Salaruria Investment Private Ltd., Kolkata V. D.C.I.T.,Circle-1(2), Kolkata

ITA 1375/KOL/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 9459 (ITAT-KOLKATA)
• Duration Of Justice: 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 04-06-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RANU BISWAS
• Assessee Lawyers: S JHAJHARIA
• Keywords: TDS; Rule 8D; FORM 26AS
• Section: 14A

Judgement Text

I.T.A. NO. 1375/KOL/2019 ASSESSMENT YEAR : 2013-2014 SALARPURIA INVESTMENT PVT. LIMITED 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA B BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, VICE-PRESIDENT AND SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER I.T.A. NO. 1375/KOL/2019 ASSESSMENT YEAR: 2013-2014 SALARPURIA INVESTMENT PVT. LIMITED,................ ..........................APPELLANT C/O. M/S. SALARPURIA JAJODIA & CO., 7, C.R. AVENUE, 3 RD FLOOR, KOLKATA-700072 [PAN:AADCS8270J] -VS.- DEPUTY COMMISSIONER OF INCOME TAX,................. .......................RESPONDENT CIRCLE-1(2), KOLKATA 54/1, RAFI AHMED KIDWAI ROAD, 5 TH FLOOR, KOLKATA-700016 APPEARANCES BY: SHRI S. JHAJHARIA, FCA , FOR THE APPELLA NT SMT. RANU BISWAS, ADDL. CIT, FOR THE RESPONDE NT DATE OF CONCLUDING THE HEARING : DECEMBER 12, 2019 DATE OF PRONOUNCING THE ORDER : JANUARY 08, 2020 O R D E R PER SHRI P.M. JAGTAP, VICE-PRESIDENT: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-16, KOLKATA DA TED 25 TH APRIL, 2019 AND THE GROUNDS RAISED BY THE ASSESSEE THEREIN READ AS UNDER:- (1) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE AO WAS WHOLLY WRONG AND UNJUSTIFIED IN MAKING DISAL LOWANCE OF RS.21,74,843/- U/S 14A READ WITH RULE 8D(2)(II) WIT HOUT APPRECIATING THE SUBMISSION MADE AND IN VIEW OF THE FACTS AND IN THE CIRCUMSTANCES THE LD. CIT(A) HAD GROSSLY ERR ED IN CONFIRMING THE SAID ADDITION OF RS.21,74,843/- MADE BY THE AA BY WRONGLY AND ILLEGALLY INVOKING THE PROVISIONS OF SEC. 14A READ WITH RULE 8D(2)(II) WITHOUT APPRECIATING THE S UBMISSION PREFERRED BEFORE THE AO AND THE LD. CIT(A) THAT - A) THE APPELLANT-COMPANY IS A NFBC COMPANY. B) THE APPELLANT HAD A NET INTEREST INCOME OF RS.26,79,987/-. (INTEREST RECEIVED RS.3,70,23,700/- AND INTEREST PAYMENT RS.3,43,43,713/-). I.T.A. NO. 1375/KOL/2019 ASSESSMENT YEAR : 2013-2014 SALARPURIA INVESTMENT PVT. LIMITED 2 C) THE SHARE CAPITAL AND RESERVES & SURPLUS OF THE APPELLANT WAS RS. 28.53 CRORES WHICH WAS FAR IN EXCESS OF INVESTMENTS IN SHARES WHICH WAS AT RS.5.1 0 CRORES ONLY. D) INVESTMENT IN SHARES INCLUDED STOCK-IN-TRADE AND PROVISIONS OF SEC. 14A WERE NOT APPLICABLE IN RESPE CT OF STOCK-IN-TRADE. E) IN ANY CASE, WITHOUT PREJUDICE AND EVEN OTHERWIS E, THE DISALLOWANCE U/S 14A READ WITH RULE 8D(2)(II) COULD ONLY BE INVESTMENT IN RESPECT OF THOSE SHARES ON WHICH EXEMPT DIVIDEND WAS RECEIVED NOT IN RESPECT OF OTHER SHARES. ACCORDINGLY, IT IS PRAYED THAT SUCH ADDITION OF RS. 21,74,843/- MAY KINDLY BE DELETED. (2) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE AO WAS WHOLLY WRONG AND UNJUSTIFIED IN NOT ALLOWING FULL AND PROPER CREDIT FOR TDS OF RS.37,13,383/- WHEN ALL TH E EVIDENCES TOGETHER WITH FORM 26AS WERE PRODUCED BEFORE HIM AN D IN VIEW OF THE FACTS AND IN THE CIRCUMSTANCES THE LD. CIT(A ) HAD GROSSLY ERRED IN NOT ALLOWING FULL AND PROPER CREDIT OF TDS OF RS.37,13,783/-, HIMSELF INSTEAD OF DIRECTING THE AO TO VERIFY AND ALLOW WHEN FULL DETAILS OF SUCH TDS WERE FURNISHED BEFORE HIM ALSO. (3) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE AO WAS WHOLLY WRONG AND UNJUSTIFIED IN NOT ALLOWING FULL AND PROPER CREDIT FOR ADVANCE TAX PAYMENT OF RS.20,00,0 00/- WHEN ALL EVIDENCES IN RESPECT OF SUCH PAYMENT HAD BEEN P RODUCED BEFORE HIM AND IN VIEW OF THE FACTS AND IN THE CIRC UMSTANCES THE LD. CIT(A) HAD GROSSLY ERRED IN NOT ALLOWING FU LL CREDIT OF ADVANCE TAX OF RS.20,00,000/-, HIMSELF INSTEAD OF D IRECTING THE AO TO VERIFY AND ALLOW WHEN FULL DETAILS AND REMIND ERS OF SUCH PAYMENT OF ADVANCE TAX WAS FURNISHED BEFORE HIM ALS O. (4) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE AO WAS WHOLLY WRONG AND UNJUSTIFIED IN NOT ALLOWING FULL AND PROPER CREDIT IN RESPECT OF MAT PAYMENT U/S 115JAA EVEN WHEN ALL THE EVIDENCES IN THIS REGARD WERE PRODUCED BEFO RE HIM AND IN VIEW OF THE FACTS AND IN THE CIRCUMSTANCES THE L D. CIT(A) WAS WHOLLY WRONG AND UNJUSTIFIED IN NOT STRAIGHT AWAY D IRECTING TO ALLOW SUCH CREDIT AND IN VIEW OF THE FACTS AND IN T HE CIRCUMSTANCES IT MAY KINDLY BE HELD ACCORDINGLY. 2. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AT THE TIME OF HEARING BEFORE US, I.T.A. NO. 1375/KOL/2019 ASSESSMENT YEAR : 2013-2014 SALARPURIA INVESTMENT PVT. LIMITED 3 THE LD. COUNSEL FOR THE ASSESSEE HAS NOT PRESSED GR OUNDS NO. 2, 3 & 4 AND THE SAME ARE ACCORDINGLY DISMISSED AS NOT PRESSED. 3. AS REGARDS THE ISSUE INVOLVED IN GROUND NO. 1 RE LATING TO THE DISALLOWANCE OF RS.21,74,843/- MADE BY THE ASSESSIN G OFFICER AND CONFIRMED BY THE LD. CIT(APPEALS) ON ACCOUNT OF INT EREST UNDER SECTION 14A READ WITH RULE 8D(2)(II), THE LD. COUNSEL FOR T HE ASSESSEE HAS INVITED OUR ATTENTION TO THE RELEVANT PORTION OF THE ANNUAL ACCOUNTS OF THE ASSESSEE-COMPANY PLACED AT PAGE NO. 35 TO SHOW THAT INTEREST EARNED BY THE ASSESSEE-COMPANY DURING THE YEAR UNDER CONSIDER ATION AT RS.3,70,23,700/- WAS MORE THAN THE INTEREST PAID AM OUNTING TO RS.3,43,43,713/- AND THE NET INTEREST OF RS.26,79,9 87/- EARNED BY THE ASSESSEE WAS SHOWN AS ITS INCOME. BY RELYING ON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF ACG ASSOCIATED CAPSULES PVT. LIMITED VS.- CIT (343 ITR 89), HE HAS CONTENDED TH AT THE NETTING OF INTEREST SHOULD BE DONE AND THERE BEING NO INTEREST EXPENDITURE CLAIMED BY THE ASSESSEE AFTER NETTING, THE QUESTION OF DISA LLOWANCE ON ACCOUNT OF INTEREST UNDER SECTION 14A READ WITH RULE 8D(2)(II) WOULD NOT ARISE. IT IS OBSERVED THAT THIS CONTENTION RAISED BY THE LD. COU NSEL FOR THE ASSESSEE IS DULY SUPPORTED BY THE JUDGMENT OF THE HONBLE GUJAR AT HIGH COURT DATED 31.08.2017 IN THE CASE OF PRINCIPAL CIT VS NIRMA CR EDIT & CAPITAL PVT. LTD. (TAX APPEAL NOS. 409 AND 514 OF 2017), WHEREIN IT WAS H ELD THAT FOR THE PURPOSE OF APPLYING RULE 8D(2)(II) OF THE INCOME TAX RULES, 1962 PRIOR TO AMENDMENT WITH EFFECT FROM 02.06.2016, WHAT WOULD BE CONSIDERED AS AMOUNT OF E XPENDITURE BY WAY OF INTEREST WOULD BE THE INTEREST PAID BY THE ASSESSEE ON THE B ORROWINGS MINUS THE TAXABLE INCOME EARNED DURING THE FINANCIAL YEAR. THE BENEFIT OF NE TTING OF INTEREST THUS HAS BEEN ALLOWED BY THE HONBLE GUJARAT HIGH COURT WHILE COMPUTING T HE DISALLOWANCE MADE UNDER SECTION 14A AS PER RULE 8D AND KEEPING IN VIEW THE SAME, WE ARE INCLINED TO ACCEPT THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE INTEREST EARNED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION BEING MORE THAN THE INTEREST PAID, NO DISALLOWANCE ON ACCOUNT OF INTEREST CAN BE MADE UNDER SECTION 14 A READ WITH RULE 8D. WE ACCORDINGLY DELETE THE DISALLOWANCE MADE BY THE ASS ESSING OFFICER AND CONFIRMED BY THE I.T.A. NO. 1375/KOL/2019 ASSESSMENT YEAR : 2013-2014 SALARPURIA INVESTMENT PVT. LIMITED 4 LD. CIT(APPEALS) ON ACCOUNT OF INTEREST UNDER SECTI ON 14A READ WITH RULE 8D AND ALLOW GROUND NO. 1 OF THE ASSESSEES APPEAL. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON JANUARY 08, 2 020. SD/- SD/- (SATBEER SINGH GODARA) (P.M. JAGTAP) JUDICIAL MEMBER VICE-PRESIDENT KOLKATA, THE 8 TH DAY OF JANUARY, 2020 COPIES TO : (1) SALARPURIA INVESTMENT PVT. LIMITED, C/O. M/S. SALARPURIA JAJODIA & CO., 7, C.R. AVENUE, 3 RD FLOOR, KOLKATA-700072 (2) DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1(2), KOLKATA 54/1, RAFI AHMED KIDWAI ROAD, 5 TH FLOOR, KOLKATA-700016 (3) COMMISSIONER OF INCOME TAX (APPEALS)-16, KOLKA TA, (4) COMMISSIONER OF INCOME TAX , (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.