M/s. Ballal Tourist Hotel Private Limited, Bangalore V. Deputy Commissioner Of Income Tax, Circle- 1(1)(2), Bangalore

ITA 1676/BANG/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3210 (ITAT-BANGALORE)
• Duration Of Justice: 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 09-03-2020
• Assessment Year: 2013-2014
• Appeal Filed On: 23-07-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R PREMI
• Assessee Lawyers: N O N E
• Keywords: Earning of tax free income; Rule 8D; Set aside
• Section: 14A

Judgement Text

ITA NO.1676/BANG/2019 M/S. BALLAL TOURIST HOTEL PVT. LTD., BANGALORE IN THE INCOME TAX APPELLATE TRIBUNAL CBENCH: BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI B.R. BASKARAN, ACCOUTANT MEMBER ITA NOS.1676/BANG/2019 ASSESSMENTYEAR:2013-14 M/S. BALLAL TOURIST HOTEL PVT. LTD. NO.74/4, RESIDENCY ROAD BENGALURU-560 025. PAN NO :AAACB8432C VS. DEPUTY COMMISSIONER OF INCOME-TAX CIRCLE-1(1)(2) BENGALURU APPELLANT RESPONDENT APPELLANT BY : N O N E RESPONDENT BY : SHRI R. PREMI, D.R. DATE OF HEARING : 09.03.2020 DATE OF PRONOUNCEMENT : 11.03.2020 O R D E R PER B.R. BASKARAN, ACCOUNTANT MEMBER: THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINS T ORDER DATED 23.5.2019 PASSED BY LD. CIT(A)-1, BENGA LURU AND IT RELATES TO ASSESSMENT YEAR 2013-14. ITA NO.1676/BANG/2019 M/S. BALLAL TOURIST HOTEL PVT. LTD., BANGALORE PAGE 2 OF 7 2. NONE APPEARED ON BEHALF OF THE ASSESSEE. HENCE, WE PROCEED TO DISPOSE OF THE APPEAL EX-PARTE WITHOUT PRESENCE OF THE ASSESSEE. 3. THE GROUNDS OF APPEAL URGED BY THE ASSESSEE RELA TE TO SOLITARY ISSUE, VIZ., DISALLOWANCE MADE U/S 14A OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS THE AC T). WE NOTICE THAT THE ASSESSEE DID NOT APPEAR BEFORE LD. CIT(A) ALSO, HENCE, THE FIRST APPELLATE AUTHORITY WAS CONS TRAINED TO PASS ORDER EX-PARTE WITHOUT PRESENCE OF THE ASSE SSEE. 4. WE HEARD LD. D.R. AND PERUSED THE RECORD. DURIN G THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS RECE IVED DIVIDEND INCOME OF RS.10.57 LAKHS AND CLAIMED THE S AME AS EXEMPT U/S 10(34) OF THE ACT. HOWEVER, THE ASSE SSEE DID NOT DISALLOW ANY AMOUNT U/S 14A OF THE ACT. HE NCE THE A.O. DISALLOWED A SUM OF RS.7.25 LAKHS U/S 14A OF THE ITA NO.1676/BANG/2019 M/S. BALLAL TOURIST HOTEL PVT. LTD., BANGALORE PAGE 3 OF 7 ACT READ WITH RULE 8D OF THE I.T. RULES. THE SAID ADDITION WAS CONFIRMED BY LD. CIT(A). 5. IN THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE BEFORE THE TRIBUNAL, THE ASSESSEE HAS STATED THAT T HE OWN FUNDS AVAILABLE WITH IT IS IN EXCESS OF THE VALUE O F INVESTMENT. THE ASSESSEE HAS FURTHER CONTENDED THA T FOR THE PURPOSE OF COMPUTING AVERAGE VALUE OF INVESTMEN T, ONLY THOSE INVESTMENTS WHICH HAVE YIELDED EXEMPT IN COME SHOULD BE CONSIDERED. 6. WE NOTICE THAT BOTH THE ABOVE CONTENTIONS HAVE N OT BEEN EXAMINED BY THE TAX AUTHORITIES. THE HONBLE KARNATAKA HIGH COURT HAS HELD IN THE CASE OF MICROL ABS LTD (383 ITR 490), BY CONCURRING WITH THE VIEW TAKE N BY HONBLE BOMBAY HIGH COURT IN THE CASE OF HDFC BANK LTD (ITA 33/2012 DATED 23-07-2014) HAS HELD THAT NO INTEREST DISALLOWANCE UNDER RULE 8D(2)(II) OF I.T. RULES IS ITA NO.1676/BANG/2019 M/S. BALLAL TOURIST HOTEL PVT. LTD., BANGALORE PAGE 4 OF 7 CALLED FOR, WHEN THE OWN FUNDS AVAILABLE WITH THE A SSESSEE IS IN EXCESS OF THE VALUE OF INVESTMENTS. HENCE, T HE FIRST CONTENTION OF THE ASSESSEE WITH REGARD TO THE DISAL LOWANCE OF INTEREST EXPENDITURE MADE UNDER RULE 8D(2)(II) S HALL BE COVERED BY THE ABOVE SAID DECISION RENDERED BY HON BLE JURISDICTIONAL KARNATAKA HIGH COURT. 7. IN THE CASE OF VIREETH INVESTMENTS 165 ITD 27, T HE DELHI SPECIAL BENCH OF TRIBUNAL HAS HELD THAT FOR T HE PURPOSE OF COMPUTING THE AVERAGE VALUE OF INVESTMEN TS UNDER RULE 8D(2)(III), ONLY THOSE INVESTMENTS WHICH HAVE YIELDED EXEMPT INCOME SHOULD BE TAKEN INTO ACCOUNT. HENCE, THE SECOND CONTENTION OF THE ASSESSEE WOULD BE COVERED BY ABOVE SAID DECISION. 8. HOWEVER BOTH THE CONTENTIONS OF THE ASSESSEE REQUIRE FACTUAL VERIFICATION. WE ALSO NOTICE THAT THE TAX AUTHORITIES HAVE COMPUTED DISALLOWANCE WITHOUT FOLL OWING ITA NO.1676/BANG/2019 M/S. BALLAL TOURIST HOTEL PVT. LTD., BANGALORE PAGE 5 OF 7 THE DECISIONS CITED ABOVE. UNDER THESE SET OF FACT S, WE ARE OF THE VIEW THAT THE ISSUE OF DISALLOWANCE U/S 14A OF THE ACT, IN THE INSTANT CASE, REQUIRE FRESH EXAMINATION AT THE END OF THE ASSESSING OFFICER. ACCORDINGLY, WE SET ASIDE THE ORDER PASSED BY LD. CIT(A) ON THIS ISSUE AND RESTOR E THE SAME TO THE FILE OF THE A.O. FOR EXAMINING IT AFRES H BY CONSIDERING BOTH THE DECISIONS REFERRED ABOVE. THE ASSESSEE IS ALSO DIRECTED TO FURNISH ALL THE DETAIL S IN SUPPORT OF ITS CONTENTIONS. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 11.03.2020. SD/- (N.V. VASUDEVAN) VICE PRESIDENT SD/- (B.R. BASKARAN) ACCOUNTANT MEMBER BANGALORE, DATED 11 TH MARCH, 2020. /VG/ ITA NO.1676/BANG/2019 M/S. BALLAL TOURIST HOTEL PVT. LTD., BANGALORE PAGE 6 OF 7 COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, BANGALORE. ITA NO.1676/BANG/2019 M/S. BALLAL TOURIST HOTEL PVT. LTD., BANGALORE PAGE 7 OF 7 1. DATE OF DICTATION 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO SR.P.S .. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER .. 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S. .. 6. DATE OF UPLOADING THE ORDER ON WEBSITE.. 7. IF NOT UPLOADED, FURNISH THE REASON FOR DOING SO .. 8. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 9. DATE ON WHICH ORDER GOES FOR XEROX & ENDORSEMENT 10. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 11. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER . 12. THE DATE ON WHICH THE FILE GOES TO DISPATCH SEC TION FOR DISPATCH OF THE TRIBUNAL ORDER . 13. DATE OF DESPATCH OF ORDER. .. 14. DICTATION NOTE ENCLOSED