CANARA ROBECO ASSET MANAGEEMNT CO. LTD ( FORMERLY KNOWN AS CANBANK INVESTMENT MANAGEMENT SERVICES LTD), MUMBAI v. ACIT (OSD) CITY-2, MUMBAI

ITA 6605/MUM/2009 | 2005-2006
Pronouncement Date: 22-12-2010 | Result: Allowed

Appeal Details

RSA Number 660519914 RSA 2009
Assessee PAN AAACC2031J
Bench Mumbai
Appeal Number ITA 6605/MUM/2009
Duration Of Justice 11 month(s) 23 day(s)
Appellant CANARA ROBECO ASSET MANAGEEMNT CO. LTD ( FORMERLY KNOWN AS CANBANK INVESTMENT MANAGEMENT SERVICES LTD), MUMBAI
Respondent ACIT (OSD) CITY-2, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 22-12-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 22-12-2010
Date Of Final Hearing 13-12-2010
Next Hearing Date 13-12-2010
Assessment Year 2005-2006
Appeal Filed On 29-12-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL 'C' BENCH MUMBAI BEFORE SHRI R.S. PADVEKAR JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH ACCOUNTANT MEMBER ITA NO. 6605/MUM/2009 (ASSESSMENT YEAR: 2005-06) CANARA ROBECO ASSET MANAGAMENT CO. LTD. ACIT (OSD) - I CITY 2 (FORMERLY KNOWN AS CANBANK INVEST. MGT. SERVICES LT D.) MUMBAI CONSTRUCTION HOUSE 4TH FLOOR VS. BALLARD ESTATE MUMBAI 400001 PAN - AAACC 2031 J APPELLANT RESPONDENT APPELLANT BY: SHRI TEJAS MEHTA RESPONDENT BY: SHRI P.N. DEVDASAN O R D E R PER B. RAMAKOTAIAH A.M. THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER OF THE CIT(A)-IV MUMBAI DATED 30.10.2009. 2. THE ISSUE IN THIS APPEAL IS WITH REFERENCE TO THE D ISALLOWANCE UNDER SECTION 14A FOLLOWING RULE 8D. ASSESSEE HAS CLAIMED EXEMPTION OF DIVIDEND INCOME OF ` 4 42 633/- AND INTEREST INCOME OF ` 49 89 329/- AS EXEMPT. SINCE THE ASSESSEE HAS SPENT LOT OF EXPENDITURE IN ITS BU SINESS THE A.O. DISALLOWED 2% OF THE TAX FREE INCOMES AS EXPENSES RELATED TO E ARNING OF EXEMPT INCOMES AND DETERMINED THE DISALLOWANCE UNDER SECTION 14A O F ` 1 08 640/-. IT WAS CONTENTION OF THE ASSESSEE THAT IT HAS NOT INCURRED ANY EXPENDITURE FOR EARNING EXEMPT INCOME. THE INVESTMENTS ARE MADE OUT OF OWN FUNDS AND NOT OUT OF BORROWED FUNDS AND THE DIVIDEND INCOME HAS C OME FROM ONLY FIVE COMPANIES AND AS SUCH NOT MUCH EXPENDITURE WAS INCU RRED FOR EARNING DIVIDEND INCOME. THE ASSESSEE RELIED ON MANY CASE L AWS FOR THE PROPOSITION THAT NO DISALLOWANCE IS REQUIRED. HOWEVER THE CIT( A) DID NOT AGREE WITH THE SUBMISSIONS AND INVOKING RULE 8D AND FOLLOWING THE PRINCIPLES ESTABLISHED BY THE DAGA CAPITAL & MANAGEMENT IN ITA NO. 8054/MU M/2003 DIRECTED ITA NO. 6605/MUM/2009 CANARA ROBECO ASSET MANAGAMENT CO. LTD. 2 THE A.O. TO RECOMPUTE THE DISALLOWANCE BY FOLLOWING RULE 8D WHICH RESULTED IN ENHANCING THE DISALLOWANCE IN THE CONSEQUENTIAL PROCEEDINGS. 3. WHILE ADMITTING THAT THE ISSUE IS TO BE RESTORED TO THE FILE OF THE AO CONSEQUENT TO THE JUDGEMENT OF THE JURISDICTIONAL H IGH COURT IN THE CASE OF GODREJ & BOYCE MFG. CO. LTD. VS. DCIT 328 ITR 81 T HE LEARNED COUNSEL HOWEVER SUBMITTED THAT ON SIMILAR FACTS IN A.Y. 20 01-02 AND IN A.Y. 2002- 03 THE ITAT RESTRICTED THE DISALLOWANCE TO ` 50 000/- ON ADHOC BASIS. IT WAS HIS SUBMISSION THAT THE DISALLOWANCE OF ` 50 000/- IS REASONABLE. 4. THE LEARNED D.R. SUBMITTED THAT THE ISSUE IS TO BE EXAMINED IN VIEW OF THE JURISDICTIONAL HIGH COURT DECISION. 5. WE HAVE CONSIDERED THE ISSUE. AS SEEN THE ITAT DECI DED THE ISSUE IN EARLIER YEARS BEFORE THE DECISION IN THE CASE OF DA GA CAPITAL & MANAGEMENT SERVICES OF SPECIAL BENCH AND RESTRICTED THE DISALL OWANCE TO ` 50 000/- IN THE ABOVE ASSESSMENT YEARS. HOWEVER IT IS SEEN THAT TH E INCOMES EARNED IN THOSE YEARS ARE MORE THAN ` 3.3 CRORES AND THE A.O. DISALLOWED 10% OF THE EXPENDITURE WHEREAS IN THIS YEAR THE EXEMPT INCOME WAS LESS. CORRESPONDINGLY RESTRICTING THE AMOUNT TO ` 50 000/- AS WAS DONE IN EARLIER YEAR MAY NOT BE APPROPRIATE IN ABSENCE OF COMPLETE DETAILS. IN VIEW OF THIS WE RESTORE THE MATTER BACK TO THE FILE OF THE A.O. TO KEEP THE FACTS IN MIND AND DETERMINE THE REASONABLE AMOUNT FOR DISALLOWING UNDER SECTION 14A KEEPING IN MIND THE PRINCIPLES ESTABLISHED BY THE H ON'BLE BOMBAY HIGH COURT IN THE ABOVE SAID CASE AND TO DETERMINE IT AC CORDING TO LAW. THE ISSUE IS RESTORED BACK TO THE FILE OF THE A.O. 6. IN THE RESULT APPEAL IS ALLOWED FOR STATISTICAL PU RPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND DECEMBER 2010. SD/- SD/- (R.S. PADVEKAR) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI DATED: 22 ND DECEMBER 2010 ITA NO. 6605/MUM/2009 CANARA ROBECO ASSET MANAGAMENT CO. LTD. 3 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) IV MUMBAI 4. THE CIT II MUMBAI CITY 5. THE DR C BENCH ITAT MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT MUMBAI BENCHES MUMBAI N.P.