SYLVEX CABLE CO. P. LTD, MUMBAI V. DCIT CEN CIR 37, MUMBAI

ITA 8581/MUM/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3788 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 04-08-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 19-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A DHYANI
• Section: 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI C.N. PRASAD, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER / I .T A NO. 8581/MUM/2011 ( / ASSESSMENT YEAR : 2008 - 09 M/S. SYLVEX CABLE CO. PVT. LTD., 11, HAPPY HOME, 244, WATERFIELD ROAD, BANDRA (W), MUMBAI - 400 050 / VS. THE DY. CIT, CENTRAL CIRCLE - 37 MUMBAI ./ ./ PAN/GIR NO. AAACS 6085L ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY: NONE / RESPONDENT BY: SHRI R.A. DHYANI / DATE OF HEARING : 02 . 0 2 . 201 6 / DATE OF PRONOUNCEMENT : 24 . 0 2 .201 6 / O R D E R PER C.N. PRASAD, JM : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A) - 4 1 , MUMBAI DATED 10.10.2011 PERTAINING TO ASSESSMENT YEAR 200 8 - 0 9 . 2. NONE APPEARED ON BEHALF OF THE ASSESSEE INSPITE OF NOTICE BY RPAD . T HEREFORE WE HEARD THE LD. DEPARTMENTAL REPRESENTATIVE AND DISPOSE OF THIS MATTER EX PARTE ON MERIT. ITA NO. 8581/M/2011 2 3. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITS THAT THE AO WHILE COMPLETING THE ASSESSMENT NOTICED THAT THE ASSE SSEE RECEIVED DIVIDEND INCOME AND THEREFORE DISALLOWED RS. 39,63,654/ - AS EXPENDITURE ATTRIBUTABLE FOR EARNING SUCH INCOME BY INVOKING THE PROVISIONS OF SEC. 14A OF THE ACT. 4. ON APPEAL, THE LD. CIT(A) SUSTAINED THE DISALLOWANCE OBSERVING THAT THE AO COM PUT ED THE DISALLOWANCE U/S. 14A R.W. RULE 8D(2)( III ) BEING 0.5% OF THE AVERAGE VALUE OF INVESTMENT SHOWN IN THE BALANCE SHEET AND THEREFORE THE ACTION OF THE AO IS CORRECT. 5. WE FIND FROM THE ASSESSMENT ORDER THAT THE ASSESSEE IN THE COURSE OF ASSESSMEN T PROCEEDINGS SUBMITTED WORKING OF DISALLOWANCE OF EXPENDITURE U/S. 14A OF THE ACT AND SUCH WORKING WAS MADE CONSIDERING ONLY THOSE INVESTMENT S WHICH WOULD YIELD DIVIDEND. BUT THE AO HAS TAKEN 0 .5% OF AVERAGE VALUE OF TOTAL INVESTMENTS APPEARING IN BALANC E SHEET. 5.1. THE ASSESSEE BEFORE THE LD. CIT(A) SUBMITTED THAT THE AO ERRED IN APPLYING SEC. 14A AND MAKING DISALLOWANCE OF INTEREST AND OTHER EXPENSES OF RS. 39,63,654/ - . IT WAS FURTHER CONTENDED THAT IN ANY EVENT, THE AO IS NOT JUSTIFIED IN DISALLOW ING EXPENSES TO THE TUNE OF RS. 39,63,654/ - WHEN THE ASSESSEE HAS RECEIVED DIVIDEND INCOME OF RS. 21,57,188/ - ONLY. HOWEVER, THE LD. CIT(A) SUSTAINED THE ORDER OF THE LD. CIT(A). HE HAS NOT DEALT WITH THE SUBMISSIONS OF THE ASSESSEE THAT THE DISALLOWANCE SHOULD BE RESTRICTED TO THE EXTENT OF DIVIDEND INCOME ONLY . 6. WE FIND FORCE IN THE SUBMISSIONS OF THE ASSESSEE THAT ONLY THOSE INVESTMENTS WHICH WOULD YIELD DIVIDEND AND WHICH IS EXEMPT SHOULD ITA NO. 8581/M/2011 3 BE CONSIDERED FOR DISALLOWANCE UNDER RULE 8D(2)( III ). WE ALSO HOLD THAT THE DISALLOWANCE UNDER SECTION 14A SHOULD NOT EXCEED THE DIVIDEND INCOME EARNED BY THE ASSESSEE. WE DIRECT THE AO TO RE - COMPUTE THE DISALLOWANCE TAKING ONLY THOSE INVESTMENTS WHICH YIELD DIVIDEND INCOME AND APPLY RULE 8D(2)( III ) AND SUCH D ISALLOWANCE SHOULD NOT EXCEED THE DIVIDEND INCOME EARNED BY THE ASSESSEE. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH FEBRUARY , 201 6 . SD/ - SD/ - ( RAJESH KUMAR ) ( C.N. PRASAD ) / ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBAI ; DATED : 24 TH FEBRUARY , 201 6 . . ./ RJ , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI