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Punjab Produce Holdings Ltd. Versus ACIT, Kolkata

2016 (1) TMI 309 - ITAT KOLKATA

Disallowance of expenses on account of exempted income - Held that:- We find that assessee has earned income from source of dividend which is exempted under income tax Act. We understand that a company cannot earn dividend without its existence and management. Investment decisions are very complex in nature. It requires substantial market research day-to-day analysis of market trends and decisions with regard to acquisition, retention and sale of shares, mutual funds etc., at the most, appropria .....

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assessee did not offer any disallowance at its own but disallowed the expenses to the tune of ₹ 2,74,150/- at its own during the appellate stage. However, we find that the rule 8D is applicable w.e.f 24th day of March 2008 i.e. from the assessment year 2008-09. Hence the provisions of Rule 8D does not apply to the relevant year under consideration i.e. Assessment year 2007-08. So prior to the applicability of Rule 8D, different ITAT benches has considered 1% of dividend income as reasonabl .....

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Waseem Ahmed, Accountant Member This appeal by the assessee is arising out of order of Commissioner of Income Tax (Appeals)VI, Kolkata in appeal No.1550/CIT(A)-VI/Cir-5/09-10/Kol dated 14.01.2013. Assessment was framed by ITO Ward-6(2), Kolkata u/s 143(3)r.w.s 115WE(3) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') vide his order dated 22.10.2009 for assessment year 2007-08 and in the solitary ground raised therein the assessee has challenged the action of Ld. CIT(A) .....

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at assessee has not claimed any expenditure in connection with exempted income in his books of account. On question put by AO to assessee about the disallowance of such expenses incurred in aforesaid income, Ld. AR of assessee submitted that the company has not incurred any expenses other than to maintain its corporate structure and running its day to day business. There is no borrowed fund for the purpose of the business. Hence no disallowance of the expenses is required for the purpose of sect .....

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der Assessing Officer by observing that assessee has received dividend of ₹ 2,30,23,830/- on stock-in-trade and the expenditure incurred at ₹ 25,93,638.00 on employee's payments and administrative and other expenses. Besides, dividend income as aforesaid, the assessee has shown income from share trading business for an amount of ₹ 702065/-. However, it is important to note that assessee at its own has disallowed an amount of ₹ 2,74,150/- as the expenditure incurred in .....

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(2010) 328 ITR 81 (Bom) the relevant extract portion of the order of Ld. CIT(A) in para-10 is extracted below for the sake of clarity and convenience:- "10. Therefore, in the facts & circumstances as discussed and following the judgments of the Hon'ble Appellate Authorities including the Hon'ble jurisdictional High Court in the case of ISG Traders Ltd. vs. CIT-III, Kolkata; Dhanuka & Sons v. CIT (Central)-1; the Hon'ble Special Bench of ITAT in the case of Chminveste Lt .....

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referred second appeal before us. Shri Sanjay Bhawmik, Ld. Authorized Representative appearing on behalf of assessee and Md. Ghayasuddin, Ld. Departmental Representative appearing on behalf of Revenue. 3. We have heard rival contentions of both the parties and perused the materials available on record. We find that assessee has earned income from source of dividend which is exempted under income tax Act. We understand that a company cannot earn dividend without its existence and management. Inve .....

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ors for which administrative expenses are incurred. It is therefore, not correct to say that income can be earned by incurring no or nominal expenditure. This aspect of the matter has also received careful attention of the Chennai Bench in the case of Southern Petrochemical Industries v. DCIT (2005) 93 TTJ 161 (Chennai) after comprehensive consideration of all the relevant aspects of the case including the provisions of law, the Tribunal has held as under:- "Whether to invest or not to inve .....

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