ACIT, New Delhi v. M/s. Morgan Securities & Credits Pvt. Ltd., New Delhi

ITA 1402/DEL/2011 | 2007-2008
Pronouncement Date: 29-02-2012 | Result: Dismissed

Appeal Details

RSA Number 140220114 RSA 2011
Assessee PAN AACCM7937R
Bench Delhi
Appeal Number ITA 1402/DEL/2011
Duration Of Justice 11 month(s) 11 day(s)
Appellant ACIT, New Delhi
Respondent M/s. Morgan Securities & Credits Pvt. Ltd., New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 29-02-2012
Appeal Filed By Department
Order Result Dismissed
Bench Allotted E
Tribunal Order Date 29-02-2012
Date Of Final Hearing 18-01-2012
Next Hearing Date 18-01-2012
Assessment Year 2007-2008
Appeal Filed On 18-03-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E NEW DELHI) BEFORE SHRI RAJPAL YADAV AND SHRI K.G. BANSAL ITA NO. 1402/DEL/2011 ASSESSMENT YEAR: 2007-08 ASSISTANT CIT VS. MORGAN SECURITIES & CREDITS CIRCLE-5(1) PVT. LTD. A-38 IST FLOOR NEW DELHI. MOHAN CO-OP IND. ESTATE MAIN MATHURA ROAD NEW DELHI (PAN: AACCM7937R) (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI RS NEGI SR.DR RESPONDENT BY: SHRI RS SINGHVI CA DATE OF HEARING : 18.01.2012 DATE OF PRONOUNCEMENT : 29.02.2012 ORDER PER RAJPAL YADAV: JUDICIAL MEMBER THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF LEARNED CIT(APPEALS) DATED 10.01.2011 PASSED FOR ASSESSMENT YEAR 2007-08. THE SOLITARY GRIEVANCE OF THE REVENUE IS THAT LEARNED C IT(APPEALS) HAS ERRED IN RESTRICTING THE DISALLOWANCE MADE UNDER SEC. 14A TO RS.53 00 505 AS AGAINST RS.147 34 064 MADE BY THE ASSESSING OFFICER. 2. THE LEARNED COUNSEL FOR THE ASSESSEE AT THE VERY OUTSET SUBMITTED THAT THE ISSUE IN DISPUTE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER 2 OF THE ITAT PASSED IN ASSESSMENT YEAR 2005-06 IN TH E CASE OF THE ASSESSEE. HE PLACED ON RECORD COPY OF THE ITATS ORDER PASSED IN ITA NO.2755/DEL/09 AND 3254/DEL/09 IN ASSESSMENT YEAR 2 005-06. THE FACTS EMERGING OUT OF THE ASSESSMENT ORDER ARE THAT THE A SSESSEE COMPANY AT THE RELEVANT TIME WAS ENGAGED IN THE BUSINESS OF FINANC E. IT HAS FILED ITS RETURN OF INCOME ON 30.10.2007 DECLARING A LOSS OF RS.736 98 571. ASSESSING OFFICER HAS PASSED THE ASSESSMENT ORDER UNDER SECTION 143(3 ) AFTER PROVIDING OPPORTUNITY OF HEARING TO THE ASSESSEE ON 30.12.200 9. HE REDUCED THE LOSS TO RS.572 48 090. ON SCRUTINY OF THE ACCOUNTS LEARNED ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS MADE INVESTMENT IN THE SHARES AND HAS DIVIDEND INCOME. LEARNED ASSESSING OFFICER IN ORDER TO FIND OUT THE EXPENSES ATTRIBUTABLE TO EARNING OF DIVIDEND INCOME HAS TAKE N COGNIZANCE OF THE INVESTMENT DETAILS FUNDS BORROWED BY THE ASSESSEE AND THE INTEREST EXPENSES INCURRED BY IT. SUCH DETAILS HAVE BEEN TABULATED ON PAGE 2 OF THE ASSESSMENT ORDER. HE FIND THAT INTEREST EXPENSES INCURRED BY T HE ASSESSEE TOWARDS INVESTMENTS ARE OF RS.53 00 505. ASSESSING OFFICER THEREAFTER COMPUTED THE DISALLOWANCE WITH THE HELP OF RULE 8D AND WORKED OU T THE DISALLOWANCE AT RS.147 34 064. 3 3. ON APPEAL LEARNED FIRST APPELLATE AUTHORITY HAS HELD THAT RULE 8D IS NOT APPLICABLE IN ASSESSMENT YEAR 2007-08 IN VIEW O F THE DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF GODREJ BOYCE MANUF ACTURING LTD. REPORTED IN 328 ITR 81. HE FURTHER OBSERVED THAT AN IDENTICAL ISSUE HAS BEEN CONSIDERED BY THE ITAT IN THE ASSESSEES OWN CASE F OR ASSESSMENT YEAR 2005-06. HE REPRODUCED THE FINDINGS OF THE ITAT AND THEREAFTER HELD THAT THE INTEREST EXPENSES TO THE EXTENT OF RS.53 00 505 IS THE DIRECT EXPENDITURE FOR EARNING DIVIDEND INCOME WHICH DESERVES TO BE DISALL OWED. THE FINDINGS OF THE LEARNED CIT(APPEALS) INCLUDING THE FINDINGS OF THE ITAT EXTRACTED BY THE LEARNED FIRST APPELLATE AUTHORITY IN ASSESSMENT YEAR 2005-06 READ AS UNDER: 4.3 I HAVE CAREFULLY CONSIDERED THE FINDINGS RECOR DED BY THE LEARNED ASSESSING OFFICER AND THE SUBMISSIONS MADE ON BEHALF OF THE APPELLANT COMPANY. ON CONSIDERATION I FIND THAT SO FAR AS THE DISALLOWANCE OF RS.5300505 IS CONCERNED THE LEARNE D COUNSEL FOR THE APPELLANT HIMSELF HAS ADMITTED THAT THE DISALLOWANC E IN QUESTION HAS RIGHTLY BEEN MADE AS THE SAME PERTAINS TO THE BORRO WING COST INCURRED DIRECTLY IN CONNECTION WITH INVESTMENT IN MUTUAL FU NDS. THEREFORE THE DISALLOWANCE TO THE EXTENT OF RS.5300505 IS BEING S USTAINED. AS REGARDS THE BALANCE OF RS.9433559 I FIND THAT W HILE DECIDING THE APPEAL FOR THE ASSESSMENT YEAR 05-06 IN THE APPELLA NTS OWN CASE THE HONBLE ITAT VIDE ITS ORDER DATED 8 TH DECEMBER 2010 HAS GRANTED 4 RELIEF WITH REGARD TO THE DISALLOWANCE MADE BY THE LEARNED A.O. IN TERMS OF RULE 8D(2)(II) AND RULE 8D(2)(III) AS UNDE R: WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED MA TERIAL ON RECORD. HONBLE BOMBAY HIGH COURT IN THE CASE OF GO DREJ BOYCE MANUFACTURING CO. LTD. HAS HELD THAT RULE 8D IS PROSPECTIVE IN NATURE. THEREFORE ASSESSEE IS NOT C OVERED BY RULE 8D. HON'BLE PUNJAB AND HARYANA HIGH COURT IN T HE CASE OF HERO CYCLES 323 ITR 518 HAS HELD THAT IN THE ABSENC E OF A CLEAR FINDING THAT UNLESS INCURRING OF SOME EXPENDITURE I N RESPECT OF EXEMPT INCOME IS DEMONSTRATED BY THE A.O. THE DISAL LOWANCE CANNOT BE SUSTAINED. AS ALREADY MENTIONED THE ASSES SEE HAS ACCEPTED THE DISALLOWANCE OF RS.4680055. LEARNED DR HAS NOT APPOINTED OUT ANY DEFECT IN 4680055 SUCH WORKING OF THE ASSESSEE. IN VIEW OF THESE FACTS AND IN THE LIGHT O F JUDGMENT IN THE CASE OF GODREJ BOYCE MANUFACTURING LTD. AND HER O CYCLES LTD. (SUPRA) WE SEE NO JUSTIFICATION TO FURTHER INC REASE THE AMOUNT OF DISALLOWANCE U/S. 14A WITHOUT POINTING OU T ANY VALID BASIS FOR SUCH FURTHER DISALLOWANCE. IN VIEW THEREO F THE GROUNDS RAISED BY THE ASSESSEES APPEAL IS ALLOWED. 4.4 ON A CAREFUL CONSIDERATION I FIND THAT THE FAC TS OF THE PRESENT ASSESSMENT YEAR ARE IDENTICAL AND SQUARELY COVERED BY THE JUDGMENT OF THE HONBLE ITAT REFERRED TO ABOVE. FURTHER I ALSO FIND THAT THE LEARNED ASSESSING OFFICER HAS NOT RECORDED ANY FIND ING LET ALONE CATEGORICAL FINDING TO THE EFFECT THAT APART FROM INTEREST OF RS.5300505 ANY EXPENDITURE DIRECT OR INDIRECT WAS INCURRED BY THE 5 APPELLANT IN RELATION TO EARNING OF DIVIDEND/EXEMPT INCOME. THEREFORE THE ADDITION OF RS.9433559 IS DIRECTED TO BE DELETE D. 4. LEARNED DR ON THE OTHER HAND SUBMITTED THAT NO D OUBT IN VIEW OF THE HON'BLE BOMBAY HIGH COURTS DECISION RULE 8D IS NO T APPLICABLE IN THE PRESENT YEAR BUT THE ISSUE BE REMITTED TO THE FILE OF THE ASSESSING OFFICER FOR EXAMINATION WHETHER ANY OTHER DIRECT EXPENSES IS AV AILABLE WHICH IS TO BE DISALLOWED FOR THE PURPOSE OF SECTION 14A OF THE AC T. THE LEARNED COUNSEL FOR THE ASSESSEE ON THE OTHER HAND SUBMITTED THAT O N THESE VERY INVESTMENT ITAT HAS RECORDED A FINDING IN ASSESSMENT YEAR 2005 -06 WHICH LEARNED CIT(APPEALS) HAS MADE THE BASIS OF HIS ORDER. THUS THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AND THE ORDER OF THE LEARNED CIT(APPEALS) DESERVES TO BE UPHELD. 5. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AND GONE THROUGH THE RECORD CAREFULLY. THE ASSESSEE HAS CLAIMED DIVIDEND OF RS.5683951 WHICH HAS BEEN FURTHER REDUCED BY THE ASSESSING OFFICER B Y AN AMOUNT OF RS.17 16 417 ON THE GROUND THAT THESE ARE SHORT TER M CAPITAL GAIN AND NOT DIVIDEND INCOME. THE ASSESSEE HAS NOT DISPUTED ABOU T THE DISALLOWANCE OF EXPENDITURE TO THE EXTENT OF RS.53 00 505. THE ITAT IN ASSESSMENT YEAR 2005-06 HAS EXAMINED THE ACTIVITIES OF THE ASSESSEE IN DETAIL AND THEREAFTER 6 UPHELD THE DISALLOWANCE TO THE EXTENT OF RS.46 80 0 55 IN ASSESSMENT YEAR 2005-06. WE DO NOT FIND ANY DISPARITY ON FACTS. THE FINDINGS OF THE ITAT HAVE ALREADY BEEN EXTRACTED BY THE LEARNED CIT(APPE ALS). RESPECTFULLY FOLLOWING THE ORDER OF THE CO-ORDINATE BENCH IN THE ASSESSEES OWN CASE ON SIMILAR FACTS AND CIRCUMSTANCES WE DO NOT FIND ANY MERIT IN THIS APPEAL OF THE REVENUE. IT IS DISMISSED. 12. IN THE RESULT THE APPEAL OF THE REVENUE IS DIS MISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 29.02.2012 SD/- SD/- ( K.G. BANSAL ) ( RAJPAL YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 29/02/2012 MOHAN LAL COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR