The ITO, Ward-3(1)(1), Ahmedabad V. M/s. Nova Properties Pvt. Ltd., Ahmedabad

ITA 1437/AHD/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 6003 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 8 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 30-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P M MEHTA
• Section: 14A; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) ITA. NO: 1437/AHD/2016 (ASSESSMENT YEAR: 2012-13) INCOME TAX OFFICER, WARD- 3 (1)(1), AHMEDABAD V/S M/S. NOVA PROPERTIES PVT. LTD. 10 TH FLOOR, COMMERCE HOUSE-4, B/S RELIANCE PETRO PUMP, PRAHLADNAGAR, AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AABCN4138N APPELLANT BY : SHRI MUDIT NAGPAL, SR. D. R. RESPONDENT BY : SHRI P.M. MEHTA, A.R. ( )/ ORDER DATE OF HEARING : 27 -2-2018 DATE OF PRONOUNCEMENT : 28 -02-2018 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. THIS APPEAL BY THE REVENUE IS PREFERRED AGAINST THE ORDER OF THE LD. CIT(A)-9, AHMEDABAD DATED 14.03.2016 PERTAINING TO A.Y. 2012- 13. ITA NO. 1437 /AHD/2016 . A.Y. 2012-13 2 2. THE FIRST GRIEVANCE OF THE REVENUE RELATES TO THE D ELETION OF THE ADDITION OF RS. 60,43,531/-. 3. WHILE SCRUTINIZING THE RETURN OF INCOME, THE A.O. N OTICED THAT THE ASSESSEE HAS EARNED INCOME OF RS. 95,94,512/- IN THE FORM OF DIV IDEND ON MUTUAL FUNDS AND THE SAME WAS CLAIMED AS EXEMPT U/S. 10(34/35) O F THE ACT. THE A.O. WAS OF THE OPINION THAT DISALLOWANCE OF INTEREST EXPENS ES AS PER THE PROVISIONS OF SECTION 14A OF THE ACT READ WITH RULE 8D IS IMPERAT IVE. THE A.O. ACCORDINGLY PROCEEDED TO COMPUTE THE DISALLOWANCE AS PER RULE 8 D AND THE DISALLOWANCE WAS COMPUTED AT RS. 60,43,531/-. THE A.O. REDUCED R S. 25,000/- BEING THE AMOUNT SUO MOTO DISALLOWED BY THE ASSESSEE AND MADE THE ADDITION OF RS. 60,43,531/-. 4. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A). IT WAS STRONGLY CONTENDED THAT THE ASSESSEE HAD SUFFICIENT INTEREST FREE FUND S IN THE FORM OF SHARE CAPITAL AND RESERVES AND SURPLUS AND THEREFORE, THERE IS NO QUESTION OF ANY DISALLOWANCE OF INTEREST U/S. 14A OF THE ACT READ WITH RULE 8D. AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS, THE LD. CIT(A) WAS CONVINCED W ITH THE AVAILABILITY OF INTEREST FREE FUNDS AND ACCORDINGLY DIRECTED THE A. O. TO DELETE THE ADDITION TO THE EXTENT OF RS. 59,74,031/- AFTER SUSTAINING THE ADDITION ON ACCOUNT OF ADMINISTRATIVE EXPENDITURE TO THE TUNE OF RS. 69,50 0/-. 5. BEFORE US, THE LD. D.R. STRONGLY SUPPORTED THE FIND INGS OF THE A.O. PER CONTRA, THE LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO THE DECISION OF THE TRIBUNAL IN ASSESEES OWN CASE FOR A.Y. 2011-12 & 2 010-11 AND POINTED OUT THAT ON IDENTICAL SET OF FACTS, THE DISALLOWANCE MA DE U/S. 14A WAS DELETED BY THE TRIBUNAL. ITA NO. 1437 /AHD/2016 . A.Y. 2012-13 3 6. WE HAVE CAREFULLY CONSIDERED THE ORDERS OF THE AUTH ORITIES BELOW QUA THE ISSUE. WE FIND FORCE IN THE CONTENTION OF THE LD. COUNSEL. THE CO-ORDINATE BENCH IN ITA NOS. 3455/AHD/2014 & 3494/AHD/2014 FOR A.Y. 201 1-12 & 2010-11 HAD THE OCCASION TO CONSIDER A SIMILAR DISALLOWANCE ON SIMILAR SET OF FACTS AND HAS DELETED THE ADDITION FOLLOWING THE ORDER OF THE CO-ORDINATE BENCH IN ASSESSEES OWN CASE FOR A.Y. 2008-09 & 2009-10. TH E ORDER OF THE TRIBUNAL AS EXHIBITED AT PAGES 1 TO 5 OF THE PAPER BOOK. 7. RESPECTFULLY FOLLOWING THE SAME, WE DECLINE TO INTE RFERE. GROUND NO. 1 IS ACCORDINGLY DISMISSED. 8. THE SECOND GRIEVANCE RELATES TO THE DELETION OF THE ADDITION OF RS. 60,43,531/- MADE IN BOOK PROFIT U/S. 115JB OF THE ACT ON ACCOUN T OF DISALLOWANCE U/S. 14A OF THE ACT FOR MAT PURPOSES. 9. SINCE THE DELETION TO THE EXTENT OF RS. 59,74,031/- HAS BEEN UPHELD BY US VIDE GROUND NO. 1 (SUPRA), TO THIS EXTENT, THERE IS NO Q UESTION OF ANY ADJUSTMENT IN THE BOOK PROFIT U/S. 115JB OF THE ACT. INSOFAR AS T HE REMAINING DISALLOWANCE IS CONCERNED, WE FIND THAT THE CO-ORDINATE BENCH IN TH E CASE OF GUJARAT LEASE FINANCING LTD. IN A BUNCH OF GROUP VIDE ORDER DATED 16.11.2017 HAD THE OCCASION TO CONSIDER AN IDENTICAL ISSUE AND THE REL EVANT FINDINGS OF THE CO- ORDINATE BENCH READ AS UNDER:- GROUND NO. 8 RELATES TO THE DISALLOWANCE MADE U/S. 14A OF THE ACT CONSIDERED FOR COMPUTING BOOK PROFIT U/S. 115JB OF THE ACT. ITA NO. 1437 /AHD/2016 . A.Y. 2012-13 4 69. SINCE WE HAVE DELETED THE DISALLOWANCE OF RS. 1 .26 CRORES OUT OF INTEREST EXPENSES INVOKING SECTION 14A OF THE ACT VIDE GROUND NO. 2 O F THIS APPEAL, THE SAME STANDS TO BE EXCLUDED WHILE COMPUTING BOOK PROFIT U/S. 115JB OF THE ACT. 71. THOUGH, WE HAVE CONFIRMED THE DISALLOWANCE OF R S. 2.40 LAKHS VIDE GROUND NO. 3 OF THIS APPEAL, IN OUR CONSIDERED OPINION, THE SAME CANNOT BE CONSIDERED WHILE COMPUTING BOOK PROFIT U/S. 115JB OF THE ACT. OUR VI EW IS FORTIFIED BY THE DECISION OF THE SPECIAL BENCH TRIBUNAL IN VIREET INVESTMENT PVT . LTD. IN ITA NO. 502/DEL/2012 BY ORDER DATED 16.06.2017. 10. RESPECTFULLY FOLLOWING THE FINDINGS OF THE CO-ORDIN ATE BENCH, WE DO NOT FIND ANY ERROR OR INFIRMITY IN THE FINDINGS OF THE LD. C IT(A). GROUND NO. 2 IS ALSO DISMISSED. 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 28 -02- 201 8 SD/- SD/- (MAHAVIR PRASAD) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY ACCOUNTANT MEMBER AHMEDABAD: DATED 28 /02/2018 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD