TRIMURTY COLONIZERS & BUILDING P LTD., Jaipur V. INCOME TAX OFFICER, Jaipur

ITA 191/JPR/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1315 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 9 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 08-02-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ROONIPAL
• Keywords: Earning of tax free income; Rule 8D
• Section: 14A

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S,B JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA. NO. 191/JP/2018 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2013-14 M/S TRIMURTY COLONIZERS & BUILDERS PVT. LTD., 601, GEETA ENCLAVE, VINOBA MARG, C-SCHEME, JAIPUR. CUKE VS. THE ITO, WARD-6(4), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAACT 6613 K VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI ROHAN SOGANI (C.A.) JKTLO DH VKSJ LS @ REVENUE BY : SMT. ROONIPAL (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 05/12/2019 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 06/12/2019 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD. CIT(A)-II, JAIPUR DATED 14.11.2017 FOR THE ASSESSME NT YEAR 2013-14 WHEREIN THE SOLE GROUND RAISED BY THE ASSESSEE RELA TED TO SUSTENANCE OF DISALLOWANCE OF RS. 1,49,445/- U/S 14A R/W RULE 8D( 2)(III). 2. DURING THE COURSE OF HEARING, THE LD AR SUBMITTE D THAT THE ASSESSEE HAD MADE INVESTMENT IN THE PREVIOUS FINANC IAL YEARS IN M/S TRIMURTY LANDCON INDIA (P) LTD., SBBJ AND A PARTNER SHIP FIRM. ALL THE INVESTMENTS WERE MADE OUT OF INTEREST FREE FUNDS AV AILABLE WITH THE ITA NO. 191/JP/2018 M/S TRIMURTY COLONIZERS & BUILDERS PVT. LTD. VS. I TO 2 ASSESSEE. THERE IS NO EXPENDITURE WHICH HAS BEEN IN CURRED BY THE ASSESSEE IN EARNING THE EXEMPT INCOME. IT WAS FURTH ER SUBMITTED THAT IT IS A SETTLED LEGAL PROPOSITION OF LAW THAT THE DISA LLOWANCE MADE BY THE ASSESSING OFFICER CANNOT EXCEED THE EXEMPT INCOME A ND IN THE INSTANT CASE, THE TOTAL EXEMPT INCOME WHICH HAS BEEN EARNED BY THE ASSESSEE IS ONLY 7,109/- AGAINST WHICH RS. 5,67,268 WAS DISA LLOWED BY THE ASSESSING OFFICER AND WHICH HAS BEEN RESTRICTED TO RS 149,445 BY THE LD CIT(A). IN SUPPORT, RELIANCE WAS ALSO PLACED ON THE COORDINATE BENCH DECISION IN CASE OF ACIT VS. M/S MAHINDRA WORLD CIT Y (JAIPUR) LTD. (IN ITA NO. 697/JP/2018 DATED 04.02.2019) WHEREIN IT WAS HELD AS UNDER:- 12. THE DISALLOWANCE ON ACCOUNT OF COMMON/INDIRECT ADMINISTRATIVE EXPENDITURE BEING 0.5% OF THE AVERAG E INVESTMENT AS PER RULE 8D(2)(III) OF THE RULES. SINCE THE DIVI DEND INCOME DURING THE YEAR IS ONLY RS. 1,81,392/-, THEREFORE, IN VIEW OF THE BINDING PRECEDENTS ON THIS ISSUE, THE DISALLOWANCE MADE U/S 14A READ WITH RULE 8D(2)(III) OF THE RULES, CANNOT BE M ORE THAN THE EXEMPT INCOME. THE HONBLE DELHI HIGH COURT IN THE CASE OF CHEMINVEST LTD. V. COMMISSIONER OF INCOME-TAX-IV 37 8 ITR 33 HAS HELD THAT IF THERE IS NO EXEMPT INCOME EARNED B Y THE ASSESSEE DURING THE YEAR, NO DISALLOWANCE CAN BE MA DE ON ACCOUNT OF ADMINISTRATIVE EXPENDITURE, THEREFORE, W E FIND THAT THE DISALLOWANCE RESTRICTED BY THE LD. CIT(A) TO THE EX TENT OF EXEMPT INCOME IS PROPER AND JUSTIFIED. 3. PER CONTRA, THE LD. DR HAS RELIED ON THE FINDING OF THE LOWER AUTHORITIES. IT WAS SUBMITTED THAT THE ASSESSEE MUS T HAVE INCURRED ITA NO. 191/JP/2018 M/S TRIMURTY COLONIZERS & BUILDERS PVT. LTD. VS. I TO 3 CERTAIN EXPENDITURE TO TAKE CARE OF ITS INVESTMENT AND THEREFORE, IT CANNOT BE ACCEPTED THAT NO EXPENDITURE HAS BEEN INC URRED BY THE ASSESSEE. IT WAS ACCORDINGLY SUBMITTED THAT THE LD. CIT(A) HAS RIGHTLY SUSTAINED THE DISALLOWANCE UNDER RULE 8D(2)(III) OF THE IT RULES. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PURSUED THE MATERIAL AVAILABLE ON RECORD. UNDISPUTEDLY, THE INVESTMENTS HAVE BEEN MADE IN THE PREVIOUS FINANCIAL, THERE IS NO FRESH INVESTMEN T WHICH HAS BEEN MADE DURING THE YEAR AND INCOME WHICH HAS BEEN CLAI MED AS EXEMPT IS RS 7,109. FOLLOWING THE BINDING PRECEDENTS ON THE ISSUE AS ALSO HELD BY THE COORDINATE BENCH IN CASE OF ACIT VS. M/S MAHIND RA WORLD CITY (JAIPUR) LTD. (SUPRA), THE DISALLOWANCE MADE U/S 14 A READ WITH RULE 8D(2)(III) OF THE RULES CANNOT BE MORE THAN THE EXE MPT INCOME. THEREFORE, THE DISALLOWANCE MADE BY THE ASSESSING O FFICER IS HEREBY RESTRICTED TO THE EXTENT OF EXEMPT INCOME AND THE B ALANCE DISALLOWANCE IS HEREBY BY DIRECTED TO BE DELETED. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 06/12/2019. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 06/12/2019. *SANTOSH VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: ITA NO. 191/JP/2018 M/S TRIMURTY COLONIZERS & BUILDERS PVT. LTD. VS. I TO 4 1. VIHYKFKHZ@ THE APPELLANT- M/S TRIMURTY COLONIZERS & BUILDERS P VT. LTD., JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- ITO, WARD-6(4), JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE { ITA NO. 191/JP/2018} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR