M/S. KAKKAR COMPLEX STELS PVT. LTD, HOSHIARPUR V. ASSISTANT COMMISSIONER OF INCOME TAX, RANGE-III, CIRCLE-III, JALANDHAR

ITA 149/ASR/2018

• Counselvise Citation: [2019] 111 COUNSELVISE.COM (IT) 9811 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 20-12-2019
• Assessment Year: 2014-2015
• Appeal Filed On: 20-03-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: ASHWANI KALIA LD
• Keywords: Rule 8D; Set aside
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE SH. N.K.CHOUDHRY, JUDICIAL MEMBER AND SH. O.P.MEENA, ACCOUNTANT MEMBER ITA NO. 149/ASR/2 018 ASSESSMENT YEAR: 2014-15 M/S. KAKKAR COMPLEX STEELS PVT. LTD. 7 KM, JALANDHAR ROAD, HOSHIARPUR. VS. ASST. CIT, CIRCLE-III, JALANDHAR [PAN:AAACK 9865A] (APPELLANT) (RESPONDENT) APPELLANT BY: SH. ASHWANI KALIA (LD. CA) RESPONDENT BY: SH. CHARAN DASS (LD. DR) DATE OF HEARING: 20.12.2019 DATE OF PRONOUNCEMENT: 20.12.2019 ORDER PER N.K.CHOUDHRY, JM: THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAINST THE ORDER DATED 03.01.2018 PASSED BY THE LD. CIT(A)-2, JA LANDHAR U/S 250(6) OF THE I.T. ACT, 1961 (HEREINAFTER CALLED AS T HE ACT). 2. THE ASSESSEE IS AGGRIEVED AGAINST THE ONLY ADDITION OF RS.18,52,896/- MADE UNDER CLAUSE (II) OF RULE 8D (2) O F THE INCOME TAX (14 TH AMENDMENT) RULES, 2016 CONFIRMED BY THE LD. CIT(A) . ITA N0.149/ASR/ 2018 (A.Y.2014-15) M/S KAKKAR COMPLEX STEELS PV T. LTD. VS. ACIT 2 IN FACT THE ASSESSING OFFICER ADDED THE AMOUNT OF RS.9,26,448/- ON ACCOUNT OF CERTAIN EXPENSES INCURRED BY T HE ASSESSEE UNDER RULE 8D OF I T RULES 1962 (HEREINAFTER CAL LED AS THE RULES) READ WITH SECTION 14A OF THE ACT @ 0.5.% WHICH WA S SUBSEQUENTLY ENHANCED BY THE LD. CIT(A) @ 1% BY REFERR ING THE SUB- CLAUSE (II) OF RULE 8D(2) WHICH CAME INTO EFFECT FROM TH E 2 ND JUNE, 2016. 3. THE ASSESSEE HAS CHALLENGED THE SAID ADDITION ON T WO FOLD, FIRST THAT THE ASSESSING OFFICER WAS NOT CERTAIN ABOUT THE EXPE NDITURE INCURRED BY THE ASSESSEE FOR THE INVESTMENT MADE BY THE ASSESSEE AND THEREFORE, ON THE BASIS OF PRESUMPTION THE ADDITIO N IS NOT SUSTAINABLE EVEN AT THE RATE OF 0.5%, BECAUSE THE ASSESSEE HAS NOT INCURRED ANY EXPENDITURE ON INVESTMENT. SECONDLY, CLA USE (II) TO SUB- RULE-2 OF RULE 8D CAME INTO EFFECT FROM 2 ND JUNE, 2016, THEREFORE, THE ADDITION ENHANCED FROM 0.5 % TO 1% BY THE LD. CIT(A) IS ALSO NOT SUSTAINABLE. 4. HAVING HEARD THE PARTIES AT LENGTH AND PERUSED THE MA TERIAL AVAILABLE ON RECORD. 4.1 FIRST WE WILL DECIDE THE ISSUE RELATING TO ENHANCEMENT OF ADDITION QUA EXPENDITURE ON INVESTMENT FROM 0.5% TO 1% BY THE LD. CIT(A) UNDER CLAUSE (II) OF RULE 8D(2) OF RULES R.W . SECTION 14A OF ITA N0.149/ASR/ 2018 (A.Y.2014-15) M/S KAKKAR COMPLEX STEELS PV T. LTD. VS. ACIT 3 THE ACT. WE ARE OF THE CONSIDERED VIEW THAT AS IT REFL ECTS FROM THE IMPUGNED ORDER ITSELF THAT SUB-CLAUSE (II) WAS MADE APPL ICABLE IN THE RULE 8D(2) OF THE INCOME TAX RULES FROM 2 ND JUNE, 2016 AND THEREFORE THAT WOULD BE APPLICABLE FROM ASST. YEAR: 20 16-17 ONWARDS AND NOT APPLICABLE TO THE CASE IN HAND AS IT PERTAINS TO ASSESSMENT YEAR 2014-15. HENCE, WE ARE UNABLE TO SUSTAIN THE ENHAN CEMENT OF THE DISALLOWANCE FROM 0.5% TO 1%. CONSEQUENTLY THE DECI SION OF LD. CIT(A) FOR ENHANCEMENT IS SET ASIDE . 4.2 COMING TO THE SECOND ISSUE QUA ADDITION @ 0.5% UNDER R ULE 8D OF I T RULES 1962 READ WITH SECTION 14A OF THE ACT. FROM THE ASSESSMENT ORDER IT REFLECTS THAT THE ASSESSING OFFICER MADE T HE ADDITION @ 0.5% UNDER RULE 8D OF THE RULES READ WIT H SECTION 14A OF THE ACT WITHOUT DETERMINING THE AMOUNT OF EXPENDI TURE INCURRED BY THE ASSESSEE ON THE GROUND THAT THE ASSESSEE HAS NOT BEEN AB LE TO SUBSTANTIATE ITS CLAIM QUA NON-EXPENDITURE ON THE INVE STMENT. THEREFORE, IN THE ABSENCE OF CRYSTALLIZATION OF EXPENDI TURE BY THE ASSESSING OFFICER, WE ARE UNABLE TO SUSTAIN THE ADDITION @ 0.5%, HOWEVER IN THE INTEREST OF JUSTICE AND FOR DETERMINATI ON OF CORRECT INCOME, WE FEEL IT APPROPRIATE TO REMAND THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR DECISION AFRESH. ITA N0.149/ASR/ 2018 (A.Y.2014-15) M/S KAKKAR COMPLEX STEELS PV T. LTD. VS. ACIT 4 5. IN THE RESULT, APPEAL FILED BY THE ASSESSEE PARTLY STAN DS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 20/1 2/2019. SD/- SD/- (O.P.MEENA) (N.K.CHOUDHRY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 20/12/2019. /PK/ PS. COPY FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THEN CIT(APPEALS) 5. SR DR, I.T.A.T. AMRITSAR 6. GUARD FILE TRUE COPY BY ORDER