Appeal details
Counselvise Citation
[2023] 140 COUNSELVISE.COM (IT) 113506 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
4 year(s) 6 month(s) 13 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
29-06-2023
Appeal Filed By
Assessee
Order Result
Dismissed
Bench Allotted
G
Next Hearing Date
27-06-2023
Assessment Year
2010-2011
Appeal Filed On
16-12-2018
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL "G" BENCH, MUMBAI SHRI B.R. BASKARAN, ACCOUNTANT MEMBER SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER ITA No. 7221/MUM/2018 (Assessment Year: 2010-11) Standard Chartered Capital Limited (formerly known as Standard Chartered Investments and Loans (India) Limited, 6 th Floor, C-38/39, G Block, Bandra Kurla Complex, Bandra (East), Mumbai - 400020 [PAN: AAHCS6432N] Deputy Commissioner of Income Tax -1(3), Mumbai, Aayakar Bhavan, Marine Lines, Mumbai - 400001 ............... Vs ................ Appellant Respondent Appearance For the Appellant/Assessee For the Respondent/Department : : Ms. Riddhi Maru Shri Paresh Deshpande Date Conclusion of hearing Pronouncement of order : : 28.06.2023 30.06.2023 O R D E R Per Rahul Chaudhary, Judicial Member: 1. By way of the present appeal the Appellant has challenged the order, dated 05/10/2018, passed by the Ld. Commissioner of Income Tax (Appeals)-58, Mumbai [hereinafter referred to as ‘the CIT(A)’] for the Assessment Year 2010-11, whereby the Ld. CIT(A) had partly allowed the appeal of the Appellant against the Assessment Order, dated 28/03/2014, passed under Section 143(3) read with Section 144C of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’). ITA No.7221/Mum/2018 (Assessment Year: 2010-11) 2 2. The Appellant has raised following grounds of appeal: “1. The learned Commissioner of Income Tax(Appeals)-58 erred in granting only partial relief on the disallowance of expenses made by the DCIT-1(3) under section 14A of the Income-tax Act, 1961 considering the same as expenses incurred in relation to earning the exempt income. The assessee submits that no notional disallowances for the expenses can be made under Rule 8D (2)(iii) as it has not incurred any direct and indirect expenses incurred related to earning exempt dividend income. Additional Ground Of Appeal Additional Ground No 2: Application of India-UK tax treaty rate for dividends while determining Dividend Distribution Tax Liability (DDT) of the Appellant 2.1. On the facts and in the circumstances of the case and in law, the Learned Assessing Officer (Ld. AO) ought to appreciate that the DDT liability of the Appellant for AY 2010-11 on the dividends declared by it to Standard Chartered Bank, a tax resident of UK shall be restricted to the applicable rate of tax on dividends, as prescribed under the India - UK tax treaty. 2.2 On the facts and in the circumstances of the case and in law, rate prescribed under Article 11 of the India - UK tax treaty should be treated as inclusive of surcharge and education cess and therefore the liability to pay tax under section 115-0 of the Act should not be further increased by surcharge and cess under the provisions of the Act. 2.3. On the facts and in the circumstances of the case and in law, the Ld. AO ought to grant a refund of the DDT paid by the Appellant in excess of the rate of tax on dividends as prescribed under the India - UK tax treaty, along with the corresponding interest due on such refund. Additional Ground No. 3: Deduction of education cess paid by the Appellant while computing the total income under normal provisions of the Act 3.1 On the facts and in the circumstances of the case and in law, the Ld. AO erred in not granting a deduction for Education Cess and Secondary and Higher Education Cess on the income tax paid for AY 2010-11 while computing the Income from Business and Profession.” ITA No.7221/Mum/2018 (Assessment Year: 2010-11) 3 3. Ground No. 1 was raised in appeal before the CIT(A) whereas Additional Ground No. 2 and Additional Ground No. 3 have been raised for the first time before the Tribunal. Ground No. 1 4. We would first take up Ground No. 1 pertaining to disallowance under Section 14A of the Act. 4.1. The relevant facts in brief are that assessment was framed on the Appellant vide Final Assessment Order, dated 28/03/2014 passed under Section 143(3) read with Section 144C of the Act. While framing the assessment, the Assessing Officer made a disallowance of INR 41,25,960/- under Section 14A of the Act by invoking provisions of Rule 8D(2)(iii) of the Income Tax Rules, 1962 (hereinafter referred to as ‘the Rules’). 4.2. The Appellant carried the issue in appeal before CIT(A) who granted partial relief to the Appellant holding as under: “The matter is examined. The decision in ACIT, Circle-17(1). New Delhi Vs Vireet Investment (P) Ltd., ITA No 502 of 2012 (SB) (Del.) goes in favour of Assessing Officer. The Assessing Officer is directed to re-compute disallowance after eliminating investment that did not yield exempt income in computation of average value of investment based on Rule 8D With this direction the ground is disposed of No order prejudicial to assessee should be passed without granting opportunity of being heard. Ground 3 is treated as partly allowed.” 4.3. Not being satisfied with the relief granted by the CIT(A), the Appellant is in appeal before us on this issue. 4.4. We have considered the rival submissions and perused the material on record. We find that the CIT(A) has granted partial relief to the Appellant by directing the Assessing Officer to re-compute ITA No.7221/Mum/2018 (Assessment Year: 2010-11) 4 disallowance under Section 14A of the Act read with Rule 8D(2)(iii) of the Rules after taking into consideration only the investments that yielded exempt income by following the decision of Special Bench of the Tribunal in the case of Assistant Commissioner of Income Tax, circle 17(1), New Delhi Vs. Vireet Investment Pvt. Ltd. : [2017] 58 ITR(T) 313 (Delhi - Trib.) (SB). Therefore, we do not find any infirmity in the order passed by the CIT(A). Ground No. 1 raised by the Appellant is, therefore, dismissed. Additional Ground No. 2 & 3 5. The Appellant had raised Additional Grounds as Additional Ground No. 2 (seeking applicability of tax treaty rate for dividends) and Additional Ground No. 3 (seeking deduction for education cess) before the Tribunal vide letter dated 14/09/2021. However, during the course of the hearing, the Ld. Authorised Representative for the Appellant stated under instruction that the Appellant does not wish to pursue the additional grounds in view of the subsequent developments. Accordingly, Ground No. 2 and 3 raised by the Appellant are dismissed as having not being pressed. 6. In result, the present appeal is dismissed. Order pronounced on 30.06.2023. Sd/- Sd/- (B.R. Baskaran) Accountant Member (Rahul Chaudhary) Judicial Member म ुंबई Mumbai; दिन ुंक Dated : 30.06.2023 Alindra, PS ITA No.7221/Mum/2018 (Assessment Year: 2010-11) 5 आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : 1. अपील र्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आय क्त/ The CIT 4. प्रध न आयकर आय क्त / Pr.CIT 5. दिभ गीय प्रदिदनदध, आयकर अपीलीय अदधकरण, म ुंबई / DR, ITAT, Mumbai 6. ग र्ड फ ईल / Guard file. आिेश न स र/ BY ORDER, सत्य दपि प्रदि //True Copy// उप/सह यक पुंजीक र /(Dy./Asstt. Registrar) आयकर अपीलीय अदधकरण, म ुंबई / ITAT, Mumbai
AI Insights
The case involves Standard Chartered Capital Limited appealing against the order of the CIT(A) which partly allowed their appeal against the Assessment Order passed under Section 143(3) read with Section 144C of the Income Tax Act, 1961 for the Assessment Year 2010-11. The primary contention was regarding the disallowance of expenses under Section 14A related to earning exempt income. The CIT(A) had directed a re-computation of the disallowance, which the appellant contested. Additionally, the appellant raised issues regarding the application of the India-UK tax treaty rate for dividends and the deduction of education cess, which were not pursued during the Tribunal hearing.
