Pavitra Commercial Ltd.,, New Delhi vs Department Of Income Tax

DCIT, Pavitra Commercial Ltd., Cent. Circle 20, Vs. 108, Ansal Bhawan, New Delhi. 16, K.G. Marg, New Delhi. AAACP0299E (Appellant) (Respondent)

Appellant by: Sh. Vikram Sahay, Sr.DR Respondent by: Sh. Ajay Vohra, Sr. Adv. & Sh. Rohit Garg, Adv.

ORDER

PER S.V. MEHROTRA, A.M.

This appeal filed by the Revenue is directed against the order of ld.

CIT(A), New Delhi dated 17/05/2013 for A.Y. 2007-08.

2. The assessee company was in the business of finance, investment,

agency and agriculture. It had filed its return of income declaring total

income of Rs. 3,04,18,250/-. The assessment was completed at a total

income of Rs. 3,92,19,610/- after, inter-alia, making disallowance u/s 14A of

Rs. 21,03,901/- as per Rule 8D rejecting the assessee's contention that no

expenditure was attributable to the earning of exempt income. Proceedings

u/s 271(1)(c) were initiated.

ITA No. 5007/D/ 2013 2

3. In reply to penalty notice, the assessee, inter-alia, submitted that the

provisions of Rule 8D were notified on 24/03/2008 by which date the

assessee company had already filed its return of income for A.Y. 2007-08.

Further it was pointed out that the provisions of Rule 8D were applicable

from A.Y. 2008-09 and, therefore, the provisions of Rule 8D were not

applicable in A.Y. 2007-08. However, the AO did not accept the assessee's

contention and levied a penalty u/s 271(1)(c) of Rs. 14,15,035/-.

4. Ld. CIT(A) deleted the penalty. Having heard both the parties, we do

not find any reason to interfere with the order of ld. CIT(A) because when the

provisions of Rule 8D were applicable from A.Y. 2008-09 and not in A.Y.

2007-08, therefore, no disallowance could be made as per Rule 8D in A.Y.

2007-08.

5. As regards the applicability of the provisions of 14A the assessee's

contention was that there was no direct expenditure related to dividend

income and hence no disallowance for relatable expenditure on estimated

basis was called for. The assessee had relied on various decisions which

have been reproduced in the assessment order. The AO has not pointed out

any specific expenditure being allocable towards earning of dividend income

and has, inter-alia, observed that investment decisions are very important as

well as complicated decisions are taken only at the top level of management.

Thus, he has not found the assessee's explanation as false but computed

the disallowance invoking Rule 8D. Under such circumstances, the decision

of Hon'ble Supreme Court in the case of Reliance Petro Products Ltd., 322 ITA No. 5007/D/ 2013 3

ITR 158 is squarely applicable, wherein it has been, inter-alia, held that if the

assessee has furnished all the details of its expenditure as well as income in

its return, and details, in themselves were not found to be inaccurate then it

cannot be held to be a case of concealment of income.

6. Admittedly, the assessee has furnished all the details regarding

expendiutre incurred by it.

7. In the result, the Department's appeal is dismissed.

Order pronounced in the open court on

(H.S. SIDHU) (S.V. MEHROTRA) JUDICIAL MEMBER ACCOUNTANT MEMBER

Dated: *Kavita

Copy to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR, ITAT, New Delhi. TRUE COPY By Order

ASSISTANT REGISTRAR ITA No. 5007/D/ 2013 4

Sl. No. Description Date 1. Date of dictation by the Author 16.02.2015 2. Draft placed before the Dictating Member 23.02.2015 3. Draft placed before the Second Member 25.02.2015 4. Draft approved by the Second Member 25.02.2015 5. Date of approved order comes to the P.S/Sr. 25.02.2015 PS 6. Date of pronouncement of order 25.02.2015 7. Date of file sent to the Bench Clerk 26.02.2015

8. Date on which file goes to the Head Clerk

9. Date of dispatch of order