The Pimpalgaon Merchants Co-op Bank , Nashik V. Assistant Commissioner of Income tax,

ITA 1/PUN/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 1440 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-05-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 13-05-2019
• Assessment Year: 2013-2014
• Appeal Filed On: 02-01-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ASHOK BABU
• Keywords: Principle of natural justice; Earning of tax free income; Rule 8D
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO. 01/PUN/2017 / ASSESSMENT YEAR : 2013-14 THE PIMPALGAON MERCHANTS CO-OP TAX BANK LTD., DHANSHREE, BANK STREET, A.P.PIMPALGAON BASWANT, NASIK-422302. PAN : AAAAT5305Q ....... / APPELLANT / V/S. ACIT, CIRCLE-1, NASIK / RESPONDENT ASSESSEE BY : SHRI PRAMOD SHINGTE REVENUE BY : SHRI ASHOK BABU / DATE OF HEARING : 13.05.2019 / DATE OF PRONOUNCEMENT : 14.05.2019 / ORDER PER ANIL CHATURVEDI, AM : THIS APPEAL BY THE ASSESSEE IS FILED AGAINST THE ORDER OF THE LD. CIT(APPEALS)-1, NASHIK DATED 01.11.2016 FOR THE ASSESSMENT YEAR 2013- 14. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER:- 2. THE ASSESSEE IS A CO-OPERATIVE SOCIETY ENGAGED IN BANKING BUSINESS. THE ASSESSEE ELECTRONICALLY FILED ITS RETURN OF INCOME FOR AY 2013-14 ON 26.09.2013 DECLARING TOTAL INCOME OF RS.1,52,21,405/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED U/S 143(3) VIDE ORDER DATED 29.01.2016 AND THE TOTAL INCOME WAS DETERMINED AT RS.1,87,57,306/-. AGGRIEVED BY THE ORDER OF ASSESSING OFFICER, THE 2 ITA NO. 01/PUN/2017 A.Y.2013-14 ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A) VIDE ORDER DATED 01.11.2016 IN APPEAL NO.-NSK/CIT(A)-1/682/2015-16 GRANTED PARTIAL RELIEF TO THE ASSESSEE. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE IS NOW IN APPEAL BEFORE US AND RAISED THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN PARTLY CONFIRMING ADDITION OF RS.2,36,624/- MADE U/S 14A R.W.R. 8D. THEREFORE, IT IS PRAYED TO CANCEL THE DISALLOWANCE OF RS.2,36,624/- MADE U/S 14A OF THE I.T.ACT, 1961. 2. YOUR APPELLANT CRAVES FOR TO LEAVE, ADD, ALTER, MODIFY, DELETE AND ALTER ABOVE GROUND OF APPEAL BEFORE OR AT THE TIME OF HEARING, IN THE INTEREST OF NATURAL JUSTICE. 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD MADE INVESTMENTS, THE INCOME FROM WHICH WOULD EARN EXEMPT INCOME. HE ALSO NOTICED THAT THE ASSESSEE HAS CLAIMED INTEREST EXPENDITURE IN ITS P&L A/C AND HAD APPROPRIATED RS.1,50,000/- TOWARDS EXPENSES INCURRED FOR EARNING EXEMPT INCOME. THE ASSESSEE WAS ASKED TO SHOW CAUSE AS TO WHY DISALLOWANCE BE NOT MADE U/S 14A R.W.RULE 8D OF INCOME TAX RULES. THE SUBMISSIONS MADE BY THE ASSESSEE WERE NOT FOUND ACCEPTABLE TO THE ASSESSING OFFICER. THE ASSESSING OFFICER THEREAFTER, FOLLOWING THE METHODOLOGY PRESCRIBED UNDER RULE 8D, WORKED OUT THE DISALLOWANCE U/S 14A R.W. RULE 8D AT RS.36,43,831/-. AGGRIEVED BY THE ORDER OF ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A) WHO GRANTED PARTIAL RELIEF TO THE ASSESSEE BY OBSERVING AS UNDER:- 5.3. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, THE ASSESSMENT ORDER, THE SUBMISSIONS OF THE APPELLANT AND THE ORDER OF HONBLE ITAT, PUNE, REGARDING THE DISALLOWANCE OF INTEREST, IT IS OBSERVED THAT THE HONBLE ITAT PUNE IN I.T.ANO.160/PN/2014 DATED 15/07/2015 IN ASSESSEES OWN CASE HAS OBSERVED THAT ASSESSEES OWN FUND IS MORE THAN INTEREST BEARING FUND AND THEREFORE THE PUNE TRIBUNAL HAS HELD THAT NO DISALLOWANCE UNDER RULE 8D(2)(II) CAN BE MADE. 3 ITA NO. 01/PUN/2017 A.Y.2013-14 ACCORDINGLY, THE DISALLOWANCE OF RS.32,57,207/- STANDS DELETED. 5.4. IT IS OBSERVED THAT THE APPELLANT ON ITS OWN HAS MADE A DISALLOWANCE OF RS.1,50,000/- ON ACCOUNT OF EXPENDITURE ON ACCOUNT OF EXEMPT INCOME WHICH IS NOT AS PER THE RULES. THE DISALLOWANCE HAS TO BE MADE AS PER SECTION 14A READ WITH RULE 8D. THEREFORE THE DISALLOWANCE MADE UNDER RULE 8D(2)(III) BY THE ASSESSING OFFICER IS IN ORDER. THE DISALLOWANCE U/S 14A READ WITH RULE 8D IS TO BE MADE AT RS.3,87,624/-. THE ASSESSEE HAS ALREADY DISALLOWED RS.1.50 LACS IN THE COMPUTATION OF INCOME AND THEREFORE THE TOTAL DISALLOWANCE UNDER SECTION 14A READ WITH RULE 8D SHOULD BE RS.2,36,624/-. THE ASSESSEE GETS RELIEF OF RS.32,57,207/-. THE GROUND IS ALLOWED IN PART. 4. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE IS NOW BEFORE US. 5. BEFORE US, LD.AR REITERATED THE SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER & CIT(A). LD. DR ON OTHER HAND SUPPORTED THE ORDER OF ASSESSING OFFICER. 6. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ISSUE IN THE PRESENT GROUND IS WITH RESPECT TO DISALLOWANCE U/S 14A OF THE INCOME TAX ACT, 1961 (IN SHORT ACT). WE FIND THAT THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND AFTER NOTING THE FACT THAT THE ASSESSEES OWN FUNDS WERE MORE THAN INTEREST BEARING FUNDS, HELD THAT NO DISALLOWANCE IS CALLED FOR UNDER RULE 8D(2)(II) BUT HOWEVER, HELD THAT THE DISALLOWANCE U/S 14A R.W.RULE 8D(2)(III) ON ACCOUNT OF ADMINISTRATIVE EXPENSES NEEDS TO BE DISALLOWED. HE ACCORDINGLY AFTER GRANTING CREDIT OF SUO MOTO DISALLOWANCE OF RS.1.50 LACS MADE BY ASSESSEE RESTRICTED THAT THE DISALLOWANCE TO THE EXTENT OF RS.2,36,624/-. BEFORE US, NO FALLACY IN THE FINDINGS OF CIT(A) HAS BEEN POINTED OUT BY THE LD.AR. FURTHER SINCE THE PROVISIONS OF SECTION 14A ARE APPLICABLE TO THE YEAR UNDER CONSIDERATION AND IN VIEW OF THE FORMULA PRESCRIBED UNDER RULE 8D, WE ARE OF THE VIEW THAT NO INTERFERENCE TO THE ORDER OF CIT(A) IS CALLED FOR. 4 ITA NO. 01/PUN/2017 A.Y.2013-14 WE THUS UPHOLD THE ORDER OF CIT(A) AND DISMISS THE GROUNDS OF THE ASSESSEE. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON 14 TH DAY OF MAY, 2019. SD/- SD/- SD/- SD/- (SUSHMA CHOWLA) (ANIL CHATURVEDI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / DATED : 14 TH MAY, 2019. AMIT KUMAR / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT-THE PIMPALGAON MERCHANTS CO-OP TAX BANK LTD., DHANSHREE, BANK STREET, A.P.PIMPALGAON BASWANT, NASIK-422302. 2. / THE RESPONDENT-ACIT, CIRCLE-1, NASIK PUNE-411036. 3. THE CIT(APPEALS). 4. THE CCIT, PUNE. 5. , , , / DR, ITAT, A BENCH, PUNE. 6. / GUARD FILE. / BY ORDER, SENIOR PRIVATE SECRETARY , / ITAT, PUNE.