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Income Tax Appellate Tribunal - Kolkata

Dcit, Circle 10, Kolkata, Kolkata vs Department Of Income Tax on 27 April, 2009

               आयकर अपीलीय अधीकरण,           बी ", कोलकाता,
                           अधीकरण Ûयायपीठ - "बी    कोलकाता
     IN THE INCOME TAX APPELLATE TRIBUNAL "B" BENCH : KOLKATA

                सम¢ ौी बी.
                सम¢)
               (सम¢    बी आर.
                           आर िमƣल,् Ûयायीक सदःय,
                                            सदःय एवं ौी बी.
                                                        बी के. हालदार लेखा सदःय,)
                                                                           सदःय
             [Before Hon'ble Sri B.R.Mittal, JM & Hon'ble Sri B. K. Haldar, AM]


                        आयकर अपील संÉया / I.T.A No. 1231/Kol/2009
                           िनधॉरण वषॅ/Assessment Year : 2002-03

Deputy Commissioner of Income Tax,         -vs.-          M/s. Smifs Securities Ltd.
Circle-10, Kolkata                                 (Presently Stewart & Mackertich Wealth
                                                    Management Ltd.), Kolkata
                                                            (PAN : AADCS 7513 E)
 अपीलाथȸ /Appellant)
(अपीलाथȸ                                                      ू×यथȸ/Respondent)
                                                              ू×यथȸ
                                                             (ू×यथȸ

                                           &

                                      C.O. No. 59/Kol./2009
                             (arising out of ITA No. 1231/Kol./2009)
                                  Assessment Year : 2002-2003

M/s. Smifs Securities Ltd., Kolkata    -vs.- Deputy Commissioner of Income Tax,
                                             Circle-10, Kolkata
   (Cross Objector)                                      (Respondent)


                   For the assessee : ौी़/ Shri Rajeeva Kumar, A.R.
                For the Department : ौी़/ Shri S.K. Malakar, Sr. D.R.


                                       आदे श/ORDER

Per Shri B. R. Mittal, Judicial Member/ ौी बी.

बी आर.

आर िमƣल,् Ûयायीक सदःय :-

The Department has filed this appeal for the assessment year 2002-03 against the order of ld. Commissioner of Income-tax (Appeals)-XII, Kolkata dated 27.04.2009 on the following grounds :-

"On the facts and in circumstances of the case, ld. CIT(A.) erred in directing the AO to follow the method as provided in Rule 8D(2)(iii) only for determining the disallowance pertaining to exempt dividend 2 ITA No.1231/Kol./2009 & CO-59-Kol.2009 income by ignoring the disallowance to be made under Rule 8D(2)(i) and 8D(2)(ii) which are applicable in the instant case".

2. The assessee has filed the Cross Objection supporting the order of the ld. Commissioner of Income-tax (Appeals).

3. We have heard the ld. representatives of the parties and have perused the orders of the authorities below.

4. We observe that the Assessing Officer while making disallowance under section 14A of the Income Tax Act made disallowance of Rs.27,53,893/- as the dividend income shown by the assessee is exempted income. Since the assesee filed appeal before the ld. CIT(A.), the ld. CIT(A.) by following the decision of the ITAT, Special Bench, Mumbai in the case of I.T.O. - vs.- Daga Capital Management Pvt. Ltd. [117 ITD 169 (SB)] directed the Assessing Officer to make disallowance as per Rule 8D of the Income Tax Rules. Hence, the Department has filed this appeal before the Tribunal.

5. At the time of hearing, it was pointed out that the said decision of the ITAT, Special Bench, Mumbai in the case of Daga Capital Management Pvt. Ltd. has since been reversed by the Hon'ble Bombay High Court in Godrej & Boyce Manufacturing Co. Ltd. -vs.- DCIT [328 ITR 81] vide which it has been held that Rule 8D is prospective in nature and is applicable from assessment year 2008-09. Since the assessment year under consideration is 2002-03, it is clear from the above decision of the Hon'ble Bombay High Court that Rule 8D is not applicable to the case of the assessee before us. Hence, we set aside the order of the ld. CIT(A.) vide which the ld. CIT(A.) had directed the Assessing Officer to apply the method as provided in Rule 8D for determining the disallowance pertains to exempt dividend income as the said Rule 8D is not applicable to the assessment year under consideration. However, we restore this issue to the file of the CIT(A.) to adjudicate the ground afresh as per law after giving due opportunity to the parties. Accordingly, the ground of appeal taken by the Department is allowed for statistical purposes by restoring the issue to the file of the CIT(A.) for his fresh adjudication.

6. In view of the above, the Cross Objection filed by the assessee has become infructuous and the same is dismissed.

7. In the result, the appeal of the Department is allowed for statistical purposes and the Cross Objection of the assessee is dismissed as infructuous.

ORDER PRONOUNCED IN THE OPEN COURT ON 08.03.2011.

                      Sd/-                                                Sd/-
               [B.K. Haldar / (बी. के. हालदार)]                                  बी.
                                                                                 बी आर.
                                                                  [ B.R. Mittal /बी  आर िमƣल ् ]
              Accountant Member/ लेखा सदःय                   Judicial Member/ Ûयायीक सदःय
             Dated : 08 / 03 / 2011
             Copy of the order forwarded to:

1. M/s. Smifs Securities Ltd. (presently Stewart & Mackertich Wealth Management Ltd., "Vaibhav", 5th floor, 4, Lee Road, Kolkata-20. 2 DCIT, Circle-10, Kolkata, 3, Govt. Place (West), Kolkata-700 001.

3. CIT(A)- ,Kolkata

4. CIT, Kolkata-

5. DR, Kolkata Benches, Kolkata (True Copy) By Order Assistant Registrar, I.T.A.T., Kolkata Laha, Sr. P.S.