DCIT, New Delhi V. Bharat Nidhi Limited, New Delhi

ITA 5980/DEL/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4046 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-05-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 07-03-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 29-12-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH : A NEW DELHI) (DELHI BENCH : A NEW DELHI) (DELHI BENCH : A NEW DELHI) (DELHI BENCH : A NEW DELHI) BEFORE SHRI G.E. VEERABHADRAPPA, HONBLE VICE PRES IDENT AND BEFORE SHRI G.E. VEERABHADRAPPA, HONBLE VICE PRES IDENT AND BEFORE SHRI G.E. VEERABHADRAPPA, HONBLE VICE PRES IDENT AND BEFORE SHRI G.E. VEERABHADRAPPA, HONBLE VICE PRES IDENT AND SHRI A.D. JAIN, JUDICIAL MEMMBER SHRI A.D. JAIN, JUDICIAL MEMMBER SHRI A.D. JAIN, JUDICIAL MEMMBER SHRI A.D. JAIN, JUDICIAL MEMMBER I.T.A. NO.5980/DEL./2010 I.T.A. NO.5980/DEL./2010 I.T.A. NO.5980/DEL./2010 I.T.A. NO.5980/DEL./2010 (ASSESSMENT YEAR : 2007 (ASSESSMENT YEAR : 2007 (ASSESSMENT YEAR : 2007 (ASSESSMENT YEAR : 2007- -- -08) 08) 08) 08) DCIT, CIRCLE 2(1), DCIT, CIRCLE 2(1), DCIT, CIRCLE 2(1), DCIT, CIRCLE 2(1), VS. VS. VS. VS. BHARAT NIDHI L BHARAT NIDHI L BHARAT NIDHI L BHARAT NIDHI LIMITED, IMITED, IMITED, IMITED, NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. 10, DARYAGANJ, 10, DARYAGANJ, 10, DARYAGANJ, 10, DARYAGANJ, NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. (PAN/GIR NO. : AAACB0195J) (PAN/GIR NO. : AAACB0195J) (PAN/GIR NO. : AAACB0195J) (PAN/GIR NO. : AAACB0195J) (APPELLANT) (APPELLANT) (APPELLANT) (APPELLANT) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) ASSESSEE BY : NONE ASSESSEE BY : NONE ASSESSEE BY : NONE ASSESSEE BY : NONE REVENUE BY : SHRI H.K. LAL, SR.DR REVENUE BY : SHRI H.K. LAL, SR.DR REVENUE BY : SHRI H.K. LAL, SR.DR REVENUE BY : SHRI H.K. LAL, SR.DR ORDER ORDER ORDER ORDER PER A.D. JAIN, JM THIS IS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2007-08 AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)- V, NEW DELHI, DATED 27.10.2010, CONTENDING THAT THE CIT(A) HAS ERR ED IN DISALLOWING THE EXPENDITURE U/S 14A OF THE I.T. ACT, 1961. 2. IN THIS CASE, NONE ATTENDED ON BEHALF OF THE ASSESSEE ON THE DATE OF HEARING. HAVING HEARD THE LD.DR., WE PROCEEDED T O DISPOSE OF THE APPEAL EX-PARTE. 3. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE COMPANY H AS RECEIVED DIVIDEND INCOME OF ` 1603118/- WHICH WAS CL AIMED AS EXEMPT INCOME. ASSESSING OFFICER WAS OF THE OPINION THAT EAR NING OF THIS EXEMPT INCOME INVOLVED MANAGEMENT/ESTABLISHMENT EXPEN SES AND OTHER OFFICE EXPENSES BY THE ASSESSEE. HENCE, THE AO P ROCEEDED TO DISALLOW PROPORTIONATE EXPENSES U/S 14A OF THE IT ACT A TTRIBUTABLE TO EARNING DIVIDEND INCOME EXEMPT FROM TAX. ACCORD INGLY, THE AO PROCEEDED TO DISALLOW A SUM OF `1603118/- AS RELATED T O EARNING OF EXEMPT INCOME. 4. UPON ASSESSEES APPEAL, LD. COMMISSIONER OF INCOME TAX (APPEALS) REFERRED THE ITAT DECISION IN THE CASE OF IT O VS. DAGA CAPITAL MANAGEMENT (P) LTD. 119 TTJ 289. THE CIT(A) OBSERV ED THAT AS PER THE ASSESSEES CALCULATION DISALLOWANCE U/S RULE 8D COMES T O ` 1603118/-. HENCE, THE CIT(A) DIRECTED THE ASSESSING O FFICER TO VERIFY THE SAME AND ACCORDINGLY, MODIFY THE FIGURE OF DISALL OWANCE U/S 14A. 5. AGAINST THIS ORDER THE ASSESSEE IS IN APPEAL BEFORE US. 6. WE FIND THAT HONBLE MUMBAI HIGH COURT IN T HE CASE OF GODREJ BOYCE MFG. CO. LTD. VS. DCIT IN ITA NO. 626 OF 2010 234 CTR 1 HAS OVERRULED THE ITAT DECISION OF DAGA CAPITAL MANAGEME NT (SUPRA) AND HELD THAT RULE 8D HAS BEEN NOTIFIED ON 24.3.2008 AND WILL BE APPLICABLE ONLY FROM ASSESSMENT YEAR 2008-09. HENCE, EXPENDITURE REASONABLE RELATED IN THIS REGARD IS TO BE DISALLOWED. ACCORDING LY, FOLLOWING THE PRECEDENT AS ABOVE, WE REMIT THIS ISSUE TO THE FILES OF THE ASSESSING OFFICER TO CONSIDER THE SAME AFRESH. NEEDLESS TO ADD THAT THE ASSESSEE SHOULD BE GIVEN ADEQUATE OPPORTUNITY OF BEING H EARD. 7. IN THE RESULT, APPEAL FILED BY THE DEPARTMENT ST ANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 06.05.11. SD/- SD/- (G.E. VEERABHADRAPPA) (A.D. JAIN) VICE PRESIDENT JUDICIAL MEMBER DATED: MAY 06, 2011. *SKB* COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A)-XVII, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DELHI. AR/ITAT