RSH Global (P) Ltd., , Kolkata V. DCIT, Circle - 8(2), Kolkata , Kolkata

ITA 1759/KOL/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5284 (ITAT-KOLKATA)
• Duration Of Justice: 9 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-05-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 14-08-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RADHEY SHYAM CIT LD
• Assessee Lawyers: SUBASH AGARWAL LD
• Keywords: Rule 8D
• Section: 143(3); 14A; 201; 68

Judgement Text

1 ITA NO. 1759/ KOL/2018 A.Y 2013 - 14 M/S. RSH GLOBAL P.LTD IN THE INCOME TAX APPELLATE TRIBUNAL D , BENCH KOLKATA BEFORE S HRI A.T. VARKEY , JM & D R .A.L.S AINI , AM ITA NO. 1 759 /K OL/201 8 (A.Y: 20 1 3 - 14 ) RSH GLOBAL (P) LTD (FORMERLY : RATNASAGAR HERBALS (P) LTD PAN:AADCR0379P VS. D.C.I.T, CIR - 8(2), KOLKATA ( / APPELLANT/ ASSESSEE ) .. ( / RESPONDENT /DEPARTMENT ) APPELLANT/ ASSESSEE BY : SHRI SUBASH AGARWAL, ADVOCATE, LD.AR RESPONDENT/ DEPARTMENT BY : SHRI RADHEY SHYAM, CIT, LD.DR / DATE OF HEARING : 14 - 03 - 2019 / DATE OF PRONOUNCEMENT : 2 4 - 0 5 - 201 9 / O R D E R PER DR. ARJUN LAL SAINI, AM: THE CAPTIONED APPEAL FILED BY THE ASSESSEE , PERTAINING TO ASSESSMENT YEAR 20 1 3 - 14 , IS DIRECTED AGAINST THE ORDER PASSED BY THE COMMISSIONER OF INCOME - TAX (APPEALS) - 3 , KOLKATA IN APPEAL NO . 11405/CIT(A) - 3,KOL/WARD - 8(3)/16 - 17 , DATED 28 - 06 - 2018 , WHICH IN TURN ARISE S OUT OF AN ORDER PASSED BY THE ASSESSING OFFICER U/S. 143(3) OF THE INCOME - T AX ACT, 1961 (IN SHORT, THE ACT ), DATED 28 - 03 - 2016 . 2. GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE AS FOLLOWS: - 1. THAT THE LD CIT(A) - 3 GROSSLY ERRED IN FACT AS WELL AS IN LAW IN CONFIRMING THE AD DITION OF RS.99 , 774/ - / - MADE BY THE LD AO U/S 14A READ W ITH RULE 8 D . 2. THAT THE LD CIT(A) - 3 KOLKATA ERRED IN FACT AS WELL AS IN LAW IN CONFIRMING ADDITION OF RS. 15,83,078/ - ON ACCOUNT OF INTEREST PAID TO LOAN CREDITORS ON THE GRO UND THAT THE SAID LOAN CREDITORS WERE HELD TO BE NOT GENUINE IN EARLIER ASSES SMENT YEAR INS PITE OF THE FACT THAT ALL THE CREDENTIALS REQUIRED TO PROVE THE GENUINENESS OF THE SAME DULY FILED. 3. THAT THE APPELLANT CRAVES TO ADD, MODIFY, AMEND AND/OR SUBSTITUTE ANY OTHER GRO UND BEFORE HEARING OF THE APPEAL. 2 ITA NO. 1759/ KOL/2018 A.Y 2013 - 14 M/S. RSH GLOBAL P.LTD 3 . GROUND NO. 1 RAISED BY THE ASSESSEE RE LATES TO DISALLOWANCE MADE BY THE AO U/S. 14A/R.W.RULE 8D OF THE I.T RULES, 1962. 4. AFTER GIVING OUR THOUGHTFUL CONSIDERATION TO THE SUBMISSION OF THE PARTIES AND PERUSING THE JUDICIAL DECISIONS RELIED UPON BY THE LD. COUNSEL , WE FIND THAT THE ISSUE INVOLVED IN THE PRESENT GROUND IS NO LONGER RES INTEGRA. WE NOTE THAT A S FAR AS DISALLOWANCE OF INTEREST EXPENSES UNDER RULE 8D(2)(II) OF THE RULES IS CONCERNED, I T HAS BEEN HELD BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS RELIANCE UTILITIES AND POWER LTD. (2009) 313 I TR 340 (BOM) AND CIT VS HDFC BANK LTD (2014) 49 TAXMANN.COM 335 (BOM) THAT WHERE INTEREST FREE FUNDS AND OVERDRAFT AND LOANS TAKEN ARE AVAILABLE WITH AN ASSESSEE, THEN A PRESUMPTION WOULD ARISE T HAT THE INVESTMENTS WOULD BE OUT OF THE INTEREST FREE FUNDS GENERATED OR AVAILABLE WITH THE ASSESSEE, IF THE INTEREST FREE FUNDS WERE SUFFICIENT TO MEET THE INVESTMENTS. THE AFORESAID VIEW HAS BEEN FOLLOWED BY THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF PRINCIPAL CIT VS RASOI LTD. IN ITAT N O.109 OF 2016 IN GA NO.633 OF 2016 JUDGMENT DATED 15.02.2017. IN VIEW OF THE AFORESAID LEGAL POSITION WE DIRECT THE ASSESSING OFFICER TO EXAMINE THE ASSESSEE`S OWN FUNDS AND RESERVES AND IF THE AO FINDS THAT THE INTERE ST FREE FUNDS WERE SUFFICIENT TO MEET THE INVESTMENTS , NO DISALLOWANCE WOULD BE MADE UNDER RULE 8D(2) (II) OF THE RULES. AS FAR AS RULE 8D(2)(III) OF THE RULES IS CONCERNED , IT HAS BEEN HELD BY THE COORDINATE BENCH OF ITAT KOLKATA IN THE CASE OF DCIT VS REI AGRO LTD. I N ITA NO.1811/KOL/2012 DATED 14.05.2013 THAT IT IS ONLY THE INVESTMENT WHICH YIELDED TAX FREE INCOME THAT SHOULD BE CONSIDERED FOR WORKING OUT THE AVERAGE VALUE OF INVESTMENT WHILE APPLYING THE RULE 8D(2)(III) OF THE RULES. THIS ORDER OF TH E TRIBUNAL HAS BEEN CONFIRMED BY THE DECISION OF HONBLE CALCUTTA HIGH COURT IN G.A. NO.3022 OF 2013 JUDGEMENT DATED 23.12.2013. IN VIEW OF THE AFORESAID LEGAL POSITION WE DIRECT THE ASSESSING OFFICER TO EXCLUDE INVESTMENTS WHICH HAD NOT YIELDED ANY EXEMP T DIVIDEND INCOME DURING THE PREVIOUS YEAR WHILE WORKING OUT THE AVERAGE VALUE OF INVESTMENTS FOR THE PURPOSE OF APPLYING RULE 8D(2)(III) OF THE RULES . WE HOLD AND DIRECT ACCORDINGLY. 3 ITA NO. 1759/ KOL/2018 A.Y 2013 - 14 M/S. RSH GLOBAL P.LTD 5 . GROUND N O. 2 RAISED BY THE ASSESSE E RELATES TO ADDITION OF RS.15,83, 078/ - ON ACCOUNT OF INTEREST PAID TO LOAN CREDITORS. 6 . AT THE OUTSET ITSELF THE LD. COUNSEL FOR THE ASSESSEE AS WELL AS LD.DR FOR THE REVENUE BOTH HAVE AGREED THAT THE ASSESSE E HAS NOT SUBMITTED SUFFICIENT AND REQUIRED DOCUMENTS AND EVIDENCES , BEFORE THE AO, TO PROVE THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE CREDITORS. THEREFORE, THE AO DISALLOWED THE INTEREST PAID TO LOAN CREDITORS AND AMOUNT RECEIVED FROM LOAN CREDITORS U/S. 68 OF THE ACT. THE LD. COUNSEL SUBMITTED BEFORE US THAT NOW THE ASS ESSE E WISHES TO PRODUCE RELEVANT DOCUMENTS AND EVIDENCES TO PROVE THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE CREDITORS , THEREFORE, ONE MORE OPPORTUNITY SHOULD BE GIVEN TO ASSESSEE TO PLEAD ITS CASE BEFORE A.O. 7 . BEFORE US THE LD. COUNSEL FOR THE ASSESSE E HAS ALSO SUBMITTED THAT ASSESSEE HAS FURNISHED THE RELEVANT DETAILS I.E CONFIRMATION OF BANK STATEMENT , ROC DETAILS BEFORE THE AO . NEITHER THE AO NOR THE LD. CIT(A) HAS CONSIDERED THE SAME. WE NOTE THAT DETAILS AS FILED BY THE ASSESSE E HA VE NOT BEEN CONSIDERED IN ANY OF THE TWO PROCEEDINGS I.E. NEITHER BEFORE THE AO NOR BEFORE THE LD.CIT(A). THEREFORE, WE DEEM IT FIT AND PROPER IN THIS PECULIAR FACTS AND CIRCUMSTANCES THAT LARGER INTEREST OF JUSTICE WOULD BE SER VED IN CASE LD. AO DECIDES THE ENTIRE ISSUE ONCE AGAIN TAKING INTO CONSIDERATION THE DETAILS WHICH ALREADY SUBMITTED BY THE ASSESSE E BEFORE HIM. WE ALSO DIRECT THE ASSESSE E TO SUBMIT THE EVIDENCES/EXPLANATION TO PROVE ITS BOANFIDE. GROUND NO. 2 RAISED BY T HE ASSESSE IS ALLOWED FOR STATISTICAL PURPOSE. 8 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 2 4 - 0 5 - 2019 . S D / - ( A.T VARKEY ) S D / - (A. L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER /KOLKATA; DATED: 2 4 /0 5 /201 9 4 ITA NO. 1759/ KOL/2018 A.Y 2013 - 14 M/S. RSH GLOBAL P.LTD **PP , SR.PS / COPY OF THE ORDER FORWARDED TO : 1. / THE ASSESSEE / APPELLANT: M/S. RSH GLOBAL (P) LTD (FORMERLY: RATNASAGAR HERBATLS P.LTD 119 PARK ST,, KOLKATA - 16. 2. / THE RESPONDENT / DEPARTMENT: THE DCIT, CIR - 8(2), AAYKAR BHAWAN, 4 TH FLOOR, P - 7 CHOWRINGHEE SQ., KOLKATA - 69. 3. ( ) / THE CIT(A) 4. / CIT 5. , , / DR, ITAT, KOLKATA 6. / GUARD FILE. //TRUE COPY/ BY ORDER ASSISTANT REGISTRAR I.T.A.T, KOLKATA BENCHES,KOLKATA .