DCIT, CC - VIII, Kolkata, Kolkata V. Pan Emami Cosmed Ltd., Kolkata

ITA 989/KOL/2011

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0483 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2015
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 18-08-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 08-07-2011
• Court: TRIBUNAL
• Department Lawyers: JAI RAJ KUMAR
• Assessee Lawyers: DEV KUMAR KOTHARI
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH B , KOLKATA [BEFORE HON BLE SRI P.K.BANSAL , A M & HON BLE SRI MAHAVIR SINGH , J M] ITA NO. 989/KOL/2011 ASSESSMENT YEAR : 2007 - 08 D.C.I.T., CENTRAL CIRCLE - V III, - VERSUS - PAN EMAMI COSMED LTD. KO LKATA KOLKATA (PAN - AABCP 5150 G) C.O.NO.48/KOL/2011 (A/O ITA NO.989/KOL/2011) ASSESSMENT YEAR : 2007 - 08 ( CROSS OBJECTOR ) - (RESPONDENT) PAN EMAMI COSMED LTD. D.C.I.T., CENTRAL CIRCLE - VIII, KOLKATA - VERSUS - KOLKATA (PAN: AABCP 5150 G) FOR THE APPELLANT : SHRI JAI RAJ KUMAR, CIT(DR) FOR THE RESPONDENT : SHRI DEV KUMAR KOTHARI DATE OF HEARING : 27 .05 .2015 DATE OF PRONOUNCEMENT : 08.06.2015. ORDER PER SHRI P.K.BANSAL, AM THIS APPEAL AS WELL AS THE CROSS OBJEC TION HAVE BEEN FILED BY THE REVENUE AND ASSESSEE AGAINST THE ORDER OF LD . CIT(A) - CENTRAL - I, KOLKATA DATED 04.04.2011 FOR A.YR. 2007 - 08. 2. THE ONLY ISSUE INVOLVED IN THE REVENUE S APPEAL RELATES TO THE RESTRICTION OF DISALLOWANCES 14A OF THE ACT TO 1% OF THE DIVIDEND RECEIVED. 3. THE FACTS RELATING TO THIS CASE ARE THAT THE AO DISALLOWED A SUM OF RS.6,42,60,544/ - U/S 14A OF THE ACT READ WITH RULE 8D OF IT RULES. THE ASSESSEE WENT IN APPEAL BEFORE CIT(A) AND CONTENDED THAT SECTION 14A OF THE ACT IS NO T AT ALL APPLICABLE AS THE ASSESSEE HAS EARNED SUBSTANTIAL TAXABLE SHORT TERM CAPITAL GAIN AT RS.8,83,80,614/ - FROM THE SAME PORTFOLIO, DIVIDEND AT RS.99,92,829/ - AND LONG TERM CAPITAL GAIN AT RS.22,87,735/ - HAVE BEEN TAXED IN OTHER MANNER. SINCE THE ASSE SSEE ITA NO. 989/KOL/2011 PAN EMAMI COSMED LTD. A.YR. 2007 - 08 2 HAS NOT INCURRED ANY EXPENDITURE THE AO HAS NOT ESTABLISHED ANY NEXUS BETWEEN THE EXPENSES AND THE INCOME. THEREFORE SECTION 14A OF THE ACT IS NOT APPLICABLE. IT WAS ARGUED THAT SECURITY TRANSACTION TAX (STT) OF RS.2,18,50,545/ - WAS PAID WHICH IS DISA LLOWED AND DIVIDEND DISTRIBUTION TAX OF R S.14,15,235/ - WAS LEVIED. THEREFORE THE DISALLOWANCE WAS EXCESSIVE AND ONLY DISALLOWANCE EQUAL TO 1% OF DIVIDEND AMOUNTING TO RS.99,929/ - CAN BE ACCEPTED TO BUY PEACE OF MIND. THE LD. CIT(A) REDUCED THE DISALLOWANCE , AFTER NOTING THAT RULE 8D WAS INSERTED W.E.F. 24.03.2008 AND IS NOT APPLICABLE TO THE IMPUGNED ASSESSMENT YEAR , TO 1% OF THE DIVIDEND EARNED IN VIEW OF THE DECISION OF KOLKATA TRIBUNAL IN THE CASE OF M/S. CIVIL ENGINEERS ENTERPRISES (P) LTD VS DCIT IN IT A NO.859/KOL/2010 VIDE ORDER DATED 19 TH AUGUST, 2010 IN RESPECT OF ESTABLISHMENT EXPENSES. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND GONE THROUGH THE ORDERS OF TAX AUTHORITIES BELOW . W E DO NOT FIND ANY ILLEGALITY OR INFIRMITY IN THE ORDER OF LD. CIT(A ) IN SUSTAINING THE DISALLOWANCE IN RESPECT OF ESTABLISHMENT EXPENSES @1% OF THE DIVIDEND EARNED. WE, THEREFORE, DO NOT FIND ANY ILLEGALITY OR INFIRMITY IN THE ORDER OF LD. CIT(A). THUS THE GROUND TAKEN BY THE REVENUE STANDS DISMISSED. 5 . COMING TO THE CR OSS OBJECTION FILED BY THE ASSESSEE , WE NOTED THAT THE ONLY ISSUE INVOLVED IN THIS APPEAL RELATES TO THE SUSTENANCE OF ADDITION OF RS.6,01,75,900/ - ON ACCOUNT OF INTEREST U/S 14A OF THE ACT. THE OTHER GROUND TAKEN IS SUPPORTIVE TO THE ORDER OF LD. CIT(A) B Y WHICH THE LD. CIT(A) REDUCED THE DISALLOWANCE IN RESPECT OF THE ESTABLISHMENT EXPENSES TO RS.99,929/ - . 6 . AFTER HEARING THE RIVAL SUBMISSIONS AND GOING THROUGH THE ORDERS OF TAX AUTHORITIES BELOW, WE NOTED THAT THE ASSESSEE HAS TAKEN MONEY FOR PURCHASE OF SHARES. THE ASSESSEE HAS INCURRED INTEREST EXPENDITURE. THE AO , WHILE CALCULATING THE INTEREST ATTRIBUTABLE TO THE INVESTMENT INCOME FROM WHICH SHALL NOT FORM PART OF THE TOTAL INCOME , HAS DULY ADJUSTED THE INTEREST RECEIVED BY THE ASSESSEE. WE DO NOT FIND ANY MERIT IN THE CONTENTION OF THE LD. AR THAT NO DISALLOWANCE SHALL BE MADE ON THE AMOUNT ADVANCED FOR PURCHASE OF THE SHARES. THE ASSESSEE HAS INVESTED IN THE SHARES ITA NO. 989/KOL/2011 PAN EMAMI COSMED LTD. A.YR. 2007 - 08 3 AND THE INCOME FROM WHICH WILL NOT FORM PART OF THE TOTAL INCOME. THE INCOME HAS BEEN INCURRED IN RESPECT OF SUCH INVESTMENT. THE REVENUE, IN OUR OPINION, IS REASONABLE IN CALCULATING THE INTEREST WHICH IS ATTRIBUTABLE TO THE INVESTMENT INCOME AT RS.6,01,75,900/ - . NO MISTAKES WERE BROUGHT TO OUR KNOWLEDGE IN THE CALCULATION MADE BY THE AUTHORITIES BELOW IN RESPECT OF THE INTEREST AMOUNTING TO RS.6,01,75,900/ - ATTRIBUTABLE TO THE INVESTMENT MADE THE INCOME FROM WHICH WHATSOEVER NOT FORMED PART OF THE TOTAL INCOME OF THE ASSESSEE. WE ACCORDINGLY SUSTAIN THE ORDER OF LD. CIT(A) BY DISALLOW ING THE INTEREST AT RS.6,01,75,900/ - U/S 14A OF THE ACT. 7 . IN THE RESULT THE APPEAL OF THE REVENUE AS WELL AS THE CROSS OBJECTION FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 0 8.06.2015. SD/ - SD/ - [MAHAVIR SINGH ] [P.K.BANSAL] JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 08.06.2015. R.G.(.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . PAN EMAMI COSMED LTD., 687, EMAMI TOWER, 6 TH FLOOR, ANANDPUR, ER.M BYPASS, KOLKATA - 700107. 2 D.C.I.T., CENTRAL CIRCLE - VIII, KOLKATA. 3 . C IT KO LKATA 4. CIT(A) - CENTRAL - I, KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRU E COPY, BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES