M/s. Coffeeday Enterprises Limited, Bangalore V. The Deputy Commissioner Of Income Tax, Central Circle-1(3), Bagalore

ITA 459/BANG/2020

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 5446 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-10-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 01-06-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S SUNDAR RAO
• Assessee Lawyers: C RAMESH
• Keywords: Rule 8D; Set aside
• Section: 14A; 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI GEORGE GEORGE K, JUDICIAL MEMBER AND SHRI B.R BASKARAN , ACCOUNTANT MEMBER ITA NO . 459 / BANG/ 20 20 ASSESSMENT YEAR : 20 1 4 - 1 5 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 INCO ME - TAX , CENTRAL CIRCLE - 1 ( 3 ), BANGALORE. APPELL ANT RESPONDENT A PPELLANT BY : SHRI C RAMESH , C .A RE SPONDENT BY : S. SUNDAR RAO CIT DATE OF HEARING : 06 . 10 .20 20 DATE OF PRONOUNCEMENT : 07 .10 .20 20 O R D E R PER B.R BASKARAN , ACCOUNTANT MEMBER THE A SSESSEE HAS FILED TH IS APPEAL CHALLENGING THE ORDER D A TED 2 5 / 02 /20 20 PASSED BY LD CIT(A) - 11 , BENGALURU AND IT RELATES TO ASST. YEAR 201 4 - 1 5 . 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. 459 / BANG/20 20 PAGE 2 OF 5 3. WE H E ARD THE PARTIES AND PERUSED THE RECORD. THE ASSESSEE IS ENG AG ED IN THE BUSINESS OF MANAGING HOTELS AND RESORTS. THE ASSESSEE HAD EARNED DIVIDEND INCOME O F RS. 8. 4 7 CRORE S AND CLAIMED THE SAME AS EXEMPT. THE ASSESSEE DISALLOWED A SUM O F RS. 28 . 56 CRORES U/S 14A OF THE ACT WHILE COM PUTING TOTAL INCOME . THE AO TOOK TH E VIEW THAT THE ASSESSEE HAS NOT COMPUTED DISALLOWANCE AS PER RULE 8D. ACCORDINGLY HE COMPUTED THE DISALLOWANCE AS PER RULE 8D AT RS.84.56 CRORES AND ACCORDINGLY MADE ADDITIONAL DISALLOWANCE OF RS.55. 99 CRORES. THE S A M E WAS CONFIRMED BY LD CIT(A) AND HENCE THE ASSES S EE HAS FILED THIS APPEAL BEFORE US. 4. THE LD AR PLACED HIS RELIANCE ON THE DECISION RENDERED BY THE COORDINATE BENCH IN TH E CASE OF SIVAN SECURITIES PVT. LTD. ( ITA NO.713 TO 715/BANG/2018 DATED 8/5/2019 ) AND SUBMITTED THAT THE DISALLOWANCE MADE U/S 14A CANNOT EX CEED THE AMOUNT OF DIVIDEND RECEIVED BY TH E ASSESSEE DURING THE Y E AR. HE SUBMITTED THAT THE COORDINATE BENCH IN TH E ABOVE SAID CASE HA D FOLLOWED THE DECISION RENDERED BY ANOTHER COORDIN AT E BENCH IN TH E CASE OF M/S WAY2WEALTH SECURITIES PVT. LTD. ( ITA NO. 1679/BANG/2017) DATED 1/6/2018 , WHEREIN THE SAID COORDINATE BENCH HAS FOLLOWED THE DECISION RENDERED BY HONBLE DELHI HIGH COURT IN TH E CASE OF JOIN T INVESTMENT PVT. LTD., 372 ITR 694 AND HOLE CIM INDIA PVT. LTD., 272 C TR 282. THE LD AR SUBMITTED THAT THE DISALLOWANCE VOLUNTARILY MADE BY THE ASSES S EE U/S 14A OF THE ACT IS MORE THAN TH E AMOUNT OF DIVIDEND AND HENCE NO FURTHER DISALLOWANCE IS CA L L E D FOR, IN THE FACTS AND CIRCUMSTANCES OF T H E CASE. HE SUBMITTED THAT IDENTICAL ISSUE HAS BEEN CONSIDERED BY THE CO - ORDINATE BENCH IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2013 - 14 IN ITA ITA NO. 459 / BANG/20 20 PAGE 3 OF 5 NO.2820/BANG/2018 DATED 10 - 06 - 2019 AND THE TRIBUNAL HAS DELETED THE ENHANCEMENT OF DISALLOWANCE MADE BY THE AO. 5. ON THE CONTRARY, TH E LD DR SUPPORTED THE ORDER PASSED BY LD CIT(A). 6. HAVING HEARD RIVAL CONTENTIONS , WE NOTICE THAT THE CO - ORDINATE BENCH HAS DECIDED AN IDENTICAL ISSUE IN THE ASSESSEES OWN CASE IN FAVOUR OF THE ASSESSEE IN AY 2013 - 14 (REFERRED SUPRA). FOR THE SAKE OF CONVENIENCE, WE EXTRACT BELOW THE OPERATIVE PORTION OF THE ORDER PASSED IN AY 2013 - 14: - 6. HAVING HEARD RIVAL CONTENTIONS, WE ARE OF THE VIEW THAT THERE IS MERIT IN THE CONTENTIONS OF THE ASSESSEE. DUR I NG THE COURSE OF HEARING THE LD A R ALSO SUBMITTED THAT THE ASSESSEE HAD RECEIVED DIVIDEND FROM ONLY ONE COMPANY NAME D M /S MIND TREE LTD. FURTHER T HE AMOUNT OF DISALLOWANCE MADE BY THE ASSESSEE RS. 302 3.29 LAKHS IS MORE THAN THE DIVIDEND AMOUNT OF RS. 2 05 .44 LAKHS . HENCE, WE ARE OF THE VIEW THAT THE DISALLOWANCE VOLUNTARILY MADE BY THE ASSESSEE WOULD MEET THE REQUIREMENTS OF SEC.14A OF THE ACT . A CCORDINGLY WE ARE OF THE VIEW THAT FURTHER DISALLOWANCE MADE BY THE AO AND CONFIRMED BY LD CIT(A) IS NOT WARRANTE D IN THE FACTS AND CIRCUMSTANCES OF THE CASE. ACCORDINGLY WE SET ASIDE THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE AND DIRECT THE AO TO DELETE F URTHER ADDITION MADE BY HIM U/S 14A OF THE ACT. 7. WE NOTICE THAT D URING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS RECEIVED DIVIDEND INCOME OF RS.8.47 CRORES AND IT HAS ITA NO. 459 / BANG/20 20 PAGE 4 OF 5 VOLUNTARILY DISALLOWED A SUM OF RS.28.56 CRORES U/S 14A OF THE ACT. WE ALSO NOTICE FROM THE COMPUTATION OF INCOME PLACED AT PAGE 65 OF THE PAPER BOOK, THE ASSESSEE HAS ALSO EARNED LONG TER M CAPITAL GAIN OF RS.13 CRORES AND CLAIMED THE SAME AS EXEMPT. THUS AGGREGATE AMOUNT OF EXEMPTION CLAIMED WAS RS.21.47 CRORES. WE ALSO NOTICE THAT THE DIVIDEND INCOME WAS RECEIVED FROM ONE GROUP COMPANY NAMED M/S MINDTREE LIMITED AND THE LONG TERM CAPITA L GAIN WAS ALSO EARNED ON SALE OF SHARES OF M/S MINDTREE LIMITED. WE NOTICE THAT, AS IN THE EARLIER YEAR, THE DISALLOWANCE MADE BY THE ASSESSEE VOLUNTARILY IS MORE THAN THE AMOUNT OF EXEMPTED INCOME. HENCE, WE ARE OF THE VIEW THAT THE DISALLOWANCE VOLUNTA RILY MADE BY THE ASSESSEE WOULD MEET THE REQUIREMENTS OF SEC.14A OF THE ACT. ACCORDINGLY, FOLLOWING THE ORDER PASSED IN AY 2013 - 14, WE ARE OF THE VIEW THAT FURTHER DISALLOWANCE MADE BY THE AO AND CONFIRMED BY LD CIT(A) IS NOT WARRANTED IN THE FACTS AND C IRCUMSTANCES OF THE CASE. ACCORDINGLY WE 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. 8 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH OCTOBER , 2020 . SD/ - ( GEORGE GEORGE K ) JUDICIAL MEMBER SD/ - (B.R B ASKARAN ) ACCOUNTANT MEMBER BANGALORE, DATED, 7TH OCTOBER , 20 20 . V G / REDDYGP ITA NO. 459 / BANG/20 20 PAGE 5 OF 5 C OPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3 . THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTRAR , ITAT, BANGALORE.