SHREE SATYANARAYAN INVESTMENTS CO. LTD, MUMBAI v. JCIT 1(3), MUMBAI

ITA 3457/MUM/2009 | 2003-2004
Pronouncement Date: 18-03-2011 | Result: Partly Allowed

Appeal Details

RSA Number 345719914 RSA 2009
Assessee PAN AABCS4627H
Bench Mumbai
Appeal Number ITA 3457/MUM/2009
Duration Of Justice 1 year(s) 9 month(s) 22 day(s)
Appellant SHREE SATYANARAYAN INVESTMENTS CO. LTD, MUMBAI
Respondent JCIT 1(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 18-03-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted E
Tribunal Order Date 18-03-2011
Date Of Final Hearing 03-03-2011
Next Hearing Date 03-03-2011
Assessment Year 2003-2004
Appeal Filed On 27-05-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E MUMBAI BEFORE SHRI R.S.SYAL ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO JUDICIAL MEMBER ITA NO. 3457/MUM/2009 (ASSESSMENT YEARS: 2003-04) SHREE SATYANARAYAN INVESTMENT CO.LTD SHREE NIWAS HOUSE HAZARIMAL SOMANI MARG FORT MUMBAI-400001. PAN: AABCS4627H . APPLICANT VS JCIT 1(3) MUMBAI. RESPONDENT APPELLANT BY : SHRI PARAS SAVALA RESPONDENT BY : SHRI D SONGATE . O R D E R PER VIJAY PAL RAO THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 16.2.2009 OF THE CIT(A) FOR THE ASSESS MENT YEAR 2003-04. 2. THE ASSESSEE HAS RAISED ONLY GROUND IN THIS APPE AL WHICH READS AS UNDER : FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN CONFIRMING LD. AOS ACTION OF FINDING TO THE EFFECT THAT A SUM OF RS.16 62 850/- WERE ALLEGEDLY INCURRED FOR EARNING DIVIDEND INCOME OF RS.1 11 77 907/- DURING THE YEAR 3. FACTS OF THE CASE ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTICED THAT THE ASSE SSEE HAS ITA NO. 3457/MUM/2009 (ASSESSMENT YEARS: 2003-04) 2 EARNED DIVIDEND INCOME OF RS.1 11 77 907 AND CLAIM ED DEDUCTION U/S 80M AT RS.1 01 16 513/- ON ACCOUNT OF DIVIDEND DISTRIBUTED BY THE COMPANY BEFORE 31.10.2003. THE ASSESSEE WAS ASKED BY THE AO TO FURNISH THE DETAILS OF EXPEN SES INCURRED FOR EARNING DIVIDEND INCOME AND HE FURTHER ASKED AS TO WHY THE NET DIVIDEND AND NOT GROSS DIVIDEND RECE IVED SHOULD BE CONSIDERED FOR WORKING OUT ALLOWABLE DEDU CTION U/S 80M. THE ASSESSEE EXPLAINED BEFORE THE AO THAT NO EXPENSES WERE INCURRED IN CONNECTION WITH EARNING OF DIVIDEN D INCOME BECAUSE THE EXPENSES INCURRED WERE OF ADMINISTRATIV E IN NATURE AND MORE OR LESS FIXED IRRESPECTIVE OF INCOM E EARNED AND THE SAME IS NOT LINKED TO EARNING OF DIVIDEND I NCOME. THE AO DID NOT ACCEPT THE ASSESSEES CONTENTION. THE AO HELD THAT THE INVESTMENT IN SHARES AND SECURITIES IS THE MAIN ACTIVITY OF THE ASSESSEE AND THEREFORE PART OF THE EXPENDITURE DEBITED BY THE ASSESSEE TO THE PROFIT AND LOSS A CCOUNT IS TOWARDS THE EARNING OF DIVIDEND INCOME. THE AO FOUN D THAT THE ASSESSEE HAS EARNED INCOME DURING THE YEAR UNDER TH E FOLLOWING HEADS: S.NO. DETAILS AMOUNT 1 DIVIDEND 1 11 77 907 2 INTEREST 9 13 590 3 MISCELLANEOUS INCOME 44 345 4 TOTAL 1 21 35 842 ITA NO. 3457/MUM/2009 (ASSESSMENT YEARS: 2003-04) 3 3. THUS THE DIVIDEND INCOME FORMS 92.10% OF THE G ROSS INCOME RECEIVED UNDER DIFFERENT HEADS. THE TOTAL EX PENDITURE DEBITED IS RS.18 05 483/- AND ACCORDINGLY 92.10% OF THIS EXPENDITURE WHICH WORKS OUT TO RS.16 62 850/- WAS HELD TO BE EXPENDITURE INCURRED FOR EARNING THE DIVIDEND IN COME. THE ALLOWABLE DEDUCTION U/S 80M WAS ACCORDINGLY WORKED OUT AS UNDER : GROSS DIVIDEND RECEIVED RS. 1 11 7 7 907/- LESS : EXPENDITURE INCURRED FOR EARNING THE SAID DIVIDEND RS. 16 6 2 850/- NET INCOME FROM DIVIDEND INCOME FOR THE PURPOSE OF DEDUCTION U/S 80M RS.95 15 05 7/- 4. ON APPEAL THE CIT(A) HAS CONFIRMED THE APPORTI ONMENT OF THE EXPENDITURE TOWARDS THE DIVIDEND INCOME BY F OLLOWING THE DECISION OF THE TRIBUNAL IN THE CASE OF DAGA CAPITAL MANAGEMENT PRIVATE LIMITED. 5. BEFORE US THE LEARNED AR HAS SUBMITTED THAT IN VIEW OF THE GODREJ & BOYCE MFG.CO.LTD. MUMBAI.VS.DY. COMMIS SIONER OF INCOME TAX REPORTED IN 234 CTR (BOM)-1. THE DAGA CAPITAL MANAGEMENT PRIVATE LIMITED IS NO MORE GOOD LAW. HE HAS FURTHER CONTENDED THAT FOR THE PURPOSES OF SEC TION 80M NO ITA NO. 3457/MUM/2009 (ASSESSMENT YEARS: 2003-04) 4 ESTIMATED ALLOCATION OF EXPENDITURE CAN BE REDUCED FROM THE DIVIDEND INCOME. HE HAS FURTHER CONTENDED THAT THE AO FOLLOWED THE ORDERS OF THE ASSESSMENT FOR THE ASSES SMENT YEAR 2002-03 WHEREAS THIS TRIBUNAL HAS REMITTED THE ISS UE TO THE RECORD OF THE AO FOR THE ASSESSMENT YEARS 2000-01 T O 2002- 03. 6. ON THE OTHER HAND THE LEARNED DR RELIED UPON TH E ORDERS OF THE LOWER AUTHORITIES. 7. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND REL EVANT RECORD. THE AO DEALT WITH THIS ISSUE IN THE ASSESS MENT ORDER BY FOLLOWING THE ORDER FOR THE ASSESSMENT YEAR 200 2-03 RELEVANT PORTION OF THE ORDER IS REPRODUCED BELOW: THE ASSESSEE HAS SHOWN INCOME EARNED DURING THEYEAR UNDER THE FOLLOWING HEADS: S.NO. DETAILS AMOUNT 1 DIVIDEND 1 11 77 907 2 INTEREST 9 13 590 3 MISCELLANEOUS INCOME 44 345 4 TOTAL 1 21 35 842 4. THUS THE DIVIDEND INCOME FORMS 92.10% OF THE GROSS INCOME OF RS.1 21 35 842/- RECEIVED UNDER DIF FERENT HEADS. TO EARN THE ABOVE INCOME OF RS./1 21 35 84 2/- THE ASSESSEE HAS DEBITED RS.18 05 483/- (RS.152630 1 + ITA NO. 3457/MUM/2009 (ASSESSMENT YEARS: 2003-04) 5 39182 + 2 40 000) = 1805483). AFTER CONSIDERING TH E FACTS AND CIRCUMSTANCES OF THE CASE AND AS HELD IN THE AY 2002-03 PROPORTIONATE EXPENSES I.E 92.10% OF RS.1805483= RS.16 62 850/- IS HELD TO BE EXPENDITU RE INCURRED FOR EARNING THE DIVIDEND OF RS.1 11 77 90 7/- WHICH IS CONSIDERED WHILE COMPUTING THE ALLOWABLE DEDUCTION U/S 80M OF THE IT ACT. 8. WE FURTHER NOTE THAT THIS TRIBUNAL FOR THE ASSE SSMENT YEAR 2002-03 IN ITA NO.6615/2005 VIDE ORDER DATED 2 8.5.2008 REMITTED THE ISSUE TO THE RECORD FOR DECISION AFRES H. THIS TRIBUNAL IN PARAGRAPH 4 HAS HELD AS UNDER : 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RECORD. THE ISSUE IN GROUND NO.1 RAISED BY THE ASSESSEE IS AGAINST DISALLOWANCE OF INTEREST UNDER THE PROVISIONS OF SECTION 14A OF IT ACT. SIM ILAR ISSUE AROSE BEFORE EH MUMBAI BENCH OF TRIBUNAL IN ASSESSEES OWN CASE IN AYS 2000-01 AND 2001-02 AND VIDE ORDER DATED 18 TH JANUARY 2007 THE ISSUE HAS BEEN RESTORED TO THE FILE OF THE AO TO DECIDE THE S AME IN LINE WITH THE PARAMETERS LAID DOWN IN PARA 6 OF THE ORDER. RESPECTIVELY FOLLOWING THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL WE REMIT THE PRES ENT ISSUE TO THE FILE OF AO FOR DECISION AFRESH IN L INE WITH THE GUIDELINES LAID DOWN IN PARA 6 OF THE ORD ER DATED 18.1.2007. THE GROUND NO.1 RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 9. IT IS CLEAR FROM THE ABOVE MENTIONED ORDERS OF THIS TRIBUNAL THAT WHILE DECIDING THIS ISSUE HAS FOLLOW ED THE ORDERS OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASS ESSMENT YEAR 2001-02 DATED 18.1.2007. THUS THIS TRIBUNAL HAS CONSISTENTLY TAKEN A VIEW ON THE ISSUE. ACCORDING LY RESPECTFULLY FOLLOWING THE EARLIER ORDERS OF THIS TRIBUNAL WE ITA NO. 3457/MUM/2009 (ASSESSMENT YEARS: 2003-04) 6 REMIT THE ISSUE TO THE RECORD OF THE AO TO DECEIT E H SAME IN TERMS OF THE PARAMETERS LAID DOWN IN THE ASSESSMENT YEAR 2001-02 2002-03. 10. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 18 TH MARCH 2011 SD SD (R.S.SYAL) (VI JAY PAL RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ON THIS 18 TH DAY OF MARCH 2011 SRL:11311 COPY TO: 1. APPLICANT 2. RESPONDENT 3. CIT CONCERNED 4. CIT(A) CONCERNED 5. DR CONCERNED BENCH BY ORDER TRUE COPY ASSTT. REGISTRAR ITAT MUMBAI