NOWROSJEE WADIA & SONS LTD, MUMBAI V. JT CIT SP. RG. 19, MUMBAI

ITA 3164/MUM/2010

• Counselvise Citation: 316419914 RSA 2010
• Duration Of Justice: 1 year(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 1998-1999
• Appeal Filed On: 23-04-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ASHIMA GUPTA
• Assessee Lawyers: M D INAMDAR
• Keywords: Depreciation; Capital expenditure
• Section: 80HHC; 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F, MUMBAI BEFORE SHRI R.V. EASWAR, PRESIDENT) AND SHRI R.K. P ANDA (A.M.) ITA NOS. 3164 TO 3167/MUM /2010 ASSESSMENT YEARS 1998-99, 2002-03, 2003-04 & 2005-0 6 NOWROSJEE WADIA & SONS LIMITED, NEVILLE HOUSE, J.N. HEREDIA MARG, BALLARD ESTATE, MUMBAI- 400 020. PAN : AAACN1836A VS. DCIT 2(2), AAYAKAR BHAVAN, M.K. MARG, MUMBAI 400020. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI M.D. INAMDAR RESPONDENT BY : SMT. ASHIMA GUPTA O R D E R PER R.K. PANDA, A.M. THE ABOVE 4 APPEALS FILED BY THE ASSESSEE ARE DIRE CTED AGAINST SEPARATE ORDERS DATED 6.1.2010, 16.02.2010, 29.01.2 010 & 17.2.2010 PASSED BY THE LD. CIT (A) -5, MUMBAI RELATING TO A. YRS. 1998-99, 2002-03, 2003-04, & 2005-06 RESPECTIVELY. SINCE COMMON GROUN DS ARE INVOLVED IN ALL THESE APPEALS, THEREFORE, THESE APPEALS WERE HE ARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NO. 3164/MUM/2010, (A.Y. 1998-99) 2. GROUND NO. 1 RELATES TO DISALLOWANCE OF INTEREST U/S 14A READ WITH RULE 8-D. ITA 3164 TO 3167/M/10 NOWROSJEE WADIA & SONS LTD. 2 3. FACTS OF THE CASE IN BRIEF ARE THAT THE A.O. DIS ALLOWED A SUM OF ` 98,39,423/- ON ACCOUNT OF INTEREST EXPENDITURE AND AN AMOUNT OF ` 12,67,080/- AS ADMINISTRATIVE EXPENSES BOTH TOTALLI NG ` 1,11,06,503/- AS EXPENSES INCURRED FOR EARNING THE EXEMPT DIVIDEND I NCOME OF ` 1,26,70,797/-. IN APPEAL, THE LD. CIT(A) DIRECTED THE A.O. TO EXAMINE THE WORKING SUBMITTED BY THE ASSESSEE AND REWORK THE DI SALLOWABLE AMOUNT IN VIEW OF PROVISIONS OF RULE 8-D OF THE INCOME TAX RULES, 1962. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSES SEE IS IN APPEAL BEFORE US. 4. AT THE TIME OF HEARING, BOTH THE PARTIES FAIRLY AGREED THAT RULE 8-D IS NOT APPLICABLE TO THE PRESENT CASE IN VIEW OF TH E DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF GODREJ & B OYCE MFG. CO. LTD. VS. DCIT REPORTED IN (2010) 328 ITR 81 (BOM.) WHEREIN I T HAS BEEN HELD THAT PROVISIONS OF RULE 8-D ARE NOT APPLICABLE RETROSPEC TIVELY. THEREFORE, THE ASSESSMENT YEAR INVOLVED IN THE INSTANCE CASE BEING 1998-99, THE PROVISIONS OF RULE 8-D ARE NOT APPLICABLE TO THE IN STANT CASE. HOWEVER, REGARDING THE DISALLOWANCE OF EXPENDITURE U/S 14A O F THE ACT, BOTH THE PARTIES AGREED THAT THE MATTER MAY BE SET ASIDE TO THE FILE OF THE A.O. FOR CALCULATING REASONABLE DISALLOWANCE. IN VIEW OF TH E ABOVE SUBMISSIONS BY BOTH THE SIDES AND IN THE LIGHT OF THE RATIO OF THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF GODREJ & B OYCE MFG. CO. LTD. (SUPRA), WE RESTORE THE MATTER TO THE FILE OF THE A .O. WITH THE DIRECTION TO CALCULATE REASONABLE DISALLOWANCE U/S 14A OF THE AC T. WE HOLD AND DIRECT ACCORDINGLY. THE GROUND RAISED BY THE ASSESS EE IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSE. ITA 3164 TO 3167/M/10 NOWROSJEE WADIA & SONS LTD. 3 5. IN GROUND NO. 2, THE ASSESSEE HAS CHALLENGED THE ORDER OF THE LD. CIT(A) IN CONFIRMING THE ENTIRE DEPRECIATION AS AN INDIRECT COST FOR THE PURPOSE OF COMPUTING DEDUCTION U/S 80HHC OF THE ACT . 6. AFTER HEARING BOTH THE SIDES, WE FIND THAT THE A .O. APPORTIONED THE DEPRECIATION OTHER THAN DEPRECIATION ON PLANT AND M ACHINERY AS AN INDIRECT COST FOR THE PURPOSE OF COMPUTING THE DEDU CTION U/S 80HHC OF THE ACT. SINCE THE ASSESSEE COMPANY HAD NO MANUFAC TURING ACTIVITIES IN CLOTH AND HAVING ONLY TRADING ACTIVITY, THE A.O. CA LCULATED THE DEPRECIATION OTHER THAN PLANT AND MACHINERY WHICH W ORKED OUT TO ` 3,83,377/- OUT OF TOTAL DEPRECIATION OF ` 7,08,400/- AND CONSIDERED THE SAME AS INDIRECT COST FOR COMPUTATION OF DEDUCTION U/S 80HHC OF THE ACT. IN APPEAL, THE LD. CIT(A) UPHELD THE ACTION O F THE A.O. FOR WHICH THE ASSESSEE IS IN APPEAL BEFORE US. 7. AFTER HEARING BOTH THE SIDES, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A). IN OUR OPINION, THE DEPRE CIATION HAS TO BE TREATED AS INDIRECT COST AND HAS TO BE INCLUDED AS PART OF THE INDIRECT COST. WE, THEREFORE, DO NOT FIND ANY INFIRMITY IN THE ORDER O F THE LD. CIT(A) AND ACCORDINGLY UPHOLD THE SAME. THE GROUND RAISED BY THE ASSESSEE IS ACCORDINGLY DISMISSED. 8. IN THE RESULT, ASSESSEES APPEAL IN ITA NO. 3164 /M/2010 FOR A.Y. 1998-99 STANDS PARTLY ALLOWED FOR STATISTICAL PURPO SE. ITA NO. 3165/MUM/2010, (A.Y. 2002-03) 9. GROUND NO. 1 RELATES TO THE ORDER OF THE LD. CIT (A) IN CONFIRMING THE ENTIRE DEPRECIATION (EXCLUDING DEPRECIATION ON BUSI NESS CENTRE) AS AN ITA 3164 TO 3167/M/10 NOWROSJEE WADIA & SONS LTD. 4 INDIRECT COST FOR THE PURPOSE OF COMPUTING DEDUCTIO N U/S 80HHC OF THE ACT. 10. AFTER HEARING BOTH THE SIDES, WE FIND THAT THE GROUND RAISED BY THE ASSESSEE IS IDENTICAL TO THE GROUND NO. 2 RAISED IN ITA NO. 3164/M/2010. WE HAVE ALREADY DECIDED THE SAME AND THE GROUND RAI SED BY THE ASSESSEE HAS BEEN DISMISSED. FOLLOWING THE SAME RATIO, THE G ROUND RAISED BY THE ASSESSEE IS DISMISSED. 11. GROUND NO. 2 RELATES TO THE DISALLOWANCE OF ` 1,14,01,556/- U/S 14-A OF THE ACT FOR EARNING EXEMPT DIVIDEND INCOME OF ` 81,98,927/-. 12. AFTER HEARING BOTH THE SIDES, WE FIND THE ABO VE GROUND RAISED BY THE ASSESSEE IS IDENTICAL TO THE GROUND NO. 1 RAISE D IN ITA NO. 3164/M/2010. WE HAVE ALREADY DECIDED THE ABOVE GROU ND AND RESTORED THE ISSUE TO THE FILE OF THE A.O. FOR ADJUDICATION WITH CERTAIN DIRECTIONS. FOLLOWING THE SAME RATIO, THE ISSUE RAISED BY THE A SSESSEE IS RESTORED TO THE FILE OF THE A.O. FOR DECIDING THE ISSUE IN THE LIGHT OF THE DIRECTION GIVEN BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CAS E OF GODREJ & BOYCE MFG. CO. LTD. (SUPRA). THE GROUND RAISED BY THE ASS ESSEE IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSE. 13. IN GROUND NO. 3, THE ASSESSEE HAS CHALLENGED TH E ORDER OF THE LD. CIT(A) IN CONFIRMING THE DISALLOWANCE OF EXPENSES O N REPAIRS & MAINTENANCE AT ` 6,83,303/- TREATED BY THE A.O. AS CAPITAL IN NATUR E. 14. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSE E PURCHASED A BEACH/GUEST HOUSE IN THE PREVIOUS YEAR RELEVANT TO A.Y. 2001-02 AND CLAIMED HEAVY EXPENDITURE ON ACCOUNT OF REPAIRS AND RENOVATION. OUT OF THE EXPENDITURE CLAIMED, EXPENDITURE AMOUNTING TO ` 8,77,883/- WERE ITA 3164 TO 3167/M/10 NOWROSJEE WADIA & SONS LTD. 5 HELD TO BE OF CAPITAL IN NATURE AND THE SAME WAS DI SALLOWED AND ADDED TO THE INCOME IN A.Y. 2001-02 AND DEPRECIATION WAS ALL OWED THEREON. THE A.O. NOTED THAT DURING THIS YEAR ALSO, THE ASSESSEE HAS INCURRED HEAVY EXPENDITURE ON ACCOUNT OF REPAIRS AND RENOVATION OF BEACH/GUEST HOUSE BUILDING. REJECTING THE EXPLANATION GIVEN BY THE AS SESSEE AND RELYING ON A COUPLE OF DECISIONS, THE A.O. DISALLOWED THE AMOU NT OF ` 6,83,303/- AS CAPITAL EXPENDITURE AND ALLOWED DEPRECIATION THEREO N. IN APPEAL, THE LD. CIT(A) UPHELD THE ACTION OF THE A.O. FOR WHICH THE ASSESSEE IS IN APPEAL BEFORE US. 15. AFTER HEARING BOTH THE SIDES, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) IN HOLDING THE REPAIRS & MA INTENANCE EXPENSES AS CAPITAL IN NATURE. ADMITTEDLY, SUCH TYPE OF EXPEND ITURE IN THE PREVIOUS YEAR RELEVANT TO A.Y. 2001-02 WAS TREATED BY THE A .O. AS CAPITAL IN NATURE AND THE ASSESSEE HAD ACCEPTED THE SAME BY NO T FILING ANY APPEAL. SINCE THE ASSESSEE HAS ACCEPTED THE EXPENDITURE AS CAPITAL IN NATURE DURING A.Y. 2001-02 AND SINCE SIMILAR NATURE OF EXP ENDITURE WAS INCURRED DURING THIS YEAR FOR THE SAME HOUSE PROPER TY ON A CONTINUOUS BASIS, THEREFORE, WE UPHOLD THE ORDER OF THE LD. CI T(A) IN TREATING THE REPAIRS AND MAINTENANCE EXPENSES AS CAPITAL IN NATU RE. THE GROUND RAISED BY THE ASSESSEE IS ACCORDINGLY DISMISSED. 16. THE ASSESSEE HAS ALSO FILED ADDITIONAL GROUND P RAYING THAT THE A.O. BE DIRECTED TO ALLOW THE DEPRECIATION ON REPAIR EXP ENSES TREATED AS CAPITAL EXPENDITURE IN A.Y. 2001-02. 17. AFTER HEARING BOTH THE SIDES AND IN VIEW OF THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF NTPC, 229 ITR 383 AND JUTE CORPORATION OF INDIA 187 ITR 688, THE ADDITIONAL GROUND RAISED BY THE ASSESSEE IS ADMITTED. ITA 3164 TO 3167/M/10 NOWROSJEE WADIA & SONS LTD. 6 18. BOTH THE PARTIES FAIRLY AGREED THAT THE MATTER HAS TO GO BACK TO THE FILE OF THE A.O. FOR ALLOWING DEPRECIATION ON THE R EPAIR EXPENSES INCURRED DURING A.Y. 2001-02 WHICH HAS BEEN HELD BY HIM AS C APITAL IN NATURE. ALTHOUGH HE HAS ALLOWED DEPRECIATION @ 5% DURING A. Y. 2001-02, HE HAS NOT ALLOWED DEPRECIATION ON THE SAID CAPITAL EXPEND ITURE DURING A.Y. 2002-03. THEREFORE, THE A.O. MAY BE DIRECTED TO VER IFY THE SAME AND ALLOW CONSEQUENTIAL DEPRECIATION. IN VIEW OF THE AB OVE SUBMISSION BY BOTH THE SIDES, WE DEEM IT PROPER TO RESTORE THE MA TTER BACK TO THE FILE OF THE A.O. WITH A DIRECTION TO VERIFY THE RECORD AND ALLOW DEPRECIATION ON THE AMOUNT OF REPAIRS AND MAINTENANCE WHICH HAS BEE N TREATED BY HIM AS CAPITAL IN NATURE IN A.Y. 2001-02 AND ON WHICH N O DEPRECIATION HAS BEEN ALLOWED IN THE IMPUGNED A.Y. ALTHOUGH DEPRECIA TION WAS ALLOWED IN THE PRECEDING A.Y. THE A.O. SHALL GIVE DUE OPPORTU NITY OF BEING HEARD TO THE ASSESSEE AND DECIDE THE MATTER IN ACCORDANCE WI TH LAW. THE ADDITIONAL GROUND RAISED BY THE ASSESSEE IS ACCORDI NGLY ALLOWED FOR STATISTICAL PURPOSE. 19. IN THE RESULT, APPEAL OF THE ASSESSEE IN ITA NO . 3165/M/2020 IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ITA NO. 3166/MUM/2010 (A.Y. 2003-04) 20. IN GROUND NO. 1, THE ASSESSEE HAS CHALLENGED TH E ORDER OF THE LD. CIT(A) IN CONFIRMING THE DISALLOWANCE OF DEDUCTION OF ` 42,55,800/- U/S 80M OF THE ACT. 21. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSE E CLAIMED DEDUCTION U/S 80M AMOUNTING TO ` 42,55,800/- THOUGH THE DIVIDEND HAD NOT BEEN PAID BY THE ASSESSEE DURING THE F.Y. 2002-03. IT WA S EXPLAINED THAT THE COMPANY RECEIVED A DIVIDEND INCOME OF ` 73.06 LAKHS DURING THE FINANCIAL YEAR 2002-03 AGAINST WHICH IT DECLARED A DIVIDEND OF ` 42.56 ITA 3164 TO 3167/M/10 NOWROSJEE WADIA & SONS LTD. 7 LAKHS (PROPOSED AS ON 31 ST MARCH, 2003 AND PAID OUT ON 24 TH NOVEMBER, 2003 I.E. BEFORE THE DUE DATE OF FILING OF THE RETU RN OF INCOME) AND CONSEQUENTLY, THE SAID DEDUCTION AGAINST TAXABLE IN COME WAS ALLOWABLE. 21.1 HOWEVER, THE A.O. REJECTED THE CONTENTIONS OF THE ASSESSEE BY HOLDING THAT AS PER THE PROVISIONS OF SEC. 80M, DED UCTION IS ALLOWED ON THE AMOUNT DISTRIBUTED AS DIVIDEND TO ITS SHAREHOLD ERS, IF SUCH DISTRIBUTION IS MADE BY THE DUE DATE OF FILING OF R ETURN OF INCOME U/S 139(1) OF THE ACT. HOWEVER, WHERE SUCH DIVIDEND IS DISTRIBUTED, ON OR AFTER 1.4.2003 IN TERMS OF SEC. 115-0(1) OF THE ACT , THE COMPANY HAS TO PAY DIVIDEND TAX. BY VIRTUE OF SEC. 115-0(5) OF TH E ACT, ONCE THE TAX IS SO PAID ON THE DIVIDEND DISTRIBUTED, NO DEDUCTION UNDE R ANY OTHER PROVISIONS OF THE ACT SHALL BE ALLOWED TO THE COMPA NY OR TO THE SHAREHOLDER IN RESPECT OF THE AMOUNT WHICH HAS BEEN CHARGED TO TAX UNDER SUB-SECTION (1) OR THE TAX THEREON. IN THIS CASE, THE ASSESSEE HAD DISTRIBUTED THE DIVIDEND ON 24 TH NOVEMBER, 2003 AND, THEREFORE, THE PROVISIONS OF SECTION 115-0(1) WERE APPLICABLE AND THE ASSESSEE COULD NOT CLAIM DEDUCTION U/S 80M ON THIS AMOUNT OF DIVIDEND DISTRIBUTED. ACCORDINGLY, IT WAS NOT ALLOWED THE DEDUCTION U/S 8 0M. 21.2 BEFORE THE LD. CIT(A) IT WAS SUBMITTED THAT UN DER SECTION 80M, DEDUCTION IS ALLOWED FOR AN AMOUNT EQUAL TO THE AMO UNT OF INCOME BY WAY OF DIVIDEND RECEIVED FROM ANOTHER DOMESTIC COMP ANY. THE QUANTUM OF DEDUCTION SHOULD NOT EXCEED THE AMOUNT OF DIVIDE ND DISTRIBUTED ON OR BEFORE THE DUE DATE OF FILING OF THE RETURN. IN OUR CASE THE DIVIDEND INCOME RECEIVED IS ` 73.06 LACS WHEREAS DIVIDEND DISTRIBUTION IS ` 42.56 LACS AND ACCORDINGLY, THE ASSESSEE CLAIMED DEDUCTIO N OF ` 42.56 LACS U/S 80M. THE A.O. HAS WRONGLY INTERPRETED THE PROVISIO NS OF SECTION 80M AND DISALLOWED THE CLAIM OF DEDUCTION U/S 80M. ITA 3164 TO 3167/M/10 NOWROSJEE WADIA & SONS LTD. 8 21.3 HOWEVER, THE LD. CIT(A) WAS NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE AND UPHELD THE ACTION OF THE A.O. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 22. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET DREW THE ATTENTION OF THE BENCH TO THE FOLLOWING DECISIONS:- 1. CASTLE INVESTMENT & INDS. PVT. LTD. VS. ITO (ITA NO. 1713/M/2006). 2. CIT VS. CASTLE INVESTMENT & INDS. PVT. LTD. (ITA NO. 1557 OF 2007)(BOM.) 3. ITO VS. KALKABOD BYRAMJEE & SONS AGENCY PVT. LTD . (ITA NO. 4102/M/2001) 4. SILVASA INDUSTRIES PVT. LTD. VS. DCIT (ITA NO. 1 62/M/02) 5. GODREJ AGROVET VS. DCIT (230 CTR 65(BOM) 23. REFERRING TO THE DECISION IN THE CASE OF CASTLE INVESTMENT & INDS. PVT. LTD. (SUPRA), THE LD. COUNSEL FOR THE ASSESSEE DREW THE ATTENTION OF THE BENCH TO THE GROUND RAISED BY THE ASSESSEE ACCO RDING TO WHICH THE A.O. REJECTED THE CLAIM OF DEDUCTION U/S 80M IN VIE W OF PROVISIONS OF SECTION 115-0(5). HE REFERRED TO PARA 17 TO 19 OF T HE ORDER OF THE TRIBUNAL AND SUBMITTED THAT THE TRIBUNAL HELD THAT DEDUCTION U/S 80M IS IN RESPECT OF ANY INCOME RECEIVED BY WAY OF DIVIDENDS FROM ANOTHER DOMESTIC COMPANY AND INCLUDED IN THE GROSS TOTAL IN COME OF THE RECIPIENT COMPANY, BUT SUCH DEDUCTION IS TO BE RESTRICTED TO THE AMOUNT OF DIVIDEND DISTRIBUTED BY RECIPIENT COMPANY ON OR BEF ORE THE DUE DATE. THE DEDUCTION IS IN RESPECT OF INCOME EARNED BY WAY OF DIVIDEND BUT RESTRICTED TO THE DIVIDEND DISTRIBUTED BY SUCH RECI PIENT COMPANY. IT HAS BEEN HELD IN THE SAID ORDER THAT SECTION 115-0(5) I S NOT IN ANY WAY RESTRICT THE CLAIM U/S 80-M. THE ONLY RESTRICTION U/S 80M IS THAT THE AMOUNT OF CLAIM CANNOT EXCEED THE AMOUNT OF DIVIDEN D DECLARED. REFERRING TO THE ORDER OF THE HONBLE JURISDICTIONA L HIGH COURT IN INCOME ITA 3164 TO 3167/M/10 NOWROSJEE WADIA & SONS LTD. 9 TAX APPEAL NO. 1557 OF 2007 DATED 22 ND JULY, 2008 (COPY PLACED ON RECORD IN THE PAPER BOOK PAGE NO. 12), THE LD. COUN SEL FOR THE ASSESSEE DREW THE ATTENTION OF THE BENCH TO THE SAME AND SUB MITTED THAT THE HONBLE HIGH COURT HAS DISMISSED THE APPEAL FILED B Y THE REVENUE AGAINST THE ORDER OF THE TRIBUNAL. REFERRING TO THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF GODREJ AGR OVET LTD. V. DCIT & ANR. [2010] 230 CTR 65 (BOM), HE SUBMITTED THAT UND ER IDENTICAL CIRCUMSTANCES, THE REOPENING OF THE ASSESSMENT BY T HE A.O. APPLYING PROVISIONS OF SECTION 115-0 HAD BEEN QUASHED. THER EFORE, THIS BEING A COVERED MATTER, THE GROUND RAISED BY THE ASSESSEE S HOULD BE ALLOWED. 24. THE LD. D.R., ON THE OTHER HAND WHILE SUPPORTIN G THE ORDER OF THE LD. CIT(A) FAIRLY CONCEDED THAT THE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE DECISIONS OF THE CO-ORDINATE BENCHE S OF THE TRIBUNAL AND THE HONBLE JURISDICTIONAL HIGH COURT HAS DISMISSED THE APPEAL FILED BY THE REVENUE IN THE CASE OF CASTLE INVESTMENT & INDS . PVT. LTD. (SUPRA). 25. AFTER HEARING BOTH THE SIDES, WE FIND THAT THE A.O. DISALLOWED THE DEDUCTION OF ` 42,55,800/- CLAIMED BY THE ASSESSEE U/S 80M ON THE GROUND THAT ONCE TAX IS SO PAID ON THE DIVIDEND DIS TRIBUTED, NO DEDUCTION UNDER ANY OTHER PROVISIONS OF THE ACT SHALL BE ALL OWED TO THE COMPANY OR SHAREHOLDER IN RESPECT OF THE AMOUNT WHICH HAS BEEN CHARGED TO TAX UNDER SUB-SECTION (1) IN VIEW OF PROVISIONS OF SECT ION 115-0(5). WE FIND THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE O F CASTLE INVESTMENT & INDS. PVT. LTD. (SUPRA) HAS HELD THAT SECTION 115-0 (5) DOES NOT IN ANY WAY RESTRICT THE ALLOWABILITY OF THE CLAIM U/S 80-M. TH E ONLY MONETARY RESTRICTION U/S 80-M IS THAT THE AMOUNT OF CLAIM CA NNOT EXCEED THE DIVIDEND DECLARED AND DEDUCTION IS IN RESPECT OF IN COME EARNED BY WAY OF DIVIDEND BUT RESTRICTED TO THE DIVIDEND DISTRIBUTED BY THE RECIPIENT COMPANY. ACCORDINGLY, IT WAS HELD THAT THE ASSESSE E IS ENTITLED TO CLAIM ITA 3164 TO 3167/M/10 NOWROSJEE WADIA & SONS LTD. 10 THE DEDUCTION U/S 80-M OF THE ACT AGAINST THE DIVID END INCOME RECEIVED DURING THE YEAR BUT RESTRICTED TO THE EXTENT OF DIV IDEND DISTRIBUTED. WE FIND THAT THE ABOVE DECISION OF THE TRIBUNAL HAS BE EN UPHELD BY THE HONBLE JURISDICTIONAL HIGH COURT AND THE APPEAL FI LED BY THE REVENUE HAS BEEN DISMISSED. THE VARIOUS OTHER DECISIONS CI TED BY THE LD. COUNSEL FOR THE ASSESSEE ALSO SUPPORT THE CASE OF THE ASSES SEE. IN VIEW OF THE ABOVE, WE HOLD THAT THE ASSESSEE UNDER THE FACTS AN D CIRCUMSTANCES OF THE CASE IS ENTITLED TO CLAIM DEDUCTION OF ` 42,55,800/- U/S 80-M OF THE ACT. THE ORDER OF THE LD. CIT(A) IS ACCORDINGLY SE T ASIDE AND A.O. IS DIRECTED TO ALLOW THE CLAIM OF DEDUCTION U/S 80-M. THE GROUND RAISED BY THE ASSESSEE IS ACCORDINGLY ALLOWED. 26. GROUND NO. 2 RELATES TO THE DISALLOWANCE OF EXP ENSES ON REPAIRS & MAINTENANCE OF ` 10,87,500/- TREATED BY THE A.O. AS CAPITAL IN NATU RE. 27. AFTER HEARING BOTH THE SIDES, WE FIND THAT THE ABOVE GROUND IS IDENTICAL TO GROUND NO. 3 IN ITA NO. 3165/M/2010 WH ICH WE HAVE ALREADY DECIDED AND THE GROUND RAISED BY THE ASSESS EE HAS BEEN DISMISSED. FOLLOWING THE REASONS GIVEN THEREIN, THI S GROUND BY THE ASSESSEE IS DISMISSED. 28. THE ASSESSEE HAS ALSO FILED ADDITIONAL GROUNDS CONTENDING THAT NO DEPRECIATION HAS BEEN ALLOWED ON REPAIR EXPENSES TR EATED AS CAPITAL EXPENDITURE BY THE A.O. DURING A.Y. 2001-02 & 2002- 03. 29. AFTER HEARING BOTH THE SIDES, WE FIND THAT THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE ARE IDENTICAL TO THE ADDITIO NAL GROUNDS RAISED IN ITA NO. 3165/M/2010. WE HAVE ALREADY DECIDED THE IS SUE AND AFTER ADMITTING THE ADDITIONAL GROUND, HAVE RESTORED THE ISSUE TO THE FILE OF THE A.O. FOR VERIFICATION AND ALLOW CONSEQUENTIAL DEPRE CIATION ON THE ITA 3164 TO 3167/M/10 NOWROSJEE WADIA & SONS LTD. 11 EXPENDITURE TREATED BY HIM AS CAPITAL IN NATURE. F OLLOWING THE SAME RATIO, THE ISSUES RAISED BY THE ASSESSEE IN THE ADD ITIONAL GROUNDS ARE RESTORED TO THE FILE OF THE A.O. FOR ADJUDICATION I N THE LIGHT OF THE DIRECTION GIVEN IN ITA NO. 3165/M/2010. THE ADDITIONAL GROUND S RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED FOR STATISTICAL PU RPOSE. 30. IN THE RESULT, APPEAL OF THE ASSESSEE IN ITA NO . 3166/M/2010 STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ITA 3167/M/2010 (A.Y. 2005-06) 31. GROUND NO. 1 RELATES TO THE DISALLOWANCE OF EXP ENSES ON REPAIRS & MAINTENANCE OF ` 4,90,446/- TREATED BY THE A.O. AS CAPITAL IN NATUR E AND CONFIRMED BY CIT(A). 32. AFTER HEARING BOTH THE SIDES, WE FIND THE ABOVE GROUND IS IDENTICAL TO GROUND NO. 3 IN ITA NO. 3165/M/2010. WE HAVE ALR EADY DECIDED THE ISSUE AND THE GROUND RAISED BY THE ASSESSEE HAS BEE N DISMISSED. FOLLOWING THE SAME RATIO, THE GROUND RAISED BY THE ASSESSEE IS DISMISSED. 33. GROUND NO. 2 RELATES TO DISALLOWANCE OF ADMINI STRATIVE EXPENSES OF ` 32,36,635/- U/S 14A FOR EARNING EXEMPT DIVIDEND IN COME OF ` 82,20,485/- . 34. AFTER HEARING BOTH THE SIDES, WE FIND THE ABOVE GROUND OF THE ASSESSEE IS IDENTICAL TO GROUND NO. 1 IN ITA NO. 31 64/M/2010. WE HAVE ALREADY DECIDED THE ISSUE AND THE MATTER HAS BEEN R ESTORED TO THE FILE OF THE A.O. IN THE LIGHT OF THE DECISION OF THE HONBL E JURISDICTIONAL HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG. CO. LTD. ( SUPRA). FOLLOWING THE SAME RATIO, THE GROUND RAISED BY THE ASSESSEE IS AL SO RESTORED TO THE FILE OF THE A.O. TO DECIDE THE ISSUE IN THE LIGHT OF THE DIRECTION GIVEN IN THE ITA 3164 TO 3167/M/10 NOWROSJEE WADIA & SONS LTD. 12 DECISION OF GODREJ & BOYCE MFG. CO. LTD. (SUPRA). THE GROUND RAISED BY THE ASSESSEE IS THEREFORE PARTLY ALLOWED FOR STATIS TICAL PURPOSE. 35. THE ASSESSEE HAS ALSO FILED ADDITIONAL GROUNDS CONTENDING THAT NO DEPRECIATION HAS BEEN ALLOWED ON REPAIR EXPENSES TR EATED AS CAPITAL EXPENDITURE BY THE A.O. IN A.Y. 2001-02, 2002-03 AN D 3003-04. 36. AFTER HEARING BOTH THE SIDES, WE FIND THE ADDIT IONAL GROUNDS RAISED BY THE ASSESSEE ARE IDENTICAL TO THE ADDITIONAL GRO UNDS RAISED IN ITA NO. 3165/M/2010. WE HAVE ALREADY DECIDED THE ISSUE AND AFTER ADMITTING THE ADDITIONAL GROUNDS, HAVE RESTORED THE ISSUE TO THE FILE OF THE A.O. FOR VERIFICATION AND ALLOW CONSEQUENTIAL DEPRECIATION O N THE EXPENDITURE TREATED BY HIM AS CAPITAL IN NATURE. FOLLOWING THE SAME RATIO, THE ISSUES RAISED BY THE ASSESSEE IN THE ADDITIONAL GROUNDS AR E RESTORED TO THE FILE OF THE A.O. FOR ADJUDICATION IN THE LIGHT OF THE DIREC TION GIVEN IN ITA NO. 3165/M/2010. THE ADDITIONAL GROUNDS RAISED BY THE A SSESSEE ARE ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSE. 37. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 29.04.2011 SD/- SD/- (R.V. EASWAR) (R.K. PANDA) PRESIDENT ACCOUNTANT MEMBER MUMBAI, DATED 29 TH APRIL, 2011. RK ITA 3164 TO 3167/M/10 NOWROSJEE WADIA & SONS LTD. 13 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS)- CONCERNED , MUMBAI 4. COMMISSIONER OF INCOME TAX, CONCERNED, MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH F, MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI ITA 3164 TO 3167/M/10 NOWROSJEE WADIA & SONS LTD. 14 1 DRAFT DICTATED ON 25.4.20 11 SR PS 2 DRAFT PLACED BEFORE AUTHOR ON 26.4.2011 SR PS 3 DRAFT PROPOSED & PLACE BEFORE THE 2 ND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY 2 ND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR PS SR.PS 6 KEPT FOR PRONOUNC EMENT ON SR PS 7 FILE SENT TO THE BENCH CLERK SR PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE ON WHICH FILE GOES TO THE AR 10 DATE OF DESPATCH SR PS ITA 3164 TO 3167/M/10 NOWROSJEE WADIA & SONS LTD. 15