DCIT, New Delhi V. M/s Vinayak Exports Ltd., New Delhi

ITA 2862/DEL/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 7483 (ITAT-DELHI)
• Duration Of Justice: 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 10-08-2010
• Assessment Year: 2007-2008
• Appeal Filed On: 09-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIKRAM BATRA
• Keywords: Depreciation; Earning of tax free income
• Section: 143(3); 14A; 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H : NEW DELHI BEFORE SHRI I.P.BANSAL, JM AND SHRI R.C.SHARMA, AM ITA NO.2862/DEL/2010 ASSESSMENT YEAR : 2007-08 DY.COMMISSIONER OF INCOME TAX, CIRCLE-17(1), NEW DELHI. VS. M/S VINAYAK EXPORTS LIMITED, D-27, GREEN PARK, NEW DELHI 110 016. PAN NO.AAACV0733C. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VIKRAM BATRA, DR. RESPONDENT BY : NONE. ORDER PER R.C.SHARMA, AM : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) DATED 31.3.2010 FOR THE AY 2007-08, IN THE MATTER OF ORDE R PASSED U/S 143(3) OF THE IT ACT. 2. FIRST GRIEVANCE OF THE REVENUE RELATES TO DELETI NG DISALLOWANCE OF EXEMPT INCOME AMOUNTING TO RS.11,29,937/-. FACTS IN BRIEF ARE THAT ASSESSEE WAS IN RECEIPT OF DIVIDEND ON THE MUTUAL FUNDS. DURING TH E COURSE OF SCRUTINY ASSESSMENT, THE ASSESSEE WAS CALLED TO FURNISH SCRIP-WISE DETAI LS OF DIVIDEND INCOME AND DETAILS OF DISALLOWANCE U/S 14A. VIDE LETTER DATED 26.11.2 009, THE ASSESSEE FURNISHED WORKING FOR DISALLOWANCE OF EXPENSES AS PER RULE 8- D AS SPECIFIED U/S 14A OF THE ACT, WHEREIN EXPENSES IN CONNECTION WITH THE EXEMPT INCOME WAS WORKED OUT AT RS.1,933/-. THE AO OBSERVED THAT ASSESSEE DID NOT FURNISH DIVIDEND WARRANT, RECORD DATE, HOLDING PERIOD AND OTHER RELEVANT DETA ILS AND INFORMATION, HENCE ASSESSEES CLAIM FOR EXEMPT INCOME WAS NOT ALLOWED. BY THE IMPUGNED ORDER, CIT(A) AFTER RECORDING FOLLOWING OBSERVATION DELETE D THE DISALLOWANCE:- ITA-2862/DEL/2010 2 7.1 THE ASSESSEE HAS SHOWN RECEIPT OF DIVIDEND INC OME OF RS.11,29,937.42, THE DETAILS OF WHICH ARE AS UNDER: DIVIDEND INCOME AS ON 31 ST MARCH, 2007 SEPTEMBER, 2006 RELIANCE EQUITY OPPORTUNITIES FUND DIVIDEND PLAN 118,512.00 NOVEMBER, 2006 RELIANCE GROWTH FUND DIVIDEND PLAN 54,509.00 JANUARY, 2007 HDFC CORE & SATELLITE MUTUAL FUND 159,421.83 FEBRUARY, 2007 RELIANCE EQUITY OPPORTUNITIES FUND DIVIDEND PLAN 177,768.00 FEBRUARY, 2007 FRANKLIN INDIA BLUE CHIP FUND 172,463.35 MARCH, 2007 RELIANCE GROWTH FUND DIVIDEND PLAN 163,527.00 MARCH, 2007 HDFC EQUITY FUND DIVIDEND 283,736.24 1,129,937.42 7.2 THESE DETAILS WERE MADE AVAILABLE TO THE AO IN THE COURSE OF THE ASSESSMENT PROCEEDINGS. THE INVESTMENTS IN MUT UAL FUNDS ARE FOUND DECLARED IN THE BALANCE SHEET AS SEEN FROM TH E SCHEDULE 6 TO THE BALANCE SHEET. 7.3 AFTER CAREFUL CONSIDERATION OF THE FACTS BROUGH T ON RECORD, THERE IS NO CASE FOR ADDITION OF RS.11,29,937/-. AGAINST THE ABOVE ORDER OF CIT(A), THE REVENUE IS I N FURTHER APPEAL BEFORE US. 3. WE HAVE GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW AND FOUND THAT CATEGORICAL FINDING HAS BEEN RECORDED BY THE CIT(A) TO THE EFFECT THAT ASSESSEE WAS IN RECEIPT OF DIVIDEND INCOME ON THE MUTUAL FUNDS W HICH WAS DULY DECLARED IN THE BALANCE SHEET AS PER SCHEDULE-6 ATTACHED THEREWITH. IN VIEW OF THE FACT THAT THIS DIVIDEND INCOME WAS FROM MUTUAL FUNDS, AFTER OBSERV ING THAT THE DETAILS AS MENTIONED AT PARA 7.1 WAS MADE AVAILABLE TO THE AO DURING THE COURSE OF ITA-2862/DEL/2010 3 ASSESSMENT PROCEEDINGS, THE CIT(A) DELETED THE DISA LLOWANCE. THE ABOVE FINDING OF CIT(A) HAS NOT BEEN CONTROVERTED BY THE DEPARTME NT, THEREFORE THE ALLEGATION OF THE DEPARTMENT TO THE EFFECT THAT AO HAS NOT BEEN G IVEN OPPORTUNITY BY THE CIT(A) IN VIOLATION OF RULE 46A, CANNOT BE ACCEPTED. 4. THE DEPARTMENT IS ALSO AGGRIEVED FOR DELETING DI SALLOWANCE OF DEPRECIATION OF RS.68,153/- IN RESPECT OF THE VEHICLE FOR WHICH REGISTRATION BOOK WAS NOT FURNISHED BEFORE THE AUDITOR OF THE COMPANY. THE A O OBSERVED THAT THE AUDITORS REPORT FILED WITH THE RETURN OF INCOME CONTAINS FIN DING WITH REGARD TO FACT THAT ASSESSEE COMPANY FAILED TO PRODUCE THE REGISTRATION BOOK (RC) IN RESPECT OF VEHICLE FOR RS.4,54,355/-. AS PER AO, THE ASSESSEE FAILED TO COMPLY WITH THE SPECIFIC REQUIREMENT OF SECTION 32 TO THE EFFECT TH AT THE ASSESSEE MUST BE THE OWNER OF THE ASSETS ON WHICH DEPRECIATION IS CLAIMED. BY THE IMPUGNED ORDER, CIT(A) AFTER CONSIDERING ASSESSEES CONTENTION DELETED THE DISALLOWANCE BY OBSERVING THAT NO DEPRECIATION WAS CLAIMED IN RESPECT OF THE VEHIC LE INDICATED BY THE AO. THIS CAR WAS FOUND TO BE SOLD DURING THE YEAR. SINCE NO DEPRECIATION WAS CLAIMED IN THE PROFIT & LOSS ACCOUNT IN RESPECT OF VEHICLE SOLD DU RING THE YEAR, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) FOR DELETING DISAL LOWANCE OF DEPRECIATION ON CAR, WHICH WAS NOT AT ALL CLAIMED. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 10 TH AUGUST, 2010. SD/- SD/- (I.P.BANSAL) (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 10.08.2010. VK. ITA-2862/DEL/2010 4 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT DEPUTY REGISTRAR