DY/ASSTT, REGISTRAR .