DCIT Circle-12 (1), V. Hero Financial Services Ltd, New Delhi

ITA 2387/DEL/2008

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0374 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 03-02-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 23-06-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MONA MOHANTY

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: C NEW DELHI BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA ACCOUNTANT MEMBER I.T.A NO. 2387/DEL/08 ASSTT. YEAR 2004-05 DCIT, CIRCLE 12(1) NEW DELHI. VS. M/S. HERO FINANCIAL SERVICE LTD. 601, INTERNATIONAL TRADE TOWER, NEHRU PLACE, NEW DELHI 19. (APPELLANT) (RESPONDENT) APPELLANT BY: SMT. MONA MOHANTY, SR. DR RESPONDENT BY: SHRI RANJAN CHOPRA, CA ORDER PER RAJPAL YADAV, JM: THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF LD. CIT(A) DATED 3 RD APRIL, 2008 PASSED FOR ASSTT. YEAR 2004-05. THE SO LITARY GRIEVANCE OF THE REVENUE IS THAT LD. CIT(A) HAS ERR ED IN DELETING THE ADDITION OF ` 32,03,809/- BY FOLLOWING THE ORDER OF ITAT PASSED IN THE ASSESSEES OWN CASE FOR ASSTT. YEAR 2002-03. IT HAS BEEN MADE BY THE AO WITH THE HELP OF SECTION 14A. ACCORDING TO THE R EVENUE THE ORDER OF THE ITAT IN ASSTT. YEAR 2002-03 IS NOT APPLICABLE O N THE FACTS OF THIS ASSTT. YEAR. ITA NO. 2387/DEL/08 ASSTT. YEAR 2004-05 2 2. WITH THE ASSISTANCE OF LD. REPRESENTATIVE, WE HA VE GONE THROUGH THE RECORD CAREFULLY. FROM THE ASSESSMENT ORDER, IT EMERGES OUT THAT ASSESSEE HAS FILED ITS RETURN OF INCOME ON 29.10.20 04 DECLARING AN INCOME OF ` 3,716/-. THE ASSESSEE HAS SHOWN DIVIDEND INCOME O F ` 18,87,602/-. THE AO FURTHER OBSERVED THAT ASSESSEE IS MAINTAINING INVESTMENT PORTFOLIO AT ` 2.96 CRORE AS ON 31 ST MARCH, 2004. HE FURTHER OBSERVED THAT ASSESSEE IS NOT MAINTAINING SEPARATE DETAILS OF EXPENDITURE INCURRED BY IT IN RELATION TO EARNING D IVIDEND INCOME. ACCORDING TO THE AO, THE EXPENSES ARE TO BE DETERMI NED KEEPING INTO CONSIDERATION THE FACTS AND CIRCUMSTANCES OF THE AS SESSEES CASE. THERE IS NO SEGREGATION OF ACCOUNTS AND ALL THE RECEIPTS/ FUNDS HAVE BEEN PUT IN THE SAME ACCOUNT FROM IT INVESTMENTS ARE MADE AND B USINESS EXPENDITURE ARE INCURRED. THE AO AFTER TAKING INTO CONSIDERATION THIS ASPECT QUANTIFY THE EXPENSES RELATABLE TO EARNING O F DIVIDEND INCOME AT ` 32,03,809/-. 3. ON APPEAL LD. CIT(A) DELETED THE DISALLOWANCE ON THE GROUND THAT INTEREST BEARING FUNDS WERE USED BY THE ASSESSEE IN MAKING INVESTMENT. 4. ON DUE CONSIDERATION OF THE FACTS AND CIRCUMSTAN CES WE FIND THAT ASSESSEE HAS DEMONSTRATED BEFORE THE LD. CIT(A) TH AT IT WAS HAVING CAPITAL RESERVES AT ` 826.24 LACS. IT HAS MADE INVESTMENT IN THE GOVT. SECURITIES AT ` 161.41 LACS. THIS INVESTMENT IS COMPULSORY INVESTM ENT AS ITA NO. 2387/DEL/08 ASSTT. YEAR 2004-05 3 IN ORDER TO MEET THE REQUIREMENT LAID DOWN BY RBI B ECAUSE ASSESSEE IS A NON MAKING FINANCIAL COMPANY. LD. COUNSEL FOR THE ASSESSEE AT THE TIME OF HEARING TOOK US THROUGH PAGE 1 AND PAGE 3 O F THE PAPER BOOK WHEREIN BALANCE SHEET AS ON 31 ST MARCH, 2004 IS AVAILABLE. HE POINTED OUT THAT AUTHORIZED SHARE CAPITAL IS OF 10 CRORE. I T HAS GENERAL RESERVE OF ` 63,66,434/-. ON THE STRENGTH OF THESE DETAILS ASSE SSEE HAS DEMONSTRATED THAT ITS FACTS AND CIRCUMSTANCES ARE P ERI MATERIAL TO THAT OF ASSTT. YEAR 2002-03 WHEREIN THE TRIBUNAL HAS DELETE D THE DISALLOWANCE MADE U/S 14A. LD. COUNSEL FOR THE ASSESSEE ALSO INF ORMED THAT DEPARTMENT HAS NOT CHALLENGED THE ORDER OF THE ITAT IN ASSTT. YEAR 2002-03. LD. CIT(A) HAS ALSO DID NOT FIND ANY DISPA RITY ON FACTS. IT HAS REPRODUCED THE ORDER OF THE TRIBUNAL ON PAGES 2005- 06. TAKING INTO CONSIDERATION THE ORDER OF THE TRIBUNAL IN ASSTT. Y EAR 2002-03 AND FACTS AND CIRCUMSTANCES WE DO NOT FIND ANY REASON TO INTE RFERE IN THE ORDER OF LD. CIT(A). 5. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 11.2.2011 SD/- [SHAMIM YAHYA] [RAJPAL YADAV] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 11.2.2011 ITA NO. 2387/DEL/08 ASSTT. YEAR 2004-05 4 VEENA COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT