GODREJ INVESTMENTS P.LTD, MUMBAI v. DCIT RG 10(2), MUMBAI

ITA 1856/MUM/2010 | 2005-2006
Pronouncement Date: 29-03-2011 | Result: Partly Allowed

Appeal Details

RSA Number 185619914 RSA 2010
Assessee PAN AAACG1391H
Bench Mumbai
Appeal Number ITA 1856/MUM/2010
Duration Of Justice 1 year(s) 21 day(s)
Appellant GODREJ INVESTMENTS P.LTD, MUMBAI
Respondent DCIT RG 10(2), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 29-03-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted G
Tribunal Order Date 29-03-2011
Date Of Final Hearing 23-03-2011
Next Hearing Date 23-03-2011
Assessment Year 2005-2006
Appeal Filed On 09-03-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES G MUMBAI BEFORE SHRI R V EASWAR PRESIDENT AND SHRI RAJENDRA SINGH ACCOUNTANT MEMBER I T A NO: 1856/MUM/2010 (ASSESSMENT YEAR: 2005-06) GODREJ INVESTMENTS PVT. LTD. MUMBAI APPELLANT (PAN: AAACG1391H) VS DEPUTY COMMISSIONER OF INCOME TAX 10(2) RESPONDEN T MUMBAI APPELLANT BY: MR F H BILIMORIA RESPONDENT BY: MR S K SINGH O R D E R R V EASWAR PRESIDENT: THIS IS AN APPEAL BY THE ASSESSEE AND IT RELATES T O THE ASSESSMENT YEAR 2005-06. THE ASSESSEE IS A COMPANY CARRYING ON BUSINESS IN INVESTING IN SHARES AND SECURITIES. 2. THE ONLY ISSUE IN THE APPEAL IS WHETHER THE DEPA RTMENTAL AUTHORITIES WERE JUSTIFIED IN DISALLOWING THE EXPEN DITURE OF ` 1 24 291/- BY INVOKING SECTION 14A READ WITH RULE 8 D OF THE INCOME TAX RULES. THE ASSESSEE DERIVED DIVIDEND IN COME OF ` 353.46 LAKHS INTEREST INCOME OF ` 30 59 839/- AND SHORT TERM CAPITAL GAINS ON SALE OF UNITS. THE DIVIDEND INCOM E WAS EXEMPT UNDER SECTION 10(34) OF THE INCOME TAX ACT 1961. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE EXPENDITURE OF ` 1 24 291/- NO PART OF WHICH WAS ALLOCATED BY THE ASSESSEE AGAINST THE DIVIDEND BUT ITA NO: 1856/MUM/2010 2 WAS FULLY CLAIMED AGAINST THE INTEREST INCOME WAS ENTIRELY ALLOCABLE AGAINST THE DIVIDEND INCOME WHICH WAS EXEMPT. HE A CCORDINGLY ALLOCATED THE ENTIRE EXPENDITURE AGAINST THE DIVIDE ND INCOME. THE RESULT WAS THAT THE INTEREST INCOME WAS ASSESSED WI THOUT ANY DEDUCTION OF EXPENDITURE. 3. ON APPEAL THE ACTION OF THE ASSESSING OFFICER W AS CONFIRMED AND HENCE THE PRESENT APPEAL. 4. WE HAVE CONSIDERED THE FACTS. THE BREAK-UP OF T HE EXPENDITURE IS AS BELOW: - PARTICULARS AMOUNT RS . REMUNERATION TO AUDITORS 31 285 PROFESSIONAL FEES 74 160 RATES & TAXES 2 000 FILING FEES PAID TO REGISTRAR OF COMPANIES 2 000 MISCELLANEOUS EXPENSES 14 846 --------------- TOTAL 1 24 291 --------------- IT MAY BE SEEN THAT THE REMUNERATION TO AUDITORS P ROFESSIONAL FEES RATES & TAXES AND FILING FEES PAID TO THE REGISTRAR OF COMPANIES ARE ALL EXPENDITURE WHICH THE ASSESSEE HAS TO INCUR WHA TEVER BE THE SOURCE OF ITS INCOME. IT CANNOT BE SAID THAT ANY P ART OF THESE ITEMS OF EXPENDITURE WAS SPECIFICALLY INCURRED IN RELATIO N TO THE DIVIDEND INCOME SO AS TO ATTRACT SECTION 14A OF THE ACT. TH ERE ARE NO DETAILS FURNISHED IN RESPECT OF THE MISCELLANEOUS EXPENSES BUT WE WOULD CONSIDER AN EXPENDITURE OF ` 5 000/- OUT OF THE MISCELLANEOUS EXPENSES TO BE EXPENDITURE INCURRED IN RELATION TO THE EARNING OF DIVIDEND INCOME. WE THEREFORE HOLD THAT ONLY ` 5 000/- OUT OF THE ENTIRE EXPENDITURE OF ` 1 24 291/- IS TO BE ALLOCATED TO THE DIVIDEND ITA NO: 1856/MUM/2010 3 INCOME AND THE BALANCE OF ` 1 19 291/- IS TO BE ALLOWED AGAINST THE INTEREST INCOME EARNED BY THE ASSESSEE WHICH HAS B EEN ASSESSED UNDER THE HEAD BUSINESS. WE MAY ALSO CLARIFY THA T RULE 8D WHICH HAS BEEN INVOKED BY THE DEPARTMENTAL AUTHORITIES IS NOT APPLICABLE TO THE ASSESSMENT YEAR PRIOR TO THE ASSESSMENT YEAR 2008-09 AS HELD BY THE HONBLE BOMBAY HIGH COURT IN THE CASE O F GODREJ AND BOYCE MFG. CO. LTD. VS. DCIT (2010) 328 ITR 81 (BOM ). 5. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH MARCH 2011. SD/- SD/- (RAJENDRA SINGH) (R V EASWAR) ACCOUNTANT MEMBER PRESIDE NT MUMBAI DATED 29 TH MARCH 2011 SALDANHA COPY TO: 1. GODREJ INVESTMENTS PVT. LTD. PLANT 11 PIROJSHANAGAR VIKHROLI (EAST) MUMBAI 400 079 2. DCIT 10(2) MUMBAI 3. CIT-X MUMBAI 4. CIT(A)-21 MUMBAI 5. DR G BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR ITAT MUMBAI