Shri Gaurang Manubhai Doshi, Ahmedabad v. The ACIT.,Cent.Circle-2(1),, Ahmedabad

ITSSA 150/AHD/2009 | 2001-2002
Pronouncement Date: 25-11-2011 | Result: Allowed

Appeal Details

RSA Number 15020516 RSA 2009
Assessee PAN AAZPD2973L
Bench Ahmedabad
Appeal Number ITSSA 150/AHD/2009
Duration Of Justice 2 year(s) 15 day(s)
Appellant Shri Gaurang Manubhai Doshi, Ahmedabad
Respondent The ACIT.,Cent.Circle-2(1),, Ahmedabad
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 25-11-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 25-11-2011
Date Of Final Hearing 17-11-2011
Next Hearing Date 17-11-2011
Assessment Year 2001-2002
Appeal Filed On 10-11-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH AHMEDABAD BEFORE SHRI MUKUL KUMAR SHRAWAT JUDICIAL MEMBER AND SHRI A. K. GARODIA ACCOUNTANT MEMBER I.T.(SS) NO. 150 151/ AHD/2009 (ASSESSMENT YEAR 2001-02 & 2002-03 RESPECTIVELY) GAURANG MANUBHAI DOSHI 26 SAMASTA BRAHKSHATRIYA SOC. NARAYANNAGAR ROAD PALDI AHMEDABAD VS. ACIT CENT. CIRCLE 2(1) AHMEDABAD PAN/GIR NO. : AAZPD2973L (APPELLANT) .. (RESPONDENT) APPELLANT BY: SHRI S N DIVETIA AR RESPONDENT BY: SHRI VINOD TANWANI SR. DR DATE OF HEARING: 17.11.2011 DATE OF PRONOUNCEMENT: 25.11.2011 O R D E R PER SHRI A. K. GARODIA AM:- BOTH THESE APPEALS ARE FILED BY THE ASSESSEE WHIC H ARE DIRECTED AGAINST THE COMBINED ORDER OF LD. CIT(A) III AHMED ABAD DATED 07.08.2009 FOR THE ASSESSMENT YEARS 2001-02 AND 200 2-03. SINCE THE ISSUE INVOLVED IS SIMILAR BOTH THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. BOTH THESE APPEALS WERE TIME BARRED BY THREE DAY S AND THE ASSESSEE HAD FILED AN APPLICATION FOR CONDONATION OF DELAY I N WHICH IT WAS SUBMITTED BY THE ASSESSEE THAT THESE APPEALS WERE R EQUIRED TO BE FILED BEFORE THE TRIBUNAL ON OR BEFORE 08.11.2009 WHICH W AS SUNDAY AND ON THE NEXT WORKING DAY I.E. 09.11.2009 ASSESSEE HAD TO G O TO PALLITANA I.T.(SS).NO.150 151 /AHD/2009 2 PILGRIMAGE ON COMPLETION OF CHATUR MAS AND HENCE H E COULD NOT MAKE PAYMENT OF APPEAL FEE AND SIGN THE APPEAL MEMO AND THE DELAY OF THREE DAYS HAS ARISEN DUE TO THESE REASONS AND HENCE IT SHOULD BE CONDONED. CONSIDERING THE FACTS OF THE PRESENT CASE THE DELA Y IS CONDONED FOR BOTH THE YEARS. 3. IT WAS SUBMITTED BY THE LD. A.R. THAT GROUND NO. 3 & 1 IS NOT PRESSED IN BOTH THE YEARS AND ACCORDINGLY THESE GR OUNDS IN BOTH THE YEARS ARE REJECTED AS NOT PRESSED. 4. THE ONLY ISSUE INVOLVED IS REGARDING DISALLOWANC E MADE BY THE A.O. U/S 14A TO THE EXTENT OF 30% OF DIVIDEND INCOM E IN BOTH THE YEARS AND IN THIS MANNER HE MADE DISALLOWANCE OF RS.2 66 892/- IN ASSESSMENT YEAR 2001-02 AND RS.5 42 337/- IN ASSESSMENT YEAR 2 002-03. 5. IT WAS THE SUBMISSION BY THE LD. A.R. THAT THIS AD-HOC DISALLOWANCE IS NOT JUSTIFIED AND IT IS EXCESSIVE ALSO AND HENCE ONLY REASONABLE DISALLOWANCE SHOULD BE MADE AS HAS BEEN HELD BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MANUFACTUR ING PVT. LTD. VS DCIT AS REPORTED IN 194 TAXMAN 203. 6. AS AGAINST THIS LD. D.R. OF THE REVENUE DRAWN O UR ATTENTION TO PARA 5.2 OF THE ASSESSMENT ORDER IN ASSESSMENT YEAR 2001 -02 WHERE IT IS NOTED BY THE A.O. THAT THE ASSESSEE HAS NOT FILED ANY PRO OF TO ESTABLISH THAT THE SHARES HAVE BEEN PURCHASED OUT OF ITS OWN FUNDS. I T IS ALSO NOTED BY THE A.O. THAT THE ASSESSEE IN HIS SUBMISSION HAS ACCEPT ED TO HAVE BORROWED FUNDS FOR INVESTMENT IN SHARES AND HAS PAID INTERES T ON LOAN TAKEN FOR THE PURCHASE OF SHARES. IT WAS ALSO SUBMITTED THAT SIM ILARLY IN THE NEXT YEAR ALSO SIMILAR OBSERVATIONS ARE MADE BY THE A.O. IN PARA 5.2 OF THE ASSESSMENT ORDER OF THAT YEAR AND IT WAS SUBMITTED THAT UNDER THESE FACTS THE DISALLOWANCE MADE BY THE A.O. IS VERY MUCH REAS ONABLE AND HENCE THE ASSESSMENT ORDER ON THIS ISSUE SHOULD BE UPHELD . I.T.(SS).NO.150 151 /AHD/2009 3 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS PERUSE D THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW AND THE JUDGEMENT CITED BY THE LD. A.R. OF THE ASSESSEE. W E FIND THAT IN BOTH THE YEARS THE A.O. HAS MADE DISALLOWANCE TO THE EXTENT OF 30% OF DIVIDEND INCOME. IN OUR CONSIDERED OPINION PERCENTAGE OF D IVIDEND INCOME SHOULD NOT BE THE BASIS FOR MAKING DISALLOWANCE U/S 14A BECAUSE THE EXPENSE TO BE INCURRED FOR EARNING THE DIVIDEND INC OME IS NOT DEPENDING ON QUANTUM OF DIVIDEND. IN ONE YEAR THE COMPANY M AY DECLARE MORE DIVIDEND AND IN OTHER YEAR THE COMPANY MAY DECLARE LESSER DIVIDEND AND EVEN IT MAY NOT DECLARE ANY DIVIDEND AND HENCE THE EXPENSES OF THE ASSESSEE WILL NOT VARY ON THE BASIS OF DIVIDEND DEC LARED BY THE COMPANY AND THEREFORE THIS BASIS ADOPTED BY THE A.O. FOR M AKING DISALLOWANCE U/S 14A IS NOT APPROPRIATE. REGARDING THIS SUBMISSION OF THE LD. A.R. THAT DISALLOWANCE MADE BY THE A.O. IS EXCESSIVE WE WOUL D LIKE TO OBSERVE THAT NO SUCH DETAILS OR EVIDENCE HAS BEEN BROUGHT O UT ON RECORD BY THE ASSESSEE BEFORE THE AUTHORITIES BELOW OR BEFORE US SHOWING THAT THE DISALLOWANCE MADE BY THE A.O. IS EXCESSIVE. IN SPI TE OF THE SPECIFIC QUERY BY THE BENCH LD. A.R. DID NOT SUBMIT ANY DET AIL REGARDING THE ACTUAL EXPENSES INCURRED BY THE ASSESSEE IN RESPECT OF EARNING DIVIDEND INCOME. HE HAS ALSO NOT CONTROVERTED THE FINDING O F THE A.O. THAT INTEREST BEARING BORROWED FUNDS WERE USED FOR THE PURPOSE OF MAKING INVESTMENT IN SHARES AND HENCE IN OUR CONSIDERED OPINION THIS ISSUE SHOULD GO BACK TO THE FILE OF THE A.O. FOR FRESH DECISION FOR MAKI NG REASONABLE DISALLOWANCE U/S14A AS PER THE JUDGMENT OF HONBLE BOMBAY HIGH COURT RENDERED IN THE CASE OF GODREJ & BOYCE MANUFACTURIN G PVT. LTD. (SUPRA). WE ORDER ACCORDINGLY. THE A.O. SHOULD PASS NECESS ARY ORDER AS PER LAW IN THE LIGHT OF ABOVE DISCUSSION AFTER PROVIDING AD EQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. I.T.(SS).NO.150 151 /AHD/2009 4 7. THERE WAS ONE MORE SUBMISSION BY THE LD. A.R. TH AT DIRECTION SHOULD BE GIVEN TO THE A.O. THAT IN ANY CASE THE D ISALLOWANCE IF MADE BY HIM SHOULD NOT EXCEED 30% OF THE DIVIDEND INCOME B EING DISALLOWANCE MADE BY THE A.O. IN THE IMPUGNED ASSESSMENT ORDERS. IN THIS REGARD WE WOULD LIKE TO OBSERVE THAT NO SUCH DIRECTION IS REQ UIRED TO BE GIVEN BECAUSE WE HAVE FOUND THAT THE BASIS ADOPTED BY THE A.O. IS NOT SUSTAINABLE AND WE HAVE DIRECTED TO FOLLOW THE JUDG MENT OF HONBLE BOMBAY HIGH COURT RENDERED IN THE CASE OF GODREJ & BOYCE MANUFACTURING PVT. LTD. (SUPRA) AND THEREFORE PRO PER DISALLOWANCE HAS TO BE MADE BY HIM WHICH IS REASONABLE IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AFTER ALLOWING ADEQUATE OPPORTUNIT Y OF BEING HEARD TO THE ASSESSEE. 8. IN THE RESULT BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 9. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE M ENTIONED HEREINABOVE. SD./- SD./- (MUKUL KUMAR SHRAWAT) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER SP COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR AHMEDABAD BY ORDER 6. THE GUARD FILE AR ITAT AHMEDABAD I.T.(SS).NO.150 151 /AHD/2009 5 1. DATE OF DICTATION 22/11 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 23/11.OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S.24/11 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 25/11/2011 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.25/11 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 25/11/2011 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. ..