DCIT 2(1), MUMBAI V. BATLIBOI LTD, MUMBAI

ITA 7674/MUM/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3813 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 02-04-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 14-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: V MOHAN
• Section: 14A

Judgement Text

ITA NO.7674 OF 2011 BATLIBOI LTD MUMBAI. PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL 'B' BENCH, MUMBAI BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER & DR. S.T.M. PAVALAN, JUDICIAL MEMBER ITA NO.7674/MUM/2011 (ASSESSMENT YEAR: 2008-09) ACIT 2(1) AAYAKAR BHAVAN, ROOM NO.575 5 TH FLOOR, MK ROAD, MUMBAI 400020 VS. M/S BATLIBOI LTD, BHARAT HOUSE, 5 TH FLOOR, 104 BOMBAY SAMACHAR MARG, FORT, MUMBAI 400001 PAN: AAACB 4408 L (APPELLANT) (RESPONDENT) DEPARTMENT BY: SHRI MOHIT JAIN, DR ASSESSEE BY: SHRI V. MOHAN DATE OF HEARING: 02/04/2013 DATE OF PRONOUNCEMENT: 10/04/2013 O R D E R PER B. RAMAKOTAIAH, A.M. THIS IS A REVENUE APPEAL AGAINST THE ORDERS OF THE CIT (A)-4 MUMBAI DATED 04.08.2011 ON THE ISSUE OF DISALLOWNCE UNDER SECTION 14A. THE REVENUE HAS RAISED THE FOLLOWING GROUND: 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT (A) ERRED IN DIRECTING AO TO R ESTRICT THE DISALLOWANCE TO ` .3.10 LAKHS WITHOUT ASSIGNING ANY REASONS AS AGAINST ` .17.02 LAKHS DISALLOWANCE CALCULATED BY AO AS PER RULE 8D RWS 14A. 2. BRIEFLY STATED, ASSESSEE CLAIMED A DIVIDEND AMOUNT OF ` .21,07,875 AS EXEMPT. AO FOLLOWING CONFIRMATION OF DISALLOWANCE AT 0.5% OF THE AVERAGE INVESTMENT IN EARLIER YEARS INV OKED RULE 8D AND DISALLOWED AN AMOUNT OF ` .17,02,000. IT WAS SUBMITTED BEFORE THE CIT (A) THAT DURING THE YEAR ASSESSEE MADE AN INVES TMENT OF ` .25.44 CRORES IN A MAURITIUS SUBSIDIARY KNOWN AS QUEEN PRO JECT MAURITIUS LTD AND FURTHER SUBMITTED THAT THE DIVIDEND RECEIVE D FROM THE SAID MAURITIUS SUBSIDIARY IS TAXABLE EVEN THOUGH NO DIVI DEND WAS RECEIVED DURING THE YEAR. THEREFORE, IT WAS SUBMITT ED THAT THE 0.5% ITA NO.7674 OF 2011 BATLIBOI LTD MUMBAI. PAGE 2 OF 3 DISALLOWANCE CAN ONLY BE MADE IN INVESTMENT MADE ON WHICH DIVIDEND IS NOT TAXABLE. IN SUPPORT, ASSESSEE SUBMI TTED THE AUDITED REPORT AND THE PRINTED BALANCE SHEET OF THE COMPANY BEFORE THE CIT (A). THE LEARNED CIT (A) ACCEPTED THE CONTENTIONS A ND PARTLY SUSTAINED THE DISALLOWANCE RESTRICTING THE DISALLOW ANCE TO ONLY ON THE INVESTMENT ON WHICH THE DIVIDEND WAS EXEMPT. HI S ORDER IN PARA 4 IS AS UNDER: 4. I HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSIONS OF ASSESSEE. DIVIDEND RECEIVED/RECEIVAB LE FROM A FOREIGN SUBSIDIARY OR COMPANY IS TAXABLE AND THEREFORE, NO DISALLOWANCE IS REQUIRED TO BE MADE U NDER SECTION 14A WITH REGARD TO SUCH INVESTMENTS. HENCE, INVESTMENT OF ` .25.44 CRORES IN MAURITIUS SUBSIDIARY BY ASSESSEE IS EXCLUDED OUT OF THE CLOSING BALANCE OF INVESTMENT FOR CALCULATING AVERAGE INVESTMENT AND ACCORDINGLY THE DISALLOWANCE UNDER SECTION 14A BY REVISING THE AVERAGE INVESTMENT FIGURE IN THE CALCU LATION AS PER RULE 8D COMES TO ` .3,10,000 ONLY. THEREFORE, THE DISALLOWANCE IS RESTRICTED TO ` .3,10,000 AND THE GROUND OF THE APPEAL IS PARTLY ALLOWED 3. AFTER HEARING THE RIVAL CONTENTIONS, WE DO NOT SEE ANY REASON TO DIFFER FROM THE ORDER OF THE CIT (A). SINCE THE INVESTMENT WAS MADE IN SUBSIDIARY COMPANY AND THE DIVIDEND IF EARN ED IS TAXABLE, THE LEARNED CIT (A) RIGHTLY EXCLUDED THE AMOUNT FOR CONSIDERING DISALLOWANCE UNDER SECTION 14A. THE REVENUE DID NOT MAKE OUT ANY CASE WHY RULE 8D WAS INVOKED AND HOW THE ENTIRE INV ESTMENT BE CONSIDERED. SINCE THE ORDER OF THE CIT (A) IS ACCOR DING TO THE FACTS AND LAW ON THE ISSUE, WE REJECT THE REVENUE GROUND. 4. IN THE RESULT APPEAL FILED BY THE REVENUE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH APRIL, 2013 SD/- SD/- (DR. S.T.M. PAVALAN) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED 10 TH APRIL, 2013. VNODAN/SPS ITA NO.7674 OF 2011 BATLIBOI LTD MUMBAI. PAGE 3 OF 3 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, B BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI