ITA Nos 4162 3707 4931 and 6044 Jayantilal Khandwala & Sons-J Bench
IN THE INCOME TAX APPELLATE TRIBUNAL
"J" Bench, Mumbai
Before Shri B. Ramakotaiah, Accountant Member and
Shri S.S. Godara, Judicial Member
ITA Nos.4162/Mum/2008
(Assessment years: 2000-01)
Jayantilal Khandwala & Sons Income Tax Officer 12(1)(4)
201,Stock Exchange, Dalal Strt. Aayakar Bhavan, MK Road
Vs
Fort, Mumbai 400023 Mumbai 400020
PAN No. AAAF 4525 F
(Appellant) (Respondent)
Assessee by: Shri D. Bhaskara Rao,
Department by: Shri D.S.Sunder Singh, DR
Date of Hearing: 28/05/2012
Date of Pronouncement: 06/06/2012
ORDER
Per B. Ramakotaiah, A.M.
This is an assessee's appeal in which assessee raised four
grounds on the issue of section 14A. AO on noticing that assessee
had earned dividend income of `1,54,80,674/- considered an
amount of 5% as expenses towards earning dividend income which
was exempt. Accordingly he disallowed an amount of `.7,74,033/-.
2. Before the CIT (A) it was submitted that assessee was
maintaining separate ledger accounts with reference to separate
expenses under each head of income and assessee had both shares
in trading account as well as investment a/c and the disallowance
of 5% expenditure is arbitrary and excessive. The CIT (A) upheld the
estimation of expenses and confirmed the action of AO.
3. Before us the learned Counsel submitted that assessee
income included short term capital gain, long term capital gain and
also business income and the dividend was earned both under
trading a/c as well as investment a/c. It was submitted that even
though the disallowance per se is not disputed, what is disputed is
the quantum of disallowance. The learned DR relied on the orders of
the CIT (A).
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ITA Nos 4162 3707 4931 and 6044 Jayantilal Khandwala & Sons-J Bench
4. We have considered the issue. Considering the facts of the
case and the amount of dividend earned, we are of the opinion that
there is no need to estimate the expenditure at 5% on the dividend
earned. It was assessee's submissions that the dividend income was
earned both on the shares held in trading a/c as well as in
investment a/c. However, the learned Counsel fairly admitted that
they could not bifurcate the dividend income earned on the above
two accounts. Considering the above facts, we are of the view that
the disallowance of 2% of the amount, which the ITAT is
consistently considering in a number of cases, would meet the ends
of justice. Accordingly AO is directed to disallow only 2% of the
gross dividend income as expenditure relatable to earning exempt
income under section 14A. Accordingly this ground is partly
allowed.
5. In the result the appeal is partly allowed.
Order pronounced in the open court on 6th June, 2012.
Sd/- Sd/-
(S.S.Godara) (B. Ramakotaiah)
Judicial Member Accountant Member
Mumbai, dated 6th June, 2012.
Vnodan/sps
Copy to:
1. The Appellant
2. The Respondent
3. The concerned CIT(A)
4. The concerned CIT
5. The DR, "J" Bench, ITAT, Mumbai
By Order
Assistant Registrar
Income Tax Appellate Tribunal,
Mumbai Benches, MUMBAI
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