DCIT, Circle - 10, Kolkata v. M/s. Strassenburg Pharmaceuticals Ltd., Kolkata

ITA 1131/KOL/2009 | 2000-2001
Pronouncement Date: 27-01-2011

Appeal Details

RSA Number 113123514 RSA 2009
Assessee PAN RULES2008W
Bench Kolkata
Appeal Number ITA 1131/KOL/2009
Duration Of Justice 1 year(s) 6 month(s) 27 day(s)
Appellant DCIT, Circle - 10, Kolkata
Respondent M/s. Strassenburg Pharmaceuticals Ltd., Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 27-01-2011
Appeal Filed By Department
Bench Allotted A
Tribunal Order Date 27-01-2011
Date Of Final Hearing 27-01-2011
Next Hearing Date 27-01-2011
Assessment Year 2000-2001
Appeal Filed On 30-06-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL BENCH : KOLKATA () BEFORE . . . . . . . . !' !' !' !' /AND . .. . . .. .! !! ! # ) [BEFORE HONBLE SRI D. K. TYAGI JM & HONBLE SRI C . D. RAO AM] '$ '$ '$ '$ / I.T.A NO. 1131/KOL/2009 %&' !() %&' !() %&' !() %&' !()/ // / ASSESSMENT YEAR : 2000-01 & '$ '$ '$ '$ / I.T.A NO. 1132/KOL/2009 %&' !() %&' !() %&' !() %&' !()/ // / ASSESSMENT YEAR : 2005-06 & '$ '$ '$ '$ / I.T.A NO. 1133/KOL/2009 %&' !() %&' !() %&' !() %&' !()/ // / ASSESSMENT YEAR : 2006-07 DEPUTY COMMISSIONER OF INCOME-TAX -VS- M/S. STRA SSENBURG PHARMACEUTICALS LTD CIRCLE-10 KOLKATA. ( + /APPELLANT ) (-+ / RESPONDENT ) FOR THE APPELLANT : SRI B. R. PURAKAYASTHA FOR THE RESPONDENT : SRI ARVIND AGARWAL . / ORDER PER D. K. TYAGI JM ( . . . . . . . . ) ALL THESE APPEALS PREFERRED BY THE REVENUE ARE DIRE CTED AGAINST THE SEPARATE ORDERS PASSED BY THE LD. CIT(A) KOLKATA ALL DATED 31.03.2 009 FOR ASSESSMENT YEARS 2000-01 2005-06 AND 2006-07. SINCE GROUNDS ARE MOSTLY COMMO N AND FACTS ARE IDENTICAL ALL THESE APPEALS ARE DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. GROUND NO. 1 IN RESPECT OF ALL THE THREE APPEALS ARE IDENTICAL EXCEPT DIFFERENCE IN AMOUNT WHICH IS AS UNDER : 1.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) ERRED IN HOLDING THAT THE SUM OF RS.23 12 430/- (FOR A.Y.2000-01) R S.37 23 748/- (FOR A.Y.2005-06) AND RS.31 48 434/- (FOR A.Y.2006-07) RECEIVED BY THE AS SESSEE AS WEST BENGAL INDUSTRIAL PROMOTION ASSISTANCE IS OF CAPITAL IN NATURE AND D ELETING THE ADDITION WHEREAS THE A.O. TREATED IT AS REVENUE RECEIPT RELYING ON THE DECISI ON OF THE HONBLE APEX COURT IN THE CASE OF M./S. SAHANEY STEEL AND PRESS WORKS LTD. VS . CIT (228) ITR 253). 2 3. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSING OFFICER RELYING ON THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF M /S. SAHANEY STEEL & PRESS WORKS LTD. VS. CIT 228 ITR 253 TREATED THE AMOUNT RECEIV ED BY THE ASSESSEE AS WEST BENGAL INDUSTRIAL PROMOTION ASSISTANCE AS REVENUE RECEIPT AND ON APPEAL THE LD. CIT(A) FOLLOWING THE DECISION OF JURISDICTIONAL KOLKATA IT ATS ORDER IN THE CASE OF RASOI LTD. VS. DCIT IN ITA NO. 1080/CAL/98 DATED 18.5.2001 AND ALSO THE HONBLE JURISDICTIONAL HIGH COURTS DECISION IN THE CASE OF KLAR SEHEN P. LTD. VS. ITO TREATED THE WBIPA AS A CAPITAL RECEIPT AND DIRECTED THE ASSESSING OFFICER TO DELETE THE ADDITIONS FOR ALL THE YEARS UNDER APPEAL. AGGRIEVED BY THE SAID ORDER NOW THE REVENUE IS IN APPEALS BEFORE US. 4. AT THE TIME OF HEARING BEFORE US THE LD. DR REL IED ON THE ORDER OF THE ASSESSING OFFICER AND URGED BEFORE THE BENCH TO CONFIRM THE S AME. 5. ON THE OTHER HAND THE LD. COUNSEL FOR THE ASSES SEE WHILE RELYING ON THE ORDER OF THE LD. CIT(A) SUBMITTED THAT THE ISSUE IS COVERED BY THE DECISION OF JURISDICTIONAL ITATS ORDER AND ALSO THE JURISDICTIONAL HIGH COURT S DECISION ON WHICH THE LD. CIT(A) HAS PLACED RELIANCE WHILE TREATING THE WBIPA RECEI PT AS A CAPITAL RECEIPT AND DIRECTED THE ASSESSING OFFICER TO DELETE THE ADDITIONS FOR A LL THE THREE ASSESSMENT YEARS. 6. WE HAVE HEARD BOTH THE PARTIES PERUSED THE MATE RIAL PLACED BEFORE US AND THE DECISION OF THE ITAT AND ALSO THE DECISION OF THE H ONBLE JURISDICTIONAL HIGH COURT CITED SUPRA. WE FIND THAT THE ISSUE IS COVERED BY THE AFORESAID DECISIONS CITED SUPRA AND THE LD. CIT(A) FOLLOWING THE SAID DECISIONS TREATED THE WBIPA RECEIPT AS A CAPITAL RECEIPT AND DIRECTED THE ASSESSING OFFICER TO DELET E THE ADDITIONS FOR ALL THE THREE ASSESSMENT YEARS UNDER APPEAL. SINCE THE LD. CIT(A ) BY FOLLOWING THE DECISION OF HONBLE JURISDICTIONAL HIGH COURTS ORDER AND ALSO THE DECISION OF THE JURISDICTIONAL ITAT TREATED THE WBIPA RECEIPT AS A CAPITAL RECEIP T AND DIRECTED THE ASSESSING OFFICER TO DELETE THE ADDITIONS FOR ALL THE THREE ASSESSMEN T YEARS UNDER APPEAL. WE FIND NO INFIRMITY IN HIS ORDER AND THE SAME IS HEREBY UPHEL D. FOR THE SAKE OF BREVITY WE REPRODUCE THE RELEVANT PORTION OF HIS ORDER AS UNDE R : 3 6.3 I HAVE DULY CONSIDERED THE A.OS RELIANCE PLAC ED ON THE JUDICIAL DECISIONS AND REASONS FOR TREATING THE WBIPA AS A REVENUE RECEIPT . THE COUNTER SUBMISSIONS MADE BY THE APPELLANT HAVE ALSO BEEN CAREFULLY EXAMINED AND CONSIDERED. THE ISSUE THAT IS TO BE DECIDED IS WHETHER THE WBIPA RECEIPT IS A REVENUE O R A CAPITAL RECEIPT. THE A.O PLACED RELIANCE ON THE FOLLOWING CASE LAWS: SAHNEY STEEL & PRESS WORKS LTD. (1997) 228 HR 253 ( SC) CIT VS. CHINDWARA FUELS 245 ITR 9 (CAL) EAST INDIA PHARMACEUTICAL WORKS LTD. VS. DCIT (ITA NO.587 (KOL) 2006 THE APPELLANT PLACED RELIANCE ON THE FOLLOWING CASE LAWS: CIT VS. PONNI SUGARS & CHEMICALS LTD. (SC) ACITVS. RASOI LTD. (ITA NO. 1467 TO 1469 (CAL) 2001 CIT VS. KLARSEHEN P. LTD. (G.A.N. 145106 DT. 12.5.0 8 (CALCUTTA HIGH COURT) KLAR SAHEN P. LTD. VS. ITO (ITA NO. 2069 TO 2071 (K OL) OF 2004) EMCEE PHARMACEUTICALS (P) LTD. VS. DY. CIT (ITA NO. 1941 (KOL)/2004) MENDINE PHARMACEUTICALS (P) LTD. (ITA NO. 2403/KOH/ 2003) THE DEPARTMENT HAS BEEN RELYING ON THE HONBLE SUPR EME COURT DECISION IN THE CASE OF SAHNEY STEEL AND PRESS WORKS LTD.(SUPRA). THE CALCU TTA HIGH COURT IN THE CASE OF CIT VS. CHINDWARA FUELS (SUPRA) HAS FOLLOWED THE APEX C OURT DECISION. THIS DECISION HAS ALSO BEEN FOLLOWED BY HONBLE ITAT KOLKATA IN THE CASE OF EAST INDIA PHARMACEUTICALS WORKS LTD. (SUPRA). THE A.O IN HIS ASSESSMENT ORDER SIMPLY QUOTED THE CASE LAWS AND HELD THAT WBIPA RECEIPT IS A CAPITAL RECEIPT. THE A .O HAS NOT ANALYSED THE FACTS NOR COMPARED THE FACTS WITH THE FACTS OF THE SUPREME CO URT CASE (SAHNEY STEEL & PRESS WORKS LTD.(SUPRA). ON THE OTHER HAND THE HONBLE IT AT KOLKATA HAS DEALT THIS ISSUE IN A NUMBER OF CASES AND HELD THAT THE SUBSIDY/ASSISTA NCE RECEIVED FROM WEST BENGAL GOVERNMENT IS A CAPITAL RECEIPT. BEFORE I PROCEED T O DISCUSS THE ITAT ORDERS WHICH ARE IN FAVOUR OF THE APPELLANT I WOULD FIRST PREFER TO EXAMINE THE FACTS OF SAHNEY STEEL & PRESS WORK LTD. (SUPRA) WHEREIN THE APEX COURT TREA TED THE SUBSIDY AS REVENUE IN NATURE. THE APEX COURT DEEPLY EXAMINED THE SALIENT FEATURES OF THE SCHEME FORMULATED BY THE ANDHRA PRADESH GOVERNMENT. IT NOTICED THE FO LLOWING CONDITIONS TO BE FULFILLED FOR GETTING INCENTIVES: - INCENTIVE IS CONDITIONAL UPON COMMENCEMENT OF PRO DUCTION - INCENTIVE IS LIMITED TO 5 YEARS FROM THE DATE OF COMMENCEMENT OF PRODUCTION - INCENTIVES ARE TO BE GIVEN BY WAY OF REFUND OF SA LES TAX AND ALSO SUBSIDY AS POWER CONSUMED AND OTHER EXEMPTIONS. AFTER ANALYZING THE ABOVE FEATURES THE APEX COURT AT PAGE 262 OBSERVED AS UNDER: THAT PRECISELY IS THE QUESTION RAISED IN THIS CASE . BY NO STRETCH OF IMAGINATION CAN BE SUBSIDIES WHETHER BY WAY OF REFUND OF SALES TAX OR RELIEF OF ELECTRICITY CHARGES OR WATER CHARGES TO BE TREATED AS AN AID TO SETTING UP OF THE INDUSTRY OF THE ASSESSEE. . THE SUBSIDIES ARE OPERATIONAL SUBSIDIES AND NOT CAPITAL SUBSIDIES. 4 THE ABOVE FACTS OF THE CASE ARE SIMILAR TO THE CASE OF KESORAM INDUSTRIES & COTTON MILLS LTD. (1991) 191 ITR 518 (CAL) WHEREIN THE SUBSIDY RECEIVED BY WAY OF REFUND OF SALES TAX LEVIED ON RAW MATERIALS MACHIN ERY FINISHED GOODS ETC. THUS THESE TWO JUDICIAL DECISIONS ARE MAINLY BASED ON TWO FACT ORS : FIRST SUBSIDY FOR CARRYING ON BUSINESS (CONDITIONAL) SECONDLY THE INCENTIVE BY W AY OF REFUND OF SALES TAX ETC. THE FACTS OF THE PRESENT CASE ARE DIFFERENT AND ARE VERY SIMILAR TO THE CASE LAWS RELIED ON BY THE APPELLANT ESPECIALLY CASES DECIDED BY ITAT KOLKATA. IN THE PRESENT CASE THE SUBSIDY CALLED AS ASSISTANCE IS GIVEN EQ UIVALENT TO 90% OF SALES TAX PAID AND NOT TO EQUATED WITH SALES TAX REFUND AND OTHER EXEM PTIONS PROVIDED AS IN THE CASE OF SAHNEY STEEL & PRESS WORKS LTD. (SUPRA). THE TAT DE CISIONS RELIED ON BY THE APPELLANT CLEARLY DISTINGUISHED THIS POINT AND ALSO OTHER CON DITIONS AND HELD THE ASSISTANCE RECEIPT IS A CAPITAL RECEIPT. THE NOTABLE CASE AMON G OTHERS IS THE CASE OF RASOI LTD.(SUPRA) WHEREIN THE HONBLE JURISDICTIONAL ITA T (KOLKATA) HAS DISCUSSED THE SIMILAR ISSUE THREAD BEAR DISTINGUISHING THE SAHNEY STEEL & PRESS WORKS LTD. CASE AND HELD AS A CAPITAL RECEIPT. THIS DECISION HAS BEEN F OLLOWED IN OTHER CASES DEALT BY KOLKATA ITAT BENCH INCLUDING THE CASE OF KIAR SEHEN P. LTD. (SUPRA) WHICH WAS LATER UPHELD BY THE KOLKATA HIGH COURT. IT IS VERY MUCH RELEVANT TO REPRODUCE THE RELEVANT EXTRACT FROM THE ITAT ( - R IN THE CASE OF RASOI LTD. VS. DCIT IN ITA NO. 1080/CAL /98 DT. 18.5.01: 7. SO FAR AS THE PRESENT CASE BEFORE US IS CONCERN ED THE NOTIFICATION NO. 1460 F.Y. DATED 27TH MAY 1994 RECITES THE RESOLUTION O F THE GOVT. OF WEST BENGAL STARTING AS FOLLOWS: WHEREAS CERTAIN INDUSTRIES IN THE STATE HAVE BEEN PASSING THROUGH AN ACUTE FINANCIAL CRISIS AND IT HAS BEEN CONSIDERED N ECESSARY TO EXTEND FINANCIAL ASSISTANCE TO TIDE OVER SUCH CRISIS FOR P ROMOTION OF SUCH INDUSTRIES IT HAS BEEN DECIDED IN THE PUBLIC INTER EST TO FORMULATE A SCHEME TO ALLOW FINANCIAL ASSISTANCE TO THE MANUFAC TURING UNITS IN WEST BENGAL OF SUCH. IT IS CLEAR FROM THE ABOVE PREAMBLE TO THE RESOLUTI ON THAT THE SCHEME FOR ALLOWING ASSISTANCE TO INDUSTRIES IS TO HELP THEM T O TIDE OVER THE FINANCIAL CRISIS FACED BY THE INDUSTRIES AND FOR PROMOTION OF THE INDUSTRIES THEMSELVES. THE SCHEME OF THE GOVT. OF WEST BENGAL DOES NOT RELATE TO NEW INDUSTRIES ALONE AND RATHER ALLOWS BENEFIT UNDE R THE SCHEME TO NEW AS WELL AS EXISTING UNITS PERTAINING TO CERTAIN IN DUSTRIES. THE PURPOSE OF THE SCHEME IS DEFINITELY TO REMOTE THE SPECIFIED INDUSTRIES AND TO HELP THE UNITS UNDER SUCH INDUSTRIES TO TIDE OVER THE FI NANCIAL CRISIS BEING FACED BY THE INDUSTRIES AS SUCH. THERE IS NOTHING I N THE SCHEME WHICH COULD BE CONSIDERED TO HELP THE INDUSTRIES IN CARRY ING ON THEIR OPERATIONS ON DAY TO DAY BASIS. WHEN FINANCIAL CRISIS IS FACED BY SOME BUSINESS PUMPING OF FRESH CAPITAL IS REQUIRED TO! HELP THE B USINESS TO TIDE OVER SUCH FINANCIAL CRISIS. THE FINANCIAL HELP IN THIS REGARD HAS THEREFORE GOT TO BE CONSIDERED AS HAVING AN ENDURING EFFECT O F DRAGGING THE BUSINESS OUT OF THE POOR FINANCIAL CONDITIONS BEING FACED BY THE INDUSTRIES. THE SCHEME OF THE GOVT. OF WEST BENGAL DOES NOT AT ALL 5 ENVISAGE GIVING ANY SUBSIDY IN RESPECT OF SPECIFIC ITEMS OF EXPENSES LIKE SALES-TAX POWER WATER ETC. HENCE WE ARE OF THE O PINION THAT THE FACTS OF THE PRESENT CASE NOT ONLY DIFFER GREATLY FROM THOSE IN THE CASES OF EITHER KESORAM INDUSTRIES & COTTON MILLS LTD. OR SAHNEY ST EEL & PRESS WORKS LTD. AS DECIDED EARLIER BUT THE ASSISTANCE IN THE INSTANT CASE BEING UNRELATED TO THE DAY-TO-DAY OPERATIONS OF THE ASSES SEE-COMPANY OR EVEN MEETING OF ANY SPECIFIC ITEMS OF REVENUE EXPENSES HAS GOT TO BE CONSIDERED AS CAPITAL RECEIPT. THERE IS NO DOUBT AB OUT THE FACT THAT THE UNITS RECEIVING THE ASSISTANCE FROM THE GOVT. OF WE ST BENGAL WILL BE REQUIRED TO UNDERGO CERTAIN REGULATORY MEASURES AND FULFILL CERTAIN EXISTENCE TO BE ALLOWABLE TO THE ASSESSEE IN CARRYI NG FOR THE BUSINESS ITSELF IN A REGULAR MANNER OR EVEN FOR THE PURPOSE OF AUGMENTING ITS PRO FITS ON THE OTHER HAND THE SOLE PURPOSE BEHIND THE GRANT OF THE ASSISTANCE SEEMS TO BE TO TIDE OVER THE FINANCIAL CRISES AND PROMOTION OF INDUSTRIES. BOTH THESE ACTIVITIES RELATE TO CAP ITAL FIELD AND CANNOT BE CONSIDERED TO BE LINKED UP WITH THE DAY TO DAY OPER ATIONS OF THE ASSESSEE IN ANY MANNER. HENCE WE ARE OF TOO VIEW THAT THE I NCENTIVE RECEIVED BY THE ASSESSEE ALTHOUGH DEPENDENT UPON CERTAIN CONDI TIONALITIES IS ACTUALLY GRATUITOUS IN NATURE AND FORMS CAPITAL REC EIPT IN ITS HANDS. THE INCENTIVE CANNOT AGAIN BE CONSIDERED AS PROVIDED BY THE GOVT. TO THE ASSESSEE TO MEET SOME OF ITS REVENUE EXPENSES. THE ABOVE RATIO LAID DOWN IN TERMS OF ASSISTANCE IN THE FORM OF FRESH CAPITOL TO TIDE OVER THE FINANCIAL CRISIS ENDURING EFFECT PROMOTION OF INDUSTRIES ETC. HAS ALSO BEEN FOLLOWED IN THE CASE OF KLAR SEHEN P. LTD.(SUP RA) FOR TREATING THE ASSISTANCE AS A CAPITAL RECEIPT. SUBSEQUENTLY THE KOLKATA HIGH COUR T HAS ALSO CONFIRMED THE DECISION IN THE CASE OF KLAR SEHEN P. LTD. AS UNDER: FURTHER WE HAVE PERUSED THE ORDER PASSED BY THE TR IBUNAL. WE HAVE FOUND THAT THE TRIBUNAL HAS EXTENSIVELY DEALT WITH THE MA TTER INCLUDING THE FACTS MATERIALS AND EVIDENCE PLACED BEFORE THE TRIBUNAL O R ADJUDICATION. WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER SO PASS ED BY THE LEARNED TRIBUNAL NOR THE ORDER SO PASSED BY HE LEARNED TRIBUNAL SUFF ERS FROM ANY LEGAL INFIRMITY NOR WE FIND ANY SUBSTANTIAL QUESTION OF LAW IS INVO LVED IN THE APPEAL. 6.4 DECISION: THE FACTS OF THE CASE AND THE ISSUE INVOLVED IN TH E PRESENT CASE IS SIMILAR TO FACTS OF THE CASES DECIDED BY THE JURISDICTIONAL KOLKATA TRIBUN AL AND HIGH COURT. I FIND IN THE LATER YEARS (A.Y. 2001-02) IN THE APPELLANTS OWN CASE M Y PREDECESSOR FOLLOWING THE JURISDICTIONAL ITAT DECISIONS [RASOI LTD. MENDINE PHARM. LTD. (SUPRA)} HELD THE WBIPA AS CAPITAL RECEIPT. I AM ALSO OF THE VIEW TH AT THE SOLE PURPOSE BEHIND THE GRANT OF ASSISTANCE IS TO TIDE OVER THE FINANCIAL CRISIS AND PROMOTION OF INDUSTRIES AND THAT BOTH THESE ACTIVITIES ARE RELATED TO CAPITAL FIELD AND CANNOT BE LINKED UP WITH DAY TO DAY OPERATIONS OF THE APPELLANT IN ANY MANNER. RESPECT FULLY FOLLOWING THE JURISDICTIONAL KOLKATA ITAT AND HIGH COURT DECISIONS DISCUSSED EA RLIER I TREAT WBIPA AS A CAPITAL RECEIPT AND DIRECT THE A.O TO DELETE THE ADDITION OF RS.23 12 430/-. THIS GROUND OF APPEAL OF THE REVENUE FOR ALL THE TH REE ASSESSMENT YEARS ARE DISMISSED. 6 7. THE ONLY GROUND REMAINS FOR OUR ADJUDICATION I.E . GROUND NO. 2 FOR ASSESSMENT YEAR 2005-06 WHICH IS AS UNDER : ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN DIRECTING THE A.O. TO FOLLOW THE METHOD AS PROVIDED IN RULE 8D(2 )(III) ONLY OF I. T. RULES FOR DETERMINING THE DISALLOWANCE PERTAINING TO EXEMPT DIVIDEND WHEREAS RULE 8D(2)(II) IS ALSO APPLICABLE IN THE INSTANT CASE. 8. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSING OFFICER NOTICED EXEMPTED INCOME CONSISTING OF DIVIDEND INCOME OF RS.5 03 392 /- AND TAX FREE INTEREST INCOME OF RS.20 00 000/-. THE ASSESSING OFFICER ALSO NOTICED THAT THE ASSESEE HAS NOT SHOWN ANY EXPENDITURE TOWARDS THESE INCOMES. AS THERE WAS NO SPECIFIC REPLY FROM THE ASSESSEE HE WORKED OUT A PRORATE DISALLOWANCE OF RS.8 79 844 /- CORRESPONDING TO EXPENDITURE RELATABLE TO EARNING DIVIDEND INCOME AND TAX FREE I NTEREST INCOME. ON APPEAL THE LD. CIT(A) DIRECTED THE ASSESSING OFFICER TO FOLLOW THE METHOD AS PROVIDED IN RULE 8D(2)(III) OF I. T. RULES FOR DETERMINING THE DISAL LOWANCE PERTAINS TO EXEMPT DIVIDEND INCOME AND TAX FREE INTEREST. AGGRIEVED BY THE SAI D ORDER NOW THE REVENUE IS IN APPEAL BEFORE US. 9. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ASSESSING OFFICER NOTICED EXEMPTED INCOME CONSISTING OF DIVIDEND INCOME OF RS.5 03 392/- AND TAX FREE INTEREST INCOM E OF RS.20 00 000/-. THE ASSESSING OFFICER MADE A PROPORTIONATE DISALLOWANCE OF RS.8 7 9 844/- AS INCURRED FOR EARNING DIVIDEND INCOME AND TAX FREE INTEREST INCOME. THE LD. CIT(A) DIRECTED THE ASSESSING OFFICER TO FOLLOW THE METHOD AS PROVIDED IN RULE 8D (2)(III) OF I. T. RULES FOR DETERMINING THE DISALLOWANCE PERTAINS TO EXEMPT DIV IDEND INCOME AND TAX FREE INTEREST. SINCE RULE 8D WAS INSERTED BY THE IT 5 TH AMENDMENT RULES 2008 W.E.F. 24.3.2008 AND BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG . CO. LTD. VS. DCIT (2010) 328 ITR 81 (BOM) HAS HELD THAT IT IS NOT RETROSPECTIVE IN NATURE THIS RULE IS NOT APPLICABLE FOR THE YEAR UNDER APPEAL. THEREFORE THE LD. CIT(A) W AS NOT JUSTIFIED IN DIRECTING THE ASSESSING OFFICER TO APPLY RULE 8D(2)(III) FOR DISA LLOWANCE. WHILE ADJUDICATING THIS ISSUE IN MANY OTHER CASES THE TRIBUNAL HAS BEEN TA KING THE CONSISTENT VIEW OF RESTRICTING THE DISALLOWANCE TO 1% OF THE EXEMPTED INCOME. WE ORDER ACCORDINGLY. 7 10. IN THE RESULT THE APPEALS OF THE REVENUE FOR A SSESSMENT YEARS 2000-01 AND 2006- 07 ARE DISMISSED AND THE APPEAL FOR ASSESSMENT YEAR 2005-06 OF THE REVENUE IS PARTLY ALLOWED. 11. ORDER IS PRONOUNCED IN THE OPEN COURT. SD/- SD/- . . ! # . . (C. D. RAO) (D. K. TYAGI) ACCOUNTANT MEMBER JUDICIAL MEMBER ( # # # #) )) ) DATED : 27 TH JANUARY 2011 !/0 %&12 %3! JD.(SR.P.S.) . 4 -%%5 65(7- COPY OF THE ORDER FORWARDED TO: 1 . + / APPELLANT DCIT CIRCLE-10 KOLKATA. 2 -+ / RESPONDENT M/S. STRASSENBURG PHARMACEUTICALS LTD . P-6 CIT ROAD KOLKATA-14. 3 . %.& / THE CIT KOLKATA. 4. %.& ( )/ THE CIT(A) KOLKATA. 5 . !=% -%& / DR KOLKATA BENCHES KOLKATA 5 -%/ TRUE COPY .&>/ BY ORDER ? '2 /DEPUTY REGISTRAR .