TMI Blog2010 (8) TMI 975X X X X Extracts X X X X X X X X Extracts X X X X ..... al in many other cases @ 1% of the dividend income is treated as expenses related to dividend income. Therefore, the disallowance comes to ₹ 18,000/-. This ground of the assessee is, therefore, partly allowed. Disallowance of credit for TDS - AO had not given credit for this TDS as in the TDS certificate filed by the assessee, it is clearly mentioned that the tax has been deducted by the Sikkim Government as a state govt. tax and has been paid to the credit of the state Govt. and not the Central Govt - CIT(A) held that this amount has not been paid to the Central Govt. account on behalf of the assessee at all, thus upheld the decision of the AO for not giving credit for this amount - HELD THAT:- We find that before the AO the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustified in rejecting our prayer to treat ₹ 16,13,333/- deducted by Sikkim Government from our bills as expenses incurred by the company and paid ₹ 16,13,333/- to the Government of Sikkim as Sikkim Government Tax. The issue of the certificate in Form No. 16A as per Rule 31(1)(b) of the Income Tax Rules misguided us and claimed by us as TDS. As such the assessment is totally wrong and bad in law. 2. Ground no. 1 relates to confirmation of disallowance of ₹ 2,46,937/- made by the AO. u/s. 14A of the I. T. Act. Briefly stated facts of the case are that the AO observed that the assessee had earned dividend income of ₹ 18,00,000/- and claimed it as exempt u/s. 10(34). According to AO, management expenses attributable t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the lower authorities and delete the disallowance of ₹ 2,46,937/-. 4. On the other hand, the Ld. DR relied on the orders of the authorities below. 5. Heard the rival submissions, perused the material available on record and the case laws cited by the Ld. Counsel. We find that the assessee earned dividend income of ₹ 18,00,000/-. The assessee did not file any evidence in respect of any expenditure incurred by him to earn the said dividend income before the lower authorities and also before the Tribunal. In view of the above, and the consistent view taken by the Tribunal in many other cases also a sum of ₹ 18,000/- i.e. @ 1% of the dividend income is treated as expenses related to dividend income. Therefore, the dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal disallowance was unjustified. 8. On the other hand, the Ld. DR relied on the orders of the lower authorities. 9. We have heard the rival submissions and carefully perused the material available on record. We find that before the AO the assessee claimed ₹ 16,13,333/- as TDS amount deducted by the Sikkim Govt. from their bills and issued Form No. 16A as prescribed in Rule 31(1)(b) of the I. T. Rules. But before the Ld. CIT(A), on careful consideration, it stated that the deducted amount was not paid to the Central Govt. Account, but paid to the account of the Sikkin Govt. and also stated that this mistake was detected at the time of appeal before the Ld. CIT(A). Since the assessee took different stand before the lower authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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