DCIT, Circle - 10, Kolkata, Kolkata V. Vatican Commercials Limited, Kolkata

ITA 880/KOL/2011

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 7218 (ITAT-KOLKATA)
• Duration Of Justice: 2 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2011
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 09-06-2011
• Court: TRIBUNAL
• Department Lawyers: K R MONDAL
• Assessee Lawyers: R KUMAR
• 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 NOS.880 & 881/KOL/2011 &' ()/ ASSESSMENT YEARS : 2004-05 & 2006-07 (+, / APPELLANT ) - & - ( ./+, /RESPONDENT) D.C.I.T., CIRCLE-10,, VATICAN COMMERCIALS LTD. KOLKATA -VERSUS- KOLKATA (PAN:AAACV 0690 G) +, 0 1 '/ FOR THE APPELLANT: SHRI K.R.MONDAL ./+, 0 1 '/ FOR THE RESPONDENT: SHRI R.KUMAR '2 / ORDER ( (( ( . .. . ! ! ! !. .. . ) )) ), , , , '# PER SHRI C.D.RAO, AM THE ABOVE APPEALS FILED BY THE REVENUE ARE AGAINST SEPARATE ORDERS DATED 24.03.2011 & 25.03.2011 OF THE CIT(A)-XII, KOLKATA PERTAINING TO A.YRS. 2004-05 AND 2006-07 RESPECTIVELY. 2. THE ONLY ISSUE RAISED IN BOTH THE APPEALS BY THE REVENUE IS RELATING TO RESTRICTING THE DISALLOWANCE TO 1% OF DIVIDEND INCO ME U/S 14A OF THE IT ACT. 3. THE BRIEF FACTS OF THIS ISSUE ARE THAT DURING TH E COURSE OF ASSESSMENT PROCEEDINGS IT WAS OBSERVED BY AO THAT THE ASSESSEE COMPANY HAS CREDITED DIVIDEND INCOME OF RS.7,12,054/- IN A.Y 2004-05 AND RS.16,03 ,272/- IN A.Y. 2006-07 AND SAME WAS CLAIMED EXEMPTED IN COMPUTATION OF TAXABLE INCOME. HOWEVER, THE PROPORTIONATE EXPENDITURE INCIDENTAL TO THE DIVIDEN D INCOME WAS NOT DISALLOWED U/S 14A OF THE ACT. AS A RESULT AO INVOKED PROVISIONS O F RULE 8D TO COMPUTE THE DISALLOWANCE U/S 14A AGGREGATING TO RS.21,33,199/- IN A.Y 2004-05 AND RS.43,94,425/- IN A.YEAR 2006-07 AND ADDED THE SAME TO THE INCOME OF ASSESSEE. 2 3.1. ON APPEAL LD. CIT(A) HAS RESTRICTED THE DISALL OWANCE TO 1% OF THE DIVIDEND INCOME BY OBSERVING AS UNDER :- THE DISALLOWANCE U/S 14A CANNOT BE MADE BY APPLYIN G PROVISIONS OF RULE 8D BECAUSE THE SAID PROVISIONS ARE APPLICABLE FROM A.Y.2008-09 AS HELD BY THE HONBLE BOMBAY HIGH COURT IN TH CASE OF GODREJ & BOYCE MFG.CO LTD. VS DCIT REPORTED IN 234 CTR 1 (BOM). IT IS OBSERVED THAT IN ORDER TO MAKE THE C OMPLIANCE OF PROVISIONS OF SECTION 14A IN THE YEARS PRIOR TO THE YEAR OF APPLICATION OF RULE 8D, IT HAS BEEN HELD BY THE HONBLE ITAT, KOLKATA, IN NUMBER OF CASES, THAT 1% OF EXEMPTED INCOME MAY BE TREATED AS EXPENDITURE INCURRED IN RELATION TO EARN ING OF EXEMPTED 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 APPEALS OF THE REVENUE. 6. IN THE RESULT THE APPEALS OF THE REVENUE ARE DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30.08.2011. SD/- SD/- [ , ] [ . !., '# ] [ MAHAVIR SINGH ] [ C. D. RAO ] JUDICIAL MEMBER ACCOUNTANT MEMBER ( (( (!# !# !# !#) )) ) DATE: 30.08.2011. R.G.(.P.S.) 3 '2 0 .3 4'3(5- COPY OF THE ORDER FORWARDED TO: 1. VATICAN COMMERCIALS LIMITED, 4, LEE ROAD, KOLKATA-7 00020.. 2 THE D.C.I.T., CIRCLE-10, KOLKATA 3. THE CIT, 4. THE CIT(A)-XII, KOLKATA 5. DR, KOLKATA BENCHES, KOLKATA /3 ./ TRUE COPY, '2&:/ BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES