Pataka Industries Pvt. Ltd., Kolkata v. ACIT, C.C.-VIII, Kolkata, Kolkata

ITA 805/KOL/2010 | 2004-2005
Pronouncement Date: 01-11-2011 | Result: Partly Allowed

Appeal Details

RSA Number 80523514 RSA 2010
Assessee PAN AABCP5057C
Bench Kolkata
Appeal Number ITA 805/KOL/2010
Duration Of Justice 1 year(s) 6 month(s) 8 day(s)
Appellant Pataka Industries Pvt. Ltd., Kolkata
Respondent ACIT, C.C.-VIII, Kolkata, Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 01-11-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 01-11-2011
Date Of Final Hearing 28-06-2011
Next Hearing Date 28-06-2011
Assessment Year 2004-2005
Appeal Filed On 23-04-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA () BEFORE /AND . ! . '# ) [BEFORE SRI MAHAVIR SINGH JM & SHRI C. D. RAO AM] $ $ $ $ /IN I.T.A NOS. 805 & 806/KOL/2010 %& '( %& '( %& '( %& '(/ // / ASSESSMENT YEARS: 2004-05 &2005-06 PATAKA INDUSTRIES PVT. LTD. VS. ASSISTANT COMMIS SIONER OF INCOME-TAX (PAN-AABCP 5057 C) CENTRAL CIRCLE-VIII KOLKATA (*+ /APPELLANT ) ( -*+/ RESPONDENT ) DATE OF HEARING: 01/11/2011 DATE OF PRONOUNCEMENT: 01.11.2011 *+ . / ' /FOR THE APPELLANT: SHRI S. L. KOCHAR -*+ . / ' /FOR THE RESPONDENT: SHRI S. K. ROY '0 / ORDER PER MAHAVIR SINGH JM/ : THESE TWO APPEALS BY ASSESSEE ARE ARISING OUT OF SE PARATE ORDERS OF CIT(A) KOLKATA IN APPEAL NOS. 86 & 87/CC-VIII/CIT(A) C-I/09-10 DATED 19.03.2010. ASSESSMENTS WERE FRAMED BY ACIT C.C-VIII KOLKATA U/S.143(3)/147 OF THE IN COME TAX ACT 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEARS 2004-05 & 200 5-06 VIDE HIS ORDERS DATED 26.11.2009 AND 27.11.2009. 2. THE FIRST COMMON ISSUE IN THESE TWO APPEALS OF A SSESSEE IS AGAINST THE ORDER OF CIT(A) CONFIRMING THE ASSUMPTION OF JURISDICTION OF REASSE SSMENT U/S. 147 R.W.S. 148 OF THE ACT. AT THE OUTSET LD. COUNSEL FOR THE ASSESSEE HAS NOT PRESSED THIS ISSUE UNDER THE INSTRUCTION OF ASSESSEE. HENCE THE SAME IS DISMISSED AS NOT PRESSED. 3. THE NEXT COMMON ISSUE IN THESE TWO APPEALS OF AS SESSEE IS AGAINST THE ORDER OF CIT(A) CONFIRMING THE DISALLOWANCE OF EXPENSES BY INVOKING THE PROVISIONS OF SECTION 14A OF THE ACT R.W.R. 8D OF I. T. RULES 1962 (HEREINAFTER REFERRE D TO AS THE RULES). FOR THIS ASSESSEE RAISED FOLLOWING COMMON GROUND: FOR THAT THE LD. CIT(A) ERRED IN UPHOLDING THE DIS ALLOWANCE OF RS.19 87 843/- (A.Y.2004-05) AND RS.42 80 339/- (A.Y. 2005-06) MAD E BY THE A.O. OUT OF EXPENSES BY INVOKING PROVISIONS CONTAINED IN SEC. 14A OF THE IN COME TAX ACT 1961. 2 ITA NOS.805&806/K/2010 PATAKA INDUSTRIES PVT. LTD. . AY 04-05 & 05-06 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUG H FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEARS 2004-05 AND 2005-06 FOUND THAT ASSESSEE HAS G OT EXEMPTED INCOME OF RS.3 93 85 866/- ON ACCOUNT OF DIVIDEND FROM MUTUAL FUND AND AT RS.1 04 88 190/- ON ACCOUNT OF DIVIDEND FROM MUTUAL FUND AND RS.2 93 68 302/- AS LONG TERM CAPIT AL GAIN ON MUTUAL FUND RESPECTIVELY. ASSESSING OFFICER IN BOTH THE YEARS COMPUTED THE DI SALLOWANCE BY INVOKING THE PROVISIONS OF SECTION 14A OF THE ACT R.W.R 8D OF THE RULES AND MA DE DISALLOWANCE OF RS.19 87 843/- AND RS.42 80 339/- RESPECTIVELY IN BOTH THE ASSESSMENT YEARS. AGGRIEVED ASSESSEE PREFERRED APPEAL BEFORE CIT(A) WHO ALSO CONFIRMED THE ACTION OF ASS ESSING OFFICER IN BOTH THE YEARS. AGGRIEVED ASSESSEE IS IN SECOND APPEALS BEFORE US. WE FIND THAT HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG. CO. LTD. (SUPRA) HAS ALREADY HELD THAT APPLICABILITY OF RULE 8D OF THE RULES IS PROSPECTIVE AND NOT RETROSPECTIV E W.E.F. ASSESSMENT YEAR 2007-08 WHEREIN HONBLE HIGH COURT HAS ALSO DIRECTED TO RECOMPUTE D ISALLOWANCE IN CASE THERE IS A NEXUS FOR EXPENSES WITH EXEMPT INCOME BY LAYING DOWN THE PRIN CIPLE AS UNDER: (V) THE PROVISIONS OF RULE 8D OF THE INCOME-TAX RU LES WHICH HAVE BEEN NOTIFIED WITH EFFECT FROM MARCH 24 2008 SHALL APPLY WITH E FFECT FROM THE ASSESSMENT YEAR 2008-09; (VI)EVEN PRIOR TO THE ASSESSMENT YEAR 2008-09 WHE N RULE 8D WAS NOT APPLICABLE THE ASSESSING OFFICER HAS TO ENFORCE TH E PROVISIONS OF SUB-SECTION (1) OF SECTION 14A. FOR THAT PURPOSE THE ASSESSING OFF ICER IS DUTY BOUND TO DETERMINE THE EXPENDITURE WHICH HAS BEEN INCURRED I N RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THE AC T. THE ASSESSING OFFICER MUST ADOPT A REASONABLE BASIS OR METHOD CONSISTENT WITH ALL THE RELEVANT FACTS AND CIRCUMSTANCES AFTER FURNISHING A REASONABLE OPPORTU NITY TO THE ASSESSEE TO PLACE ALL GERMANE MATERIAL ON THE RECORD; (VII) THE PROCEEDINGS FOR THE ASSESSMENT YEAR 2002 -03 SHALL STAND REMANDED BACK TO THE ASSESSING OFFICER. THE ASSESSING OFFICE R SHALL DETERMINE AS TO WHETHER THE ASSESSEE HAS INCURRED ANY EXPENDITURE ( DIRECT OR INDIRECT) IN RELATION TO DIVIDEND INCOME/INCOME FROM MUTUAL FUNDS WHICH D OES NOT FORM PART OF THE TOTAL INCOME AS CONTEMPLATED UNDER SECTION 14A. THE ASSESSING OFFICER CAN ADOPT REASONABLE BASIS FOR EFFECTING THE APPORTIONM ENT. WHILE MAKING THAT DETERMINATION THE ASSESSING OFFICER SHALL PROVIDE A REASONABLE OPPORTUNITY TO THE ASSESSEE OF PRODUCING ITS ACCOUNTS AND RELEVANT AND GERMANE MATERIAL HAVING A BEARING ON THE FACTS AND CIRCUMSTANCES OF THE CAS E WE FURTHER FIND THAT THE TRIBUNAL KOLKATA BENCH ON THE SELF SAME FACTS IN THE CASE OF SAGRIKA GOODS & SERVICES PVT. LTD. VS. INCOME-TAX OFFICER I.T.A NO. 1278/KOL/2010 ASSESSMENT YEAR 2005-06 DATED 24 TH SEPTEMBER 2010 HAS HELD AS UNDER: 3 ITA NOS.805&806/K/2010 PATAKA INDUSTRIES PVT. LTD. . AY 04-05 & 05-06 5. HEARD THE RIVAL SUBMISSIONS PERUSED THE MATERIAL A VAILABLE ON RECORD AND THE DECISIONS RELIED ON BY THE LD. AUTHORISED REPRE SENTATIVE OF THE ASSESSEE CITED SUPRA. WE FIND THAT ON THE ISSUE OF DISALLOWANCE U/ S. 14A THIS BENCH OF THE TRIBUNAL HAS BEEN TAKING A CONSISTENT VIEW THAT THIS DISALLO WANCE SHOULD BE RESTRICTED TO 1% OF DIVIDEND INCOME. FOLLOWING THE SAME IN THIS AP PEAL ALSO WE HOLD THAT THE DISALLOWANCE U/S 14A FOR EARNING EXEMPT DIVIDEND IN COME SHOULD BE RESTRICTED TO 1% OF DIVIDEND INCOME. THE ASSESSING OFFICER IS AC CORDINGLY DIRECTED TO DO SO AND WORK OUT THE QUANTUM OF DISALLOWANCE. THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED AS DIRECTED ABOVE. IN VIEW OF THE ABOVE AND RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF JURISDICTION TRIBUNAL (CITED SUPRA) WE DIRECT THE AO TO RESTRICT THE DIS ALLOWANCE AT 1% OF EXEMPTED INCOME AS EXPENSES RELATED TO THIS INCOME. WE ORDER ACCORDIN GLY. 5. NEXT ISSUE IN APPEAL OF THE ASSESSEE FOR ASSESSM ENT YEAR 2005-06 IS AGAINST THE ORDER OF CIT(A) IN HOLDING THAT S.T. CAPITAL LOSS OF RS.56 4 82/- WAS ALLOWABLE FOR ADJUSTMENT AGAINST OTHER INCOME. LD. COUNSEL FOR THE ASSESSEE HAS NOT PRESSED THIS ISSUE UNDER INSTRUCTION OF ASSESSEE. HENCE THE SAME IS DISMISSED AS NOT PRESS ED. 6. IN THE RESULT ASSESSEES APPEALS ARE PARTLY AL LOWED. 7. ORDER IS PRONOUNCED IN THE OPEN COURT. SD/- SD/- . ! . '# (C. D. RAO) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( !# !# !# !#) )) ) DATED : 1ST NOVEMBER 2011 12 %34 5 JD.(SR.P.S.) '0 . 6 7'6'8- COPY OF THE ORDER FORWARDED TO: 1 . ' /APPLICANT PATAKA INDUSTRIES PVT. LTD. C/O S. L. KOCHAR ADVOCATE 86 CANNING STREET KOLKATA-1. 2 -*+ / RESPONDENT ACIT C.C-VIII KOLKATA 3 . 0% ( )/ THE CIT(A) KOLKATA 4. 0% / CIT KOLKATA 5 . ?@ % / DR KOLKATA BENCHES KOLKATA -6 / TRUE COPY '0%A/ BY ORDER 4 /ASSISTANT REGISTRAR .