ACIT, New Delhi V. M/s. HCL Comnet Ltd., New Delhi

ITA 5059/DEL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58462 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-01-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 16-01-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 14-11-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SALIL MISHRA
• Assessee Lawyers: S K AGGARWAL
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : C : NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO.5059/DEL/2011 ASSESSMENT YEAR : 2005-06 ACIT, CIRCLE 12 (1), NEW DELHI. VS. HCL COMNET LTD., 806, SIDDHARTHA, 96, NEHRU PLACE, NEW DELHI. PAN : AAACH9667H (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S.K. AGGARWAL, CA REVENUE BY : SHRI SALIL MISHRA, SR.DR ORDER PER I.P. BANSAL, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE OR DER PASSED BY THE CIT (A) DATED 29 TH JULY, 2011 FOR ASSESSMENT YEAR 2005-06. THE GROUNDS OF APPEAL READ AS UNDER:- 1. WHETHER LD. CIT (A) WAS CORRECT ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW IN DELETING THE DISALLOWANCE OF RS.16,52,168/- MADE BY THE A.O. U/S 14A AS EXPENDITURE INCURRED IN RELATION TO EARNING OF DIVIDEN D INCOME. 2. THE APPELLANT RAVES LEAVE TO ADD, ALTER OR AMEND AN Y GROUND OF APPEAL RAISED ABOVE AT THE TIME OF THE HEARING. 2. IN THE RETURN OF INCOME FILED FOR THE IMPUGNED A SSESSMENT YEAR, THE DIVIDEND INCOME OF ` 67,40,607/- WAS CLAIMED AS E XEMPT. THE ASSESSEE WAS REQUIRED TO SHOW AS TO WHY THE PROVISIONS OF SE CTION 14A SHOULD NOT BE APPLIED. VIDE REPLY DATED 17 TH DECEMBER, 2007 IT WAS ITA NO.5059/DEL/2011 2 SUBMITTED THAT NO EXPENSES HAVE BEEN INCURRED FOR EARN ING DIVIDEND INCOME SINCE THE INVESTMENT HAS BEEN MADE OUT OF FUNDS AVAILABLE FROM TIME TO TIME. HOWEVER, THE ASSESSING OFFICER ESTIM ATED THE DISALLOWANCE @ 25% OF THE DIVIDEND INCOME AND MADE D ISALLOWANCE OF ` 16,85,152/-. LEARNED CIT (A) AFTER CONSIDERING TH E SUBMISSIONS MADE BY THE ASSESSEE HAS COME TO THE CONCLUSION THAT THE DISALL OWANCE, IF ANY, HAS TO BE MADE ON REASONABLE BASIS. LEARNED CIT ( A), AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, BY APPLYING THE VARIOUS CRITERIA, HAS COME TO THE CONCLUSION THAT THE REASONAB LE DISALLOWANCE U/S 14A WOULD BE A SUM OF ` 32,984/-. THESE FINDINGS O F LEARNED CIT (A) ARE RECORDED IN PARA 15 AND 16 OF THE IMPUGNED ORDE R. THE DEPARTMENT IN ITS APPEAL IS AGGRIEVED BY THE DECISION OF CIT (A) VIDE WHICH THE IMPUGNED DISALLOWANCE HAS BEEN RESTRICTED TO ` 32,984/- WHICH WORKS TO LESS THAN 2% OF THE TOTAL DIVIDEND. 3. AFTER NARRATING THE FACTS, IT IS THE CASE OF THE LE ARNED DR THAT FOR CALCULATING SO-CALLED REASONABLE DISALLOWANCE, LEARNED CIT (A) HAS NOT CONFRONTED THE ISSUE TO THE ASSESSING OFFICER, HENCE, THE MATTER MAY BE RESTORED BACK TO THE FILE OF ASSESSING OFFICER. HE SU BMITTED THAT IN THE RECENT DECISION OF HONBLE DELHI HIGH COURT IN T HE CASE OF MAXOPP INVESTMENT LIMITED VS. CIT 203 TAXMAN 364 (COPY OF TH E SAID ORDER IS PLACED BY THE ASSESSEE IN THE PAPER BOOK AT PAGES 87-124 ). IT HAS BEEN HELD THAT RULE 8D IS NOT APPLICABLE RETROSPECTIV ELY, HOWEVER, REASONABLE DISALLOWANCE HAS TO BE MADE. THE LEARNED D R SUBMITTED THAT WITHOUT CONFRONTING TO THE ASSESSING OFFICER IT CA NNOT BE SAID THAT LEARNED CIT (A) HAS REASONABLY WORKED OUT THE DISALLOW ANCE. 4. ON THE OTHER HAND, IT IS THE CASE OF THE LEARNED A R THAT LEARNED CIT (A) WHILE CALCULATING REASONABLE DISALLOWANCE HAS KEPT IN MIND ALL THE RELEVANT FACTS AND, THEREFORE, HIS ORDER SHOULD BE UPHELD. THEREFORE, THE LEARNED AR SUPPORTED THE ORDER OF THE CIT (A) AND ITA NO.5059/DEL/2011 3 CONTENDED THAT LEARNED CIT (A) HAS RIGHTLY CALCULATE D THE DISALLOWANCE AND HIS ORDER SHOULD BE UPHELD. 5. WE HAVE HEARD BOTH THE PARTIES AND THEIR CONTENTI ONS HAVE CAREFULLY BEEN CONSIDERED. THOUGH LEARNED CIT (A) H AS DISCUSSED ALL THE RELATED FIGURES IN HIS ORDER, BUT, APPARENTLY, HE HAS NOT CONFRONTED ALL THESE FIGURES TO THE ASSESSING OFFICER. THE ASSESSING OF FICER HAD MADE ESTIMATED DISALLOWANCE OF 25% OF THE DIVIDEND IN COME. KEEPING IN VIEW THE ENTIRETY OF FACTS, WE ARE OF THE OPINION THAT IT WOULD MEET THE INTEREST OF JUSTICE IF THE MATTER IS RESTORED BACK TO THE FILE OF ASSESSING OFFICER TO RECONSIDER THE DISALLOWANCE KEEPING IN MIND THE AFOREMENTIONED DECISION OF THE HONBLE DELHI HIGH CO URT IN THE CASE OF MAXOPP INVESTMENT LTD. VS. CIT (SUPRA). WE DIRECT ACC ORDINGLY. THE ASSESSING OFFICER WILL GIVE REASONABLE OPPORTUNITY OF HE ARING TO THE ASSESSEE AND AFTER GIVING SUCH OPPORTUNITY, THE ASSESSING OF FICER WILL RE-COMPUTE THE DISALLOWANCE BY TAKING INTO CONSIDERAT ION THE AFOREMENTIONED DECISION OF HONBLE DELHI HIGH COURT AS PER THE PROVISIONS OF LAW. 6 . IN THE RESULT, FOR STATISTICAL PURPOSES THE APPEAL F ILED BY THE REVENUE IS CONSIDERED TO BE ALLOWED IN THE MANNER AFO RESAID. THE ORDER PRONOUNCED IN THE OPEN COURT ON 20.01.20 12. SD/ SD/- [SHAMIM YAHYA] [I.P. BANSAL] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, 20.01.2012. DK ITA NO.5059/DEL/2011 4 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES