M/s. Rasna Pvt. Ltd., Ahmedabad V. The DCIT, Circle-3(1)(2), Ahmedabad

ITA 1528/AHD/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 7301 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-08-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 23-04-2020
• Assessment Year: 2013-2014
• Appeal Filed On: 19-06-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR SHYAM PRASAD
• Assessee Lawyers: PF JAIN
• Keywords: Earning of tax free income; Rule 8D
• Section: 143(3); 234B; 14A; 115JB; 80IC; 143(2); 64; 80IC; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH (CONDUCTED THROUGH VIRTUAL COURT) BEFORE: SHRI RAJPAL YADAV, VICE PRESIDENT AND SHRI AMARJIT SINGH, ACCOUNTANT MEM BER RASNA PVT. LTD. OPP. SEARS TOWER, GULBAI TEKRA, PANCHVATI, AHMEDABAD PAN: AAACW4408M (APPELLANT) VS THE DY. CIT, CIRCLE-3(1)(2), AHMEDABAD (RESPONDENT) RASNA PVT. LTD. OPP. SEARS TOWER, GULBAI TEKRA, PANCHVATI, AHMEDABAD PAN: AAACW4408M (APPELLANT) VS THE DY. CIT, CIRCLE-3(1)(2), AHMEDABAD (RESPONDENT) ITA NO. 1528 /AHD/2017 ASSESSMENT YEAR 2013-14 ITA NO. 2870 /AHD/2017 ASSESSMENT YEAR 2014-15 ITA NO. 1788/AHD/2018 ASSESSMENT YEAR 2015-16 I.T.A NOS. 1528, 2870/AHD/2017 & 1788/AHD/2018 PAGE NO RASNA PVT. LTD. VS. DY. CIT 2 RASNA PVT. LTD. OPP. SEARS TOWER, GULBAI TEKRA, PANCHVATI, AHMEDABAD PAN: AAACW4408M (APPELLANT) VS THE DY. CIT, CIRCLE-3(1)(2), AHMEDABAD (RESPONDENT) REVENUE BY: DR. SHYAM PRASAD, SR. D.R. ASSESSEE BY: SHRI P.F. JAIN, A.R. DATE OF HEARING : 30-07-2021 DATE OF PRONOUNCEMENT : 17-08-20 21 /ORDER PER : AMARJIT SINGH, ACCOUNTANT MEMBER:- THESE THREE APPEALS FILED BY ASSESSEE FOR A.Y. 2013 -14, 2014-15 AND 2015-16, ARISE FROM ORDER OF THE CIT(A), AHMEDABAD , IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHOR T THE ACT. 2. THERE WAS A DELAY OF 105 DAYS IN FILING THE INST ANT APPEAL. THE ASSESSEE HAS FILED AFFIDAVIT STATING THAT THE LD. C IT(A) HAS PASSED ITS ORDER ON 12 TH DECEMBER, 2016. THE REASON FOR DELAY IN FILING AP PEAL WAS STATED BECAUSE OF MISDELIVERING/DISPLACED OF CIT(A)S ORDE R. THE ASSESSEE HAS ALSO FILED COPY OF SPEED POST ENVELOPE ADDRESSED BY THE OFFICE OF LD. CIT(A) ON THE BACK SIDE OF THE ENVELOPE THE NAME OF SHR. RAME SHBHAI ALONG MOBILE NO. WAS MENTIONED. IT IS REPORTED THAT THERE WAS NO S UCH PERSON WORKING IN THE ASSESSEE COMPANY THEREFORE THE LD. CIT(A)S ORDER W AS MISDELIVERED/ MISPLACED. THE ASSESSEE HAS STATED THAT EXCEPT AS SESSMENT YEAR 2013-14 IN ALL THE SUBSEQUENT ASSESSMENT YEARS APPEAL WAS FILE D IN TIME. AFTER CONSIDERING THE FACTS REPORTED BY THE ASSESSEE, IT APPEARS, THERE IS REASONABLE I.T.A NOS. 1528, 2870/AHD/2017 & 1788/AHD/2018 PAGE NO RASNA PVT. LTD. VS. DY. CIT 3 CAUSE FOR DELAY IN FILING THE INSTANT APPEAL BY 105 DAYS BECAUSE OF NON- RECEIVING OF THE ORDER OF THE LD. CIT(A) BY THE A UTHORIZED PERSON OF THE ASSESSEE. IN THE LIGHT OF THE ABOVE FACT AND DECISI ON OF THE HONBLE SUPREME COURT IN THE CASE OF COLLECTOR LAND ACQUISITION VS. MST KATGIRORS CIVIL APPEAL NO. 460 OF 1987 HOLDING THAT SUFFICIENT CAU SE FOR THE PURPOSE OF CONDONATION SHOULD BE INTERPRETED WITH A VIEW TO DO EVEN-HANDED JUSTICE ON MERIT IN PREFERENCE TO APPROACH WHICH SCUTTLES A DE CISION ON MERITS, WE CONDONE THE DELAY IN FILING THIS APPEAL. ITA NO. 1528/AHD/2017 FOR A.Y. 2013-14 3. THE FACT OF THE CASE IS THAT ASSESSEE FILED RETURN OF INCOME ON 29 TH NOV, 2013 DECLARING TOTAL INCOME AT RS. 12,28,38,184/-. THE CASE WAS SUBJECT TO SCRUTINY ASSESSMENT AND NOTICE U/S. 143(2) OF THE A CT WAS ISSUED ON 4 TH SEP, 2014. THE ASSESSMENT U/S. 143(3) OF THE ACT WAS FIN ALIZED ON 30 TH DECEMBER, 2015. FURTHER FACTS OF THE CASE RELEVANT TO THE ISS UES CONTESTED IN THE APPEAL ARE DISCUSSED WHILE ADJUDICATING THE GROUNDS OF APP EAL OF THE ASSESSEE AS FOLLOWS:- GROUND NO. 1 (DISALLOWANCE U/S. 14A OF RS. 41,78,64 7/-) 4. DURING THE COURSE OF ASSESSMENT, THE ASSESSI NG OFFICER NOTICED THAT ASSESSEE HAS CLAIMED EXEMPT INCOME OF RS. 5,33,23,5 78/- INCLUDING DIVIDEND INCOME OF RS. 1,26,88,771/- IN THE COMPUTATION OF I NCOME. THE ASSESSEE HAS DISALLOWED A SUM OF RS. 4,75,768/- U/S. 14A. ON QU ERY, THE ASSESSEE EXPLAINED THAT IN VIEW OF NON-INTEREST BEARING FUND /SURPLUS FUND AVAILABLE WITH THE ASSESSEE ITSELF THE QUESTION OF ANY FURTHE R DISALLOWANCE UNDER RULE 8D WAS NOT APPLICABLE IN THE CASE OF THE ASSESSEE. THE ASSESSING OFFICER HAS I.T.A NOS. 1528, 2870/AHD/2017 & 1788/AHD/2018 PAGE NO RASNA PVT. LTD. VS. DY. CIT 4 NOT AGREED WITH THE SUBMISSION OF THE ASSESSEE. TH E ASSESSING OFFICER STATED THAT NO REASON HAS BEEN FURNISHED FOR NON-ALLOCATIO N OF COMMON MANAGEMENT EXPENSES, THEREFORE, THE ASSESSING OFFIC ER HAS DETERMINED THE AMOUNT OF EXPENDITURE IN ACCORDANCE IN THE PROVISIO N OF SECTION 14A(2) R.W.R. 8D TO THE AMOUNT OF RS. 46,54,415/-. AFTER R EDUCING THE SUO-MOTO DISALLOWANCE OF RS. 4,75,768/- MADE BY THE ASSESSEE , FURTHER DISALLOWANCE OF RS. 41,78,647/- WAS MADE AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 5. THE ASSESSEE HAS FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) AFTER REFERRING THE DECISION OF HIS PREDECESSOR FOR ASSESSMENT YEAR 2010-11 HAS CONFIRMED THE ORDER OF ASSESSING OFFICER. 6. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US, THE LD. COUNSEL CONTENDED THAT IDENTICAL ISSUE ON SIMILAR FACTS IN THE CASE OF THE ASSESSEE ITSELF FOR ASSESSMENT YEAR 2010-11 HAS BEEN ADJUDIC ATED BY THE CO-ORDINATE BENCH OF THE ITAT VIDE ITA 2334/AHD/2015 WHEREIN TH E DISALLOWANCE ON ACCOUNT OF ADMINISTRATIVE EXPENDITURE WAS RESTRICTE D UP TO RS. 7 LACS AFTER CONSIDERING THE NATURE OF INVESTMENT MADE IN FORM O F BONDS AND SECURITIES COUPLED WITH SUFFICIENT INTEREST FREE FUNDS OWNED B Y THE ASSESSEE . ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTATIVE HAS SUPPORTED THE ORDER OF LOWER AUTHORITIES. 7. HEARD BOTH THE SIDES AND PERUSED THE MATERIA L ON RECORD. DURING THE COURSE OF ASSESSMENT, THE ASSESSING OFFICER COMPUTE D DISALLOWANCE OF ADMINISTRATIVE EXPENDITURE TO THE EXTENT OF RS. 46, 54,415/-. THE ASSESSEE HAS SUO MOTO COMPUTED SUCH DISALLOWANCE TO THE AMOUNT O F RS. 4,75,768/- U/S. I.T.A NOS. 1528, 2870/AHD/2017 & 1788/AHD/2018 PAGE NO RASNA PVT. LTD. VS. DY. CIT 5 14A OF THE ACT. THE ASSESSEE EXPLAINED THAT INTE REST FREE FUND WAS USED FOR MAKING INVESTMENT ON WHICH EXEMPT INCOME WAS EARNED . THE ASSESSEE ALSO FURNISHED TAX AUDIT REPORT AND RELEVANT ANNEXURE OF ACCOUNT INDICATING THAT INVESTMENT WAS MADE IN TAX FREE BONDS AND MUTUAL FU ND IN EARLIER YEARS AND CLAIMED THAT BECAUSE OF NATURE OF INVESTMENT IT HAD CORRECTLY COMPUTED THE AMOUNT OF DISALLOWANCE OF ADMINISTRATIVE EXPENDITUR E. WITH THE ASSISTANCE OF LD. REPRESENTATIVES, WE HAVE GONE THOUGH THE DEC ISION OF CO-ORDINATE BENCH OF THE ITAT AHMEDABAD IN THE CASE OF THE ASSE SSEE FOR ASSESSMENT YEAR 2010-11 VIDE 2334/AHD/2015 DATED 30 TH JAN, 2019 VIDE WHICH THE DISALLOWANCE U/S. 14A ON ACCOUNT OF ADMINISTRATIVE EXPENDITURE WAS RESTRICTED TO RS. 7 LACS AFTER CONSIDERING THE NATU RE OF INVESTMENT MADE IN THE FORM OF BONDS AND SECURITIES. THE RELEVANT PART OF THE DECISION OF THE ITAT IS REPRODUCED AS UNDER:- 27. WE HAVE HEARD THE RIVAL CONTENTION AND PERUSED THE MATERIAL ON RECORD CAREFULLY. IT IS NOTICED THAT ASSESSEE WAS HAVING SUFFICIENT INTERES T FREE FUND AS AGAINST THE INVESTMENT MADE ON WHICH EXEMPT INCOME WAS EARNED. WE HAVE GONE THROUG H WORKING OF DISALLOWANCE MADE U/S. 14A R.W. RULE 8D OF THE I.T. RULE AND IT IS NOTICED THA T MAJOR PART OF THE DISALLOWANCE WAS MADE BY THE ASSESSING OFFICER TO THE AMOUNT OF RS. 20,57,946/- BEING 0.5% OF THE AVERAGE INVESTMENT FOR ADMINISTRATIVE EXPENDITURE. AFTER CONSIDERING THE N ATURE OF INVESTMENT MADE IN THE FORM OF BONDS & SECURITIES WE ARE OF THE VIEW THAT IT WILL BE A PPROPRIATE TO RESTRICT THE DISALLOWANCE ON ACCOUNT OF ADMINISTRATIVE EXPENSES INCURRED TOWARDS EARNI NG EXEMPT INCOME TO THE AMOUNT OF RS. 7 LACS. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS PARTLY A LLOWED. ON PERUSAL OF THE ABOVE REFERRED DECISION OF THE IT AT, IT IS NOTICED THAT THE DECISION OF LD. CIT(A) PERTAINING TO ASSESSMENT YEA R 2010-11 ON THE BASIS OF WHICH THE LD. CIT(A) HAS SUSTAINED THE IMPUGNED DIS ALLOWANCE FOR THE YEAR UNDER CONSIDERATION HAS BEEN ADJUDICATED BY THE CO- ORDINATE BENCH OF THE ITAT AND ADDITION ON ACCOUNT OF ADMINISTRATIVE EXPE NDITURE WAS RESTRICTED TO THE AMOUNT OF RS. 7 LACS AS AGAINST DISALLOWANCE OF RS. 20,57,946/- MADE BY THE ASSESSING OFFICER. IN THE INSTANT CASE IN APPEAL, THE LD. CIT(A) HAS SIMILARLY SUSTAINED THE ADDITION AFTER FOLLOWING TH E DECISION OF HIS I.T.A NOS. 1528, 2870/AHD/2017 & 1788/AHD/2018 PAGE NO RASNA PVT. LTD. VS. DY. CIT 6 PREDECESSOR FOR ASSESSMENT YEAR 2010-11. RESPECTFU LLY FOLLOWING THE DECISION OF THE CO-ORDINATE BENCH OF THE ITAT, WE R ESTRICT THE DISALLOWANCE ON ACCOUNT OF ADMINISTRATIVE EXPENDITURE INCURRED T OWARDS EARNING EXEMPT INCOME TO THE EXTENT OF RS. 14 LACS AS AGAINST OF D ISALLOWANCE OF RS. 46,54,415/- DETERMINED BY THE ASSESSING OFFICER AFT ER APPLYING THE FINDING OF THE ITAT DECISION AS CITED ABOVE WHEREIN COMPARA TIVELY SUCH DISALLOWANCE WAS RESTRICTED TO RS. 7 LACS CONSIDERI NG THE DISALLOWANCE AMOUNT OF RS. 20,57,946/- COMPUTED BY THE ASSESSING OFFICER ON SIMILAR FACTS AND CIRCUMSTANCES IN ASSESSMENT YEAR 2010-11 BY THE ASSESSING OFFICER. THE ASSESSING OFFICER IS DIRECTED TO ALLO W DEDUCTION OF SUO-MOTO DISALLOWANCE ALREADY MADE BY THE ASSESSEE. THEREFO RE, THIS GROUND OF APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. GROUND NO. 2 ( DISALLOWANCE OF RS. 27,89,536/- U/S. 80IC) 8. DURING THE COURSE OF ASSESSMENT THE ASSESSIN G OFFICER HAS VERIFIED THE DETAILS OF ALLOCATION OF EXPENSES BETWEEN THE ELIGI BLE AND NON-ELIGIBLE UNITS IN VIEW OF DEDUCTION CLAIMED UNDER THE PROVISION OF SECTION 80IC OF THE ACT. THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAS NOT ALLOCATED ANY FINANCIAL EXPENSES AMOUNTING TO RS. 47, 53,000/- (PERTAINING TO DOMESTIC SALES) TO SECTION 80IC ELIGIBLE UNIT. THE EXPLANATION OF THE ASSESSEE MENTIONED AT PAGE 12 OF THE ASSESSMENT ORDER IS REPRODUCED AS UN DER:- 'IN A.Y. 2012-13 AMOUNT OF RS.5,69 , 414/- WAS TREATED AS ALLOCABLE AND ACCORDINGLY DIS ALLOWANCE OF DEDUCTION U/S. 80IC OF THIS AMOUNT WAS MADE. DU RING THE YEAR THERE IS NET ALLOCABLE BANK INTEREST IS RS. 6,24,072/- AND BANK CHARGES IS RS. 3,13,703/- AGGREGATING RS.9,37,775/- AND THE ALLOCABLE AMOUNT ON THE BASIS OF RATIO OF 58,67% IT WILL COME TO RS.5,50,193/- '. ACCORDINGLY, ON THE BASIS OF ALLOCATION OF RATE OF 58.69%, THE ASSESSING OFFICER HAS COMPUTED AN AMOUNT OF RS. 27,89,536/- B EING 58.69% OF THE I.T.A NOS. 1528, 2870/AHD/2017 & 1788/AHD/2018 PAGE NO RASNA PVT. LTD. VS. DY. CIT 7 FINANCIAL EXPENSES TO 80IC UNIT. THE SAME WAS RE DUCED FROM THE DEDUCTION CLAIMED BY THE ASSESSEE U/S. 80IC 9. AGGRIEVED ASSESSEE HAS FILED APPEAL BEFORE T HE LD. CIT(A). THE LD. CIT(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE HOL DING THAT DURING THE COURSE OF APPELLATE PROCEEDINGS THE ASSESSEE HAD NO T PRESSED THE SIMILAR GROUND OF APPEAL IN ASSESSMENT YEAR 2012-13. 10. HEARD BOTH THE SIDES AND PERUSED THE MATERIA L ON RECORD. DURING THE COURSE APPELLATE PROCEEDINGS THE LD. COUNSEL HAS NE ITHER DISPROVED THE FINDINGS OF THE LOWER AUTHORITIES NOR BROUGHT ANY M ATERIAL ON RECORD IN CONTRARY TO THE FINDING OF THE LOWER AUTHORITY. T HEREFORE, WE DO NOT FIND MERIT IN THIS GROUND OF APPEAL OF THE ASSESSEE AND THE SAME IS DISMISSED. GROUND NO. 3 (DISALLOWANCE U/S. 36(1)(VA) OF RS. 2 ,43,874/- 11. DURING THE COURSE OF ASSESSMENT, THE ASSESS ING OFFICER NOTICED THAT ASSESSEE HAS NOT DEPOSITED THE EMPLOYEES CONTRIBUT ION AMOUNTING TO RS. 2,43,874/- TO ESIC IN THE EMPLOYEES ACCOUNT IN THE RELEVANT FUND ON OR BEFORE THE DUE DATE. THE DETAIL OF SUCH AMOUNT WA S COMPUTED BY THE ASSESSING OFFICER AT PAGE NO. 13 OF THE ASSESSMENT ORDER AT RS. 2,43,874/-. THEREFORE, THE ASSESSING OFFICER HAS DISALLOWED THE SAME IN VIEW OF THE SPECIFIC PROVISION OF SECTION 36(1)(VA) R.W.S. 2(24 )(V) OF THE ACT, THE DEDUCTION FOR THE EMPLOYEES CONTRIBUTION IS ALLOWAB LE ONLY IF SUCH SUM IS CREDITED BY THE ASSESSEE TO THE EMPLOYEES ACCOUNT I N THE RELEVANT FUND OR FUNDS ON OR BEFORE THE DUE DATE. I.T.A NOS. 1528, 2870/AHD/2017 & 1788/AHD/2018 PAGE NO RASNA PVT. LTD. VS. DY. CIT 8 12. THE ASSESSEE HAS FILED APPEAL BEFORE LD. CIT (A). THE LD CIT(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE STATING THAT A SSESSEE HAS NOT PRESSED FOR THIS GROUND OF APPEAL. 13. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED THE MATERIAL ON RECORD CAREFULLY. THE ASSESSEE HAS NOT DEPOSITED THE CON TRIBUTION RECEIVED FROM THE EMPLOYEES UNDER THE ESI ACT WITHIN THE DUE DATE AS PRESCRIBED IN THE ESI ACT AMOUNTING TO RS. 2,43,874/- THE LD. COUNSEL HA S REFERRED THE DECISION OF ITAT HYDERABAD IN THE CASE OF VALUE MOMENTUM SOF TWARE SERVICES PVT. LTD. VS. DCIT VIDE ITA NO. 2197/HYD/2017 DATED 19-0 5-2021. WE DO NOT FIND ANY FORCE IN THE CONTENTION OF THE LD. COUNSEL REGARDING RELEVANCY OF THE SAID DECISION TO THE SPECIFIC ISSUE AND FACTS OF TH E CASE OF THE ASSESSEE AFTER CONSIDERING THAT THE IDENTICAL ISSUE ON SIMILAR FAC TS HAS BEEN ADJUDICATED BY THE HONBLE JURISDICTIONAL HIGH COURT OF GUJARAT IN THE CASE OF GUJARAT STATE ROAD TRANSPORT CORPORATION. WE CONSIDER THAT THE H ONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. GUJARAT STATE ROA D TRANSPORT CORPORATION 265 CTR 64 HAS HELD THAT WHEN THE EMPLOYER HAS NOT CREDITED THE SUM RECEIVED BY IT AS EMPLOYEES CONTRIBUTION TO EMPLOYE ES ACCOUNT IN RELEVANT FUND ON OR BEFORE THE DUE DATE AS PRESCRIBED IN EXP LANATION TO SECTION 36(I)(VA) THE ASSESSEE SHALL NOT BE ENTITLED TO DED UCTION. IN VIEW OF THE ABOVE, FACTS AND JUDICIAL FINDINGS, WE UPHOLD THE D ECISION OF LD. CIT(A). ACCORDINGLY, THIS GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE I S PARTLY ALLOWED. ITA NO. 2870/AHD/2017 A.Y. 2014-15 I.T.A NOS. 1528, 2870/AHD/2017 & 1788/AHD/2018 PAGE NO RASNA PVT. LTD. VS. DY. CIT 9 GROUND NO. 1 (A) (DISALLOWANCE U/S. 14A OF RS. 43,4 9,310/-) 15. DURING THE COURSE OF ASSESSMENT, THE ASSESS ING OFFICER NOTICED THAT ASSESSEE CLAIMED EXEMPT INCOME OF RS. 2,87,28,799/- INCLUDING DIVIDEND INCOME OF RS. 26,63,671/- IN THE COMPUTATION OF INC OME. THE ASSESSEE HAS DISALLOWED A SUM OF RS. 12,55,562/- U/S. 14A. THE ASSESSEE EXPLAINED THAT DISALLOWANCE U/S. 14A WAS MADE OF RS. 12,55,562/- I N VIEW OF INTEREST BEARING FUND/SURPLUS FUND AVAILABLE NO FURTHER DISA LLOWANCE TO BE MADE IN THE CASE OF THE ASSESSEE. THE ASSESSING OFFICER HA S NOT AGREED WITH THE SUBMISSION OF THE ASSESSEE AND STATED THAT NO REASO N HAS BEEN FURNISHED FOR NON-ALLOCATION OF COMMON MANAGEMENT EXPENSES. THE ASSESSING OFFICER HAS COMPUTED THE AMOUNT OF DISALLOWANCE IN ACCORDAN CE IN THE PROVISION OF SECTION 14A(2) R.W.R. 8D TO THE AMOUNT OF RS. 56,0 4,872/- AFTER REDUCING THE SUO MOTO DISALLOWANCE MADE BY THE ASSESSEE OF RS. 12,55,562/- FURTHER DISALLOWANCE OF RS. 43,49,310 WAS MADE U/S. 14A OF THE ACT AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 16. THE ASSESSEE HAS FILED APPEAL BEFORE THE LD . CIT(A). THE LD. CIT(A) AFTER REFERRING THE DECISION OF HIS PREDECESSOR FOR ASSESSMENT YEAR 2010-11 TO 2031-14 HAS CONFIRMED THE ORDER OF ASSESSING OFFICE R. 17. DURING THE COURSE OF APPELLATE PROCEEDING S BEFORE US, THE LD. COUNSEL HAS CONTENDED THAT IDENTICAL ISSUE ON SIMILAR FACTS IN THE CASE OF THE ASSESSEE ITSELF FOR ASSESSMENT YEAR 2010-11 HAS BEEN ADJUDIC ATED BY THE CO-ORDINATE BENCH OF THE ITAT VIDE ITA 2334/AHD/2015 WHEREIN TH E DISALLOWANCE ON ACCOUNT OF ADMINISTRATIVE EXPENDITURE WAS RESTRICTE D UP TO RS. 7 LACS AFTER CONSIDERING THE NATURE OF INVESTMENT MADE IN FORM O F BONDS AND SECURITIES I.T.A NOS. 1528, 2870/AHD/2017 & 1788/AHD/2018 PAGE NO RASNA PVT. LTD. VS. DY. CIT 10 COUPLED WITH SUFFICIENT INTEREST FREE FUNDS OWNED B Y THE ASSESSEE . ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTATIVE HAS SUPPORTED THE ORDER OF LOWER AUTHORITIES 18. HEARD BOTH THE SIDES AND PERUSED THE MATERI AL ON RECORD. DURING THE COURSE OF ASSESSMENT, THE ASSESSING OFFICER COMPUTE D DISALLOWANCE OF ADMINISTRATIVE EXPENDITURE TO THE EXTENT OF RS. 56, 04,892/-. THE ASSESSEE HAS SUO MOTO COMPUTED SUCH DISALLOWANCE TO THE AMOUNT O F RS. 12,55,562/- U/S. 14A OF THE ACT. THE ASSESSEE HAS EXPLAINED THAT A LL INVESTMENTS HAVE BEEN MADE FROM THE ACCRUED FUNDS. THE ASSESSEE HAS FUR NISHED TAX AUDIT REPORT AND RELEVANT ANNEXURE OF ACCOUNT INDICATING THAT IN VESTMENT WAS MADE IN TAX FREE BONDS IN EARLIER YEARS AND CLAIMED IT HAS NOT MADE ANY NEW INVESTMENT DURING THE YEAR. RESPECTFULLY FOLLOWING THE DECIS ION OF THE CO-ORDINATE BENCH OF THE ITAT, GROUND NO. 1 OF ITA 1528/AHD/201 7 AS PER PARA 7 OF THIS ORDER, WE ARE OF THE VIEW THAT DISALLOWANCE OF ADMI NISTRATIVE EXPENDITURE INCURRED TOWARDS EARNING EXEMPT INCOME TO THE EXTEN T OF RS. 15 LACS IS APPROPRIATE AS AGAINST DISALLOWANCE OF RS. 56,04,89 2/- DETERMINED BY THE ASSESSING OFFICER AFTER APPLYING THE FINDINGS OF AS SESSING OFFICER ELABORATED ON SIMILAR ISSUE AT PARA 7 OF THIS ORDER. THE ASSE SSING OFFICER IS DIRECTED TO ALLOW DEDUCTION OF SUO-MOTO DISALLOWANCE ALREADY MA DE BY THE ASSESSEE. THEREFORE, THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. GROUND NO. 1 (B) (DISALLOWANCE U/S. 36(1)(IV) OF RS . 13,95,100/-) 19. THE ASSESSEE HAS NOT DEPOSITED THE EXPENSES CO NTRIBUTION TO PF AND ESIC IN THE RELEVANT FUND ON OR BEFORE THE DUE DATE . THEREFORE, AS PER THE DETAILS OF SUCH CONTRIBUTION MENTIONED AT PAGE NO. 6 OF ASSESSING OFFICER I.T.A NOS. 1528, 2870/AHD/2017 & 1788/AHD/2018 PAGE NO RASNA PVT. LTD. VS. DY. CIT 11 AMOUNT OF RS. 13,95,100/- WAS DISALLOWED IN VIEW OF THE SPECIFIC PROVISION OF SECTION 36(1)(VA) READ WITH SECTION 2(24)(X) OF THE ACT BY THE ASSESSING OFFICER AND ADDED TO THE TOTAL INCOME OF THE ASSESS EE. 20. THE LD. CIT(A) HAS SUSTAINED THE DISALLOWANCE FOLLOWING THE DECISION OF JURISDICTIONAL HONBLE HIGH COURT OF GUJARAT IN THE CASE OF CIT VS. GUJARAT STATE ROAD TRANSPORT CORPORATION (2014) 41 TAXMAN.C OM 100 (GUJARAT) 21. WITHOUT REITERATING THE SIMILAR SUBMISSION OF THE ASSESSEE AS MENTIONED AT PARA 11 OF THIS ORDER WHILE ADJUDICATING THE GRO UND OF APPEAL NO. 3 OF THE ASSESSEE VIDE ITA NO. 1528/AHD/2017 FOR ASSESSMENT YEAR 2013-14, THIS GROUND OF APPEAL OF THE ASSESSEE STANDS DISMISSED A FTER APPLYING THE FINDING GIVEN AT PARA 13 OF THIS ORDER PERTAINING TO THE AB OVE REFERRED SIMILAR ISSUE AND IDENTICAL FACTS IN THE CASE OF THE ASSESSEE. T HEREFORE, THIS GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. GROUND NO. 3 (INTEREST U/S. 234A OF RS. 98, 316) 22. THIS GROUND OF APPEAL STANDS DISMISSED AS LEV YING OF INTEREST U/S. 234A IS MANDATORY AS PRESCRIBED IN THE LAW. ITA NO. 1788/AHD/2017 A.Y. 2015-16 GROUND NO. 1 (DISALLOWANCE U/S. 14A OF RS. 30,13,73 3/-) 23. DURING THE COURSE OF ASSESSMENT, THE ASSESS ING OFFICER NOTICED THAT ASSESSEE HAS CLAIMED EXEMPT INCOME FROM DIVIDEND, T AX FREE BOND ETC. ON QUERY, REGARDING DISALLOWANCE U/S. 14A, THE ASSESSE E EXPLAINED THAT IN THE TAX AUDIT REPORT, THE AUDITOR HAS ALREADY MADE DISA LLOWANCE OF RS. I.T.A NOS. 1528, 2870/AHD/2017 & 1788/AHD/2018 PAGE NO RASNA PVT. LTD. VS. DY. CIT 12 2,77,536/- WHICH ALSO INCLUDED RS. 29,158/- PERTAIN ING TO DISALLOWANCE OF INTEREST ON BANK OVERDRAFT. THE ASSESSEE ALSO EXPL AINED THAT IT WAS HAVING OWN INTEREST FREE FUNDS WHICH WAS MORE THAN THE AMO UNT OF INVESTMENT MADE IN THE FUNDS FROM WHICH EXEMPT INCOME WAS EARNED. THE ASSESSING OFFICER HAS NOT AGREED WITH THE SUBMISSION OF THE ASSESSEE. THEREFORE, THE ASSESSING OFFICER HAS DETERMINED THE AMOUNT OF EXPENDITURE IN ACCORDANCE IN THE PROVISION OF SECTION 14A(2) R.W.R. 8D TO THE AMOUNT OF RS. 32,88,401/- AND AFTER REDUCING THE SUO-MOTO DISALLOWANCE OF RS. 2,7 4,668/- MADE BY THE ASSESSEE, FURTHER DISALLOWANCE OF RS. 30,13,733/- WAS MADE U/S. 14A OF THE ACT. 24. THE ASSESSEE HAS FILED APPEAL BEFORE THE LD . CIT(A). THE LD. CIT(A) REFERRING THE DECISION OF HIS PREDECESSOR FOR ASSES SMENT YEAR 2010-11 CONFIRMED THE ORDER OF ASSESSING OFFICER. 25. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US, THE LD. COUNSEL HAS CONTENDED THAT IDENTICAL ISSUE ON SIMILAR FACTS IN THE CASE OF THE ASSESSEE ITSELF FOR ASSESSMENT YEAR 2010-11 HAS BEEN ADJUDIC ATED BY THE CO-ORDINATE BENCH OF THE ITAT VIDE ITA 2334/AHD/2015 WHEREIN TH E DISALLOWANCE ON ACCOUNT OF ADMINISTRATIVE EXPENDITURE WAS RESTRICTE D UP TO RS. 7 LACS AFTER CONSIDERING THE NATURE OF INVESTMENT MADE IN FORM O F BONDS AND SECURITIES COUPLED WITH SUFFICIENT INTEREST FREE FUNDS OWNED B Y THE ASSESSEE . ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTATIVE HAS SUPPORTED THE ORDER OF LOWER AUTHORITIES. I.T.A NOS. 1528, 2870/AHD/2017 & 1788/AHD/2018 PAGE NO RASNA PVT. LTD. VS. DY. CIT 13 26. HEARD BOTH THE SIDES AND PERUSED THE MATERI AL ON RECORD. DURING THE COURSE OF ASSESSMENT, THE ASSESSING OFFICER HAS COM PUTED DISALLOWANCE OF ADMINISTRATIVE EXPENDITURE TO THE EXTENT OF RS. 32, 14,661/- AND DISALLOWANCE OF INTEREST EXPENSES AT RS. 73,740/-. THE ASSESSEE HAS SUO MOTO COMPUTED SUCH DISALLOWANCE TO THE AMOUNT OF RS. 2,77,536/- COMPRISING AN AMOUNT OF RS. 2,48,378/- TOWARDS ADMINISTRATIVE EXPENSES AND RS. 29,158/- TOWARDS INTEREST ON BANK OVERDRAFT. THE ASSESSEE EXPLAINED THAT IT WAS HAVING SUFFICIENT INTEREST FREE FUNDS OUT OF WHICH CONCERN ED INVESTMENT HAS BEEN MADE AND PLEADED THAT BECAUSE OF NATURE OF INVESTME NT IT HAS CORRECTLY COMPUTED THE DISALLOWANCE OF ADMINISTRATIVE EXPENDI TURE. THE ASSESSING OFFICER HAS NOT MADE SPECIFIC REASONS FOR NOT SATIS FYING THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE IN RESPECT OF SUCH EXPEND ITURE THEREFORE APPLYING THE FINDINGS OF GROUND OF NO. 1(D) VIDE ITA 1528/A HD/2017 AS PER PARA 7 OF THIS ORDER, WE ARE OF THE VIEW THAT IT WOULD BE APP ROPRIATE TO RESTRICT THE DISALLOWANCE ON ACCOUNT OF ADMINISTRATIVE EXPENDITU RE INCURRED TOWARDS EARNING EXEMPT INCOME TO THE EXTENT OF RS. 12 LACS AS AGAINST SIMILAR DISALLOWANCE OF RS. 32,14,661/-MADE BY THE ASSESSIN G OFFICER. THE ASSESSING OFFICER IS DIRECTED TO ALLOW DEDUCTION OF SUO-MOTO DISALLOWANCE ALREADY MADE BY THE ASSESSEE. THEREFORE, THIS GROU ND OF APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. GROUND NO. 3 (DISALLOWANCE U/S. 36(1)(VA) OF RS. 2 92,657/- 27. DURING THE COURSE OF ASSESSMENT, THE ASSESS ING OFFICER NOTICED THAT ASSESSEE HAS NOT DEPOSITED THE EMPLOYEES CONTRIBUT ION TO ESIC IN THE EMPLOYEES ACCOUNT IN THE RELEVANT FUND ON OR BEFOR E THE DUE DATE. THE DETAIL OF SUCH AMOUNT WAS COMPUTED BY THE ASSESSING OFFICER AT PAGE NO. 13 I.T.A NOS. 1528, 2870/AHD/2017 & 1788/AHD/2018 PAGE NO RASNA PVT. LTD. VS. DY. CIT 14 OF THE ASSESSMENT ORDER AT RS. 2,92,658/-. IN VIE W OF THE SPECIFIC PROVISION OF SECTION 36(1)(VA) R.W.R. 2(24)(V) OF THE ACT THE DEDUCTION FOR THE EMPLOYEES CONTRIBUTION IS ALLOWABLE ONLY IF SUCH SU M IS CREDITED BY THE ASSESSEE TO THE EMPLOYEES ACCOUNT IN THE RELEVANT F UND OR FUNDS ON OR BEFORE THE DUE DATE. CONSEQUENTLY, THE ASSESSING OFFICER HAS DISALLOWED THE SAME AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 28. THE ASSESSEE HAS FILED APPEAL BEFORE LD. CIT (A). THE LD CIT(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE STATING THAT A SSESSEE HAS NOT PRESSED FOR THIS GROUND OF APPEAL. 29. HEARD BOTH THE SIDES AND PERUSED THE MATERIA L ON RECORD. WITHOUT REITERATING THE FACTS AS MENTIONED ABOVE HONBLE JU RISDICTIONAL HIGH COURT IN THE CASE OF GUJARAT STATE ROAD TRANSPORT CORPORA TION 265 CTR 64 HELD THAT DEDUCTION IS NOT ALLOWABLE IF EMPLOYEES HAS NO T CREDITED THE SUM RECEIVED FROM EMPLOYEES CONTRIBUTION IN THE EMPLO YEES ACCOUNT IN THE RELEVANT FUND ON OR BEFORE THE DUE DATE. WITHOUT R EITERATING THE SIMILAR SUBMISSION MADE BY THE ASSESSEE FOR ASSESSMENT YEAR 2013-14 AND ASSESSMENT YEAR 2014-15 AS REPORTED AT PARA 13 OF T HIS ORDER AFTER APPLYING THE FINDINGS GIVEN AT PARA 21 OF THIS ORDER, THIS G ROUND OF APPEAL OF THE ASSESSEE STANDS DISMISSED. GROUND NO. 3 (INTEREST U/S. 234B OF RS. 10,06,110 A ND U/S. 234C OF RS. 9,91,453/-) 30. THIS GROUND OF APPEAL STANDS DISMISSED AS LEV YING OF INTEREST U/S. 234A IS MANDATORY AS PRESCRIBED IN THE LAW. I.T.A NOS. 1528, 2870/AHD/2017 & 1788/AHD/2018 PAGE NO RASNA PVT. LTD. VS. DY. CIT 15 ADDITIONAL GROUND OF APPEAL A.Y. 2013-14 VIDE ITA 1 528/AHD/2017 AND ADDITIONAL GROUND FOR A.Y. 2014-15 VIDE ITA 28 70/AHD/2017 31. THESE TWO IDENTICAL GROUNDS OF APPEALS FOR ASSESSMENT YEAR 2013-14 AND 2014-15 HAS BEEN RAISED ON THE ISSUE OF ADDING THE DISALLOWANCE MADE U/S. 14A IN THE BOOK PROFIT WHILE COMPUTING BOOK PR OFIT. THE LD. COUNSEL CONTENDED THAT ISSUE IS COVERED IN FAVOUR OF THE AS SESSEE IN VIEW OF THE DECISION OF ITAT SPECIAL BENCH DELHI IN THE CASE OF ACIT VS. VINEET INVESTMENT. THE LD. DEPARTMENTAL REPRESENTATIVE IS FAIR ENOUGH NOT TO CONTROVERT THE AFORESAID CONTENTION OF THE LD. COUN SEL. 32. HEARD BOTH THE SIDES AND PERUSED THE MATERIA L ON RECORD. 33. THE SPECIAL BENCH OF THE DELHI ITAT IN THE C ASE OF ACIT VS. VINEET INVESTMENT PVT. LTD. (2017) 165 ITD 27/82 TAXMANN. COM HAS HELD THAT EXPENSES INCURRED TO EARN EXEMPT INCOME NOT TO BE A DDED FOR COMPUTING BOOK PROFIT U/S. 115JB OF THE ACT. THEREFORE, WE A LLOW THESE ADDITIONAL GROUNDS OF APPEALS OF THE ASSESSEE. 34. IN THE COMBINED RESULT, ALL THE THREE APPEAL S FILED BY THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 17-08-2021 SD/- SD/- (RAJPAL YADAV) (AMARJIT SINGH) VICE PRESIDENT A CCOUNTANT MEMBER AHMEDABAD : DATED 17/08/2021 I.T.A NOS. 1528, 2870/AHD/2017 & 1788/AHD/2018 PAGE NO RASNA PVT. LTD. VS. DY. CIT 16 / COPY OF ORDER FORWARDED TO:- 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,