ACIT,Cri.-6, Pune V. RDA Holding P.Ltd., Pune

ITA 258/PUN/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49930 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2003-2004
• Appeal Filed On: 12-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R D ONKAR
• Assessee Lawyers: HARESHWAR SHARMA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER I.T.A. NO. 258/PN/2010 : A.Y. 2003-04 ASSTT. CIT CIR. 6, PUNE APPELLANT VS. RDA HOLDINGS P. LTD., 12 BOAT CLUB ROAD, RIVERSIDE ESTATES PUNE PAN AAACK 7301 F RESPONDENT APPELLANT BY: SHRI R.D. ONKAR RESPONDENT BY: SHRI HARESHWAR SHARMA ORDER PER SHAILENDRA KUMAR YADAV, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDERS OF THE CIT(A)-I PUNE DATED 12-6-2009 FOR A.Y . 2003- 04 ON THE POINT OF DEDUCTION U/S 80-M OF THE ACT. 2. THE ASSESSEE IS AN INVESTMENT COMPANY ENGAGED IN THE BUSINESS OF INVESTMENT OF SECURITIES. THE ISSUE IN VOLVED IN THIS APPEAL RELATES TO ALLOWABILITY OF CLAIM OF DED UCTION U/S 80-M OF THE ACT AMOUNTING TO RS. 2,18,94,555/- IN R ESPECT OF INTER CORPORATE DIVIDEND RECEIVED BY THE ASSESSE E AMOUNTING RS. 2,20,34,535/- DURING THE PREVIOUS YEA R RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION . THE ASSESSING OFFICER DENIED THE DEDUCTION CLAIMED BY T HE ASSESSEE BY INVOKING THE PROVISIONS OF SECTION 115 ((5) OF 2 ITA NO. 258/PN/2010 RDA HOLDINGS PVT.LTD. A.Y. 2003-04 THE ACT. FURTHER, THE ASSESSEE RECEIVED INTER CORPO RATE DIVIDENDS AGGREGATING TO RS. 2,20,34,535/- AND DIST RIBUTED THE DIVIDEND TO ITS SHAREHOLDERS OF RS. 2,24,72,184 /- ON 9-8-2003 (I.E. BEFORE THE DUE DATE FOR FURNISHING I TS RETURN OF INCOME) AND PAID DIVIDEND DISTRIBUTION TAX @ 12. 8125% AMOUNTING TO RS. 28,79,249/- ON 20-8-2003. THE ASS ESSEE CLAIMED DEDUCTION U/S 80-M OF THE ACT IN RESPECT OF INTER CORPORATE DIVIDENDS RECEIVED (RS. 2,20,34,535/-) RE STRICTED TO THE EXTENT OF DIVIDEND DISTRIBUTED BY THE COMPAN Y (RS. 2,24,72,184/-) TO ITS SHAREHOLDER BEFORE THE D UE DATE FOR FILING RETURN OF INCOME FOR THE YEAR UNDER CONS IDERATION. THE CLAIM OF THE ASSESSEE WAS DENIED BY THE ASSESSI NG OFFICER. ON APPEAL, THE CIT(A) ALLOWED THE CLAIM O F THE ASSESSEE HOLDING THAT THE DEDUCTION U/S 80-M OF THE ACT IS IN RESPECT OF ANY INCOME RECEIVED BY WAY OF DIVIDEN D FROM ANOTHER DOMESTIC COMPANY INCLUDED IN THE GROSS TOTA L INCOME OF THE RECIPIENT COMPANY SUBJECT TO THE REST RICTION TO THE AMOUNT OF DIVIDEND DISTRIBUTED BY THE RECIPI ENT COMPANY ON OR BEFORE THE DUE DATE OF FILING OF RETU RN. SAME HAS BEEN OPPOSED BEFORE US BY THE REVENUE. 3. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE FIND THAT THE ISSUE IS FULLY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF CO-ORD INATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO. 3 ITA NO. 258/PN/2010 RDA HOLDINGS PVT.LTD. A.Y. 2003-04 1058/PN/2009 DATED 19-1-2011 WHEREIN FOLLOWING THE DECISION OF BOMBAY BENCH OF THE TRIBUNAL IN THE CAS E OF CASTLE INVESTMENT AND INDUSTRIES PVT. LTD. IN ITA N O. 1713/MUM/2006 FOR A.Y. 2003-04 AND ALSO THE DECISIO N OF HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ AGR OVET LTD., IN IDENTICAL ISSUE (2010-TIOL-172-HC-MUM-IT) THE ISSUE WAS DECIDED BY OBSERVING AS UNDER: 3. FROM THE ORDER OF THE REVENUE IT IS EVIDENT THA T THERE IS REFERENCE TO THE ORDER OF THE TRIBUNAL IN THE CASE OF CASTLE INVESTMENTS AND INDUSTRIES PVT. LTD. (SUPRA) AND PARA 3.3 OF THE IMPUGNED ORDER IS RELEV ANT AND THE SAME READS AS UNDER: 3.3 I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE APPELLANT AND PERUSED MATERIAL ON RECORD. THE ISSU E IS SQUARELY COVERED BY THE RATIO DECIDENDI OF HONB LE ITAT, MUMBAIS DECISION IN CASE OF CASTLE INVESTMEN T & INDUSTRIES PVT. LTD., QUOTED SUPRA. THE DEDUCTION U/S 80-M OF THE ACT IS IN RESPECT OF ANY INCOME RECEIVE D BY WAY OF DIVIDEND FROM ANOTHER DOMESTIC COMPANY INCLUDED IN THE GROSS TOTAL INCOME OF THE RECIPIENT COMPANY BUT SUCH DEDUCTION HAS TO BE RESTRICTED TO THE DIVIDEND DISTRIBUTED BY THE RECIPIENT COMPANY O N OR BEFORE THE DUE DATE OF FILING OF THE RETURN. IN OTHER WORDS, IN CASE THE GROSS TOTAL INCOME OF THE DOMEST IC COMPANY INCLUDES ANY SUM ON ACCOUNT OF DIVIDEND RECEIVED FROM ANOTHER DOMESTIC COMPANY, THEN STATUT E PROVIDES A DEDUCTION WHICH SHALL BE LIMITED TO THE AMOUNT DISTRIBUTED BY WAY OF DIVIDEND BY THE RECIPI ENT COMPANY. IN VIEW OF THIS, RESPECTFULLY FOLLOWING T HE DECISION OF THE ITAT MUMBAI QUOTED SUPRA, IT IS HEL D THAT THE APPELLANT IS ENTITLED TO CLAIM DEDUCTION U /S 80-M OF THE ACT AGAINST THE DIVIDEND INCOME RECEIVE D DURING THE ASSESSMENT YEAR UNDER APPEAL. APPELLANT GETS CONSEQUENTIAL RELIEF. 4. THIS DECISION OF THE MUMBAI BENCH IN THE CASE OF CASTLE INVESTMENTS AND INDUSTRIES PVT. LTD. (SUPRA) IS FOUND APPROVED BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF GODREJ AGROVET LTD. (2010-TIOL-172-HC-MUM- IT VIDE PARA 10 AND SAME READS AS UNDER: 4 ITA NO. 258/PN/2010 RDA HOLDINGS PVT.LTD. A.Y. 2003-04 10. ON THESE FACTS AS THEY STAND, IT IS IMPOSSIBLE TO CONTEND THAT THE ASSESSEE WAS NOT ENTITLED TO A DEDUCTION U/S 80-M. SIGNIFICANTLY, THE VIEW OF THE A.O WAS CONSISTENT WITH THE DECISION OF THE TRIBUNAL IN THE CASE OF CASTLE INVESTMENT (SUPRA). THE JUDGMENT IN CASTLE INVESTMENT INSOFAR AS IS MATERIAL HELD THAT SECTION 115-)(5) DOES NOT IN ANY WAY RESTRICT THE ALLOWABILITY OF THE CLAIM UNDER SECTION 80-M. UNDER SECTION 80-M WHAT IS CLAIMED AS A DEDUCTION IS THE DIVIDEND RECEIVED BY THE COMPANY. DIVIDENDS DECLARED, DISTRIBUTED OR PAID ARE NOT CLAIMED AS DEDUCTION U/S 80-M THOUGH THEY CONSTITUTE AN OUTFLOW OF FUNDS FROM THE COMPANY. SECTION 80-M IMPOSES A MONETARY RESTRICTION ON THE AMOUNT THAT MAY BE CLAIMED BY WAY OF A DEDUCTION BY PROVIDING THAT THE AMOUNT OF CLAIM CANNOT EXCEED THE DIVIDEND DISTRIBUTED BY THE ASSESSEE BY THE DUE DATE. THOUGH THE JUDGMENT OF THE TRIBUNAL IN CASTLE INVESTMENT WAS DATED 18-7-2007(THE ORDER OF ASSESSMENT BEING DATED 28-2-2006) IT IS NECESSARY TO NOTE THAT THE DECISION FOLLOWED THE EARLIER DECISION OF THE TRIBUNAL DATED 10-5-2002 IN THE CASE OF SILVASA INDUSTRIES AND THE DECISION DATED 7-10-2004 IN M/S. KAIKOBAD BYRAMJEE (SUPRA). THE DECISION OF THE TRIBUNAL IN CASTLE INVESTMENT (SUPRA) WAS AFFIRMED BY A DIVISION OF THIS COURT ON 22-7-2008 IN ITA NO. 1557 OF 2007. 5. THUS, IT IS BINDING THAT THE DECISION OF THE TRIBUNAL IN CASTLE INVESTMENT (SUPRA) WAS AFFIRMED BY THE JURISDICTIONAL HIGH COURT AS DISCUSSED ABOVE. THEREFORE, WE ARE OF THE OPINION THAT THE ORDER OF THE CIT(A) DOES NOT CALL FOR ANY INTERFERENCE. ACCORDIN GLY, THE GROUNDS RAISED IN THIS APPEAL BY THE REVENUE AR E DISMISSED. 4. FACTS BEING SIMILAR, SO FOLLOWING THE AFORESAID ORDER OF THE TRIBUNAL IN THE ASSESSEES OWN IN ITA NO. 1058/PN/2009 DATED 19-1-2011, WE HOLD THAT THE ORDE R OF THE CIT(A) DOES NOT CALL FOR ANY INTERFERENCE AT OU R HANDS AND ACCORDINGLY, THE GROUND RAISED BY THE REVENUE I S DISMISSED. 5 ITA NO. 258/PN/2010 RDA HOLDINGS PVT.LTD. A.Y. 2003-04 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 13 TH JULY 2011 SD/- SD/- (D. KARUNAKARA RAO) ACCOUNTANT MEMBER (SHAILENDRA KUMAR YADAV JUDICIAL MEMBER PUNE DATED THE 13 TH JULY 2011 ANKAM COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A)- I PUNE 4. THE CIT I PUNE 5. THE D.R, A BENCH, PUNE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL