Sindhu Trade Links Ltd, New Delhi v. DCIT, New Delhi

ITA 1747/DEL/2009 | 2006-2007
Pronouncement Date: 26-10-2010 | Result: Partly Allowed

Appeal Details

RSA Number 174720114 RSA 2009
Bench Delhi
Appeal Number ITA 1747/DEL/2009
Duration Of Justice 1 year(s) 5 month(s) 27 day(s)
Appellant Sindhu Trade Links Ltd, New Delhi
Respondent DCIT, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 26-10-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted G
Tribunal Order Date 26-10-2010
Date Of Final Hearing 26-10-2010
Next Hearing Date 26-10-2010
Assessment Year 2006-2007
Appeal Filed On 29-04-2009
Judgment Text
I.T.A. NO.1747 /DEL/09 1/3 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G NEW DELHI) BEFORE SHRI R.P. TOLANI JUDICIAL MEMBER AND SHRI A.K. GARODIA ACCOUNTANT MEMBER I.T.A. NO.1747 /DEL/2009 ASSESSMENT YEAR : 2006-07 M/S SINDHU TRADE LINKS LTD. DCIT 129-TRANSPORT CENTRE CIRCLE-8(1) NEW ROHTAK ROAD NEW DELHI. PUNJABI BAGH NEW DELHI. V. (APPELLANT) (RESPONDENT) PAN /GIR/NO.AAACS-0447-A APPELLANT BY : SHRI SALIL KAPOOR ADVOCATE. RESPONDENT BY : SHRI KISHORE B. DR. ORDER PER A.K. GARODIA AM: THIS IS AN ASSESSEE'S APPEAL FILED AGAINST THE ORDER OF LD CIT(A)- XI NEW DELHI DATED 13.3.2009 FOR ASSESSMENT YEAR 2006 -07. 2. THE ONLY GROUND RAISED BY THE ASSESSEE READS AS UNDER:- THAT THE LD CIT(A) HAS ERRED IN CONFIRMING THE ADDI TION MADE BY THE LD ASSESSING OFFICER OF `.2 50 538/- U/S 14A OF THE INCOME TAX ACT 1961 AGAINST THE DIVIDEND INCOME OF `.8 36 291/-. 3. BRIEF FACTS OF THE CASE ARE THAT THAT THE ASSESSEE COM PANY IS ENGAGED IN THE BUSINESS OF FINANCING OF MOTOR TRUCKS L ORRIES AND . I.T.A. NO.1747/DEL/09 2/3 MACHINERY. THE COMPANY ALSO EARNED INCOME FROM INTE REST DIVIDEND RENT AND SHARE TRADING. TOTAL INCOME DECLARED FOR T HIS YEAR WAS `.5 00 72 527/- AND THE RETURN OF INCOME WAS FILED O N 15.11.2006. IT WAS NOTED BY THE ASSESSING OFFICER THAT DIVIDEND INCOME WAS OF `.8 36 291/-. THE ASSESSING OFFICER MADE DISALLOWANCE U/ S 14A OF `.2 50 538/- OUT OF INTEREST EXPENSES. IT WAS PROPOSED B Y THE BENCH THAT SINCE THE DIVIDEND INCOME IS ONLY `.8 36 291/- AND THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IS OF `.2 50 5 38/- IT WILL BE REASONABLE IF 10% OF DIVIDEND INCOME IS DISALLOWED U/S 14A OF THE ACT. IN REPLY LD AR OF THE ASSESSEE AGREED TO THIS PROPOSITIO N. LD DR OF THE REVENUE ALTHOUGH SUPPORTED THE ORDERS OF AUTHORITIES BELOW BUT NO SERIOUS OBJECTION WAS RAISED AGAINST THE P ROPOSITION PUT FORWARD BY THE BENCH. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE GONE TH ROUGH THE MATERIAL AVAILABLE ON RECORD. THE ONLY GRIEVANCE OF THE ASSESSEE IS REGARDING DISALLOWANCE MADE BY THE ASSESSING OF FICER OF `. 2 50 538/- U/S 14A. THIS DISALLOWANCE HAS BEEN CONFIRME D BY THE LD CIT(A) ON THE BASIS OF PROVISIONS OF SECTION 14A OF THE INCOME TAX ACT 1961 AND RULE 8D OF THE IT RULES 1962 SINCE THE ASSESSEE HAD DIVIDEND INCOME ALSO AND THEREFORE IT WAS HELD THAT THE PROVISIONS OF SECTION 14A ARE APPLICABLE BUT AS PER THE RECENT JUDG MENT OF HON'BLE BOMBAY HIGH COURT RENDERED IN THE CASE OF GODREJ & B OYCE MFG. PVT. LTD. AS REPORTED IN 43 DTR 177 (BOM.) RULE 8D IS NOT RETROSPECTIVE AND HENCE IT CANNOT BE MADE APPLICABLE IN THE ASSESSMENT YE AR 2006-07 AS IN THE PRESENT CASE BUT STILL DISALLOWANCE HAS TO BE MAD E BY THE ASSESSING OFFICER ON REASONABLE BASIS. WE FEEL THAT CONSIDE RING THE SMALLNESS OF AMOUNT OF DIVIDEND INCOME AND SMALLNESS OF T HE AMOUNT OF DISALLOWANCE MADE BY THE ASSESSING OFFICER IT WILL M EET THE ENDS OF JUSTICE IF THE DISALLOWANCE IS MADE TO THE EXTENT OF 1 0% OF DIVIDEND . I.T.A. NO.1747/DEL/09 3/3 INCOME BECAUSE CONSIDERING THE SMALLNESS OF AMOUNT IN DI SPUTE WE DO NOT FEEL IT FRUITFUL TO RESTORE THE MATTER BACK TO T HE FILE OF THE ASSESSING OFFICER FOR A FRESH DECISION AS WE ARE DOING IN OTHER CASES WHERE THE STAKES ARE HIGH. WE THEREFORE DIRECT THE ASSESSING OFFI CER TO RESTRICT THE DISALLOWANCE TO 10% OF DIVIDEND INCOME. 6. IN THE RESULT THE APPEAL OF THE ASSESSEE STANDS PARTLY ALLOWED. 7. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE O F HEARING I.E. 26TH TH OCTOBER 2010. SD/- SD/- (R.P. TOLANI) (A.K. GAROD IA) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 26.10.2010. HMS COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)- NEW DELHI. 5. THE DR ITAT LOKNAYAK BHAWAN KHAN MARKET NEW DEL HI. TRUE COPY. (ITAT NEW DELHI).