TaxTMI 
TaxTMI 
2012 (3) TMI 116
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....s. 1,27,044/- Cess on green leaves Rs.18,58,537/- Dividend expenses under section 14A Rs. 22,404/- Assessment Year : 2005-2006 Amount Cess on green leaves Rs.15,95,393/- Dividend expenses under section 14A Rs. 2,17,379/- The assessee preferred appeal before ld. CIT(Appeals), who has partly allowed the assessee's appeal. Being aggrieved, the Department has preferred appeals before us. 3. We first take up ITA No. 929/Kol./2009 for assessment year 2002-03. Ground No. 1 of this appeal reads as under :- "That ld. CIT(A.) has erred in deleting the disallowance of depreciation of Rs.1,27,044/- made under section 33AB(6) ignoring the fact that depreciation is expenditure in view of decision of Hon'ble Calcutta High Court, in the case of Indian Jute Mills Association (134 ITR 68)". 4. Brief facts apropos this issue are that during the relevant assessment year, the Assessing Officer noticed that the assessee had acquired fixed assets out of withdrawals made from NABARD A/c. Assessee had claimed depreciation on these assets as given below :- Name of asset Addition Rate of depreciation Depreciation claimed Bolero 5,44,219/- 20% 1,08,844/- CTC Machine 1,45,600/- 25% 18....
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....ection 33AB of the Act. On perusal of section 33AB, which was inserted w.e.f 1.4.1986 and subsequently substituted by Finance Act, 1990 w.e.f. 01.04.1991, it appears that both the sections are parameteria except a few clauses such as in the earlier clauses the actual cost of Plant & Machinery was to be reduced by the amount utilized out of withdrawal from NABARD for the purpose of ascertaining the actual cost on which depreciation is allowable whereas in the newly inserted sub-section no such restriction has been imposed. Further more in the newly inserted section 33AB sub-section 4, restriction is imposed on utilization on certain items including the items on which 100% depreciation is allowable. In other words, there is no restriction on account of allowability of depreciation on the assets purchased out of withdrawal from NABARD. After considering the AO's findings and the argument advanced by A.R. and respectfully following the order of the Hon'ble ITAT, Kolkata in the case of CIT vs. Goodrick Group Ltd., in ITA No. 2557/Kol/2004. I find considerable force in the argument of A.R. and hence direct the A.O. to delete the addition made on this account. I have also examined scheme ....
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....e same could not be allowed as a deduction under the Central Income Tax Act. After considering the assessee's plea that the disallowance in earlier years on the same issue has been deleted by Tribunal in several cases, Assessing Officer made a disallowance of Rs.18,58,537/- observing that it was a legal issue and therefore, in order to maintain judicial consistency, the disallowance was to be made. 8. Ld. CIT(Appeals) relying on the judgment of Hon'ble Kolkata High Court in the case of CIT -vs.- AFT Industries Ltd. reported in 270 ITR 167 (Cal.) deleted the disallowance. 9. We have heard both the parties and perused the material available on record. From the record, we find that this issue is squarely covered by the judgment of the Hon'ble Kolkata High Court in the case of AFT Industries Ltd. (supra), wherein it has been held as under :- "In respect of computation of income of tea grown and manufactured, a fiction has been created under which both the agricultural component and the business component of the income would be assessed together for the purpose of computing the income under the Act and only after the computation of the total income, the apportionment is to be made de....
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.... for earning such dividend income. The lower authorities following the decision of Special Bench, ITAT in the case of Daga Capital Management Pvt. Ltd. (supra) disallowed the sum of Rs.15,01,665/- on estimate basis as inadmissible deduction from business income u/s. 14A of the Act r.w. r 8D of the I. T. Rules. We find that the principle laid down by Hon'ble Bombay High Court in the case of Godrej Boycee Mfg. Co. Ltd. vs. DCIT [2010] 328 ITR 81 (Bom.) at pages 138 & 139 vide sub paras (v) to (vii) are as under: "(v) The provisions of rule 8D of the Income-tax Rules which have been notified with effect from March 24, 2008, shall apply with effect from the assessment year 2008-09; (vi) Even prior to the assessment year 2008-09, when rule 8D was not applicable, the Assessing Officer has to enforce the provisions of sub-section (1) of Section 14A. For that purpose, the Assessing Officer is duty bound to determine the expenditure which has been incurred in relation to income which does not form part of the total income under the Act. The Assessing Officer must adopt a reasonable basis or method consistent with all the relevant facts and circumstances after furnishing a reasonable oppor....
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....CIT (2007) 12 SOT 194 (Del) and ii) CIT Vs. Eicher Ltd. (2007) 160 Taxman 80 (Mag). He lastly urged before the bench to set aside the orders of the lower authorities and delete the disallowance of Rs.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 Rs.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 Rs.18,000/- i.e. @ 1% of the dividend income is treated as expenses related to dividend income. Therefore, the disallowance comes to Rs.18,000/-. This ground of the assessee is, therefore, partly allowed". However, in the present case, assessee had himself disallowed Rs.22,404/-, which is more than 1% of the dividend income. Therefore, no further disallowance is called for. In view of above discussion, we find no reason to interfere wi....