DCIT, New Delhi V. M/s. S C Johnson Products Pvt. Ltd., New Delhi

ITA 5922/DEL/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97002 (ITAT-DELHI)
• Duration Of Justice: 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 17-08-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 03-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: NAYURTOSHNIWAL ADVS
• Keywords: Retrospective amendment
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G , NEW DELHI BEFORE SHRI H.S.SIDHU , JUDICIAL MEMBER AND SHRI O.P.KANT, ACCOUNTANT MEMBER ITA NO. 5 9 22 /DEL/201 4 AY: 200 6 - 07 DCIT, C IRCLE 7(1) VS. SC JOHNSON PRODUCTS P.LTD. NEW DELHI M 69, M BLOCK MARKET GK I, NEW DELHI PAN: AAACL 3128 M (APPELLANT) (RESPONDENT) A PPELLANT BY : SH. SUJIT KUMAR, SR.D.R. RESPONDENT BY : SH. K.M.GUPTA & SH.NAYURTOSHNIWAL, ADVS. ORDER PER H.S. SIDHU, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DT. 12.8.2014 OF LD.CIT(A) - X, DELHI FOR THE ASSESSMENT YEAR 200 6 - 07 , ON THE FOLLOWING GROUNDS. 1 . ON THE FACTS AND CIRCUMSTANCES OF CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN RESTRICTING THE DISALLOWANCE TO RS.5,21,316/ - AS AGAINST RS.99,30,360/ - MADE U/S 14A OF THE INCOME TAX ACT, 1961. 2. THE APPELLANT CRAVES LEAVE TO ADD ONE OR MORE GROUND OF APPE AL OR TO ALTER/ MODIFY THE EXISTING GROUND BEFORE OR AT THE TIME OF HEARING OF APPEAL. 2. AT THE TIME OF HEARING THE LD.COUNSEL FOR THE ASSESSEE STATED THAT THE ASSESSMENT YEAR IN DISPUTE IS A.Y. 2006 - 07. THE CONTENTIONS OF THE LD.COUNSEL FOR THE ASSESSEE ARE THAT : T HE REVENUE AUTHORITIES HA VE WRONGLY INVOKED THE PROVISIONS OF S.14A OF THE INCOME TAX ACT, 1961 (THE ACT) R.W. RULE 8D OF THE I.T.RULES, 1962 ; S.14A OF THE ACT WAS INTRODUCED BY THE FINANCE ACT, 2001 WITH RETROSPECTIVE EFFECT FROM 1 ST APRIL,1962 ; L ATER ON THE SAID SECTION WAS AMENDED BY THE FINANCE ACT, 2006 WHEREIN SUB SECTION (2) ITA NO.5922/DEL/2014 A.Y. 2006 - 07 SC JOHNSON PRODUCTS PVT.LTD. ~ 2 ~ AND (3) WERE INTRODUCED STATING THAT THE A.O. SHALL DETERMINE THE AMOUNT OF EXPENDITURE INCURRED IN RELATION TO SUCH INCOME WHICH IS NOT LIABLE TO TAX IN ACCORDANCE WITH THE METHOD AS PRESCRIBED ; L ATER ON, THE BOARD INTRODUCED RULE 8D WAS INTRODUCED IN THE I.T. RULES VIDE NOTIFICATION NO.45/2008 W.E.F. 24 TH MARCH, 2008 ; THE SAID PROVISIONS OF AMENDED SECTION 14A WER E APPLICABLE TO SUBSEQUENT TO A.Y. 2007 - 08. HENCE HE CONTENDED THAT IT DOES NOT HAVE ANY APPLICATION FOR THE A.Y. IN QUESTION. 3. LD.SR.D.R. RELIED ON THE ORDER PASSED BY THE ASSESSING OFFICER. 4. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE RELEVANT REC ORDS AVAILABLE WITH US SPECIALLY THE ORDERS PASSED BY THE REVENUE AUTHORITIES. WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSING OFFICER MADE THE ADDITION S IN DISPUTE BY INVOKING RULE 8 D R.W.S.14A OF THE INCOME TAX ACT, 1961 AND DISALLOWED NOTIONAL EXPE NDITURE OF RS.99,30,360/ - AS EXPENDITURE INCURRED TO EARN DIVIDEND INCOME. 5. THE CONTENTION OF THE ASSESSEE THAT THE ASSESSEE HAS NOT INCURRED ANY EXPENDITURE IN EARNING INCOME DURING THE A.Y. IS IN DISPUTE. 6. THE ASSESSEE SUBMITTED THAT RULE 8D WHICH PROVIDES FOR COMPUTATION OF DEEMED DISALLOWANCE WAS PRESCRIBED BY CBDT VIDE NOTIFICATION NO.45/2008 W.E.F. 24 TH MARCH, 2008 AND THEREFORE DOES NOT APPLY TO THE SUBJECT A.Y. FOR THE SAME, THE ASSESSEE HAS RELIED UPON THE FOLLOWING RULINGS. I . MAXOPP INVESTME NT VS. CIT(2011) TAXMAN364 (DEL HC) II . GODREJ AND BOYCE MFG.CO.LTD. VS. DCIT (194 TAXMAN 203 (BOM. HC) III . MINDA INVESTMENTS VS. DCIT (2011) 52 DTR 1 (TRIB.) (ITAT DEL.) IV . DCIT VS. M/S MAHARASTHRA SEAMLESS LTD. (ITA NO.4063/DEL/2006) ITA NO.5922/DEL/2014 A.Y. 2006 - 07 SC JOHNSON PRODUCTS PVT.LTD. ~ 3 ~ V . EXPIRE INFRASTRUCTURE CORPORATI ON LTD. VS. DCIT 2011 - TIOL - 11 - ITAT - DEL VI . KRISHNA MARUTI LTD. VS. ACIT 2011 - TIOL - 106 - ITAT - DEL 7. ACCORDING TO THE ARGUMENT OF THE LD.COUNSEL FOR THE ASSESSEE THAT RULE 8D WAS NOT APPLICABLE DURING THE YEAR IN DISPUTE . IN OUR CONSIDERED VIEW, THE ARGUMENT OF THE LD.COUNSEL FOR THE ASSESSEE DESERVES TO BE ACCEPTED BECAUSE THE ACTION OF THE AO IN COMPUTING THE DISALLOWANCES AS PER RULE 8D (2)(III) OF IT RULES 1962 IS NOT JUSTIFIED FOR THE A.Y. IN DISPUTE. ANY HOW WE FIND THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE OF THE ASSESSEE, THE LD.FIRST APPELLATE AUTHORITY HAS RESTRICTED THE DISALLOWANCES U/S 14A OF THE ACT TO 1% OF THE DIVIDEND BY THE ASSESSEE WHICH AMOUNTS TO RS.5,21,316/ - ONLY AGAINST WHICH THE ASSESSEE HAS NOT FILED ANY APPEAL BEFORE THE TRIBU NAL. KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AND CITATIONS GIVEN BY THE LD.COUNSEL FOR THE ASSESSEE BEFORE THE LD.FIRST APPELLATE AUTHORITY WHICH IS AVAILABLE IN THE IMPUGNED ORDER AT PAGE 5. WE UPHOLD THE IMPUGNED ORDER AND DI SMISS THE APPEAL FILED BY THE REVENUE. 8. IN THE RESULT THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 9 T H AUGUST, 2015 . S D / - S D / - (O.P.KANT) (H .S.SIDHU ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: THE 1 9 T H A UGUST, 2015 *MANGA ITA NO.5922/DEL/2014 A.Y. 2006 - 07 SC JOHNSON PRODUCTS PVT.LTD. ~ 4 ~ COPY OF THE ORDER FORWARDED TO: 1. APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT(A); 5.DR; 6.GUARD FILE BY ORDER ASST. REGISTRAR