Shri Kiwans Farsuram Bhamwala, Ahmedabad V. The Income Tax Officer, Ward-1, Bharuch

ITA 145/AHD/2015

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 2202 (ITAT-SURAT)
• Duration Of Justice: 3 year(s) 8 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 12-06-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 13-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIL DHAKA
• Assessee Lawyers: MRS KINJAL SHAH
• Keywords: Earning of tax free income; Rule 8D
• Section: 234B; 14A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT , , BEFORE SHRI C.M.GARG, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER . / ITA NO.145/AHD/2015/SRT / ASSESSMENT YEAR: 2009-10 SHRI KIWANS FARSURAM BHAMWALA, 3, PRITAM SOCIETY, BHARUCH 392 001. [PAN: ACQPB 6488F] VS. INCOME TAX OFFICER, WARD-1, BHARUCH. ( ' / APPELLANT) ( #$' /RESPONDENT) / ASSESSEE BY : MRS. KINJAL SHAH, C.A /REVENUE BY : SHRI ANIL DHAKA, SR. D.R /DATE OF HEARING : 19-09-2018 / DATE OF PRONOUNCEMENT : 25-09-2018 / ORDER PER C.M.GARG, JUDICIAL MEMBER: THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-V, BARODA (CI T(A) FOR SHORT) DATED 07.11.2014 FOR THE ASSESSMENT YEAR (A.Y) 2009 -10. 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE REA D AS FOLLOWS: 1. THE CIT(A) HAS ERRED BOTH IN LAW AND IN FACT IN UPH OLDING APPLICABILITY OF SEC.L4A OF THE ACT AND THEREBY CON FIRMING THE ADDITION OF RS.7,72,351/- ADDED UNDER SEC.L4A BY TH E ASSESSING OFFICER. 2 ITA NO.145/AHD/2015/SRT (A.Y: 2009-10) SHRI KIWANS FARSURAM BHAMWALA 2. ON FACTS OF THE CASE AS PER PROVISIONS OF LAW AND S EC. 14A DOES NOT APPLY SINCE THERE IS NO EXEMPT INCOME EARN ED BY THE APPELLANT AND THE A.O. HAS FAILED ESTABLISH ANY NEX US BETWEEN LOANS AND INTEREST IN SHARES EXEMPT ASSETS. FURTHER AND WITHOUT PREJUDICE THE INTEREST U / S .14A OF RS.7,72,351/- IS NOT CORRECTLY WORKED OUT. 3. THE CIT(A) HAS ERRED IN UPHOLDING LEVY OF INTEREST U/S. 234A, 234B AND 234D THE CHANGED BY THE ASSESSING OFFICER OF RS.53,568/-, RS. 95,264/- AND RS. 1,307/- RESPECTIV ELY. IT IS SUBMITTED THAT ON FACTS OF THE CASE AS PER PR OVISIONS OF LAW AND IN VIEW OF GUJARAT H.C. JUDGEMENT IN THE CA SE OF ACIT VS. S.K. FAMILY TRUST 251 CTR PAGE 427 IN ABSE NCE OF SPECIFIC ORDER TO CHARGE INTEREST BY THE ASSESSING OFFICER THE INTEREST IS WRONGLY CHARGED AND THEREFORE REQUIRES TO BE DELETED. 3. WE HAVE HEARD THE ARGUMENTS OF BOTH SIDES AND CA REFULLY PERUSED THE RELEVANT MATERIAL PLACED ON THE RECORD OF THE T RIBUNAL. THE LD. ASSESSEES REPRESENTATIVE (AR) SUBMITTED THAT THE C IT(A) HAS ERRED BOTH IN LAW AND IN FACT IN UPHOLDING APPLICABILITY OF SE C.L4A OF THE ACT AND THEREBY CONFIRMING THE ADDITION OF RS.7,72,351/- AD DED UNDER SEC.14A BY THE ASSESSING OFFICER (AO). THE LD. AR FURTHER SUB MITTED THAT AS PER PROVISIONS OF LAW AND SEC. 14A DOES NOT APPLY SINCE THERE IS NO EXEMPT INCOME EARNED BY THE APPELLANT AND THE A.O. HAS FAI LED ESTABLISH ANY NEXUS BETWEEN LOANS AND INTEREST IN SHARES EXEMPT A SSETS. FURTHER AND WITHOUT PREJUDICE THE INTEREST U / S .14A OF RS.7,72,351/- IS NOT CORRECTLY WORKED OUT. 4. THE LD. AR PLACING RELIANCE ON THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. HOLCIM INDIA PVT. LTD. REPORTED IN 272 CTR 3 ITA NO.145/AHD/2015/SRT (A.Y: 2009-10) SHRI KIWANS FARSURAM BHAMWALA 282 (DEL.), SUBMITTED THAT IN THE PRESENT CASE EXEMPT INCOME W AS ONLY RS. 23,806/- AS SHARE OF PROFIT FROM THE PARTNERSHI P FIRM M/S. VEDANT ENTERPRISE AND THE DISALLOWANCE U/S. 14A OF THE AC T AND RULE 8D OF THE I.T RULES, 1962 CANNOT BE MADE MORE THAN AMOUNT OF EXEMPT INCOME. 5. REPLYING TO THE ABOVE, THE LD. DEPARTMENTAL REPR ESENTATIVE (DR) SUBMITTED THAT THE AO MAY BE DIRECTED TO APPLY R. 8 D OF THE RULES FOR MAKING DISALLOWANCE AND RECALCULATING THE SAME. HO WEVER, IN ALL FAIRNESS, THE LD. DR COULD NOT SHOW US ANY CONTRARY DECISION FROM THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF HOLCIM (SUPRA). 6. ON CAREFUL CONSIDERATION OF ABOVE RIVAL SUBMISSI ONS, WE ARE OF THE VIEW THAT AS PER RATIO OF THE DECISION OF HON'BLE D ELHI HIGH COURT IN THE CASE OF HOLCIM INDIA PVT. LTD. (SUPRA) AND VARIOUS OTHER DECISIONS THE AMOUNT OF DISALLOWANCE CANNOT BE MORE THAN THE AMOU NT OF EXEMPT INCOME WHICH IS RS. 23,806/- IN THE PRESENT CASE WH ICH HAS BEEN RECEIVED BY THE ASSESSEE AS PROFIT SHARE OF A PARTN ERSHIP FIRM. THEREFORE, THE GROUNDS OF THE ASSESSEE ARE PARTLY ALLOWED AND AO IS DIRECTED TO RESTRICT THE DISALLOWANCE TO RS. 23,806/- UP TO THE AMOUNT OF EXEMPT INCOME CLAIMED BY THE ASSESSEE. 4 ITA NO.145/AHD/2015/SRT (A.Y: 2009-10) SHRI KIWANS FARSURAM BHAMWALA 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 2 5 TH SEPTEMBER, 2018. / SURAT ; DATED : 25 TH SEPTEMBER, 2018 EDN # & / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT ; 3. $ ( ) / THE CONCERNED CIT(A); 4. THE CONCERNED PRL. CIT; 5. , , / DR, ITAT, SURAT; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // * / ASSISTANT REGISTRAR , / ITAT, SURAT SD/- SD/- ( ) ( O.P.MEENA ) / ACCOUNTANT MEMBER ( ) (C.M.GARG) /JUDICIAL MEMBER