ACIT, Cir.-1(1), Pune V. Corrugated Box Industries (I) Ltd., Pune

ITA 505/PUN/2010

• Counselvise Citation: 50524514 RSA 2010
• Duration Of Justice: 1 year(s) 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2003-2004
• Appeal Filed On: 08-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: HARESHWAR SHARMA
• Section: 263; 63

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE BEFORE SHRI I.C. SUDHIR JUDICIAL MEMBER AND SHRI G.S. PANNU ACCOUNTANT MEMBER ITA NO. 505/PN/2010 (ASSTT. YEAR: 2003-04) ASSTT. COMMISSIONER OF INCOME TAX , ... APPELLANT CIRCLE 1(1), PUNE V. CORRUGATED BOX INDUSTRIES (I) LTD., RESPONDENT HARMONY COMPLEX, 5, ICS COLOHNY, GANESHKHIND ROAD, PUNE -07 PAN : AAACC7585K ITA NO. 507/PN/2010 (ASSTT. YEAR: 2003-04) DEPUTY COMMISSIONER OF INCOME TAX, ... APPELLANT CIRCLE 11(1), PUNE 4 TH FLOOR, C WING, INCOME TAX OFFICE, PMT COMMERCIAL COMPLEX, SWARGATE, PUNE 411037 V. KATARA DENTAL PRIVATE LIMITED RESPONDENT APURVA COMPLEX, 56, GANESHKHIND ROAD, AUNDH, PUNE 411007 PAN: AAACK7513K APPELLANT BY : SHRI NIKHIL PATHAK RESPONDENT BY : SHRI HARESHWAR SHARMA DATE OF HEARING :30.08.11 DATE OF PRONOUNCEMENT: 21.10.11 ORDER PER I.C. SUDHIR, JM IN THESE APPEALS, THE REVENUE HAS QUESTIONED FIRST APPELLATE ORDER MAINLY ON THE GROUND THAT THE LD CIT(A) HAS ERRED IN DELETING THE ADDITION (RS. 50,22,450/- IN ITA NO. 505/PN/2010 AND RS. 4,22,954/- IN ITA NO. 5 07/PN/2010) MADE ON ACCOUNT OF DISALLOWANCE OF DEDUCTION U/S. 80M OF THE I.T. A CT 1961 AGAINST THE INTER CORPORATE DIVIDEND RECEIVED BY THE ASSESSEES. ITAS . NO 505 & 505/PN/2010 CORRUGATED BOX INDUSTRIES (I) LTD. & KATARA DENTAL P. LTD. A.YS. 2003-04 PAGE OF 4 2 2. AT THE OUTSET OF HEARING, THE LD. A.R. POINTED O UT THAT PRESENT ARE THE APPEALS PREFERRED BY THE REVENUE AGAINST THE RELIEF GRANTED BY FIRST APPELLATE AUTHORITY AGAINST THE ASSESSMENT ORDER FRAMED IN CO MPLIANCE OF SECTION 263 ORDER. HE SUBMITTED THAT IN THE MEANWHILE, THE TRIBUNAL HA S DECIDED THE APPEALS PREFERRED BY THE ASSESSEES AGAINST THE SAID SECTION 263 ORDE R WITH THIS FINDING THAT LD CIT HAS ASSUMED JURISDICTION INVALIDLY AND HAS ALLOWED THE APPEALS.. THE LD. A.R. FILED COPIES OF THE ORDERS DATED 31 ST DECEMBER 2009 IN CASE OF KATARA DENTAL PVT. LTD. VS. ACIT (ITA NO. 626/PN/2008, A.Y. 2003-04 & OTHE RS) AND DATED 12 TH FEBRUARY 2010 IN CASE OF CORRUGATED BOX INDUSTRIES (I) PVT. LTD. VS. ACIT (ITA NO.554/PN/2008, A.Y. 2003-04). 3. THE LD. D.R., ON THE OTHER HAND, TRIED TO JUSTIF Y THE ASSESSMENT ORDER IN SUPPORT OF THE GROUND RAISED. 4. THE FACTS IN BRIEF ARE THAT THE ASSESSEES COMP ANY ENGAGED IN INVESTMENTS AND TRADING IN SHARES & MUTUAL FUNDS AND ALSO FIN ANCING & LEASING BUSINESS HAD CLAIMED DEDUCTION U/S. 80-M. THE SAME WAS ALLOWED BY A.O IN THE ASSESSMENT FRAMED U/S. 143(3). SUBSEQUENTLY, THE LD CIT VIDE HIS ORDER PASSED U/S. 263 HAD SET ASIDE THE ASSESSMENT ORDER ON THE ISSUE OF ADMI SSIBILITY OF DEDUCTION U/S. 80 M TO THE ASSESSEES WITH THE DIRECTION TO THE A.O TO E XAMINE APPLICABILITY OF PROVISIONS OF SECTION 115-O TO THE ASSESSEES CLAIM AND DECIDE THE ISSUE AFRESH AS PER LAW. IN COMPLIANCE, THE A.O DISALLOWED THE CLAIM MADE U/S. 80 M. THE LD CIT(A) HELD THAT THE ASSESSEES ARE ENTITLED TO CLAIM DEDUCTION U/S. 80M ON AN AMOUNT EQUAL TO SO MUCH OF THE AMOUNT OF INCOME BY WAY OF DIVIDEND REC EIVED FROM OTHER DOMESTIC COMPANIES AS DOES NOT EXCEED THE AMOUNT OF DIVIDEND DISTRIBUTED BY THE ASSESSEES ON OR BEFORE THE DUE DATE. LD CIT(A) ACCORDINGLY C AME TO THE CONCLUSION THAT THE A.O WAS NOT JUSTIFIED IN DENYING THE DEDUCTION U/S. 80M IN RESPECT OF DIVIDEND RECEIVED BY THE ASSESSEE. HE ACCORDINGLY HAS DELET ED THE DISALLOWANCE MADE BY THE A.O IN THIS REGARD. AGAINST THIS FIRST APPELLATE ORDER, REVENUE IS IN APPEAL. WE FIND ITAS . NO 505 & 505/PN/2010 CORRUGATED BOX INDUSTRIES (I) LTD. & KATARA DENTAL P. LTD. A.YS. 2003-04 PAGE OF 4 3 THAT IN MEANWHILE, THE TRIBUNAL IN THE ABOVE CITED APPEALS IN THE CASE OF ASSESSEES (SUPRA) QUESTIONING THE SECTION 263 ORDER HAS ALLO WED THE APPEALS IN FAVOUR OF THE ASSESSEES. THE RELEVANT PARA NO.10 OF THE ORDER OF THE TRIBUNAL IN THE CASE OF KATARA DENTAL PVT LTD. AND PARA NO. 3 OF THE ORDER OF THE TRIBUNAL IN THE CASE OF CORRUGATED BOX INDUSTRIES (I) PVT. LTD. ARE BEING R EPRODUCED HEREUNDER : 10. CONSIDERING THE ABOVE LEGAL SCOPE OF SECTION 2 63 AND VARIOUS DECISIONS OF THE TRIBUNAL DISCUSSED ABOVE, THE ISSUE IS A SE TTLED ONE TO THE EXTENT THAT THE PROVISIONS OF SECTION 1150 (5) AND INTERPRETAT ION THEREON SUFFERS FROM DEBATABILITY VIZ-E-VIZ DEDUCTION U/S 80M. DEBATE I S ON WHETHER THE DIVIDEND WHICH IS DISTRIBUTED AS REFERRED TO IN SUB-SECTION (1) & (5) OF SECTION 115O IS ONE AND THE SAME DIVIDEND WHICH IS RECEIVED FROM DO MESTIC COMPANY AND WHETHER SUCH DIVIDEND WHICH CHARGED UNDER TAX CONT RIBUTES TO THE DENIAL OF DEDUCTION U/S 80M, THE SECTION WHICH PRIMARILY PROV IDES FOR DEDUCTION TO THE ASSESSEE SUBJECTED TO THE CONDITION OF RECEIVING OF THE DIVIDEND FROM THE DOMESTIC COMPANY. WHEN THE ISSUE IS DEBATABLE AND THERE EXISTS MORE THAN ONE VIEW, THE CIT IS BARRED FROM ASSUMING THE JURIS DICTION AS HELD BY THE SUPERIOR COURT IN THE CASE OF M/S MALABAR INDUSTRIA L CO LTD (SUPRA). ON MERITS ALSO, THE ISSUE IS SETTLED THAT THE ASSESSEE IS ALS O ENTITLED TO DEDUCTION U/S 80M IN RESPECT OF INTER-CORPORATE DIVIDENDS RECEIVE D BY THE ASSESSEE AS THE DIVIDEND IS DISTRIBUTED TO THE SHARE HOLDERS OF THE ASSESSEE COMPANY BEFORE FILING OF THE RETURN OF INCOME DESPITE THE EXISTENC E OF SECTION 115O(5) OF THE ACT. CONSIDERING THE ABOVE MENTIONED APEX AS WELL AS THE JURISDICTIONAL HIGH COURT DECISIONS AND ALSO THE DECISIONS OF THE TRIB UNAL, IN OUR OPINION, THE CIT HAS ASSUMED JURISDICTION INVALIDLY AND THEREFORE, G ROUNDS RAISED IN THE APPEAL OF THE ASSESSEE NEED TO BE ALLOWED. (FROM TRIBUNAL ORDER IN THE CASE OF KATARA DENTAL PVT. LTD.). 3. THUS, THERE EXISTS DEBATE AND THE SAME IS ON WHE THER THE DIVIDEND WHICH IS DISTRIBUTED AS REFERRED TO IN SUB-SECTION (1) & (5) OF SECTION 115O IS ONE AND THE SAME AS THAT OF THE DIVIDEND WHICH IS RECEIVED FROM DOMESTIC COMPANY AND WHETHER SUCH DIVIDEND WHICH IS CHARGED TO TAX CONTRIBUTES TO THE DENIAL OF DEDUCTION U/S 80M, THE SECTION WHICH PRIMARILY PROVIDES FOR DEDUCTION TO THE ASSESSEE SUBJECTED TO THE CONDITIO N OF RECEIVING OF THE DIVIDEND FROM THE DOMESTIC COMPANY. WHEN THE ISSUE IS DEBATABLE AND THERE EXISTS MORE THAN ONE VIEW, THE CIT IS BARRED FROM A SSUMING THE JURISDICTION AS HELD BY SUPERIOR COURT IN THE CASE OF M/S MALABA R INDUSTRIAL CO LTD (SUPRA). IN THESE CIRCUMSTANCES, WE ARE OF THE OPINION THAT THE ISSUE IN QUESTION ITAS . NO 505 & 505/PN/2010 CORRUGATED BOX INDUSTRIES (I) LTD. & KATARA DENTAL P. LTD. A.YS. 2003-04 PAGE OF 4 4 STANDS COVERED IN FAVOUR OF THE ASSESSEE BY THE ABO VE REFERRED DECISIONS OF THE TRIBUNAL. CONSEQUENTLY, THE GROUNDS RAISED BY THE ASSESSEE IN THE APPEAL SHOULD BE ALLOWED. (FROM TRIBUNAL ORDER IN THE CASE OF CORRUGATED BO X INDUSTRIES(I) PVT. LTD.) KEEPING IN VIEW THE ABOVE DEVELOPMENT, WE ARE OF T HE VIEW THAT PRESENT APPEALS HAVE BECOME INFRUCTUOUS SINCE VERY ASSESSMENT ORD ER WHICH WAS SET ASIDE BY THE LD CIT U/S. 263 OF THE ACT HAS BEEN RESTORED IN CON SEQUENCE OF THE APPEALS ALLOWED BY THE TRIBUNAL AGAINST SECTION 263 ORDER. THE GRO UND IS ACCORDINGLY REJECTED. 5. IN RESULT, APPEALS ARE DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 21ST OCTOBER 2011. SD/- SD/- ( G.S. PANNU ) ACCOUNTANT MEMBER (I.C. SUDHIR ) JUDICIAL MEMBER PUNE, DATED THE 21ST OCTOBER, 2011 US COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(1), PUNE 4. THE CIT(A)-1,PUNE 5. THE D.R., A BENCH, ITAT PUNE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PUNE