M/s Hydroline Products Private Limited , Bangalore V. Assistant Commissioner of Income Tax Circle-3(1)(2), Bangalore

ITA 2217/BANG/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 7235 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Appeal Filed On: 18-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: A. S. NARAYAN MOORTHY
• Keywords: Set aside
• Section: 14A; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, AM AND SHRI PAVAN KUMAR GADALE, JM ITA NO. 2217/BANG/2018 ASSESSMENT YEAR : 2015 16 M/S HYDROLINE PRODUCTS PVT. LTD., NO. 3/1, VARSOVA LAYOUT, C. V. RAMAN NAGAR, BANGALORE 560093. PAN: AAACH9129E VS. ACIT CIRCLE 3 (1) (2), BANGALORE APPELLANT RESPONDENT ASSESSEE BY : S HRI A . S. NARAYAN MOORTHY, C. A. REVENUE BY : S HRI SUNIL KUMAR AGARWAL , ADDL. CIT DR DATE OF HEARING : 02 . 1 2 .20 19 DATE OF PRONOUNCEMENT : 30 . 0 1.20 20 O R D E R PER SHRI A.K. GARODIA, AM: THIS APPEAL IS FILED BY THE ASSESSEE AND IT IS DIRECTED AGAINST THE ORDER OF CIT(A) 3 BENGALURU DATED 01.06.2018 FOR A. Y. 2015 16. 2. ALTHOUGH SEVERAL GROUNDS ARE RAISED BY THE ASSESSEE BUT THE ONLY EFFECTIVE GRIEVANCE IS ABOUT DISALLOWANCE OF RS. 272,444/- U/S 14A OF I T ACT. 3. IN COURSE OF HEARING, IT WAS SUBMITTED BY THE LEARNED AR OF THE ASSESSEE THAT ON PAGE 3 OF THE PAPER BOOK NO. 2 IS THE DETAIL OF ALL INVESTMENTS INCLUDING THE INVESTMENTS ON WHICH DIVIDEND INCOME WAS EARNED AND AS PER THE SAME, ON INVESTMENT OF RS. 101,79,087/- ONLY IN THREE MUTUAL FUNDS, DIVIDEND OF RS. 869,173/- WAS EARNED IN THE PRESENT YEAR. HE SUBMITTED THAT AS PER THE ORDER OF THE SPECIAL BENCH OF THE TRIBUNAL RENDERED IN THE CASE OF ACIT VS. VIREET INVESTMENT PVT. LTD., 165 ITD 27, ONLY THOSE INVESTMENTS SHOULD BE CONSIDERED FOR COMPUTING AVERAGE VALUE OF INVESTMENTS WHICH YIELDED EXEMPT DIVIDEND INCOME IN THE YEAR UNDER CONSIDERATION. HE SUBMITTED THAT THEREFORE, 0.5% OF ONLY RS. 101,79,087/- SHOULD BE DISALLOWED AND IT WORKS OUT TO RS. 50,895/- ITA NOS.2217(B)/2018 PAGE 2 OF 2 OUT OF WHICH, RS. 17,383/- IS ALREADY DISALLOWED BY THE ASSESSEE ITSELF. LEARNED DR OF THE REVENUE SUPPORTED THE ORDER OF CIT (A). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND FORCE IN THE SUBMISSIONS OF THE LEARNED AR OF THE ASSESSEE THAT DISALLOWANCE U/S 14A SHOULD BE MADE IN THE LIGHT OF THIS ORDER OF THE SPECIAL BENCH OF THE TRIBUNAL CITED BY HIM AS NOTED ABOVE BUT THE FACTS ARE TO BE EXAMINED AS TO WHAT IS THE AMOUNT OF INVESTMENTS WHICH YIELDED EXEMPT DIVIDEND INCOME IN THE YEAR UNDER CONSIDERATION. HENCE, WE SET ASIDE THE ORDER OF CIT (A) AND RESTORE THIS MATTER BACK TO AO FOR FRESH DECISION AFTER EXAMINING THE FACTS OF THE PRESENT CASE IN THE LIGHT OF THIS ORDER OF THE SPECIAL BENCH OF THE TRIBUNAL RENDERED IN THE CASE OF ACIT VS. VIREET INVESTMENT PVT. LTD. (SUPRA). 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE. SD/- SD/- (PAVAN KUMAR GADALE) (ARUN KUMAR GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 30 TH JANUARY, 2020. /NS/ COPY TO: 1. APPELLANT 4. CIT (A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.