ITO Ward-18 (4), V. Zuari Investment Ltd,

ITA 455/DEL/2008

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 6674 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 9 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-11-2010
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 03-11-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 08-02-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MANISH GUPTA
• Keywords: Question of law
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH I DELHI BEFORE SHRI I.P. BANSAL AND SHRI K.G. BANSAL ITA NO. 455(DEL)/2008 ASSESSMENT YEAR: 2004-05 INCOME-TAX OFFICER, M/S ZUARI INVESTMENTS LTD., WARD 18(4), NEW DELHI. VS. IN TERNATIONAL TRADE TOWER, NEHRU PLACE, F-BLOCK, IIND FLOOR , NEW DELHI. (PAN-AAACZ0196R) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MANISH GUPTA, SR. DR RESPONDENT BY: SH RI KVSR KRISHNA, C.A. ORDER PER K.G. BANSAL : AM THIS APPEAL OF THE REVENUE ARISES FROM THE ORDE R OF CIT(APPEALS)- XXI, NEW DELHI, PASSED ON 26.11.2007 IN APPEAL NO. 144/2006-07, AND IT PERTAINS TO ASSESSMENT YEAR 2004-05. THE CORRESPONDING ASSESSMENT ORDER WAS MADE BY THE INCOME-TAX OFFICER, WARD 18(4), NEW DELHI, ON 7.12.2006 U/S 143(3) OF THE INCOME-TAX ACT, 1961 . THE ONLY GROUND TAKEN BY THE REVENUE IS THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETING THE ADDI TION OF ` 11,28,050/- MADE BY THE AO U/S 14A OF THE ACT. 2. THE CASE OF THE LD. COUNSEL BEFORE US IS THA T THE MAJOR INVESTMENT IN THE SHARES OF A COMPANY CALLED TEXMECO WAS MADE IN THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 1997-98, AS OBSERVED BY THE LD. CIT(A) IN PARAGRAPH 2.5 OF THE IMPUGNED ORDER. THE ASSESSEE RECEIVED ITA NO. 455(DEL)/2008 2 DIVIDENDS OF ` 14,48,195/- FROM THIS COMPANY. THE INVESTMENT I N THESE SHARES WERE MADE OUT OF THE FUNDS OF THE ASSESS EE ON WHICH NO INTEREST WAS PAYABLE OR PAID. THEREFORE, THE LD. CIT(A) RIGHTLY HELD THAT NO EXPENDITURE CAN BE ATTRIBUTED TO EARNING THIS I NCOME. RELIANCE HAS ALSO BEEN PLACED ON THE DECISION IN THE CASE OF CIT VS. HERO CYCLES LTD. IN ITA NO. 331 OF2009 OF PUNJAB & HARYANA HIGH COUR T; CIT VS. MS. SUSHMA KAPOOR (2009) 319 ITR 299 (DEL) AND CIT VS. KASTURBHAI MAYABHAI PVT. LTD. IN ITA NO. 1991 OF 2008 (GUJ.) . AS AGAINST THE AFORESAID, THE LD. DR SUBMITTED THAT IN ALL THES E CASES, THE QUESTION WAS NOT DECIDED ON MERITS BUT APPEAL WAS NOT ADMIT TED ON THE GROUND THAT NO SUBSTANTIAL QUESTION OF LAW AROSE. 2.1 THE LD. COUNSEL ALSO PLACED ON RECORD THE ORDER OF THE TRIBUNAL IN THE CASE OF THE ASSESSEE FOR ASSESSMENT YEAR 20 01-02 IN ITA NO. 3006(DEL)/2004 DATED 11.8.2006. IN THIS ORDER, IT IS MENTIONED THAT ADMINISTRATIVE EXPENSES AND PERSONNEL EXPENSES WERE COMMON TO THE BUSINESS ACTIVITY AND EARNING OF THE DIVIDEND IN COME. THEREFORE, IT CANNOT BE SAID THAT NO PART OF THE EXPENDITURE WAS I NCURRED IN RELATION TO EARNING OF DIVIDEND INCOME. THE CASE OF MARUTI UDYOG, 92 ITD 119 (DEL) WAS REFERRED TO, WHICH WAS DECIDED IN F AVOUR OF THE ASSESSEE. IN VIEW THEREOF, IT WAS MENTIONED THAT THE AO SHOU LD ALLOW THE ASSESSEE TO FURNISH HIS ARGUMENT AGAINST THE WORKING OF DIS ALLOWANCE DONE BY HIM IN THE ASSESSMENT ORDER. THEREAFTER, A SPEAKING OR DER SHOULD BE PASSED IN RESPECT OF DISALLOWANCE AS MAY BE CONSIDERED N ECESSARY IN VIEW OF THE PROVISIONS OF SECTION 14A. WE FIND THAT TWO MOR E DECISIONS ARE AVAILABLE IN THIS MATTER. THESE ARE IN THE CA SE OF GODREJ & BOYCE MANUFACTURING CO. LTD. VS. DCIT 2010-TIOL-564-HC-MU M-IT DATED ITA NO. 455(DEL)/2008 3 12.8.2010 AND CIT VS. CHEMICAL & METALURGICAL CO. LTD. IN ITA NO. 803 OF 2008 DATED 15.7.2008 (DEL). 2.2 HAVING CONSIDERED THE DECISION OF THE TRIBUN AL IN ASSESSEES OWN CASE, WE THINK IT FIT TO RESTORE THE MATTER TO THE FILE OF THE AO TO PASS A FRESH ORDER TAKING INTO ACCOUNT THE FACTS OF TH E CASE AND VARIOUS CASES MENTIONED ABOVE. 3. IN THE RESULT, THE APPEAL IS TREATED AS ALL OWED FOR STATISTICAL PURPOSES. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT ON 19 NOVEMBER, 2010. SD/- SD/- (I.P. BANSAL) (K.G.BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE OF ORDER: 19TH NOVEMBER, 2010. SP SATIA COPY OF THE ORDER FORWARDED TO: ITO, WARD 18(4), NEW DELHI. M/S ZUARI INVESTMENTS LTD., NEHRU PLACE, NEW DELHI. CIT(A) CIT THE DR, ITAT, NEW DELHI. ASSISTANT REGISTRAR.