DCIT, New Delhi V. M/s Pavitra Commercial Ltd., New Delhi

ITA 5007/DEL/2013

• Counselvise Citation: 500720114 RSA 2013
• Duration Of Justice: 1 year(s) 5 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 06-01-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 30-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIKRAM SAHAY
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F : NEW DELHI BEFORE SHRI S.V. MEHROTRA , ACCOUNTANT MEMBER AND SHRI H.S. SIDHU , JUDICIAL MEMBER ITA NO . 5007 /DEL/ 2013 ASSESSMENT YEAR : 2007 - 08 DCIT, CENT. CIRCLE 20, NEW DELHI. VS. PAVITRA COMMERCIAL LTD., 108, ANSAL BHAWAN, 16, K.G. MARG, NEW DELHI. AAACP0299E (APPELLANT) (RESPONDENT) APPELLANT BY: SH. VIKRAM SAHAY, SR.DR RESPONDENT BY: SH. AJAY VOHRA, SR. ADV. & SH. ROHIT GARG, ADV. O R D E R PER S.V. ME HROTRA, A.M. THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A) , NEW DELHI DATED 17 /05 /2013 FOR A.Y. 2007 - 08 . 2. THE ASSESSEE COMPANY WAS IN THE BUSINESS OF FINANCE, INVESTMENT, AGENCY AND AGRICULTURE. IT HAD FILED ITS RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 3,04,18,250/ - . THE ASSESSMENT WAS COMPLETED AT A TOTAL INCOME OF RS. 3,92,19,610/ - AFTER, INTER - ALIA, MAKING DISALLOWANCE U/S 14A OF RS. 21,03,901/ - AS PER RULE 8D REJECTING THE ASSESSEE S CONTENTION THAT NO EXPENDITURE WAS ATTRIBUTABLE TO T HE EARNING OF EXEMPT INCOME. PROCEEDINGS U/S 271(1)(C) WERE INITIATED. ITA NO. 5007 /D/ 2013 2 3. IN REPLY TO PENALTY NOTICE, THE ASSESSEE, INTER - ALIA, SUBMITTED THAT THE PROVISIONS OF RULE 8D WERE NOTIFIED ON 24/03/2008 BY WHICH DATE THE ASSESSEE COMPANY HAD ALREADY FILED ITS R ETURN OF INCOME FOR A.Y. 2007 - 08. FURTHER IT WAS POINTED OUT TH AT THE PROVISIONS OF RULE 8D WERE APPLICABLE FROM A.Y. 2008 - 09 AND, THEREFORE, THE PROVISIONS OF RULE 8D WERE NOT APPLICABLE IN A.Y. 2007 - 08. HOWEVER, THE AO DID NOT ACCEPT THE ASSESSEE S CON TENTION AND LEVIED A PENALTY U/S 271(1)(C) OF RS. 14,15,035/ - . 4. LD. CIT(A) DELETED THE PENALTY. HAVING HEARD BOTH THE PARTIES, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF LD. CIT(A) BECAUSE WH EN THE PROVISIONS OF RULE 8D WERE APPLICABLE FRO M A.Y. 2008 - 09 AND NOT IN A.Y. 2007 - 08 , THEREFORE, NO DISALLOWANCE COULD BE MADE AS PER RULE 8D IN A.Y. 2007 - 08 . 5. AS REGARDS THE APPLICABILITY OF THE PROVISIONS OF 14A THE ASSESSEE S CONTENTI O N WAS THAT THERE WAS NO DIRECT EXPENDITURE RELATED TO DIVIDEND INCOME AND HENCE NO DISALLOWANCE FOR RELATABLE EXPENDITURE ON ESTIMATED BASIS WAS CALLED FOR. THE ASSESSEE HAD RELIED ON VARIOUS DECISIONS WHICH HAVE BEEN REPRODUCED IN THE ASSESSMENT ORDER. THE AO HAS NOT POINTED OUT ANY SPECIFIC EXPENDITURE BEING ALLO CABLE TOWARDS EARNING OF DIVIDEND INCOME AND HAS, INTER - ALIA, OBSERVED THAT INVESTMENT DECISIONS ARE VERY IMPORTANT AS WELL AS COMPLICATED DECISIONS ARE TAKEN ONLY AT THE TOP LEVEL OF MANAGEMENT. THUS, HE HAS NOT FOUND THE ASSESSEE S EXPLANATION AS FALSE BUT COMPUTED THE DISALLOWANCE INVOKING RULE 8D. UNDER SUCH CIRCUMSTANCES, THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCTS LTD., 322 ITA NO. 5007 /D/ 2013 3 ITR 158 IS SQUARELY APPLICABLE, WHEREIN IT HAS BEEN, INTER - ALIA, HELD THAT IF THE ASSESSEE HAS FURNISHED ALL THE DETAILS OF ITS EXPENDITURE AS WELL AS INCOME IN I TS RETURN, AND DETAILS, IN THEMSELVES WERE NOT FOUND TO BE INACCURATE THEN IT CANNOT BE HELD TO BE A CASE OF CONCEALMENT OF INCOME. 6. ADMITTEDLY, THE ASSESSEE HAS FURNISHED ALL THE DETA ILS REGARDING EXPENDIUTRE INCURRED BY IT. 7. IN THE RESULT, THE DEPARTMENT S APPEAL IS DISMISSED. O RDER PRONOUNCED IN THE OPEN COURT ON ( H.S. SIDHU ) JUDICIAL MEMBER ( S.V. ME HROTRA ) ACCOUNTANT MEMBER DATED: *K AVITA COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI. TRUE COPY BY ORDER ASSISTANT REGISTRAR ITA NO. 5007 /D/ 2013 4 SL. NO. DESCRIPTION DATE 1. DATE OF DICTATION BY THE AUTHOR 1 6 .02.2015 2. DRAFT PLACED BEFORE THE DICTATING MEMBER 23 .02.2015 3. DRAFT PLACED BEFORE THE SECOND MEMBER 25.02.2015 4. DRAFT APPROVED BY THE SECOND MEMBER 25.02.2015 5. DATE OF APPROVED ORDER COMES TO THE P.S/SR. PS 25.02.2015 6. DATE OF PRONOUNCEMENT OF ORDER 25.02.2015 7. DATE OF FILE SENT TO THE BENCH CLERK 26.02.2015 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER