M/s Nucon Switchgears Pvt. Ltd., Ludhiana V. ACIT, C-1, Ludhiana

ITA 1486/CHANDI/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5276 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 20-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MANJIT SINGH
• Section: 14A; 2

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES B, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER & MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO. 1486/CHD/2017 ASSESSMENT YEAR: 2013-14 M/S NUCON SWITCHGEARS PVT LTD., VS. THE ACIT, CIRCL E-1, D-47, PHASE V, FOCAL POINT, LUDHIANA LUDHIANA LUDHIANA PAN NO. AAACN6127E (APPELLANT) (RESPONDENT) APPELLANT BY : SH. MANJIT SINGH, SR DR RESPONDENT BY : SH. AMARJIT KAMBOJ, CA DATE OF HEARING : 07.02.2018 DATE OF PRONOUNCEMENT : 07.02.2018 ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVENU E AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEAL S), [HEREINAFTER REFERRED TO AS CIT(A)]-1, LUDHIANA DATED 18.08.20 17. 2. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED T HAT DURING THE YEAR THE ASSESSEE EARNED DIVIDEND INCOME OF RS. 25 LACS, WHEREUPON, THE ASSESSEE SUO MOTU OFFERED THE DISALLOWANCE OF R S. 6.43 LACS U/S 14A OF THE I.T. ACT. HOWEVER, THE ASSESSING OFFICE R APPLIED RULE 8- D OF THE INCOME TAX RULES AND CALCULATED DISALLOWAN CE U/S 14A OF 2 THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') AT RS . 13.95 LACS MAKING THEREBY AN ADDITION OF RS. 7.51 LACS . 3. BEING AGGRIEVED BY THE ORDER OF ASSESSING OFFIC ER THE ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A). THE LD. CIT(A), HOWEVER, CONFIRMED THE ADDITION SO MADE BY THE ASSESSING OFF ICER. THE ASSESSEE HAS, THUS, COME IN APPEAL BEFORE US. 4. WE HAVE HEARD THE RIVAL CONTENTIONS. AT THE OUTS ET, THE LD. COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION TO THE COPY OF THE BALANCE SHEET PLACED AT PAGE 26 OF THE PAPER BOOK T O SHOW THAT ASSESSEE HAD TOTAL RESERVES AND SURPLUS OF RS. 57 C RORES DURING THE YEAR, OUT OF WHICH THE TOTAL INVESTMENT WERE MADE A T RS. 18.37 CORES, WHICH WAS MUCH BELOW THAN THE TOTAL RESERVES AND SU RPLUS AVAILABLE TO THE ASSESSEE. HE IN THIS RESPECT HAS RELIED UPON THE DECISIONS OF CIT VS. MAX INDIA LTD (2016) 388 ITR 81(P&H) AND CIT VS. KAPSON ASSOCIATES (2016) 381 ITR 204 (P&H), WHEREIN, IT HA S BEEN HELD BY THE HIGHER COURTS THAT IF THE ASSESSEE HAS AVAILABI LITY OF OWN SUFFICIENT FUNDS TO MAKE THE INVESTMENT, THEN THE P RESUMPTION WOULD BE THAT INVESTMENT HAS BEEN MADE FROM OWN FUNDS AND NO DISALLOWANCE U/S 14A OF THE ACT WOULD BE ATTRACTED UNDER THOSE CIRCUMSTANCES. THE LD. COUNSEL HAS FURTHER SUBMITT ED THAT EVEN OTHERWISE, THE ASSESSEE HAS ALREADY SUO MOTU OFFERE D A DISALLOWANCE OF RS. 6.43 LACS AND THAT IN VIEW OF THE ABOVE PROPOSITION OF LAW, N O FURTHER DISALLOWANCE SHOULD HAVE BEEN MADE. 5. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE FIND MERIT IN THE SUBMISSIONS OF THE LD. AR OF THE ASSESSEE AS THE FA CTS AND ISSUE 3 INVOLVED IN THE CASE ARE SQUARELY COVERED BY THE AF ORESAID DECISIONS OF THE HON'BLE HIGH COURTS IN CIT VS. MAX INDIA LTD AND CIT VS. KAPSON ASSOCIATES (SUPRA). 6. IN VIEW OF THIS, THE DISALLOWANCE IS RESTRICTED TO RS. 6.43 LACS U/S 14A OF THE ACT THAT HAS BEEN SUO MOTU OFFERED B Y THE ASSESSEE. ANY FURTHER DISALLOWANCE MADE BY THE ASSESSING OFFI CER OR CONFIRMED BY THE CIT(A) IS HEREBY ORDERED TO BE DELETED 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS HER EBY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (ANNAPURNA GUPTA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 07.02.2018 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR