ITO, Ward - 29(4), Kolkata, Kolkata v. Smt. Nandini Pasari, Kolkata

ITA 1020/KOL/2011 | 2007-2008
Pronouncement Date: 22-11-2011 | Result: Dismissed

Appeal Details

RSA Number 102023514 RSA 2011
Assessee PAN AGDPP7573L
Bench Kolkata
Appeal Number ITA 1020/KOL/2011
Duration Of Justice 4 month(s) 4 day(s)
Appellant ITO, Ward - 29(4), Kolkata, Kolkata
Respondent Smt. Nandini Pasari, Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 22-11-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 22-11-2011
Assessment Year 2007-2008
Appeal Filed On 18-07-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA () BEFORE . . ! '# '# '# '# /AND ' $# ! ) [BEFORE SHRI S. V. MEHROTRA AM & SRI MAHAVIR SINGH JM] #% #% #% #% / I.T.A NO. 1020/KOL/2011 $&' '() $&' '() $&' '() $&' '()/ // / ASSESSMENT YEAR: 2007-08 INCOME-TAX OFFICER WD-29(4) KOLKATA VS. SMT. NAN DINI PASARI (PAN:AGDPP 7573 L) (+ /APPELLANT ) (-.+ / RESPONDENT ) DATE OF HEARING: 22.11.2011 DATE OF PRONOUNCEMENT: 22.11.2011 FOR THE APPELLANT: SHRI P. S. DUTTA FOR THE RESPONDENT: SHRI RAJEEVA KUMAR / / ORDER PER MAHAVIR SINGH JM ( ' $# ' $# ' $# ' $# ! ! ! ! ) THIS APPEAL BY REVENUE IS ARISING OUT OF ORDER OF C IT(A)-XVI KOLKATA IN APPEAL NO.58/CIT(A)-XVI/WD.29(4)/09-10 DATED 12.01.2011. A SSESSMENT WAS FRAMED BY ITO WD- 29(4) KOLKATA U/S.143(3) OF THE INCOME TAX ACT 19 61 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2007-08 VIDE HIS ORDER DATED 14.12. 2009. 2. THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS AGA INST THE ORDER OF CIT(A) RESTRICTING THE DISALLOWANCE U/S. 14A OF THE ACT AT 1% OF THE TOTAL EXEMPT INCOME. FOR THIS REVENUE HAS RAISED FOLLOWING GROUND NOS. 1 AND 2: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE TH E LD. CIT(A) ERRED IN DISLODGING A LOGICAL AND TRANSPARENT VIEW (RULE-8D) WHICH WAS IN VOKED FOR CALCULATION OF DISALLOWANCE U/S. 14A SIMPLY ON THE GROUND THAT THE SAID RULE CANNOT BE INVOKED RETROSPECTIVELY. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN RESTRICTING THE DISALLOWANCE U/S. 14A AT 1% OF THE TOTAL EXEMPT INC OME. 3. BRIEFLY STATED FACTS OF THE CASE ARE THAT DURIN G THE YEAR UNDER CONSIDERATION THE ASSESSEE FILED RETURN ON 31.10.2007 DECLARING A TOTAL INCOME OF RS.67 500/-. ASSESSMENT WAS COMPLETED U/S. 143(3) OF THE ACT ON A TOTAL INCOME OF RS.17 5 0 659/-. DURING THE ASSESSMENT PROCEEDINGS ASSESSING OFFICER FOUND THAT ASSESSEE WAS EARNING E XEMPT INCOME. MOREOVER HE OBSERVED THAT IT WAS APPARENT FROM THE BALANCE SHEET THAT THE LIA BILITY SIDE CONSISTED OF LOAN AND THE ASSET SIDE 2 ITA 1020/K/2011 SM T. NANDINI PASARI. A.Y.07-08 CONSISTED OF NON-PERFORMING ASSET. AS THERE WAS NO NEXUS BETWEEN THE INTEREST PAID AND THE INCOME EARNED ASSESSING OFFICER APPLIED RULE 8D OF THE I. T. RULES 1962 (HEREINAFTER REFERRED TO AS THE RULE) FOR DETERMINING THE INTEREST TO B E DISALLOWED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. AGGRIEVED ASSESSEE PREFERRED APPEAL BEFORE CIT(A) WHO RESTRICTED THE DISALLOWANCE @ 1% OF TOTAL EXEMPT INCOME BY FOLLOWI NG THE DECISION OF GODREJ & BOYCEE MANUFACTURING CO. LTD. VS. DCIT (2010) 234 CTR 1 (M UM.). AGGRIEVED REVENUE IS NOW IN APPEAL BEFORE US. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT CIT(A) RESTRICTED THE DISALLOWANCE @ 1 % OF TOTAL EXEMPT INCOME BY FOLLOWING THE DECISION OF GODREJ & BOYCE MANUFACTURING CO. LTD. V S. DCIT [2010] 328 ITR 81 (BOM.). THE HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & B OYCE MFG. CO. LTD. (SUPRA) HAS ALREADY HELD THAT APPLICABILITY OF RULE 8D OF THE RULES IS PROSPECTIVE AND NOT RETROSPECTIVE W.E.F. ASSESSMENT YEAR 2008-09 WHEREIN HONBLE HIGH COURT HAS ALSO DIRECTED TO RECOMPUTE THE DISALLOWANCE IN CASE THERE IS A NEXUS FOR EXPENSES WITH EXEMPT INCOME BY LAYING DOWN THE PRINCIPLE AS UNDER: (V) THE PROVISIONS OF RULE 8D OF THE INCOME-TAX RU LES WHICH HAVE BEEN NOTIFIED WITH EFFECT FROM MARCH 24 2008 SHALL APPLY WITH E FFECT FROM THE ASSESSMENT YEAR 2008-09; (VI) EVEN PRIOR TO THE ASSESSMENT YEAR 2008-09 WHE N RULE 8D WAS NOT APPLICABLE THE ASSESSING OFFICER HAS TO ENFORCE TH E PROVISIONS OF SUB-SECTION (1) OF SECTION 14A. FOR THAT PURPOSE THE ASSESSING OFF ICER IS DUTY BOUND TO DETERMINE THE EXPENDITURE WHICH HAS BEEN INCURRED I N RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THE AC T. THE ASSESSING OFFICER MUST ADOPT A REASONABLE BASIS OR METHOD CONSISTENT WITH ALL THE RELEVANT FACTS AND CIRCUMSTANCES AFTER FURNISHING A REASONABLE OPPORTU NITY TO THE ASSESSEE TO PLACE ALL GERMANE MATERIAL ON THE RECORD; (VII) THE PROCEEDINGS FOR THE ASSESSMENT YEAR 2002 -03 SHALL STAND REMANDED BACK TO THE ASSESSING OFFICER. THE ASSESSING OFFICE R SHALL DETERMINE AS TO WHETHER THE ASSESSEE HAS INCURRED ANY EXPENDITURE ( DIRECT OR INDIRECT) IN RELATION TO DIVIDEND INCOME/INCOME FROM MUTUAL FUNDS WHICH D OES NOT FORM PART OF THE TOTAL INCOME AS CONTEMPLATED UNDER SECTION 14A. THE ASSESSING OFFICER CAN ADOPT REASONABLE BASIS FOR EFFECTING THE APPORTIONM ENT. WHILE MAKING THAT DETERMINATION THE ASSESSING OFFICER SHALL PROVIDE A REASONABLE OPPORTUNITY TO THE ASSESSEE OF PRODUCING ITS ACCOUNTS AND RELEVANT AND GERMANE MATERIAL HAVING A BEARING ON THE FACTS AND CIRCUMSTANCES OF THE CAS E WE FURTHER FIND THAT THE TRIBUNAL KOLKATA BENCH ON THE SELF SAME FACTS IN THE CASE OF SAGRIKA GOODS & SERVICES PVT. LTD. VS. INCOME-TAX OFFICER I.T.A NO. 1278/KOL/2010 ASSESSMENT YEAR 2005-06 DATED 24 TH SEPTEMBER 2010 HAS HELD AS UNDER: 5. HEARD THE RIVAL SUBMISSIONS PERUSED THE MATERIAL A VAILABLE ON RECORD AND THE DECISIONS RELIED ON BY THE LD. AUTHORISED REPRE SENTATIVE OF THE ASSESSEE CITED 3 ITA 1020/K/2011 SM T. NANDINI PASARI. A.Y.07-08 SUPRA. WE FIND THAT ON THE ISSUE OF DISALLOWANCE U/ S. 14A THIS BENCH OF THE TRIBUNAL HAS BEEN TAKING A CONSISTENT VIEW THAT THIS DISALLO WANCE SHOULD BE RESTRICTED TO 1% OF DIVIDEND INCOME. FOLLOWING THE SAME IN THIS AP PEAL ALSO WE HOLD THAT THE DISALLOWANCE U/S 14A FOR EARNING EXEMPT DIVIDEND IN COME SHOULD BE RESTRICTED TO 1% OF DIVIDEND INCOME. THE ASSESSING OFFICER IS AC CORDINGLY DIRECTED TO DO SO AND WORK OUT THE QUANTUM OF DISALLOWANCE. THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED AS DIRECTED ABOVE. IN VIEW OF THE ABOVE AND RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF JURISDICTIONAL TRIBUNAL (CITED SUPRA) WE UPHOLD THE ORDER OF CIT(A) THER EBY HE RESTRICTED THE DISALLOWANCE AT 1% OF TOTAL EXEMPT INCOME. 5. IN THE RESULT APPEAL OF REVENUE IS DISMISSED 6. ORDER PRONOUNCED IN OPEN COURT . SD/- SD/- . . ! ' '' ' $# $# $# $# ! (S. V. MEHROTRA) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( 0 0 0 0) )) ) DATED : 22ND NOVEMBER 2011 '12 $&34 $5' JD.(SR.P.S.) / 6 -$$7 87(9- COPY OF THE ORDER FORWARDED TO: 1 . + / APPELLANT ITO WARD-29(4) KOLKATA . 2 -.+ / RESPONDENT SMT. NANDINI PASARI 5D NEW ROAD KO LKATA-27. 3 . $/& ( )/ THE CIT(A) KOLKATA 4. $/& / CIT KOLKATA 5 . '$? -$& / DR KOLKATA BENCHES KOLKATA .7 -$/ TRUE COPY /&@/ BY ORDER #4 /ASSTT. REGISTRAR .