DSP BLACKROCK INVESTMENT MANAGERS PVT. LTD.(FORMERLY DSP MERRIL LYNCH FUND MANAGERS LTD.), MUMBAI V. ADDL.C.I..T RG. 3(1), MUMBAI

ITA 2578/MUM/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71168 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2007-2008
• Appeal Filed On: 17-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DIPAK RIPOTE
• Section: 14A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL D DD D BENCH, BENCH, BENCH, BENCH, MUMBAI MUMBAI MUMBAI MUMBAI , . , . , ! ! ! ! '# '# '# '# BEFORE BEFORE BEFORE BEFORE SHRI SHRI SHRI SHRI VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM & & & & SHRI SHRI SHRI SHRI D. KARUNAKARA RAO D. KARUNAKARA RAO D. KARUNAKARA RAO D. KARUNAKARA RAO, AM , AM , AM , AM ./ I.T.A. NO.2578/MUM/2012 I.T.A. NO.2578/MUM/2012 I.T.A. NO.2578/MUM/2012 I.T.A. NO.2578/MUM/2012 ( $% $% $% $% & & & & / ASSESSMENT YEAR :2007-08) DSP BLACK ROCK INVESTMENT MANAGERS PVT. LTD., (FORMERLY KNOWN AS DSP MERRILL LYNCH FUND MANAGERS LIMITED), 10 TH FLOOR, MAFATLAL CENTRE, NARIMAN POINT, MUMBAI-400021 % % % % / VS. THE ADDITIONAL COMMISSIONER OF INCOME TAX, RANGE 3(1), AAYAKAR BHAVAN, MUMBAI-400020 #' ! ./ ( ./ PAN/GIR NO. :AAACD3069K ( ') / APPELLANT APPELLANT APPELLANT APPELLANT) .. ( *+') / RESPONDENT RESPONDENT RESPONDENT RESPONDENT) ') ') ') ') , , , , / APPELLANT BY : SHRI NITESH JOSHI *+') *+') *+') *+') - -- - , , , , /RESPONDENT BY : SHRI DIPAK RIPOTE % % % % - -- - .! .! .! .! / DATE OF HEARING : 22 ND AUGUST 2013 /0& /0& /0& /0& - -- -.! .! .! .! /DATE OF PRONOUNCEMENT: 18 TH SEPTEMBER 2013 ' 1 / O R D E R PER : , . . / VIJAY PAL RAO, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 9.3.2012 OF COMMISSIONER OF INCOME TAX(APPEALS) FOR THE ASSESSMENT YEAR 2007-08. 2. THE ASSESSEE HAS RAISED VARIOUS GROUNDS IN THIS APPEAL HOWEVER, THE ONLY ISSUE ARISES FOR OUR CONSIDERATION AND ADJUDIC ATION IS: WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) IS J USTIFIED IN DISALLOWING 5% OF DIVIDEND INCOME UNDER THE PROVISIONS OF SECTI ON 14A OF INCOME TAX ACT. ITA NO. 2578/M/2012 DSP BLACKROCK INVESTMENT MANAGERS PVT. LTD. 2 3. WE HAVE HEARD THE LD. AR AS WELL AS LD. DR AND C ONSIDERED THE RELEVANT MATERIAL ON RECORD. THE LD. AR OF THE ASSE SSEE HAS SUBMITTED THAT THE ASSESSEE ITSELF HAS DISALLOWED A SUM OF ` 1,88, 450/- U/S 14A ON A SCIENTIFIC REASONABLE BASIS. HE HAS REFERRED THE CO MPUTATION OF DISALLOWANCE AT PAGE 37 OF THE PAPER BOOK WHEREIN T HE ASSESSEE HAS CALCULATED THE EXPENDITURE TO BE APPORTIONED FOR EA RNING THE DIVIDEND INCOME ON THE BASIS OF MAN HOURS. THE LD. AR HAS PO INTED OUT THAT FOR THE ASSESSMENT YEAR 2005-06 THE TRIBUNAL HAD REMITTED T HE ISSUE OF DISALLOWANCE U/S 14A TO THE RECORD OF THE ASSESSING OFFICER FOR RECONSIDERATION IN THE LIGHT OF THE DECISION OF HON BLE JURISDICTION HIGH COURT IN CASE OF GODREJ & BOYCE MANUFACTURING CO. L TD. VS DCIT 328 ITR 81. THE ASSESSING OFFICER IN THE ORDER GIVING EFFEC T HAS ACCEPTED THE DISALLOWANCE MADE BY THE ASSESSEE U/S 14A ON THE BA SIS OF THE MAN HOURS ATTRIBUTABLE TO THE EARNING OF DIVIDEND INCOME. THU S, THE LD. AR HAS SUBMITTED THAT WHEN THE COMPUTATION OF DISALLOWANCE U/S 14A FOR THE ASSESSMENT YEAR 2005-06 HAS BEEN ACCEPTED BY THE AO THEN DISALLOWANCE COMPUTED BY THE ASSESSEE ON THE SAME SCIENTIFIC BAS IS SHOULD BE ACCEPTED FOR THE YEAR UNDER CONSIDERATION. ON THE O THER HAND, THE LD. DR HAS RELIED UPON THE ORDER OF THE AUTHORITIES BELOW AND SUBMITTED THAT 5% OF DIVIDEND INCOME IS A REASONABLE DISALLOWANCE. 4. HAVING CONSIDERED THE RIVAL SUBMISSIONS AND CARE FULLY GONE THROUGH THE RELEVANT MATERIAL ON RECORD WE NOTE THAT FOR TH E ASSESSMENT YEAR 2005-06 THE TRIBUNAL REMITTED THE ISSUE TO THE RECO RD OF THE ASSESSING OFFICER FOR DECIDING AFRESH IN LIGHT OF THE DECISIO N OF HONBLE JURISDICTION ITA NO. 2578/M/2012 DSP BLACKROCK INVESTMENT MANAGERS PVT. LTD. 3 HIGH COURT IN CASE OF GODREJ & BOYCE MANUFACTURING CO. LTD. VS DCIT (SUPRA) IN PARA 3 AS UNDER: 3. WE FIND THAT THE DECISION OF SPECIAL BENCH IN T HE CASE OF DAGA CAPITAL MANAGEMENT PVT. LTD. HAS BEEN SET ASID E BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF GODREJ & B OYCE MANUFACTURING CO. LTD. VS DCIT (2010 TIOL-564-HC-MU M-IT). IN THE CIRCUMSTANCES, WE SET ASIDE THE ORDER OF THE AS SESSING OFFICER AND CIT(A) ON THIS ISSUE AND REMIT THE MATT ER BACK TO THE FILE OF THE ASSESSING OFFICER TO DECIDE THE ISSUE A FRESH IN LINE WITH THE RATIO OF THE DECISION OF THE JURISDICTIONAL HIG H COURT. 5. WE FURTHER NOTE THAT WHILE PASSING THE GIVING EF FECT ORDER DATED 26.12.2011 THE ASSESSING OFFICER HAS ACCEPTED THE D ISALLOWANCE MADE BY THE ASSESSEE AS IT WAS FOUND TO BE REASONABLE AS UN DER: THEREFORE, DISALLOWANCE U/S 14A IS REQUIRED TO BE MADE IN THE ASSESSEES CASE. THE AMOUNT OF DISALLOWANCE OF ` 1, 30,807/- AS COMPUTED BY THE ASSESSEE IS FOUND TO BE REASONABLE. HENCE, THE DISALLOWANCE U/S 14A IS MADE AT ` 1,30,807/-. 6. THUS, IT IS CLEAR THAT FOR THE ASSESSMENT YEAR 2 005-06 THE DISALLOWANCE CALCULATED BY THE ASSESSEE ON THE BASI S OF MAN HOUR HAS BEEN ACCEPTED BY THE AO. IN THE ASSESSMENT YEAR UND ER CONSIDERATION THE ASSESSEE HAS ADOPTED THE SAME METHOD FOR COMPUTATIO N OF THE DISALLOWANCE U/S 14A. ACCORDINGLY, WE ARE OF THE VI EW THAT WHEN THE ASSESSEES COMPUTATION HAS BEEN ACCEPTED FOR THE AS SESSMENT YEAR 2005- 06 THEN THE SAME CANNOT DENIED FOR THE YEAR UNDER C ONSIDERATION. THEREFORE, NO FURTHER DISALLOWANCE U/S 14A ON ACCOU NT OF ADMINISTRATIVE AND MANAGERIAL EXPENSES ARE TO BE MADE WHEN THE ASS ESSEE ITSELF HAS MADE THE DISALLOWANCE ON THE BASIS OF THE MAN HOURS ATTRIBUTABLE TO THE ITA NO. 2578/M/2012 DSP BLACKROCK INVESTMENT MANAGERS PVT. LTD. 4 EARNING OF DIVIDEND INCOME. ACCORDINGLY, WE DELETE THE ADDITION SUSTAINED BY THE CIT(A) U/S 14A. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 18 TH DAY OF SEPTEMBER 2013 SD/- SD/- ( . ) ! '# (D. KARUNAKARA RAO) ACCOUNTANT MEMBER ( ) $ '# (VIJAY PAL RAO) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 18 TH SEPTEMBER 2013 SUBODH COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI