TMI Blog2010 (11) TMI 1122X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee read as follows:- 1.The learned Commissioner of Income-tax (Appeals) erred in confirming the disallowance of Rs. 25,46,967/- being estimated expenses to earn dividend income. 2. The learned Commissioner of Income-tax (Appeals) further erred in holding that Rule 8D framed as per the provisions of sub-section (2) of section 14A of the I.T. Act is applicable retrospectively though sub-sections (2) and (3) of Section 14A are introduced in the I.T. Act by the Finance Act 2006 w.e.f. the assessment year 2007-08. 3. The assessee is a company engaged in the business of marketing of luggage accessories. The assessee earned dividend income of Rs. 1,49,88,174/-, which did not form the part of the total income of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1) of additional income tax on profits declared, distributed or paid is a charge on a component of the profits of the company. The company is chargeable to tax on its profits as a distinct taxable entity and it pays tax in discharge of its own liability and not on behalf of or as an agent for its shareholders. In the hands of the shareholder as the recipient of dividend, income by way of dividend does not form part of the total income by virtue of the provisions of Section 10(33). Income from mutual funds stands on the same basis; iii)The provisions of sub sections (2) and (3) of Section 14A of the Income Tax Act 1961 are constitutionally valid; iv)The provisions of Rule 8D of the Income Tax Rules as inserted by the Income Tax (Fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or germane material having a bearing on the facts and circumstances of the case. 6. Since, in the present case, the AO and the CIT(A) have applied Rule-8D of the IT rules, 1962 to make the impugned disallowance and since for the assessment year 06-07, the said rule is not applicable, the issue has to be decided afresh by the AO in the light of the principles laid down by the Hon ble Bombay High Court referred to above. We therefore set aside the order of the CIT(A) and remand the issue to the AO for fresh consideration. The AO will afford opportunity of being heard to the Assessee before deciding the issue. 7. Ground No.3 raised by the assessee reads as follows: The learned Commissioner of Income Tax (Appeals) further err ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... identical issue has come up for consideration in assessee s own case for A.Y 2002-03 in ITA No.5097/M/05 for A.Y 2002-03 and this Tribunal held as follows. 7. 2nd issue of the department relates to disallowance out of provisions on account of discount under the head sales promotion expenses . 7.1 The AO disallowed an amount of Rs. 71,20,319/- by observing that to this extent the assessee has returned back out of the total amount of Rs. 2,29,67,635/-. The AO concluded by observing that in respect to excess provision for Rs. 71,20,319/-, I am of the opinion that the same cannot be allowed as a deduction since to this extent the assessee has over estimated its liability for the year and the profits of the year cannot e determi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision of the Bombay High Court in the case of M/s. Pamwi Tissues Ltd. (ITA No.1014 of 2004 dated 04/02/2008). 14. The Assessing Officer made disallowance of employees share of PF ESIC beyond the due dates as contemplated by the relevant provisions of ESIC Act. The Assessing Officer, therefore, disallowed the claim of the assessee for deduction of the aforesaid sum. 15. On appeal by the assessee the CIT(A) deleted the addition made by the Assessing Officer for the following reasons: 3.3 I have carefully considered the reply given by the appellant and perused the assessment order. In assessment order 2000-01 Hon ble ITAT had allowed payment of ESIC to Government Account within grace period of 5 days, therefore, fol ..... X X X X Extracts X X X X X X X X Extracts X X X X
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