DCIT 8(2), MUMBAI V. HINDUJA VENTURES LTD, MUMBAI

ITA 4652/MUM/2013

• Counselvise Citation: 465219914 RSA 2013
• Duration Of Justice: 1 year(s) 8 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 10-02-2015
• Assessment Year: 2001-2002
• Appeal Filed On: 14-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARMINDER
• Assessee Lawyers: PRADIP KEDIA
• Keywords: Retrospective amendment
• Section: 14A

Judgement Text

H IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER & SHRI SANJAY GARG, JUDICIAL MEMBER ./ I.T.A. NO.4652 /MUM/2013 ( / ASSESSMENT YEAR : 2001-2002 ./ I.T.A. NO.4668 /MUM/2013 ( / ASSESSMENT YEAR : 2004-2005 D Y. CIT 8 ( 2 ), R. NO. 216-A, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020. / VS. M/S HINDUJA VENTURES LTD., (FORMERLY KNOWN AS HTMT LTD.) IN CENTRE, 49/50 MIDC, 12 TH ROAD, ANDHERI (EAST), MUMBAI 400093. ./ PAN : AAACH2058N ( / APPELLANT ) .. ( / RESPONDENT ) A PPELLANT BY S MT. PARMINDER R E SPONDENT BY : SHRI PRADIP KEDIA / DATE OF HEARING : 10-2-2015 / DATE OF PRONOUNCEMENT : 20-2-2015 [ !' / O R D E R PER R.C. SHARMA, A.M . : THESE ARE THE APPEALS FILED BY THE REVENUE ARE DIRE CTED AGAINST THE ORDERS OF LD. CIT(A) -17, MUMBAI BOTH DATED 29- 11-2012 FOR THE ASSESSMENT YEARS 2001-02 & 2004-05. 2. THE COMMON GRIEVANCE RAISED BY THE REVENUE IN BO TH THESE YEARS RELATE TO DELETION OF DISALLOWANCE OF INTEREST U/S 14A OF THE INCOME TAX ACT, 1962 AND RESTRICTING THE SAME TO 10% OF THE DI VIDEND INCOME. 3. WE HAVE CONSIDERED THE RIVAL CONTENTION AND FOUN D THAT THE DISALLOWANCE MADE BY THE A.O. U/S 14A OF THE ACT WA S RESTRICTED BY THE ITA 4652/M/13 & ITA 4668/M/13 2 LD. CIT(A) TO 10% OF THE DIVIDEND INCOME AFTER HAVI NG FOLLOWING OBSERVATION:- 5.4 I HAVE CONSIDERED THE SUBMISSIONS OF THE APPEL LANT AND THE ORDER OF THE AO. THE AO HAS APPLIED WORKING OF RULE 8D TO CALCULATE THE DISALLOWANCE A]. 14A FOR AY 2001-02. IT IS PERTINENT TO NOTE THAT FOR AY 2001-02, RULE 8D WAS NOT APPLICABLE. THE HON 'BLE ITAT HAS IN THE CASE OF VF C SECURITIES PVT. LTD. THE ITAT HAS HELD IN PARA 14 AS UNDER: '14. IN THE CASE OF GODREJ & BOYCE (SUPRA), THE HON 'BLE HIGH COURT HAS EXAMINED THE SCOPE OF SEE. 14A AND R ULE 8D AND IT HAS BEEN HELD THAT RULE 80 IS APPLICABLE FROM ASSESSMENT YEAR 2008-09 AND IT IS NOT APPLICABLE WI TH RETROSPECTIVE EFFECT. IT IS FURTHER HELD THAT UP TO ASSESSMENT YEAR 2007-08 THE REASONABLE ESTIMATION O F THE EXPENDITURE MAY BE MADE BY THE AO. AS THE ASSES SING OFFICER HAS ALREADY ESTIMATED 5% AMOUNT OF THE DIVI DEND AS REASONABLE EXPENDITURE, IN OUR OPINION, THE ORDE R OF THE ASSESSING OFFICER NEEDS TO BE RESTORED. WE, THEREFO RE: SET ASIDE THE ORDER OF THE ID. CIT(A) ON THIS ISSUE AND ALLOWED THE GROUND TAKEN BY THE ASSESSEE CONFIRMING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. ACCORD INGLY, GROUND NO.3 IS ALLOWED PARTLY ALLOWED.' 5.5 IT CAN BE SEEN FROM THE ABOVE THAT THE ITAT HAS HELD THE DISALLOWANCE ALREADY ESTIMATED BY THE AO @ 5% OF TH E DIVIDEND AS A REASONABLE EXPENDITURE. IN THE PRESENT CASE, T HE AO HAD IN THE ORIGINAL ASSESSMENT ORDER DATED 12.03.2004 IN P ARA 8 HAS HELD THAT 10% OF THE DIVIDEND INCOME IS REASONABLE AND DISALLOWED THE SAME. FURTHER, IN AY 2002-03 AND AY 2003-04 THE AO ON THE SIMILAR FACTS AND CIRCUMSTANCES HAS H ELD 5% OF THE DIVIDEND 'INCOME AS REASONABLE DISALLOWANCE U/S . 14A. THE AO HAS INCREASED THE SAME TO 10% OF THE DIVIDEND IN COME IN THE PRESENT ASSESSMENT YEAR I.E. A Y 2001-02. THEREFORE , IN VIEW OF THESE FACTS AND CIRCUMSTANCES AND FOLLOWING ORDER O F HON'BLE ITAT IN VFC SECURITIES PVT. LTD. IN ITA NO. 5523/MU M/2009, THE DISALLOWANCE MADE @ 10% OF THE DIVIDEND INCOME IS HELD TO BE REASONABLE. HENCE THE GROUND OF APPEAL OF THE AP PELLANT IS PARTLY ALLOWED. 