DCIT, C.C- VII, Kolkata, Kolkata V. M/s. Mega Resources Ltd., Kolkata

ITA 749/KOL/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54463 (ITAT-KOLKATA)
• Duration Of Justice: 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-08-2011
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 16-05-2011
• Court: TRIBUNAL
• Department Lawyers: S K ROY
• Assessee Lawyers: JHAJHARIA
• Keywords: Business income
• Section: 14A

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH A , KOLKATA [ () , , . .. . ! ! ! !. .. . , , , , '# ] ]] ] [BEFORE HONBLE SRI MAHAVIR SINGH, JM & HONBLE S RI C. D. RAO, AM] % % % % /ITA NO.749/KOL/2011 &' ()/ ASSESSMENT YEAR : 2007-08 (+, / APPELLANT ) - & - ( ./+, /RESPONDENT) D.C.I.T., CENTRAL CIRCLE-VII, M/S.MEGA RESOURCES LTD. KOLKATA -VERSUS- KOLKATA (PAN:AADCM 5397 E) +, 0 1 '/ FOR THE APPELLANT: SHRI S.K.ROY ./+, 0 1 '/ FOR THE RESPONDENT: SHRI JHAJHARIA '2 / ORDER ( (( ( . .. . ! ! ! !. .. . ) )) ), , , , '# PER SHRI C.D.RAO, AM THIS IS AN APPEAL FILED BY THE REVENUE AGAINST ORDE R DATED 28.02.2011 OF THE CIT(A)-CENTRAL-II, KOLKATA PERTAINING TO A.YR. 2007 -08. 2. THE ONLY ISSUE RAISED BY THE REVENUE IS RELATING TO RESTRICTING THE DISALLOWANCE TO 1% OF DIVIDEND INCOME U/S 14A OF THE IT ACT. 3. THE BRIEF FACTS OF THIS ISSUE ARE THAT AO HAS DI SALLOWED AN AMOUNT OF RS.31,16,878/- U/S 14A OF THE IT ACT BY APPLYING RU LE 8D OF IT RULES BY OBSERVING AS UNDER :- THE ASSESSEE COMPANY HAS SHOWN DIVIDEND INCOME OF RS.1,17,93,468/- AND LTCG OF RS.4,78,68,111/- AND CLAIMED THE SAME TO BE EXEMPT UNDER SECTION 10(33) & 10(38) OF THE IT ACT, 1961 RESPECTIVELY. A S PER THE PROVISION OF SECTION 14A OF THE I.T.ACT, NO DEDUCTION CAN BE ALL OWED FOR THE EXPENSES RELATING TO EARNING THE EXEMPTED INCOME. THE ASSESS EE WAS ASKED TO EXPLAIN WHY THE PROVISIONS OF SECTION 14A WOULD NOT BE APPL ICABLE. THE ASSESSEE MADE A SUBMISSION IN THIS REGARD AND STATED THAT THEY HA VE NO OBJECTION IN THIS REGARD. ASSESSEES EXPLANATION IS ACCEPTED AND ACCORDINGLY AN AMOUNT OF RS.31,16,878/- IS DISALLOWED U/S 14A FOR EARNING EX EMPTED DIVIDEND INCOME BEING % OF AVERAGE INVESTMENT AS PER RULE 8D. 3.1. ON APPEAL LD. CIT(A) HAS RESTRICTED THE DISALL OWANCE TO 1% OF THE DIVIDEND INCOME AT RS.1,17,93,468/- AND THUS SUSTAINED THE D ISALLOWANCE OF EXPENDITURE AT 2 RS.1,17,935/- AND DIRECTED AO TO ALLOW THE BALANCE EXPENDITURE OF RS.29,98,943/- AS BUSINESS INCOME. 3.2. AGGREIVED BY THIS THE REVENUE IS IN APPEAL BEF ORE US. 4. THE LD. DR APPEARING ON BEHALF OF THE REVENUE RE LIED ON THE ORDERS OF AO. ON THE OTHER HAND, THE LD. COUNSEL APPEARING ON BEHALF OF ASSESSEE RELIED ON THE ORDERS OF LD. CIT(A). 5. AFTER HEARING THE RIVAL SUBMISSIONS AND ON CAREF UL PERUSAL OF MATERIALS AVAILABLE ON RECORD IT IS OBSERVED THAT BY SUSTAINI NG THE DISALLOWANCE U/S 14A AT 1% OF THE DIVIDEND INCOME LD. CIT(A) HAS FOLLOWED THIS TR IBUNALS DECISION. THEREFORE, WE FIND NO INFIRMITY IN THE ORDERS OF LD. CIT(A) TO BE INTERFERED WITH. HENCE WE DISMISS THE APPEAL OF THE REVENUE. 6. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17.08.2011. SD/- SD/- [ , ] [ . !., '# ] [ MAHAVIR SINGH ] [ C. D. RAO ] JUDICIAL MEMBER ACCOUNTANT MEMBER ( (( (!# !# !# !#) )) ) DATE: 17.08.2011. R.G.(.P.S.) '2 0 .3 4'3(5- COPY OF THE ORDER FORWARDED TO: 1. M/S. MEGA RESOURCES LTD., 9, GARDEN REACH ROAD, KOL KATA-700043. 2 THE D.C.I.T., CENTRAL CIRCLE-VII, KOLKATA 3. THE CIT, 4. THE CIT(A)-CENTRAL-II, KOLKATA 5. DR, KOLKATA BENCHES, KOLKATA /3 ./ TRUE COPY, '2&:/ BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES