A.C.I.T., Curcle -3, Kolkata, Kolkata V. M/s ABP TV Pvt. Ltd., Kolkata

ITA 422/KOL/2008

• Counselvise Citation: 42223514 RSA 2008
• Duration Of Justice: 7 year(s) 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 31-03-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: APURBA KUMAR DAS
• Assessee Lawyers: SOUMITRA CHOWDHURY ASSESSE
• Section: 14A

Judgement Text

I.T.A. NO . 422 / KOL ./20 08 ASSESSMENT YEAR: 200 4 - 20 0 5 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA A BENCH, KOLKATA BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI M. BALAGANESH , ACCOUNTANT MEMBER I.T.A. NO. 422 / KOL / 20 08 ASSESSMENT YEAR : 200 4 - 20 0 5 ASSISTANT COMMISSIONER OF INCOME TAX,.... ...... . . APPELLANT CIRCLE - 3 , KOLKATA, 8/2, ESPLANADE EAST, KOLKATA - VS. - ABP TV PRIVATE LIMITED,.......... ....................... ..... .... ..... . . RESPONDENT 6, PRAFULLA SARKAR STREET, KOLKATA - 700 001 [PAN : A ADCA 7296 A ] APPEARANCES BY: SHRI APURBA K UMAR DAS , JCIT, SR. D.R., FOR THE DEPARTMENT SHRI SOUMITRA CHOWDHURY, ADVOCATE , FOR THE ASSESSEE DATE OF CONCLUDING THE HEARING : SEPTEMBER 01 , 2 01 5 DATE OF PRONOUNCING THE ORDER : SEPTEMBER 11 , 201 5 O R D E R PER SHRI M. BALAGANESH, A.M .: TH IS APPEAL OF THE REVENU E ARISES OUT OF ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS) - I, KOLKATA IN APPEAL NO. 4 2 6 / CIT(A) - 1/CIR - 3/07 - 08 D ATED 0 3 . 0 1 .20 08 FOR THE ASSESSMENT YEAR 200 4 - 0 5 , WHICH IS AGAINST THE ORDER OF ASSESSMENT FRAMED UNDER SECTION 143 ( 3 ) OF THE I NCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) . 2. THE ONLY ISSUE TO BE DECIDED IN TH E APPEAL OF THE REVENU E IS AS TO WHETHER THE LD. CIT(APPEALS) IS CORRECT IN DELETING THE ADDITION MADE UNDER SECTION 14A OF THE ACT IN RESPECT OF INVESTMENT I N SHARES IN MCCS INDIA PVT. LIMITED. I.T.A. NO . 422 / KOL ./20 08 ASSESSMENT YEAR: 200 4 - 20 0 5 PAGE 2 OF 4 2.1. BRIEF FACTS OF THIS ISSUE ARE THAT THE ASSESSEE TOOK LOAN FROM M/S. ABP PVT. LIMITED FOR ACQUIRING THE SHARES OF MEDIA CONTENT & COMMUNICATIONS SERVICES (INDIA) LIMITED (HEREINAFTER CALLED MCCS ) AND PAID INTERES T OF RS.1,50,00,000/ - AND CLAIMED THE SAME AS DEDUCTION. THE ASSESSEE EXPLAINED THAT THE SOLE PURPOSE OF ACQUIRING THE SHARES WAS TO ACQUIRE THE CONTROLLING INTEREST IN THE COMPANY DOING BUSINESS IN THE SAME LINE. THE ASSESSING OFFICER OBSERVED THAT THE AS SESSEE ACQUIRED 74% OF THE PAID UP CAPITAL OF MCCS WHICH RUNS NEWS CHANNEL CALLED STAR NEWS AND THEREBY OBTAINED CONTROLLING INTEREST OF THAT COMPANY, AFTER ACQUISITION MCCS LAUNCH ANOTHER NEW CHANNEL CALLED STAR ANAND A UNDER THE SUPERVISION OF THE MA NAGEMENT OF ASSESSEE. FOR ACQUISITION OF THESE SHARES, THE ASSESSEE OBTAINED A LOAN OF RS.46,43,82,424/ - FROM ITS HOLDING COMPANY ABP. IT WAS EXPLAINED BEFORE THE ASSESSING OFFICER BY THE ASSESSEE THAT ITS INTENTION WAS NOT TO EARN DIVIDEND INCOME FROM MCC S BUT WAS ONLY TO OBTAIN CONTROLLING INTEREST IN THE SAID COMPANY TO FURTHER ITS BUSINESS INTEREST IN VIEW OF THE FACT THAT IT WAS ENGAGED IN THE SAME LINE OF BUSINESS. THE ASSESSING OFFICER DID NOT APPRECIATE THIS CONTENTION AND INVOKED THE PROVISIONS OF SECTION 14A OF THE ACT AND DISALLOWED THE ENTIRE SUM OF RS.1,50,00,000/ - TOWARDS INTEREST PAYMENT AS EXPENDITURE INCURRED FOR THE PURPOSE OF EARNING INCOME WHICH DOES NOT FORM PART OF TOTAL INCOME. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(APPEALS), WHO DELETED THIS ADDITION ACCEPTING THE CONTENTION OF THE ASSESSEE. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL ON VARIOUS GROUNDS, BUT THE ISSUE INVOLVED IS ONLY THE ADDITION UNDER SECTION 14A OF THE ACT . 2.2. SHRI APURBA KUMAR DAS, LD. JCIT, SR. D.R. ARGUED ON BEHALF OF THE REVENUE AND SHRI SOUMITRA CHOUDHURY, ADVOCATE, LD. A.R., ARGUED ON BEHALF OF THE ASSESSEE. 2.3. LD. D.R. HEAVILY RELIED ON THE ORDER OF ITAT, KOLKATA BENCH IN ITA NO. 4 22/KOL/2008 DATED 16.05.2008 IN SUPPOR T OF HIS CONTENTION. IN RESPONSE TO THIS, LD. A.R. ARGUED THAT THE EARLIER ORDER IN ITA NO. I.T.A. NO . 422 / KOL ./20 08 ASSESSMENT YEAR: 200 4 - 20 0 5 PAGE 3 OF 4 422/KOL/2008 HAS BEEN RECALLED BY THIS TRIBUNAL AND HENCE IT IS NOT AN ORDER IN THE EYES OF LAW AND ARGUED THAT THE ASSESSEE HAD ONLY MADE BUSINESS INVESTMENT IN MC CS FOR OBTAINING CONTROLLING INTEREST AND HENCE, THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. - RAJEEVA LOCHAN KANORIA REPORTED IN [1998] 208 ITR 616 (CAL.) AND THE DECISION OF THE HON BLE AP EX COURT IN THE CASE OF S.A. BUILDERS LIMITED VS. - CIT REPORTED IN 288 ITR 1 (SC). 2.4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE AGREE WITH THE CONTENTION OF THE LD. A.R. THAT THE OLD ITAT ORDER IN ITA NO. 422/ KOL/2008 DATED 16.05.2008 HAS BEEN RECALLED BY THIS TRIBUNAL IN M.A. NO. 99/KOL/2008 DATED 22.05.2015 AND HENCE AN ORDER ONCE RECALLED CANNOT BE CONSIDERED AS AN ORDER IN THE EYES OF LAW. HENCE, RELIANCE PLACED ON THE OLD TRIBUNAL S ORDER BY THE LD. D.R. I S MISPLACED. IT IS SEEN THAT THE ASSESSEE HAD MADE INVESTMENT IN SHARES OF MCCS WHICH IS ENGAGED IN THE SAME LINE OF BUSINESS AS THE ASSESSEE HOLDS THAT THIS INVESTMENT HAS BEEN MADE ONLY TO OBTAIN FURTHER BUSINESS INTEREST OF THE ASSESSEE. IT IS ALSO SEEN THAT THE ASSESSMENT UNDER APPEAL IS FOR AY 2004 - 05, FOR WHICH YEAR THE PROVISIONS OF RULE 8D OF INCOME TAX RULES CANNOT BE INVOKED AS THE SAME IS APPLICABLE ONLY FROM ASSESSMENT YEAR 2008 - 09 AS WAS HELD IN THE DECISION OF THE HON BLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MANUFACTURING CO. LTD. HOWEVER, WE FIND THAT THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF R.R. SEN & BROTHERS PVT. LTD. IN G.A. NO. 3019 OF 2012 IN ITAT NO. 243 OF 2012 DATED 04.01.2013 HAD HELD THAT 1% OF DIVIDEND INCOM E SHOULD BE DISALLOWED UNDER SECTION 14A OF THE ACT. JUDGMENT OF THE HON BLE CALCUTTA HIGH COURT IS REPRODUCED HEREUNDER: - THE ASSESSEE DID NOT SHOW ANY EXPENDITURE INCURRED BY HIM FOR THE PURPOSE OF EARNING THE MONEY WHICH IS EXEMPTED UNDER INCOME TAX. THE TRIBUNAL HAS COMPUTED EXPENDITURE AT 1% OF SUCH DIVIDEND INCOME, WHICH, ACCORDING TO THEM, IS THE THUMB RULE APPLIED CONSISTENTLY. WE FIND NO REASON TO INTERFERE. THE APPEAL IS DISMISSED. I.T.A. NO . 422 / KOL ./20 08 ASSESSMENT YEAR: 200 4 - 20 0 5 PAGE 4 OF 4 2.5. RESPECTFULLY FOLLOWING THE DECISION OF THE HON BLE CAL CUTTA HIGH COURT IN THE CASE OF R.R. SEN & BROTHERS PVT. LTD. (SUPRA) , WE DIRECT THE ASSESSING OFFICER TO DISALLOW 1% OF DIVIDEND INCOME, IF ANY, AS DISALLOWANCE UNDER SECTION 14A OF THE ACT. 3. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS PARTLY ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH SEPTEMBER , 201 5 . SD/ - SD/ - MAHAVIR SINGH M. BALAGANESH (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, THE 11 TH D AY OF SEPTEMBER , 201 5 COPIES TO : (1) ASSI STANT COMMISSIONER OF INCOME TAX, CIRCLE - 3, KOLKATA, 8/2, ESPLANADE EAST, KOLKATA - 700 001 (2) ABP TV PRIVATE LIMITED, 6, PRAFULLA SARKAR STREET, KOLKATA - 700 001 (3) COMMISSIONER OF INCOME - TAX (APPEALS) - I, KOLKATA (4) COMMISSIONER OF INCOM E TAX , KOLKATA ( 5 ) THE DEPARTMENTAL REPRESENTATIVE ( 6 ) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KOLKATA B ENCHES, KOLKATA LAHA/SR. P.S .