4. SIMILARLY THE DISALLOWANCE MADE BY THE A.O. WAS DELETED BY THE LD. CIT(A) IN A.Y. 2004-05 AFTER HAVING FOLLOWING O BSERVATION:- 5.2 I HAVE CONSIDERED THE SUBMISSIONS OF THE APPEL LANT AND THE ORDER OF THE AO. THE AO HAS APPLIED WORKING OF RULE 80 TO CALCULATE THE DISALLOWANCE U/S. 14A FOR A.Y. 2004-0 5. IT IS ITA 4652/M/13 & ITA 4668/M/13 3 PERTINENT TO NOTE THAT FOR AY 2004-05, RULE 80 WAS NOT APPLICABLE. THE HON'BLE ITAT IN THE CASE OF VFC SEC URITIES PVT. LTD. THE ITAT HAS HELD IN PARA 14 AS UNDER: '14. IN THE CASE OF GODREJ & BOYCE (SUPRA), THE HON 'BLE HIGH COURT HAS EXAMINED THE SCOPE OF SEC. 14A AND R ULE 8D AND IT HAS BEEN HELD THAT RULE 8D IS APPLICABLE FROM ASSESSMENT YEAR 2008-09 AND IT IS NOT APPLICABLE WI TH RETROSPECTIVE EFFECT. IT IS FURTHER HELD THAT UP TO ASSESSMENT YEAR 2007-08 THE REASONABLE ESTIMATION O F THE EXPENDITURE MAY BE MADE BY THE AO. AS THE ASSES SING OFFICER HAS ALREADY ESTIMATED 5% AMOUNT OF THE. DIV IDEND AS REASONABLE EXPENDITURE, IN OUR OPINION, THE ORDE R OF THE ASSESSING OFFICER NEEDS TO BE RESTORED. WE, THEREFO RE, SET ASIDE THE ORDER OF THE ID. CIT(A) ON THIS ISSUE AND ALLOWED THE GROUND TAKEN BY THE ASSESSEE CONFIRMING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. ACCORDI NGLY, GROUND NO.3 IS ALLOWED PARTLY ALLOWED.' 5.3 IT CAN BE SEEN FROM THE ABOVE THAT THE ITAT HAS HELD THE DISALLOWANCE ALREADY ESTIMATED BY THE AO @ 5% OF TH E DIVIDEND AS A REASONABLE EXPENDITURE. IN THE PRESENT CASE, T HE AO HAD IN THE ORIGINAL ASSESSMENT ORDER DATED 29-12-2006 IN P ARA 5.12 HAS HELD THAT 10% OF THE DIVIDEND INCOME IS REASONA BLE AND DISALLOWED THE SAME. FURTHER, IN AY 2002-03 AND AY 2003-04 THE AO ON THE SIMILAR FACTS AND CIRCUMSTANCES HAS H ELD 5% OF THE DIVIDEND 'INCOME AS REASONABLE DISALLOWANCE U/S . 14A. THE AO HAS INCREASED THE SAME TO 10% OF THE DIVIDEND IN COME IN THE PRESENT ASSESSMENT YEAR I.E. A Y 2004-05. THEREFORE , IN VIEW OF THESE FACTS AND CIRCUMSTANCES AND FOLLOWING ORDER O F HON'BLE ITAT IN VFC SECURITIES PVT. LTD. IN ITA NO. 5523/MU M/2009, THE DISALLOWANCE MADE @ 10% OF THE DIVIDEND INCOME IS HELD TO BE REASONABLE. HENCE THE GROUND OF APPEAL OF THE AP PELLANT IS PARTLY ALLOWED. 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, CAREFU LLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW AND FOUND THAT BY C ONSIDERING THE VARIOUS DECISIONS OF THE TRIBUNAL, THE LD. CIT(A) R ESTRICTED THE DISALLOWANCE TO 10% OF THE DIVIDEND INCOME. LOOKING TO THE FACTS OF THE CASE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) FOR RESTRICTING THE DISALLOWANCE TO 10% OF THE DIVIDEND INCOME INSOFAR AS RELEVANT ASSESSMENT YEARS UNDER CONSIDERATION ARE A SSESSMENT YEARS 2001-02 AND 2004-05 WHEREIN RULE 8D IS NOT APPLICAB LE. THE LD. D.R. COULD NOT PLACE ON RECORD ANY CONTRARY DECISION SO AS TO PERSUADE US TO ITA 4652/M/13 & ITA 4668/M/13 4 DEVIATE FROM THE CONCLUSION DRAWN BY THE LD. CIT(A) . WE ACCORDINGLY UPHOLD THE SAME. 6. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE A RE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH FEB. 2015. !' # $% &! ' 20-02-2015 ( ) SD/- SD/- (SANJAY GARG) (R.C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER $ 5 MUMBAI ; &! DATED 20-02-2015 [ .6../ RK , SR. PS ! '#$% &%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. 7 () / THE CIT(A) 17,, MUMBAI 4. 7 / CIT 8, MUMBAI 5. :;( 66<= , <= , $ 5 / DR, ITAT, MUMBAI H BENCH 6. (?@ A / GUARD FILE. ' / BY ORDER, : 6 //TRUE COPY// (/') * ( DY./ASSTT. REGISTRAR) , $ 5 / ITAT, MUMBAI