TMI Blog2014 (7) TMI 756X X X X Extracts X X X X X X X X Extracts X X X X ..... that:- Assessee has duly furnished before the AO a statement of reconciliation of gross amounts in the books of account alongwith the gross amounts as per TDS certificates which has been completely ignored by the AO - assessee has disclosed income in respect of TDS certificate as receipt during the year itself - similar claim of TDS was allowed in the earlier year - CIT(A) has examined the reconciliation statement and on his examination the CIT(A) has given a categorical finding that the assessee is entitled for the credit of the TDS – the order of the CIT(A) is confirmed – Decided against Revenue. - ITA No.5404/Mum/2007 & ITA No.6022/Mum/2008 & CO No.293/Mum/2007 - - - Dated:- 21-5-2014 - I P Bansal And N K Billaiya, JJ. For the Appellant : Shri Ravi Prakash For the Respondents : Shri Sunil Lala Ms Sheetal Jain ORDER:- PER : N K Billaiya This appeal, ITA5404/MUM/2007 , by the Revenue is directed against the order of the Ld. CIT(A)-XXVIII, Mumbai dt.3.5.2007 pertaining to A.Y. 2004-05. The assessee is in cross objection vide C.O. No. 293/Mum/2007 against the very same order of the Ld. CIT(A). ITA No. 6022/M/2008 is appeal by the assessee against the ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Southern Petro Chemical Industries Vs DCIT 93 TTJ 161, the AO concluded that certain expenses must have necessarily been incurred in earning the dividend income, therefore the same is required to be disallowed under the provisions of Sec. 14A of the Act and accordingly estimated expenditure equivalent to 10% of the exempted income and computed the disallowance at ₹ 1,27,941/-. 4. The assessee carried the matter before the Ld. CIT(A) and reiterated its claim as was made before the AO. After considering the facts and the submissions, the Ld. CIT(A) drew support from the decision of his predecessor for A.Y. 2002-03 wherein it was held that neither the assessee has incurred any interest expenditure towards the dividend income nor any direct managerial and administrative expenditure incurred to earn the dividend income. Following the findings given by his predecessor for A.Y. 2002-03, disallowance made by the AO was deleted. 5. Aggrieved by this, the Revenue is before us. The Ld. Departmental Representative strongly supported the findings of the AO. It is the say of the Ld. DR that the Hon ble Bombay High Court in the case of Godrej Boyce Mfg. Co. Ltd Vs DCIT 328 ITR 81 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded this issue in favour of the assessee. Respectfully following the findings of the Co ordinate Bench, Ground No. 2 is dismissed. 10. Ground No. 3 relates to the deletion of the estimated addition of ₹ 10 lakhs. 11. During the course of the scrutiny assessment proceedings, the AO observed that the assessee has not submitted complete exhaustive details of various expenses debited to the profit and loss account. Considering the volume of the business of the assessee and the type of expenses debited to P L account, the AO disallowed a sum of ₹ 10 lakhs on adhoc basis from such expenses. 12. The Ld. CIT(A) has considered this disallowance qua ground No. 6 before him. Before the Ld. CIT(A), it was contended that the assessee had filed all the details and explanations called for by the AO. It was pointed out that the details submitted in the course of assessment proceedings run into about 550 pages. It was also pointed out that the AO has neither given any specific reason nor given the specific nature of expenses which have been disallowed. After considering the facts and the submissions, the Ld. CIT(A) observed that the AO had all powers under the Act including pow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the year itself. The Ld. CIT(A) further observed that similar claim of TDS was allowed in the earlier year. The Ld. CIT(A) also considered the decision of the Tribunal in the case of Toyo Engineering India Ltd Vs JCIT 100 TTJ 373 and drawing support from the said decision of the Tribunal directed the AO to allow credit of TDS of ₹ 2,00,87,433/-. 18. Aggrieved by this, the Revenue is before us. The Ld. DR strongly supported the findings of the AO. It is the say of the Ld. DR that it is the duty of the assessee to reconcile the TDS claim vis- -vis the amount of income offered for taxation during the year under consideration. The Ld. DR further stated that credit for the TDS is allowed only when the income is offered for taxation and since the assessee has not filed any reconciliation, the credit of TDS was correctly denied by the AO. 19. Per contra, the Ld. Counsel for the assessee reiterated what has been submitted before the lower authorities. 20. We have carefully perused the orders of the authorities below. We find that the Ld. CIT(A) has examined the reconciliation statement and on his examination the Ld. CIT(A) has given a categorical finding that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of this dividend of ₹ 3,08,05,600/- has been received from subsidiary company. It was claimed that no expenses have been incurred for earning this dividend income. The AO did not accept the contention of the assessee who was of the firm belief that certain expenses must have necessarily been incurred in earning the dividend income. The AO went on to compute the disallowance u/s. 14A and computed the same at ₹ 17,74,857/-. 31. The assessee carried the matter before the Ld. CIT(A) but without any success. 32. We have considered a similar issue vide ground No. 1 in Revenue s appeal in ITA No. 5404/M/07. For the elaborate reasons discussed therein and following the order of the Hon ble Jurisdictional High Court in the case of Godrej Boycee (supra), we have held that a disallowance of 2% of the dividend income would meet the ends of justice. Facts and issue being identical, we direct the AO to restrict the disallowance to 2% of the dividend income. The assessee will get part relief. Ground No. 1 is partly allowed. 33. Ground No. 2 becomes otiose qua our findings given in ground No. 1 in Revenue s appeal. 34. Ground No. 3 relates to the adhoc disallowance of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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