Nirayu Private Limited , Bangalore V. Deputy Commissioner of Income TAx Circle-12(2), Bangalore

ITA 1804/BANG/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7063 (ITAT-BANGALORE)
• Duration Of Justice: 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 07-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC - B BENCH : BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER ITA NO. 1 804 /BANG/201 7 ASSESSMENT YEAR : 2009 - 10 M/S. NIRAYU PVT. LTD., 1 ST MAIN ROAD, NEAR RAILWAY STATION, WHITEFIELD, BANGALORE 560 066. PAN: AAACN 7427K VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 12(2), BANGALORE. APPELLANT RESPONDENT ASSESSEE BY : SHRI RAVISHANKAR, ADVOCATE REVENUE BY : SHRI P.V. PRADEEP KUMAR, ADDL. CIT (DR) DATE OF HEARING : 06 .1 2 .2017 DATE OF PRONOUNCEMENT : 08 .1 2 .2017 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER; THIS APPEAL IS FILED BY THE ASSESSEE WHICH IS DIREC TED AGAINST THE ORDER OF LD. CIT(A) 5, BANGALORE DATED 31.05.2017 FOR ASSESSMENT YEAR 2009-10. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER. 1. RE: DISALLOWANCE UNDER SECTION 14A OF RS.15,57,3 50/-: 1.1 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) GROSSLY ERRED IN UPHOLDING THE DISAL LOWANCE MADE BY THE ASSESSING OFFICER UNDER SECTION 14A READ WIT H RULE 8D OF RS.15,57,350/-. 1.2 THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED TH AT THE ASSESSING OFFICER HAD FAILED TO REACH PROPER SATISF ACTION THAT THE AMOUNT DISALLOWED BY THE APPELLANT OF RS.20 04,447/ - WAS NOT ADEQUATE. 1.3 THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED TH AT OWN FUNDS/INTEREST FREE FUNDS OUGHT TO BE FIRST CONSIDE RED FOR THE PURPOSE OF INVESTMENTS AND ONLY BALANCE INVESTMENTS. IF ANY OU GHT TO BE CONSIDERED OUT OF BORROWED FUNDS. 1.4 WITHOUT PREJUDICE TO THE ABOVE , THE LEARNED CIT(A) GROSSLY ERRED IN CONSIDERING TOTAL ASSETS AT RS.36,07,13,76 0/- INSTEAD OF RS.38,84,72,831 AS SUBMITTED BY THE APPELLANT IN IT S SUBMISSIONS. ITA NO. 1804/BANG/2017 PAGE 2 OF 3 1.5 WITHOUT PREJUDICE TO THE ABOVE , DISALLOWANCE UNDER SECTION 14A OUGHT TO BE SUBSTANTIALLY REDUCED. 2. THE APPELLANT CRAVES LEAVE TO ADD TO, ALTER, AME ND OR DELETE ANY GROUND OF APPEAL. 3. AT THE VERY OUTSET, IT WAS SUBMITTED BY LD. AR O F ASSESSEE THAT AS PER DECISION OF DELHI SPECIAL BENCH OF THE TRIBUNAL RENDERED IN THE CASE OF ACIT VS. VIREET INVESTMENT PVT. LTD. AS REPORTED IN 154 DTR 241 (DE LHI) (SPECIAL BENCH), IT WAS HELD IN PARA NO. 11.18 THAT THAT THE MATTER IS REST ORED BACK TO THE FILE OF AO FOR RECOMPUTING THE DISALLOWANCE U/S. 14A IN TERMS OF O BSERVATIONS IN PARA NO. 11.16 AND 11.17. HE POINTED OUT THAT AS PER PARA N O. 11.16, IT WAS HELD THAT ONLY THOSE INVESTMENTS ARE TO BE CONSIDERED FOR COM PUTING AVERAGE VALUE OF INVESTMENTS WHICH YIELDED EXEMPT INCOME DURING THE YEAR. HE ALSO SUBMITTED THAT ONLY IN RESPECT OF THREE INVESTMENTS, DIVIDEND WAS RECEIVED DURING THE PRESENT YEAR AND THEREFORE, ONLY THOSE THREE INVEST MENTS SHOULD BE CONSIDERED IN THE PRESENT YEAR FOR THE PURPOSE OF MAKING DISAL LOWANCE U/S. 14A OF THE IT ACT. THE LD. DR OF REVENUE SUBMITTED THAT THE MATT ER MAY BE RESTORED BACK TO THE FILE OF AO FOR FRESH DECISION IN THE LIGHT OF T HIS DECISION OF SPECIAL BENCH OF THE TRIBUNAL. 4. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND REST ORE BACK THIS ISSUE TO THE FILE OF AO FOR FRESH DECISION IN THE LIGHT OF THIS DECISION OF SPECIAL BENCH OF THE TRIBUNAL CITED BEFORE US BY THE LD. AR OF ASSESSEE. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. SD/- (ARUN KUMAR GARODIA) ACCOUNTANT MEMBER BANGALORE, DATED, THE 08 TH DECEMBER, 2017. /MS/ ITA NO. 1804/BANG/2017 PAGE 3 OF 3 COPY TO: 1. APP ELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.