Hinduja Ventures Ltd, Mumbai vs Department Of Income Tax

IN THE INCOME TAX APPELLATE TRIBUNAL "H" BENCH, MUMBAI BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER & SHRI SANJAY GARG, JUDICIAL MEMBER

आयकर अपील सं./I.T.A. No.4652 /Mum/2013 ( नधा रण वष / Assessment Year : 2001-2002 आयकर अपील सं./I.T.A. No.4668 /Mum/2013 ( नधा रण वष / Assessment Year : 2004-2005

Dy. CIT - 8(2), बनाम/ M/s Hinduja Ventures R. No. 216-A, Ltd., Vs. Aayakar Bhavan, (Formerly known as M.K. Road, HTMT Ltd.) In Centre, Mumbai - 400 020. 49/50 MIDC, 12 t h Road, Andheri (East), Mumbai - 400093. थायी ले खा सं . /PAN : AAACH2058N (अपीलाथ /Appellant) .. ( यथ / Respondent)

Appellant by Smt. Parminder Respondent by : Shri Pradip Kedia

ु वाई क तार ख / Date of Hearing सन : 10-2-2015 घोषणा क तार ख /Date of Pronouncement : 20-2-2015 [

आदे श / O R D E R PER R.C. SHARMA, A.M. :

These are the appeals filed by the Revenue are directed against the orders of ld. CIT(A) -17, Mumbai both dated 29-11-2012 for the assessment years 2001-02 & 2004-05.

2. The common grievance raised by the Revenue in both these years relate to deletion of disallowance of interest u/s 14A of the Income Tax Act, 1962 and restricting the same to 10% of the dividend income.

3. We have considered the rival contention and found that the disallowance made by the A.O. u/s 14A of the Act was restricted by the 2 ITA 4652/M/13 & ITA 4668/M/13

ld. CIT(A) to 10% of the dividend income after having following observation:-

"5.4 I have considered the submissions of the appellant and the order of the AO. The AO has applied working of Rule 8D to calculate the disallowance a]». 14A for AY 2001-02. It is pertinent to note that for AY 2001-02, rule 8D was not applicable. The Hon 'ble ITAT has in the case of VFC Securities Pvt. Ltd. the ITAT has held in para 14 as under:

"14. In the case of Godrej & Boyce (supra), the Hon'ble High Court has examined the scope of See. 14A and Rule 8D and it has been held that Rule 80 is applicable from Assessment Year 2008-09 and it is not applicable with retrospective effect. It is further held that up to Assessment Year 2007-08 the reasonable estimation of the expenditure may be made by the AO. As the Assessing Officer has already estimated 5% amount of the dividend as reasonable expenditure, in our opinion, the order of the Assessing Officer needs to be restored. We, therefore: set aside the order of the Id. CIT(A) on this issue and allowed the ground taken by the assessee confirming the disallowance made by the Assessing Officer. Accordingly, ground No.3 is allowed partly allowed."

5.5 It can be seen from the above that the ITAT has held the disallowance already estimated by the AO @ 5% of the dividend as a reasonable expenditure. In the present case, the AO had in the original assessment order dated 12.03.2004 in para 8 has held that 10% of the dividend income is reasonable and disallowed the same. Further, in AY 2002-03 and AY 2003-04 the AO on the similar facts and circumstances has held 5% of the dividend 'income as reasonable disallowance u/s. 14A. The AO has increased the same to 10% of the dividend income in the present assessment year i.e. A Y 2001-02. Therefore, in view of these facts and circumstances and following order of Hon'ble ITAT in VFC Securities Pvt. Ltd. in ITA No. 5523/Mum/2009, the disallowance made @ 10% of the dividend income is held to be reasonable. Hence the ground of appeal of the appellant is partly allowed."

4. Similarly the disallowance made by the A.O. was deleted by the ld. CIT(A) in A.Y. 2004-05 after having following observation:-

"5.2 I have considered the submissions of the appellant and the order of the AO. The AO has applied working of Rule 80 to calculate the disallowance u/s. 14A for A.Y. 2004-05. It is 3 ITA 4652/M/13 & ITA 4668/M/13

pertinent to note that for AY 2004-05, rule 80 was not applicable. The Hon'ble ITAT in the case of VFC Securities Pvt. Ltd. the ITAT has held in para 14 as under:

"14. In the case of Godrej & Boyce (supra), the Hon'ble High Court has examined the scope of Sec. 14A and Rule 8D and it has been held that Rule 8D is applicable from Assessment Year 2008-09 and it is not applicable with retrospective effect. It is further held that Up to Assessment Year 2007-08 the reasonable estimation of the expenditure may be made by the AO. As the Assessing Officer has already estimated 5% amount of the. dividend as reasonable expenditure, in our opinion, the order of the Assessing Officer needs to be restored. We, therefore, set aside the order of the Id. CIT(A) on this issue and allowed the ground taken by the assessee confirming the disallowance made by the Assessing Officer. Accordingly, ground No.3 is allowed partly allowed."

5.3 It can be seen from the above that the ITAT has held the disallowance already estimated by the AO @ 5% of the dividend as a reasonable expenditure. In the present case, the AO had in the original assessment order dated 29-12-2006 in para 5.12 has held that 10% of the dividend income is reasonable and disallowed the same. Further, in AY 2002-03 and AY 2003-04 the AO on the similar facts and circumstances has held 5% of the dividend 'income as reasonable disallowance u/s. 14A. The AO has increased the same to 10% of the dividend income in the present assessment year i.e. A Y 2004-05. Therefore, in view of these facts and circumstances and following order of Hon'ble ITAT in VFC Securities Pvt. Ltd. in ITA No. 5523/Mum/2009, the disallowance made @ 10% of the dividend income is held to be reasonable. Hence the ground of appeal of the appellant is partly allowed."

5. We have considered the rival contentions, carefully gone through the orders of authorities below and found that by considering the various decisions of the Tribunal, the ld. CIT(A) restricted the disallowance to 10% of the dividend income. Looking to the facts of the case, we do not find any infirmity in the order of the ld. CIT(A) for restricting the disallowance to 10% of the dividend income insofar as relevant assessment years under consideration are assessment years 2001-02 and 2004-05 wherein Rule 8D is not applicable. The ld. D.R. could not place on record any contrary decision so as to persuade us to 4 ITA 4652/M/13 & ITA 4668/M/13

deviate from the conclusion drawn by the ld. CIT(A). We accordingly uphold the same.

6. In the result, both the appeals of the Revenue are dismissed.

Order pronounced in the open court on 20th Feb. 2015.

आदे श क घोषणा खल ु े #यायालय म% &दनांकः 20-02-2015 को क गई ।

Sd/- sd/- (SANJAY GARG) (R.C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER मंब ु ई Mumbai; &दनांक Dated 20-02-2015 [

व.6न.स./ RK , Sr. PS

आदे श क! " त$ल%प अ&े%षत/Copy of the Order forwarded to :

1. अपीलाथ / The Appellant

2. यथ / The Respondent.

3. आयकर आयु7त(अपील) / The CIT(A) -17,, Mumbai

4. आयकर आयु7त / CIT -8, Mumbai

5. :वभागीय 6त6न<ध, आयकर अपील य अ<धकरण, मंब ु ई / DR, ITAT, Mumbai H Bench

6. गाड@ फाईल / Guard file.

ु ार/ BY ORDER, आदे शानस

स या:पत 6त //True Copy// उप/सहायक पंजीकार (Dy./Asstt.

Registrar) आयकर अपील य अ धकरण, मुंबई / ITAT, Mumbai