CSL Securities (P) Ltd., New Delhi V. DCIT, New Delhi

MA 568/DEL/2010

• Counselvise Citation: [2011] 123 COUNSELVISE.COM (IT) 6889 (ITAT-DELHI)
• Duration Of Justice: 9 month(s) 23 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 30-09-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2001-2002
• Appeal Filed On: 07-12-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: V MOHAN
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH FRIDAY-E NEW DELHI) BEFORE SHRI RAJPAL YADAV AND SHRI SHAMIM YAHYA MISCELLANEOUS APP. NO. 568/DEL/2010 ( IN I.T..A. NO. 1817/DEL/2005) ASSESSMENT YEAR : 2001-02 CSL SECURITIES (P) LTD., VS. DEPUTY CIT, 36 SANT NAGAR, EAST OF KAILASH, CENTRAL CIRCLE-3 , NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) APPLICANT BY: S/SHRI VED JAIN & V. MOHAN , CA RESPONDENT BY: SHRI ROHIT GARG, DR ORDER PER RAJPAL YADAV: JUDICIAL MEMBER THE PRESENT MISCELLANEOUS APPLICATION IS DIRECTED A T THE INSTANCE OF THE ASSESSEE POINTING OUT AN APPARENT ERROR IN THE ORDER OF THE ITAT DATED 12.11.2010 PASSED IN ITA NO.1817/DEL/05 IN ASSESSME NT YEAR 2001-02. THE REVENUE IN ITS APPEAL HAS CHALLENGED DELETION OF RS .9,28,216 OUT OF THE TOTAL DISALLOWANCE MADE AT RS.10,48,682 TOWARDS EXPENSES RELATING TO EARNING OF DIVIDEND INCOME. THE ASSESSEE HAS DIVIDEND INCOME O F RS.56,51,977 WHICH WAS CREDITED IN THE PROFIT AND LOSS ACCOUNT. IT DID NOT CLAIM DIVIDEND INCOME AS EXEMPT FROM TAX UNDER SEC. 10(33) OF THE INCOME- TAX ACT, 1961, WHILE FILING THE RETURN OF INCOME. HOWEVER, DURING THE CO URSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE FILED A LETTER ON 23.3.20 04 AT THE FAG END OF THE ASSESSMENT PROCEEDINGS. IT CLAIMED THE DIVIDEND INC OME AS EXEMPT FROM TAX. 2 ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS NOT A TTRIBUTED EXPENSES RELATING TO EARNING DIVIDEND INCOME. IN HIS OPINION , EXPENSES RELATABLE TO EARNING OF DIVIDEND INCOME DESERVES TO BE DISALLOWE D UNDER SEC. 14A OF THE ACT. ON AN ESTIMATE BASIS, HE DISALLOWED 5% OF THE OVERHEAD EXPENSES TOTALING TO RS.10,48,682. ON APPEAL, LEARNED CIT(AP PEALS) DELETED THE DISALLOWANCE. 2. THE TRIBUNAL WHILE ADJUDICATING THIS ISSUE HAS R EMITTED THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER ON THE GR OUND THAT HON'BLE MUMBAI HIGH COURT IN THE CASE OF GODREJ BOYCE REPORTED IN 328 ITR 81 HAS HELD THAT RULE 8D HAS BEEN NOTIFIED ON 24.3.2008 AND WILL BE APPLICABLE ONLY FROM THE ASSESSMENT YEAR 2008-09. THUS, IN THIS ASSESSMENT Y EAR, THE DISALLOWANCE HAS TO BE WORKED OUT AFTER CONSIDERING THE SURROUND ING CIRCUMSTANCES. THE ITAT IN THIS WAY REMITTED THE ISSUE BACK TO THE FIL E OF THE ASSESSING OFFICER. 3. IN THE MISCELLANEOUS APPLICATION, ASSESSEE HAS P LEADED THAT ONE OF THE REASONING ASSIGNED BY THE ITAT FOR SETTING ASIDE TH E ISSUE TO THE FILE OF THE ASSESSING OFFICER IS THAT ASSESSEE HAS SUBMITTED A COMPUTATION EXHIBITING THE DISALLOWANCE REQUIRED TO BE MADE FOR THE PURPOS E OF SECTION 14A OF THE ACT. THIS COMPUTATION WAS NOT CONFRONTED TO THE ASS ESSING OFFICER AND, 3 THEREFORE, THE ITAT HAS SET ASIDE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER. THE LEARNED COUNSEL FOR THE ASSESSEE WHILE TAKING US THROUGH THE RECORD SUBMITTED THAT A REMAND REPORT WAS CALLED FO R FROM THE ASSESSING OFFICER. THE FIRST REMAND REPORT WAS SUBMITTED ON 2 3.11.2004. IN THIS REMAND REPORT, ASSESSING OFFICER DID NOT MAKE ELABO RATE SUBMISSIONS ON THE DISALLOWANCE MADE UNDER SEC. 14A OF THE ACT,. THE A SSESSEE HAS FILED REJOINDER TO THE REMAND REPORT AND, THEREAFTER LEAR NED COMMISSIONER CALLED FOR THE SECOND REMAND REPORT. THE SECOND REMAND REP ORT WAS SUBMITTED ON 17.1.2005 AND ASSESSING OFFICER HAS MADE HIS COMMEN TS ON THE ALLEGED COMPUTATION SUBMITTED BY THE ASSESSEE. THEREFORE, A N APPARENT ERROR HAS BEEN COMMITTED BY THE ITAT IN OBSERVING THAT ASSESS ING OFFICER WAS NOT CONFRONTED ON THE COMPUTATION MADE BY THE ASSESSEE. ON THE OTHER HAND, LEARNED DR SUBMITTED THAT THERE IS NO APPARENT ERRO R IN THE ORDER OF THE ITAT. THE ITAT HAS SET ASIDE THE ISSUE AFTER DELIBE RATING UPON ALL THE DETAILS. 4. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AN D GONE THROUGH THE RECORD CAREFULLY. NO DOUBT THE ITAT HAS SET ASIDE T HE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR READJUDICATION WITH REGARD TO THE EXPENSES ATTRIBUTABLE TO EARNING OF DIVIDEND INCOME. THE ASSESSEE HAS DEB ITED TOTAL EXPENSES AT 4 RS.2,09,73,645. IT HAS TRADED IN SHARES AND THERE W AS SPECULATIVE BUSINESS. ASSESSING OFFICER HAS ALLOCATED 10% OF EXPENSES REL ATABLE TO SPECULATION BUSINESS AND IN THIS WAY HE WORKED OUT A SUM OF RS. 20,93,364 WHICH HAS BEEN APPORTIONED FROM THE SHARE TRADING BUSINESS AN D ALLOCATED TOWARDS SPECULATIVE BUSINESS FOR THE PURPOSE OF CARRIED FOR WARD. LEARNED CIT(APPEALS) HAS MADE DETAILED DISCUSSION WITH REGA RD TO THE EXPENSES RELATING TO SHARE TRADING WHILE DEALING WITH THIS I SSUE. HE HAS NOT DELIBERATED UPON THE OBJECTIONS SUBMITTED BY THE ASSESSING OFFI CER, WITH REGARD TO THE EXPENSES RELATABLE TO EARNING OF DIVIDEND INCOME. W E HAVE CONSIDERED ALL THESE DETAILS WHILE REMITTING THIS ISSUE TO THE FIL E OF THE ASSESSING OFFICER. WE WERE OF THE OPINION THAT OBJECTIONS OF THE ASSES SING OFFICER HAVE NOT BEEN DEALT WITH SPECIFICALLY BY THE LEARNED CIT(APP EALS) BEFORE DELETING THE DISALLOWANCE. A SMALL ERROR DOES CREPT IN IN MAKING AN OBSERVATIONS THAT ASSESSING OFFICER WAS NOT CONFRONTED WITH REGARD TO THE COMPUTATION. WE EXPUNGE THE FOLLOWING LINE FROM THE ORDER OF THE IT AT: HOWEVER, WE FIND THAT SUBMISSIONS AND COMPUTATION DONE BY THE ASSESSEE WERE NOT REVIEWED BY THE ASSESSING OFFICER AND WERE SUBMITTED BEFORE THE LEARNED CIT(APPEALS) ALONE INSTEAD OF THESE LINES, WE OBSERVE THAT LEARNED CIT (APPEALS) HAS NOT TAKEN INTO COGNIZANCE SPECIFICALLY THE OBJECTIONS MADE BY THE ASSESSING OFFICER IN 5 THE REMAND REPORT. FROM THE ORDER OF THE LEARNED CI T(APPEALS), FUND FLOW STATEMENT FOR THE PURPOSE OF INVESTMENT IS NOT DISC ERNIBLE. LEARNED CIT(APPEALS) HAS ACCEPTED THE SUBMISSIONS MADE BY T HE ASSESSEE WITHOUT VERIFYING THEM AND WITHOUT LOOKING INTO THE OBJECTI ONS RAISED BY THE ASSESSING OFFICER. WE DO NOT FIND ANY MISTAKE IN RE MITTING THE ISSUE TO THE FILE OF THE ASSESSING OFFICER. 5. IN VIEW OF THE ABOVE DISCUSSION, THE MISCELLANEO US APPLICATION FILED BY THE ASSESSEE IS PARTLY ALLOWED AS STATED ABOVE F OR STATISTICAL PURPOSES. DECISION PRONOUNCED IN THE OPEN COURT ON 30.09.201 1 SD/- SD/- ( SHAMIM YAHYA ) ( RAJPA L YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBE R DATED: 30/09/2010 MOHAN LAL COPY FORWARDED TO: 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR:ITAT ASSISTANT REGISTRAR