CTC (India) Pvt Ltd., Kolkata V. D.C.I.T Cir - 6,kolkata., Kolkata

ITA 97/KOL/2013

• Counselvise Citation: 9723514 RSA 2013
• Duration Of Justice: 2 year(s) 9 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 13-11-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 16-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AMIT AGARWAL A
• Section: 14A; 10B

Judgement Text

I.T.A. NO.: 97/ KOL/2013 ASSESSMENT YEAR : 2009-2010 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA C BENCH, KOLKATA BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER I.T.A. NO.: 97/ KOL./ 2013 ASSESSMENT YEAR : 2009-2010 CTC (INDIA) PVT. LIMITED, ......................... ............APPELLANT CENTRE POINT, ROOM NO. 322, 21, HEMANTA BASU SARANI, KOLKATA-700 001 [PAN : AAACC 7022 K] -VS.- DEPUTY COMMISSIONER OF INCOME TAX,.......... RESPONDENT CIRCLE-6, KOLKATA AAYAKAR BHAWAN, KOLKATA APPEARANCES BY: SHRI AMIT AGARWAL, A.C.A., FOR THE APPELLANT SHRI PRABAL CHOWDHURY, JCIT, SR. D.R., FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : NOVEMBER 13, 2015 DATE OF PRONOUNCING THE ORDER : NOVEMBER 13, 2015 O R D E R PER SHRI MAHAVIR SINGH, JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS ARISING OUT O F THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-VI, KOLKATA IN APPEAL NO. 209/CIT(A)-VI/CIR-VI/11-12 DATED 21.11.2012 FOR THE ASSESSMENT YEAR 2009-10. 2. THE FIRST ISSUE IN THIS APPEAL OF ASSESSEE IS AG AINST THE ORDER OF LD. CIT(APPEALS) CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN MAKING DISALLOWANCE OF EXPENSES RELATING TO EXEMPTED INCOM E BY INVOKING SECTION 14A OF THE ACT READ WITH RULE 8D(2)(III) OF THE RULES. FOR THIS, ASSESSEE HAS RAISED FOLLOWING GROUNDS NO. 1 & 2:- (1) FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) ERRED IN LAW AND ON FACTS IN UPHOL DING THE I.T.A. NO.: 97/ KOL/2013 ASSESSMENT YEAR : 2009-2010 PAGE 2 OF 4 DISALLOWANCE MADE U/S 14A READ WITH RULE 8D(2)(III) OF THE INCOME TAX ACT EVEN THOUGH NO PROXIMATE CAUSE BETWE EN THE EXPENSES INCURRED AND EARNING OF TAX FREE INCOM E BY WAY OF DIVIDEND WAS PROVED BY THE LOWER AUTHORITIES . (2) FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE DISALLOWANCE U/S 14A MAY KINDLY BE DELETE D AND/OR REDUCED. 3. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE H AS EARNED DIVIDEND INCOME OF RS.9,32,103/-. ACCORDING TO THE ASSESSING OFFICER, THE ASSESSEE HAS NOT ATTRIBUTED ANY EXPENSES QUA THE INCOME, ACCORDING TO THE ASSESSING OFFICER, EXPENSES RELATABLE TO THIS INCOM E IS TO BE DISALLOWED BY INVOKING THE PROVISIONS OF SECTION 14A OF THE ACT R EAD WITH RULE 8D OF THE RULES. ACCORDING TO THE ASSESSING OFFICER, IT IS NO T POSSIBLE TO EARN DIVIDEND INCOME WITHOUT INCURRING EXPENDITURE AND H ENCE, HE INVOKING RULE 8D OF THE RULES DISALLOWED A SUM OF RS.6,67,90 8/- RELATABLE TO EXEMPTED INCOME BEING AN AMOUNT EQUAL TO 0.5% OF TH E AVERAGE VALUE OF INVESTMENTS, INCOME FROM WHICH DOES NOT OR SHALL NO T PART OF THE TOTAL INCOME. 4. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(APPEALS), WHO ALSO CONFIRMED THE ACTION OF THE ASSESSING OFFICER FOR THE REASON THAT THE ASSESSEE HAS NOT DISALLOWED ANY EXPENSES ON ACCOUNT OF ADMINISTRATIVE AND ESTABLISHMENT EXPENSES AND HENCE, THE ASSESSING OFFICER HAS RIGHTLY DISALLOWED AVERAGE OF INVESTMENTS AT 0.5% BY APPLYI NG RULE 8D. HENCE, HE CONFIRMED THE DISALLOWANCE. 5. AGGRIEVED, NOW THE ASSESSEE CAME IN APPEAL BEFOR E THE TRIBUNAL. 6. BEFORE US, LD. COUNSEL FOR THE ASSESSEE PRODUCED DETAILS OF INVESTMENTS AND DIVIDEND EARNED. LD. COUNSEL FOR TH E ASSESSEE IN VIEW OF DETAILS OF INVESTMENTS STATED THAT IT IS SUCH INVES TMENT IN RESPECT OF WHICH DIVIDEND INCOME OR EXEMPTED INCOME HAS BEEN E ARNED, WHICH CAN ONLY BE CONSIDERED FOR DISALLOWANCE WHILE COMPUTING THE INCOME BY I.T.A. NO.: 97/ KOL/2013 ASSESSMENT YEAR : 2009-2010 PAGE 3 OF 4 INVOKING THE PROVISIONS OF SECTION 14A OF THE ACT R EAD WITH RULE 8D OF THE RULES. LD. COUNSEL FOR THE ASSESSEE RELIED ON THE D ECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF RE I AGRO LIMITED VS.- DCIT IN ITA NO. 1331/KOL/2011, ORDER DATED 19.06.20 13, WHEREIN THE TRIBUNAL IN PARA 8.1 HAS GIVEN FOLLOWING DIRECTION: - 8.1. THUS, NOT ALL INVESTMENTS BECOME THE SUBJECT MATTER OF CONSIDERATION WHEN COMPUTING DISALLOWANCE UNDER SEC TION 14A READ WITH RULE 8D. THE DISALLOWANCE UNDER SECTION 1 4A READ WITH RULE 8D IS TO BE IN RELATION TO THE INCOME WHICH DO ES NOT FORM PART OF THE TOTAL INCOME AND THIS CAN BE DONE ONLY BY TAKING INTO CONSIDERATION THE INVESTMENT WHICH HAS GIVEN RISE T O THIS INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME. UNDER THE CIRCUMSTANCES, THE COMPUTATION OF THE DISALLOWANCE UNDER SECTION 14A READ WITH RULE 8D(2)(III), WHICH IS ISS UE IN THE ASSESSEES APPEAL, IS RESTORED TO THE FILE OF THE A O FOR RECOMPUTATION IN LINE WITH THE DIRECTION GIVEN ABOV E. NO DISALLOWANCE UNDER SECTION 14A READ WITH RULE 8D(2) (I) AND (II) CAN BE MADE IN THIS CASE. LD. COUNSEL FOR THE ASSESSEE IN VIEW OF ABOVE DIREC TION STATED THAT LET THE ISSUE BE SET ASIDE TO THE FILE OF ASSESSING OFFICER FOR DISALLOWING ONLY THE ITEMS WHICH IS GIVING DIVIDEND INCOME. ON THE OTHER HAND, LD. SR. D.R. SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 7. WE FIND FROM THE ABOVE FACTS AND CIRCUMSTANCES O F THE CASE THAT THE PLEA OF THE ASSESSEES LD. COUNSEL IS QUITE REASONA BLE FOR THE REASON THAT THE DISALLOWANCE UNDER SECTION 14A OF THE ACT READ WITH RULE 8D OF THE RULES IS TO BE IN RELATION TO THE INCOME, WHICH DOE S NOT FORM PART OF THE TOTAL INCOME AND THIS CAN BE DONE ONLY BY TAKEN INT O CONSIDERATION THE INVESTMENT, WHICH HAS GIVEN RISE TO THE INCOME. WE DIRECT THE ASSESSING OFFICER TO DISALLOW ONLY 0.5% OF AVERAGE OF INVESTM ENTS, WHICH GIVE RISE TO DIVIDEND INCOME. WE DIRECT ACCORDINGLY. 8. THE NEXT ISSUE IN THIS APPEAL OF THE ASSESSEE IS AGAINST THE ORDER OF LD. CIT(APPEALS) CONFIRMING THE ACTION OF THE ASSES SING OFFICER IN DISALLOWING DEDUCTION UNDER SECTION 10B OF THE ACT. FOR THIS, THE ASSESSEE HAS RAISED FOLLOWING GROUND NO. 3:- I.T.A. NO.: 97/ KOL/2013 ASSESSMENT YEAR : 2009-2010 PAGE 4 OF 4 FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) WAS NOT JUSTIFIED IN NOT DIRECTING THE A O TO GRANT DEDUCTION U/S 10B OF THE I.T. ACT IN RESPECT OF THE ENTIRE GAIN DERIVED ON EXCHANGE FLUCTUATION WHICH HAD INTRINSICALLY RELATED TO EXPORT OF GOODS AND THEREF ORE QUALIFIED FOR DEDUCTION U/S 10B OF THE ACT. 9. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE STAT ED THAT HE HAS NOT INTERESTED IN PROSECUTING THIS GROUND OF APPEAL FOR THE REASON THAT THE ASSESSING OFFICER HAS ALREADY ALLOWED RELIEF TO THE ASSESSEE WHILE GIVING EFFECT TO THE ORDER OF LD. CIT(APPEALS). ON QUERY F ROM THE BENCH, LD. SR. D.R. HAS NOT OBJECTED TO THIS WITHDRAWAL OF THIS GR OUND. ACCORDINGLY, THIS GROUND IS PERMITTED TO BE WITHDRAWN. HENCE, THE SAM E IS DISMISSED AS WITHDRAWN. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH DAY OF NOVEMBER, 2015. SD/- SD/- WASEEM AHMED MAHAVIR SINGH (ACCOUNTANT MEMBER (JUDIC IAL MEMBER) KOLKATA, THE 13 TH DAY OF NOVEMBER, 2015 COPIES TO : (1) CTC (INDIA) PVT. LIMITED, CENTRE POINT, ROOM NO. 322, 21, HEMANTA BASU SARANI, KOLKATA-700 001 (2) DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-6, KOLKATA AAYAKAR BHAWAN, KOLKATA (3) CIT(A)-VI, KOLKATA (4) CIT (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ETC ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.