Alphageo India Limited , Hyderabad V. Dy. Commissioner of Income Tax , Circle-1(1), Hyderabad

ITA 1423/Hyd/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 9469 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 5 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Assessment Year: 2016-2017
• Appeal Filed On: 16-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROHIT MUZUMDAR
• Keywords: Rule 8D
• Section: 14A; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH : HYDERABAD (THROUGH VIDEO CONFERENC E ) BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO. 14 23 /HYD./ 2019 ASSESSMENT YEAR: 20 16 - 17 M/S ALPHAGEO INDIA LIMITED VS. DY.CIT, CIRCLE 1(1) HYDERABAD HYDERABAD [ PAN: AA CCA 9928Q ] (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI S. RAMA RAO, A.R. FOR REVENUE : SH. ROHIT MUZUMDAR, D.R. DATE OF HE ARING : 03/03/ 202 1 DATE OF PRONOUNCEMENT : 15 / 03 /202 1 O R D E R PER P. MADHAVI DEVI, JM THIS IS ASSESSEES APPEAL FILED AGAINST THE ORDER OF CIT(A) - 1 , HYDERABAD DATED 23.07. 2019 RELATING TO A.Y. 20 16 - 17 . HEARD BOTH THE PARTIES. ITA NO . 14 23 /HYD./ 2019 AY 20 16 - 17 M/S ALPHAGEN INDIA LTD., HYD. 2 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSE E COMPANY FILED IT'S RETURN OF INCOME FOR AY 2016 - 17 ON 30.11.2016 DECLARING INCOME OF RS. 7,87,16,400/ - AND BOOK PROFIT OF RS. 10,03,68,154/ - UNDER MAT PROVISIONS OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). DURING THE SCRUTINY PROCEEDINGS PURSUANT TO THE SELECTION OF THE RETURN UNDER CASS, THE AO EXAMINED THE RETURN OF INCOME AND OBSERVED THAT THE ASSESSE E HAS DEBITED INTEREST EXPENSES OF RS. 11,41,685/ - AND ADMITTED DIVIDEND INCOME OF RS. 28,34,866/ - AND HAD VOLUNTARILY DISALLOWED RS. 92,190/ - U/S 14A OF THE ACT. THE AO OBSERVED THAT THE DISALLOWANCE MADE BY THE ASSESSEE WAS NOT MADE AS RE QUIRED U/S 14A READ WITH RULE 8 D , AND T HEREFORE, THE AO RE - WORKED THE DISALLOWANCE U/S 14A TO RS. 9,29,928/ - AND REVISED THE T OTAL TAXABLE INCOME TO RS.7,96,46,328/ - . 2.1. AGGRIEVED, A SSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) STATING THAT 14A DISALLOWANCE IS TO BE MADE ONLY FROM THE INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME AND THAT THE INVESTMENTS OF THE ASS ESSEE WERE ALSO INTO FOREIGN INVESTMENTS , DIVIDEND INCOME FROM WHICH , IS NOT EXEMPT FROM TAX. HOWEVER , CIT(A) DISMISSED ASSESSEES APPEAL . THEREFORE ASSESS E E IS IN SECOND APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUNDS. 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) IS ERRONEOUS BOTH ON FACTS AND IN LAW. 2. THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) ERRED IN CONFIRMING DISALLOWANCE OF RS.9,29,928/ - MADE BY THE ASSESSIN G OFFICER U/S 14A OF THE I.T. ACT WITHOUT CONSIDERING THE EXPLANATIONS SUBMITTED. ITA NO . 14 23 /HYD./ 2019 AY 20 16 - 17 M/S ALPHAGEN INDIA LTD., HYD. 3 3. THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) OUGHT TO HAVE SEEN THAT NO EXPENDITURE WAS INCURRED WHICH CAN BE SUBJECTED TO DISALLOWANCE U/S 14A OF THE ACT. 4. ANY OTH ER GROUND THAT MAY BE URGED AT THE TIME OF HEARING. 3. LD.COUNSEL FOR THE ASSESSE E SUBMITTED THAT THE INVESTMENTS ON WHICH DISALLOWANCE HAS BEEN WORKED OUT AS PER SEC.14A READ WITH RULE 8D OF I.T. RULES, INCLUDES INVESTMENTS IN FOREIGN COMPANIES INC OME WHICH IS NOT EXEMPT FROM TAX . T HEREFORE , A CCORDING TO HIM , THE VALUE OF FOREIGN INVESTMENTS AT THE END OF THE RELEVANT ASSESSMENT YEAR WHICH WAS RS.13,22,13,750/ - FALL OUTSIDE THE SCOPE OF SECTION 14A OF THE ACT AND FURTHER SINCE INTEREST FREE FUNDS ARE MORE THAN THE VALUE OF INVESTMENTS , NO DISALLOWANCE U/S 14A SHOULD BE MADE , BUT CIT(A) CONFIRMED AOS ORDER . 4. AT THE TIME OF HEARING LEARNED COUNSEL FOR THE ASS ESSEE SUBMITTED THAT HE HAS NO GRIEVANCE AGAINST THE CALCULATION OF DISALLOWANCE U/S 14A R.W. RULE 8 D , BUT ONLY PRAYER OF ASSESSE E IS TO EXCLUDE THE INVESTMENTS MADE IN FOREIGN COMPANIES FOR CALCULATING THE DISALLOWANCE U /S 8 D(III) OF THE ACT . S INCE NONE OF THE AUTHORITIES BELOW HAVE GONE INTO THE ISSUE , WE DEEM IT FIT AND PROPER TO REMAND THE ISSUE BACK TO THE AO WITH A DIRECTION TO RE - EXAMINE AND COMPUTE THE DISALLOWANCE U/S 14A ONLY WITH ITA NO . 14 23 /HYD./ 2019 AY 20 16 - 17 M/S ALPHAGEN INDIA LTD., HYD. 4 RELATION TO INVESTMENTS MADE IN DOMESTIC COMPANIES THE INCOME FROM WHICH IS EXEMPT FROM TAX. 5 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 15 /03/2021. SD/ - SD/ - (A. MOHAN ALANKAMONY) (P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 15 TH M ARCH, 2021 *GMV COPY OF ORDER FORWARDED TO: 1. M/S ALPHAGEO INDIA LIMITED, PLOT NO.1, SAGAR SOCIETY, ROAD NO.2, BANJARA HILLS, HYDERABAD 500 034 . 2. DY.CIT, CIRCLE 1(1), HYDERABAD 3. ACIT, RANGE 1, HYDERABAD 4. C IT( A ) - 1 , HYDERABAD . 5 . PR.CIT - 1, HYDERABAD 6 D.R. ITAT HYDERABAD 7 . GUARD FILE