The Dy. CIT., Circle-2(1)(1), Ahmedabad V. Gujarat State Financial Corporation , Gandhinagar

ITA 1779/AHD/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 2121 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-10-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 09-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SU RENDRA KUMAR
• Assessee Lawyers: P.F. JIAN
• Keywords: Earning of tax free income; Rule 8D
• Section: 14A; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH (BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER & SHRI AMARJIT SINGH, ACCOUNTANT MEMBER) ITA. NO: 1779/AHD/2018 (ASSESSMENT YEAR: 2015-16) THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE- 2(1)(1), AHMEDABAD V/S GUJARAT STATE FINANCIAL CORPORATION, BLOCK NO. 10, SECTOR-11, UDHYOG BHAVAN, GANDHINAGAR (APPELLANT) (RESPONDENT) PAN: AABCG2924M APPELLANT BY : SHRI SURENDRA KUMAR CIT, D.R. & MUDIT NAGPAL, SR . D.R. RESPONDENT BY : SHRI P.F. JIAN, A.R. ( )/ ORDER DATE OF HEARING : 18 -09-201 9 DATE OF PRONOUNCEMENT : 22 -10-2019 PER MAHAVIR PRASAD, JUDICIAL MEMBER 1. THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER OF THE LD. CIT(A)-2, AHMEDABAD DATED 31.05.2018 PERTAINING TO A.Y. 2015-16 AND FOLLOWING GROUNDS HAVE BEEN TAKEN: ITA NO. 1779 /AHD/2018 . A.Y. 2015-16 2 THE LD.CLT(A) HAS ERRED IN LAW AND ON FACTS IN DELE TING THE DISALLOWANCE U/S 14A OF THE IT ACT 1.1 THE LD CIT(A) HAS FAILED TO APPRECIATE THAT THE ONUS LIES ON THE ASSESSEE TO DEMONSTRATE THAT IT HAD INTEREST FREE FUNDS AVAILAB LE WITH IT FOR MAKING SUCH INVESTMENT AND NOT OTHER WAY AROUND. 1.2 THE LD CIT(A) HAS FAILED TO APPRECIATE THAT IN THE CASE OF MIXED FUNDS, THEORY OF APPORTIONMENT OF INTEREST IS APPLICABLE. REFEREN CE IN THIS REGARD IS MADE TO THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE O F MAXOPP INVESTMENT LTD VS CIT ( CIVIL APPLICATION NO. 104-109 OF 2018). 1.3 THE LD CIT (A) HAS FAILED TO APPRECIATE THAT AS PER SECTION 106 OF EVIDENCE ACT, WHEN ANY FACT IS ESPECIALLY WITHIN THE KNOWLED GE OF OF ANY PERSON, THE BURDEN OF PROVING THE FACT IS UPON HIM. 2. THE FACTS OF THE CASE ARE THAT ON VERIFICATION OF B ALANCE SHEET, IT IS NOTICED THAT THE ASSESSEE COMPANY HAS RECEIVED DIVIDEND INCOME O N SHARE OF RS. 6,66,021/-. THEREAFTER A NOTICE WAS ISSUED TO THE ASSESSEE WHET HER ANY EXPENSES HAVE BEEN CLAIMED IN RESPECT OF EXEMPT INCOME IN RESPONSE TO SUCH NOTICE WAS FILED DETAILS OF INVESTMENT IN SHARES AND WORKING OF DISA LLOWANCE U/S. 14A R.W.R. 8D. BUT ASSESSING OFFICER DID NOT FIND ASSESSEE CALCULA TION AS PER LAW AND MADE DISALLOWANCE U/S. 14A TO THE TUNE OF RS. 6,08,85,03 6/-. 3. THEREAFTER ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A) WHO GRANTED RELIEF TO THE ASSESSEE. 4. NOW REVENUE HAS COME BEFORE US BY WAY OF SECOND APP EAL. 5. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMPUGN ED ORDER. IN THIS CASE, LD. A.O. HAS MADE DISALLOWANCE U/S. 14A OF RS. 6,08,85, 036/- INVOKING THE PROVISION OF RULE 8D ON THE EXEMPTED INCOME OF RS. 6,66,021/-. THE ASSESSEE SUO MOTO HAS MADE DISALLOWANCE OF RS. 13,43,258/- I N THE COMPUTATION OF INCOME. IT IS UNDISPUTED FACT THAT ASSESSEE HAS EAR NED DIVIDEND INCOME OF RS. ITA NO. 1779 /AHD/2018 . A.Y. 2015-16 3 6,66,021/- AND HAS HELD IN THE CASE OF CIT VS. COR RTECH ENERGY PVT. LTD. REPORTED IN (2014) 223 TAXMANN.COM 0130. THE HONBL E GUJARAT HIGH COURT HAS HELD THAT THERE CANNOT BE DISALLOWANCE U/S. 14A MORE THAT EXEMPTED INCOME. 6. IN OUR CONSIDERED OPINION, LD. CIT(A) HAS PASSED DE TAILED AND REASONED ORDER AND SAME DOES NOT REQUIRE ANY KIND OF INTERFERENCE AT OUR END. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 22 - 10- 2019 SD/- SD/- (AMARJIT SINGH) (MAHAVIR PRASAD) ACCOUNTANT MEMBER TRUE COPY JUDICIAL MEMBER AHMEDABAD: DATED 22/10/2019 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