ASPINWALL AND COMPANY LTD,KOCHI V. DCIT CORPORATE CIRCLE 1(1), KOCHI

ITA 575/COCH/2023

AI Insights

Aspinwall and Company Ltd. filed five appeals against the orders of the National Faceless Appeal Centre, Delhi, concerning disallowances made under section 14A read with rule 8D of the Income Tax Act, 1961, related to exempt income for various assessment years. The main contention was the incorrect invocation of disallowances by the lower authorities, despite the assessee having sufficient interest-free funds. Additionally, the assessee challenged the additions made under section 41(1) for the assessment years 2010-11 and 2017-18, arguing there was no actual cessation of liability. The Tribunal directed the Assessing Officer to reconsider the computations regarding the disallowances and accepted the assessee's arguments regarding the cessation of liability under section 41(1).

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 38393 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-10-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 02-08-2023
• Other Referred Cases: CIT vs. Sugauli Sugar Works (P) Ltd., [1999] 236 ITR 518 (SC)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V.SWARNALATHA
• Assessee Lawyers: RAJAKANNAN
• Keywords: Earning of tax free income; Rule 8D
• Section: 250; 14A

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN Before Shri Satbeer Singh Godara, Judicial Member and Shri Amarjit Singh, Accountant Member ITA No. 572/Coch/2023 : AY 2011-12) ITA No. 573/Coch/2023 : AY 2010-11) ITA No. 574/Coch/2023 : AY 2013-14) ITA No. 575/Coch/2023 : AY 2014-15) ITA No. 576/Coch/2023 : AY 2017-18) Aspinwall and Company Ltd. Post Box No. 560 Subramanian Road Wellingdon Island Kochi 682003 [PAN: AACCA2655G] vs. DCIT, Corporate Circle 1(1) Ernakulam (Appellant) (Respondent) Appellant by: Shri Rajakannan, Advocate Respondent by: Smt. V. Swarnalatha, Sr. D.R. Date of Hearing: 22.08.2024 Date of Pronouncement: 23.10.2024 O R D E R Per Bench These assessee’s five appeals ITA.Nos.572 to 576/Coch/2023 arise against orders of the National Faceless Appeal Centre, Delhi [CIT(A)] proceedings u/s. 250 of the Income Tax Act, 1961 (the Act) as under : - Sr. No. ITA No. AY DIN & Order No. Date 1 572/Coch/2023 2011-12 ITBA/NFAC/S/250/2023- 24/1053552929(1) 05.06.2023 2 573/Coch/2023 2010-11 ITBA/NFAC/S/250/2023- 24/1053552740(1) 05.06.2023 2 ITA Nos. 572 to 576/Coch/2023 Aspinwall and Company Ltd. 3 574/Coch/2023 2013-14 ITBA/NFAC/S/250/2023- 24/1053553697(1) 05.06.2023 4 575/Coch/2023 2014-15 ITBA/NFAC/S/250/2023- 24/1053309179(1) 05.06.2023 5 576/Coch/2023 2017-18 ITBA/NFAC/S/250/2023- 24/1053554055(1) 05.06.2023 Heard both parties in detail. Case files perused. 2. It emerges during the course of hearing that the assessee’s former substantive ground in AYs 2010-11 & 2017-18 and the solitary grievance in AYs 2011-12, 2013- 14 and 2014-15 is that of the correctness of both the lower authorities action invoking section 14A r.w. rule 8D disallowance(s) regarding its exempt income involving varying sums; as the case may be. 3. Learned counsel submits very fairly that the assessee has indeed derived exempt income(s) in all these assessment years. He confines his challenge to the impugned disallowance only on the ground that so far as proportionate expenditure and administrative head(s) are concerned, the assessee was having sufficient interest free funs and the lower authorities herein ought to have only considered the exempt income yielding investments respectively. 4. Faced with this situation, we deem it appropriate to direct the learned Assessing Officer to finalise his consequential computation afresh, inter alia considering the interest bearing funds utilised in making the investments which have actually yielded exempt income in the relevant previous years subject to a rider that it shall be the taxpayer’s onus and responsibility only to plead and prove all the relevant facts in consequential proceedings. The assessee’s instant former substantive ground in assessment years 2010-2011 and 2017-2018 is accepted for statistical 3 ITA Nos. 572 to 576/Coch/2023 Aspinwall and Company Ltd. purposes. It’s three appeals ITA Nos, 573, 576 & 572/Coch/2023 are accepted for statistical purposes since raising the instant sole issue (supra). 5. This leaves us with the assessee’s latter identical substantial ground in AYs 2010-11 and 2017-18 seeking to delete section 41 (1) cessation of liability addition; involving varying sum(s). Learned D.R. submits that it was the duty of the assessee only to plead and prove all the relevant facts. The fact however remains that we do not find any actual cessation in the assessee’s books which forms a pre-condition for the impugned addition u/s.41(1) as per Cit vs. Sugauli Sugar Works (P) Ltd., [1999] 236 ITR 518 (SC) that there is no concept of invoking section 41(1) over in any case qua outstanding dues as the same has to be based only in an instance of actual cessation. We thus accept the assessee’s instant latter substantive ground in these twin assessment years in very terms. Ordered accordingly. 6. To sum up, assessee’s appeal ITA Nos.573 & 576/Coch/2023 are partly allowed and the remaining three appeals ITA Nos.572, 574 & 575/Coch/2023 are allowed for statistical purposes in above terms. A copy of this common order be placed in the respective case files. Order pronounced in the open court on 23rd October, 2024 under Rule 34 of The Income Tax (Appellate Tribunal) Rules, 1963. Sd/- Sd/- (Amarjit Singh) Accountant Member (Satbeer Singh Godara) Judicial Member Cochin, Dated: 23rd October, 2024 n.p. 4 ITA Nos. 572 to 576/Coch/2023 Aspinwall and Company Ltd. Copy to: 1. The Appellant 2. The Respondent 3. The Pr. CIT concerned 4. The Sr. DR, ITAT, Cochin 5. Guard File By Order Assistant Registrar ITAT, Cochin "