M/s Coffeeday Enterprises Limited , Bangalore V. The Deputy Commissioner of Income Tax Circle-2(1)(1), Bangalore

ITA 2820/BANG/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1426 (ITAT-BANGALORE)
• Duration Of Justice: 7 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 11-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR SHANKAR PRASAD
• Assessee Lawyers: C RAMESH
• Keywords: Rule 8D; Set aside
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI N.V VASUDEVAN, VICE PRESIDNET AND SHRI B.R BASKARAN, ACCOUNTANT MEMBER ITA NO.2820/BANG/2018 ASSESSMENT YEAR : 2013-14 M/S COFFEEDAY ENTERPRISES LTD., NO.23/2, COFFEEDAY SQUARE, VITTAL MALLYA ROAD, BANGALORE-560 001. PAN AADCC 3995 L VS. THE DY. COMMISSIONER OF INCOME-TAX, CIRCLE-2(1)(1), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI C RAMESH, C.A RESPONDENT BY : DR. SHANKAR PRASAD, ADDL. CIT DATE OF HEARING : 10.06.2019 DATE OF PRONOUNCEMENT : .06.2019 O R D E R PER B.R BASKARAN, ACCOUNTANT MEMBER THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 12/7/2018 PASSED BY LD CIT(A)-II, BENGALURU AND IT RELATES TO ASST. YEAR 2013-14. 2. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD CIT(A) IN CONFIRMING THE ENHANCEMENT OF DISALLOWANCE MADE BY THE AO OVER AND ABOVE THE AMOUNT DISALLOWED BY THE ASSESSEE U/S 14A OF THE ACT. ITA NO.2820/BANG/2018 PAGE 2 OF 5 3. WE HEARD THE PARTIES AND PERUSED THE RECORD. T HE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANAGING HOTELS AND R ESORTS. THE ASSESSEE HAD EARNED DIVIDEND INCOME OF RS.205.44 LA KHS AND CLAIMED THE SAME AS EXEMPT. THE ASSESSEE DISALLOW ED A SUM OF RS.3023.29 LAKHS U/S 14A OF THE ACT. THE AO TOOK T HE VIEW THAT THE DISALLOWANCE MADE BY THE ASSESSEE UNDER RULE 8D (2)(III) OUT OF ADMINISTRATIVE EXPENSES HAS NOT BEEN COMPUTED IN AC CORDANCE WITH THE PROVISIONS OF RULE 8D. ACCORDINGLY HE ENHANCED THE DISALLOWANCE OUT OF ADMINISTRATIVE EXPENSES TO RS.6 58.90 LAKHS, WHICH RESULTED IN ADDITIONAL DISALLOWANCE OF RS.557 .39 LAKHS. THE SAME WAS CONFIRMED BY LD CIT(A) AND HENCE THE ASSES SEE HAS FILED THIS APPEAL BEFORE US. 4. THE LD AR PLACED HIS RELIANCE ON THE DECISION R ENDERED BY THE COORDINATE BENCH IN THE CASE OF SIVAN SECURITIES P VT. LTD. (ITA NO.713 TO 715/BANG/2018 DATED 8/5/2019) AND SUBMITT ED THAT THE DISALLOWANCE MADE U/S 14A CANNOT EXCEED THE AMOUNT OF DIVIDEND RECEIVED BY THE ASSESSEE DURING THE YEAR. HE SUBMI TTED THAT THE COORDINATE BENCH IN THE ABOVE SAID CASE HAD FOLLOWE D THE DECISION RENDERED BY ANOTHER COORDINATE BENCH IN THE CASE OF M/S WAY2WEALTH SECURITIES PVT. LTD. (ITA NO.1679/BANG/2 017) DATED 1/6/2018, WHEREIN THE SAID COORDINATE BENCH HAS FOL LOWED THE DECISION RENDERED BY HONBLE DELHI HIGH COURT IN TH E CASE OF JOINT INVESTMENT PVT. LTD., 372 ITR 694 AND HOLECIM INDIA PVT. LTD., 272 CTR 282. THE LD AR SUBMITTED THAT THE DISALLOWANC E VOLUNTARILY MADE BY THE ASSESSEE U/S 14A OF THE ACT IS MORE THA N THE AMOUNT OF DIVIDEND AND HENCE NO FURTHER DISALLOWANCE IS CA LLED FOR, IN THE FACTS AND CIRCUMSTANCES OF THE CASE. ITA NO.2820/BANG/2018 PAGE 3 OF 5 5. ON THE CONTRARY, THE LD DR SUPPORTED THE ORDER P ASSED BY LD CIT(A). 6. HAVING HEARD RIVAL CONTENTIONS, WE ARE OF THE VI EW THAT THERE IS MERIT IN THE CONTENTIONS OF THE ASSESSEE. DURIN G THE COURSE OF HEARING THE LD AR ALSO SUBMITTED THAT THE ASSESSEE HAD RECEIVED DIVIDEND FROM ONLY ONE COMPANY NAMED M/S MIND TREE LTD. FURTHER THE AMOUNT OF DISALLOWANCE MADE BY THE ASSE SSEE RS.3023.29 LAKHS IS MORE THAN THE DIVIDEND AMOUNT O F RS.205.44 LAKHS. HENCE, WE ARE OF THE VIEW THAT THE DISALLOW ANCE VOLUNTARILY MADE BY THE ASSESSEE WOULD MEET THE REQUIREMENTS OF SEC.14A OF THE ACT. ACCORDINGLY WE ARE OF THE VIEW THAT FURTH ER DISALLOWANCE MADE BY THE AO AND CONFIRMED BY LD CIT(A) IS NOT WA RRANTED IN THE FACTS AND CIRCUMSTANCES OF THE CASE. ACCORDINGLY W E SET ASIDE THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE AND DIRECT THE AO TO DELETE FURTHER ADDITION MADE BY HIM U/S 14A OF THE ACT. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH JUNE, 2019. SD/ - (N.V VASUDEVAN) VICE PRESIDENT SD/ - (B.R BASKARAN) ACCOUNTANT MEMBER BANGALORE, DATED, 10 TH JUNE, 2019. / VMS / ITA NO.2820/BANG/2018 PAGE 4 OF 5 COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3 . THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER A SST. REGISTRAR, ITAT, BANGALORE. ITA NO.2820/BANG/2018 PAGE 5 OF 5 1. DATE OF DICTATION 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO SR.P.S .. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER .. 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S. .. 6. DATE OF UPLOADING THE ORDER ON WEBSITE.. 7. IF NOT UPLOADED, FURNISH THE REASON FOR DOING SO .. 8. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 9. DATE ON WHICH ORDER GOES FOR XEROX & ENDORSEMENT 10. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 11. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER . 12. THE DATE ON WHICH THE FILE GOES TO DISPATCH SEC TION FOR DISPATCH OF THE TRIBUNAL ORDER . 13. DATE OF DESPATCH OF ORDER. ..