Educational Initiatives Pvt. Ltd., Ahmedabad V. The ACIT, Circle-4, Ahmedabad

ITA 1755/AHD/2014

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 4680 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 25-07-2019
• Assessment Year: 2009-2010
• Appeal Filed On: 06-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S N DIVETIA
• Keywords: Rule 8D; Set aside
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH (BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) ITA. NO: 1755 & 1920/AHD/2014 (ASSESSMENT YEAR: 2009-10) EDUCATIONAL INITIATIVES PVT. LTD. A/201, BALESHWAR SQUARE, OPP. ISKON TEMPLE, S.G. HIGHWAY AHMEDABAD-380015 V/S ACIT, CIRCLE-4, AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AAACE 9834B APPELLANT BY : SHRI S. N. DIVETIA & MEHUL TALERA , AR RESPONDENT BY : SHRI MUDIT NAGPAL, SR. D.R. ( )/ ORDER DATE OF HEARING : 25 -07-201 9 DATE OF PRONOUNCEMENT : 29 -07-2019 PER MAHAVIR PRASAD, JUDICIAL MEMBER 1. THESE TWO CROSS APPEALS FILED BY THE ASSESSEE AND T HE REVENUE ARE DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-VIII, AHMEDABAD DATED 07.03.2014 PERTAINING TO A.Y. 2009-10. ASSESSEE HAS TAKEN SOL ELY GROUND IN ITS APPEAL THAT ITA NOS. 175 5 & 1920/AHD/2014 . A.Y. 2009-1 0 2 LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND ON FACTS IN UPHOLDING THE DISALLOWANCE OF RS. 8,62,215/- U/S. 14A READ WITH R ULE 8D. 2. FACTS OF THE CASE ARE THAT THE APPELLANT COMPANY IS A CLOSELY HELD COMPANY AND ENGAGED IN EDUCATIONAL RESEARCH, PREPARATION OF PAP ERS FOR EDUCATIONAL TESTS, DEVELOPMENT OF TEACHERS ETC. IT HAD FILED ITS RETUR N OF INCOME FOR A.Y. 2009-10 ON 30.06.2010 DECLARING TOTAL INCOME OF RS. 5,52,67 ,990/-. 3. ON VERIFICATION OF BALANCE SHEET, IT IS NOTICED THA T ASSESSEE COMPANY HAS MADE INVESTMENT IN SHARES AND MUTUAL FUND OF RS. 1899117 62/- BUT ASSESSEE HAS NOT OFFERED DISALLOWANCE WORKED OUT U/S. 14A OF INCOME TAX ACT. AS PER ASSESSING OFFICER, ASSESSEE FAILED TO FURNISH AND T O PROVE NEXUS FROM WHICH IT CAN BE ESTABLISHED THAT INVESTMENT MADE IN SHARES A RE VERY ITS OWN FUND OR FROM NON INTEREST BEARING FUNDS. 4. ON THE OTHER HAND, IN SUPPORT OF ITS CONTENTION, LD . AR. STATED THAT IT HAS NO BORROWINGS AT ALL AND APPELLANT HAD INTEREST FREE F UNDS TOTALING TO RS. 172377845/- CONSISTING OF SHARE CAPITAL OF RS. 9464 311 AND RESERVE, SURPLUS OF RS. 162913534/- AS PER SCHEDULE 1 & 2. 5. IN SUPPORT OF ITS CONTENTION, ASSESSEE HAS FILED AT PAPER BOOK PAGE NO. 6 & 7 AND MOST OF THE INVESTMENT ARE MADE THROUGH MUTUAL FUND AND GROWTH FUND ETC AND SAME IS PART OF PAPER BOOK AT PAGE NO. 8. A S LOWER AUTHORITIES HAVE FAILED TO BIFURCATE THE CARRY FORWARDED FUND AND NE W INVESTMENT MADE BY THE ASSESSEE. THEREFORE, IN THE INTEREST OF THE JUSTICE , WE SET ASIDE THIS MATTER TO THE FILE OF THE ASSESSING OFFICER TO GO THROUGH THE AUD ITED BALANCE SHEET AND DETAILS ITA NOS. 175 5 & 1920/AHD/2014 . A.Y. 2009-1 0 3 OF INVESTMENT. THEREAFTER WILL MAKE DISALLOWANCE U/ S. 14A READ WITH RULE 8D AS PER LAW. 6. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLO WED FOR STATISTICAL PURPOSES. 7. NOW WE COME TO REVENUE APPEAL IN ITA NO. 1920/AHD/ 2014 WHEREIN FOLLOWING GROUNDS HAVE BEEN TAKEN: 8. FACTS OF THE CASE ARE THAT ASSESSEE IS ENGAGED IN T HE BUSINESS OF EDUCATIONAL RESEARCH, PREPARATION OF PAPERS FOR EDUCATIONAL TES TS, DEVELOPMENT OF TEACHERS ETC. THEREFORE IN ORDER TO FULFILL ITS OBLIGATION, ASSESSEE HAS MADE FOLLOWING EXPENSES: SR.NO NAME INCENTIVE AMOUNT 1 DEEPALI SINHA 26,68,111 2 RAJENDRA SHAH 820,507 3. M.S.KRISHNAN 662,885 4 MINI LAL 281 ,492 5 RENNU MARWAH 254,072 6 MADHURI POTWAR 27,326 7 SNEHA WANI 72,703 8 ANITA CHOUDHARY 31,600 9 ARUL SELVAM 16,725 ITA NOS. 175 5 & 1920/AHD/2014 . A.Y. 2009-1 0 4 9. THEREAFTER ASSESSEE HAD PREFERRED FIRST STATUTORY A PPEAL BEFORE THE LD.CIT(A) WHO GRANTED RELIEF TO THE ASSESSEE. 10. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMPUGN ED ORDER. ASSESSEE IS IN THE BUSINESS SINCE LONG AND MAINTAINING HIS ACCOUNT S AS PER AS-2 AND HIS BOOKS ARE DULY AUDITED IN EARLIER YEAR, SIMILAR EXPENSES HAVE BEEN ALLOWED BY THE DEPARTMENT AND IN SUPPORT OF ITS CONTENTION, ASSESS EE HAS FILED VOLUMINOUS PAPER BOOK CONTAINING 363 PAGES WHEREIN ASSESSEE HA S ADDRESSED ALL THE GROUNDS WITH REGARD TO AFORESAID DISALLOWANCES MADE BY THE A.O. AND SUBSEQUENTLY RELIEF GIVEN BY THE LD. CIT(A). 11. IN THIS CASE, ASSESSEE HAS BEEN CONSISTENTLY FOLLOW ING THE SAME PRACTICE OF SHOWING THE REVENUE FROM ITS ACTIVITIES OF PREPARIN G PAPERS FOR EDUCATIONAL TESTS AND DEVELOPMENT OF TEACHERS AND EDUCATIONAL RESEARC H ETC. IT IS NOT POSSIBLE TO SHOW WORK IN PROGRESS IN EARLIER YEAR AS WELL AS SU BSEQUENT YEAR AND IN SUPPORT OF ITS CONTENTION, SAME OF THE CONTRACT SIGNED WITH THE PERSONS TO WHOM INCENTIVES PAYMENTS WERE MADE. ASSESSEE HAD ALSO PU RCHASED CONFIRMATION LETTER, COPIES OF AGREEMENT, PASSPORT PAN CARD ETC IN ORDER TO STRENGTHEN ITS CASE. 12. IN OUR CONSIDERED OPINION, LD. CIT(A) HAS PASSED RE ASONED ORDER AND SAME DOES NOT REQUIRE ANY KIND OF INTERFERENCE AT OUR EN D. 13. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMI SSED. ITA NOS. 175 5 & 1920/AHD/2014 . A.Y. 2009-1 0 5 14. IN THE COMBINED RESULT, APPEAL FILED BY THE ASSESSE E IS ALLOWED FOR STATISTICAL PURPOSES AND APPEAL FILED BY THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN OPEN COURT ON 29 - 07- 2019 SD/- SD/- (PRADIP KUMAR KEDIA) (MAHAVIR PRASAD) ACCOUNTANT MEMBER TRUE COPY JUDICIAL MEMBER AHMEDABAD: DATED 29 /07/2019 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD