Bosch Chassis Systems India Ltd., Pune v. DCIT, Cir.-1(1),, Pune

ITA 61/PUN/2011 | 2006-2007
Pronouncement Date: 27-07-2012 | Result: Partly Allowed

Appeal Details

RSA Number 6124514 RSA 2011
Assessee PAN AAACK7312E
Bench Pune
Appeal Number ITA 61/PUN/2011
Duration Of Justice 1 year(s) 6 month(s) 15 day(s)
Appellant Bosch Chassis Systems India Ltd., Pune
Respondent DCIT, Cir.-1(1),, Pune
Appeal Type Income Tax Appeal
Pronouncement Date 27-07-2012
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 27-07-2012
Date Of Final Hearing 27-07-2012
Next Hearing Date 27-07-2012
Assessment Year 2006-2007
Appeal Filed On 11-01-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B PUNE BEFORE SHRI R.S. PADVEKAR JUDICIAL MEMBER AND SHRI R.K. PANDA ACCOUNTANT MEMBER ITA NO. 61/PN/2011 (ASSTT. YEAR : 2006-07) BOSCH CHASSIS SYSTEMS INDIA LTD. ... APPELLANT PANCHSHIL QUADRA 1 238 HADAPSAR MAGARPATTA CITY ROAD PUNE 411028 PAN : AAACK 7312 E V. DY. COMMISSIONER OF INCOME TAX RESPONDENT CIRCLE 1(1) PUNE APPELLANT BY : NIKHIL PATHAK RESPONDENT BY : SHRI ALOK MISHRA DATE OF HEARING : 27/7/12 DATE OF PRONOUNCEMENT : -7-12 ORDER PER R.S. PADVEKAR JM IN THIS APPEAL THE ASSESSEE HAS CHALLENGED THE IMPUGNE D ORDER/DIRECTIONS OF DISPUTE RESOLUTION PANEL (DRP) PASSED U/S. 144C(5) OF THE ACT WHICH WAS FOLLOWED BY THE A.O. THE ASSESSEE HAS TAKEN FOLLOWING EFFECTIVE GROUND : 1.1 ON THE FACTS OF THE CASE AND IN LAW THE HONBLE DISPUTE RESOLUTION PANEL PUNE ERRED IN CONFIRMING THAT THE LEARNED ASSES SING OFFICER WAS JUSTIFIED IN DISALLOWING AN ADHOC SUM OF RS. 13 12 7 08/- AS INCURRED IN RELATION TO EXEMPT DIVIDEND RECEIVED OF RS. 2 06 96 793/- U/S. 14A BY APPLYING RULE 8D WHILE ASSESSING TOTAL INCOM E AS PER REGULAR PROVISIONS. 2. THE SHORT ISSUE IN CONTROVERSY IS IN RESPECT OF DISALLOW ANCE MADE BY THE A.O. AT RS. 13 12 708/- EVOKING SEC. 14A R.W.R. 8D. THE A.O. HA S OBSERVED THAT THE ASSESSEE HAS RECEIVED DIVIDEND OF RS. 2 06 96 793/- WH ICH WAS CLAIMED EXEMPT U/SS. 10(34/10(35) OF THE ACT. THE A.O. WAS OF THE OPINION THAT AS PER RULE 8D OF THE I.T. RULES THE DISALLOWANCE OF THE EXPENDITUR E ATTRIBUTABLE FOR EARNING THE DIVIDEND INCOME IS TO BE DISALLOWED. HE THEREFOR E WORKED OUT THE DISALLOWANCE IN RESPECT OF THE EXPENDITURE WHICH WAS 0.5% OF THE AVERAGE VALUE ITA . NO.61/PN/2011 BOSCH CHASSIS SYSTEMS INDIA LTD. A.Y. 2006-07 PAGE OF 3 2 OF INVESTMENT I.E. RS. 26 25 41 500/- AND WORKED OUT THE QU ANTUM OF DISALLOWANCE AT RS.13 12 708/-. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE RECORD. SO FAR AS APPLICABILITY OF RULE 8D IS CONCERNED NOW T HE CONTROVERSY HAS BEEN SET TO REST BY THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF GO DREJ BOYCE MANUFACTURING CO. PVT. LTD. 328 ITR 81 (BOM) AND IT IS HELD THAT RULE 8D HAS NO RETROSPECTIVE APPLICABILITY AND THE SAID RULE IS APPLICABLE FROM THE A.Y. 2008- 09. IN THE PRESENT APPEAL PERTAINS TO A.Y. 2006-07 HEN CE THE A.O WAS NOT JUSTIFIED IN APPLYING RULE 8D OF THE I.T. RULES. TO THAT EX TENT THE ARGUMENT OF THE LD. COUNSEL IS ACCEPTED. IN THIS CASE IT IS NOT DISPUT ED THAT THE ASSESSEE HAS EARNED THE EXEMPT DIVIDEND INCOME TO THE EXTENT OF RS.2 06 93 793/- AND IT CANNOT BE SAID THAT NO EXPENDITURE IS ATTRIBUTABLE FOR EA RNING THE SAID EXEMPTED INCOME. THE LD COUNSEL SUBMITTED THAT IN THE PRECEDING Y EAR ALSO THE DISALLOWANCE WAS MADE AND THE LD CIT(A) RESTRICTED THE D ISALLOWANCE TO RS. 50 000/- AND REVENUE IS NOT IN APPEAL AGAINST THE ORDER OF LD CIT(A). HE ALSO SUBMITTED THAT ASSESSEE HAS SUFFICIENT INTEREST FREE SURPL US FUND AND EVEN PRESUMING THE INVESTMENTS ARE MADE FOR EARNING THE EXEM PTED INCOME WHICH IS NOT FORMING PART OF THE TOTAL INCOME THEN IN THAT CA SE THE PRESUMPTION GOES IN FAVOUR OF THE ASSESSEE. 4. WE ARE UNABLE TO ACCEPT THE PLEA OF THE ASSESSEE. W E FIND THAT IN THE A.Y. 2004-05 THE ASSESSEE HAS DECLARED THE EXEMPT DIVIDEND TO THE EXTENT OF RS. 68 06 999/- AND THE A.O HAS MADE THE DISALLOWANCE AT THE RATE OF 5% OF THE DIVIDEND WHICH WAS WORKED OUT AT RS.3 40 350/-. ON APPEA L THE LD CIT(A) SUSTAINED THE DISALLOWANCE AT RS.50 000/- ON ADHOC BASIS. IN OUR OPINION SOME REASONABLE APPROACH IS REQUIRED TO BE TAKEN. WE ACCORD INGLY DIRECT THE A.O TO WORK OUT THE DISALLOWANCE AT 1% OF THE GROSS DIVIDEND INCO ME AS EXPENDITURE DISALLOWABLE U/S. 14A. THE ASSESSEE HAS SHOWN THE GROSS DIVIDEND INCOME AT RS. 2 06 96 793/- HENCE BY TAKING 1% OF THE SAID AMOUNT A S AN EXPENDITURE THE DISALLOWANCE IS WORKED OUT AT RS. 2 07 000/-. ACCORDIN GLY THE A.O. IS DIRECTED TO DISALLOW RS. 2 07 000/- AS AGAINST RS. 13 12 708/-. ITA . NO.61/PN/2011 BOSCH CHASSIS SYSTEMS INDIA LTD. A.Y. 2006-07 PAGE OF 3 3 5. IN THE RESULT ASSESSEES APPEAL IS PARTLY ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 27TH JU LY 2012 SD/- SD/- (R.K. PANDA) ACCOUNTANT MEMBER (R.S. PADVEKAR ) JUDICIAL MEMBER PUNE DATED THE 27TH JULY 2012 US COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT/DIT PUNE 4. THE D.R. B BENCH PUNE 5. GUARD FILE /-TRUE COPY-/ BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE