Govind Commercial Co. Ltd., Kolkata V. THE DCIT, CIR-7, KOLKATA, Kolkata

ITA 60/KOL/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1068 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 9 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-11-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 13-01-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S YADEN
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : KOLKATA [BEFORE HONBLE SHRI M.BALAGANESH, AM & SHRI S.S. VISWANETHRA RAVI, JM] I.T.A NO. 60/KOL/2016 ASSESSMENT YEAR : 2010-1 1 GOVIND COMMERCIAL CO. LTD. -VS- DCIT, CIRCLE-7, KOLKATA [PAN: AABCG 1643 D] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : NILIMA JOSHI, FCA FOR THE RESPONDENT : SHRI S.YADEN, ADDL. CIT. DATE OF HEARING : 08.11.2017 DATE OF PRONOUNCEMENT : 08.11.2017 ORDER PER M.BALAGANESH, AM 1. THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE OR DER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-11, KOLKATA [IN SHORT THE LD CI T(A)] IN APPEAL NO. 559/CIT(A)- 11/CIR-7(1)/14-15/KOL DATED 26.11.2015 AGAINST THE ORDER PASSED BY THE DCIT, CIRCLE- 7, KOLKATA [ IN SHORT THE LD AO] UNDER SECTION 14 3(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 18.01.2013 FOR THE ASSESSME NT YEAR 2010-11. 2. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS A S TO WHETHER THE LD. CIT(A) WAS JUSTIFIED IN CONFIRMING THE DISALLOWANCE OF RS. 31, 44,117/- U/S 14A OF THE ACT, IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE BRIEF FACT OF THIS ISSUE IS THAT THE ASSESSE E IS A NON-BANKING FINANCIAL COMPANY AND HAD FILED ITS RETURN OF INCOME FOR THE ASSESSME NT YEAR 2010-11 ELECTRONICALLY ON 27.09.2010 DISCLOSING THE TOTAL INCOME OF RS. 4,02, 16,360/-. THE ASSESSEE WAS IN RECEIPT 2 ITA NO.60/KOL/2016 GOVIND COMMERCIAL CO. LTD. A.YR.2010-11 2 OF DIVIDEND INCOME OF RS. 49,68,757/-WHICH WAS CLAI MED AS EXEMPT. THE ASSESSEE MADE A DISALLOWANCE OF RS. 1,84,552/- U/S 14A OF THE ACT AS UNDER:- (I) DISALLOWANCE OF DIRECT EXPENSES ON ACCOUNT OF D EMAT CHARGES RS.14705/- (II) DISALLOWANCE OF SECURITY TRANSACTION TAX RS.121734/- (III) DISALLOWANCE OF ADMINISTRATIVE EXPENSES RS.48113/- TOTAL RS. 1,84,552/- THE LD. AO INVOKED THE PROVISION OF RULE 8D AND MAD E DISALLOWANCE UNDER THE THIRD LIMB THEREON AT 0.5% OF AVERAGE VALUE OF INVESTMENT AND ACCORDINGLY ARRIVED AT THE DISALLOWANCE FIGURE OF RS. 31,92,230/-. THE LD. AO REDUCED A SUM OF RS. 48,113/- ALREADY DISALLOWED BY THE ASSESSEE ON ACCOUNT OF A DMINISTRATIVE EXPENSES AND ACCORDINGLY, DISALLOWED THE REMAINING SUM OF RS. 31 ,44,117/- U/S 14A OF THE ACT READ WITH RULE 8D(2)(III) OF THE RULES. THIS ACTION OF T HE LD. AO WAS UPHELD BY THE LD. CIT(A). AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS: 1.A. THAT THE CIT (APPEAL) HAS ERRED IN LAW AND ON FACTS OF THE CASE WHILE CONFIRMING DISALLOWANCE UNDER SECTION 14A OF THE IN COME TAX ACT, 1961. 1.B. THAT THE APPELLANT ITSELF HAVING CORRECTLY DIS ALLOWED A SUM OF RS. 1,84,552/- UNDER SECTION 14A. BUT CIT(APPEAL) IGNORED THAT FAC T. 1.C. AS THE LEARNED CIT(APPEAL) HAS ERRED IN LAW AN D ON FACTS IN CONFIRMING THE DISALLOWANCE OF RS. 31,44,117.00 UNDER SECTION 14A OF THE INCOME TAX ACT, 1961 WHICH IS NOT IN CONFORMITY WITH LEGAL PROVISIONS. 2. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND OTHER OR FURTHER GROUNDS OF APPEAL ON OR BEFORE THE DATE OF HEARING. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS. DURING THE COURSE OF HEARING, THE LD. AR SUBMITTED THE LIST OF INVESTMENTS WHICH HAD YIELDED THE DIVIDEND TO THE ASSESSEE DURING THE YEAR UNDER APPEAL AND PRAYED FOR CONSIDERATION OF THE SAME FOR MAKING DISALLOWANCE UNDER RULE 8D(2)(III) IN ACCORDANCE WITH THE DECISI ON OF CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF REI AGRO LTD. REPORTED IN 144 ITD 141 (KOL-TRIBUNAL). WE FIND 3 ITA NO.60/KOL/2016 GOVIND COMMERCIAL CO. LTD. A.YR.2010-11 3 LOT OF FORCE IN THE ARGUMENT OF THE LD. AR IN THIS REGARD AND ACCORDINGLY DIRECT THE LD. AO TO MAKE DISALLOWANCE UNDER RULE 8D(2)(III) BY CO NSIDERING ONLY DIVIDEND BEARING INVESTMENTS THEREON. THE LD. AO IS ALSO DIRECTED TO REDUCE THE SUM OF RS. 48,113/- ALREADY DISALLOWED BY THE ASSESSEE ON ACCOUNT OF A DMINISTRATIVE EXPENSES. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE PARTLY ALLO WED. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 08.11.2017 SD/- SD/- [S.S. VISWANETHRA RAVI] [ M.BALAGA NESH ] JUDICIAL MEMBER ACCOUNTANT MEM BER DATED : 08.11.2017 SB, SR. PS COPY OF THE ORDER FORWARDED TO: 1. GOVIND COMMERCIAL COMPANY LTD., 216, A.J.C. BOSE ROAD, KOLKATA(WEST BENGAL)-700017 2. DCIT, CIRCLE-7, KOLKATA 3..C.I.T.- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVAT E SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHE S