Adani Welspun Exploration Ltd., Ahmedabad V. The Income Tax Officer, Ward-1(1)(1), Ahmedabad

ITA 1948/AHD/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5842 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 27-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: VIJAY RANJAN; IRA KAPOOR ARS
• Keywords: Revenue expenditure; Capital expenditure
• Section: 14A

Judgement Text

, . . , IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD , , BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ./ I.T.A. NO.1948/AHD/2016 ( / ASSESSMENT YEAR : 2012-13) ADANI WELSPUN EXPLORATION LTD. ADANI HOUSE NR.MITHAKHALI SIX ROADS NAVRANGPURA AHMEDABAD-380 009 / VS. THE ITO WARD-1(1)(1) AHMEDABAD # ./ ./ PAN/GIR NO. : AAFCA 3786 P ( #& / APPELLANT ) .. ( '#& / RESPONDENT ) #&( / APPELLANT BY : SHRI VIJAY RANJAN, & MS.IRA KAPOOR, ARS '#&)( / RESPONDENT BY : MS. PRAJNA PARAMITA, SR.DR *+), / DATE OF HEARING 08/03/2018 -./0), / DATE OF PRONOUNCEMENT 20/ 03 /2018 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTAN CE OF THE ASSESSEE AGAINST THE APPELLATE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-1, AHMEDABAD [CIT(A) IN SHORT] DATED 24/05/2016 ITA NO.1948/AHD /2016 ADANI WELSPUN EXPLORATION LTD. VS. ITO ASST.YEAR 2012-13 - 2 - ARISING IN THE ASSESSMENT ORDER PASSED UNDER S.143(3) OF T HE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT') D ATED 17/03/2015 RELEVANT TO ASSESSMENT YEAR (AY) 2012-13. 2. THE SOLITARY ISSUE IN THE CAPTIONED APPEAL INVOL VES DISALLOWANCE OF RS.20,90,781/- UNDER S.14A OF THE ACT AGAINST TAX-F REE DIVIDEND INCOME RECEIVED BY THE ASSESSEE. 3. WHEN THE MATTER WAS CALLED FOR HEARING, THE LD.A R FOR THE ASSESSEE AT THE OUTSET REFERRED TO THE FINANCIAL ST ATEMENTS AND PROFIT & LOSS ACCOUNT IN PARTICULAR AND SUBMITTED THAT THE A SSESSEE HAS NOT INCURRED ANY REVENUE EXPENDITURE DURING THE YEAR WH ICH CALLS FOR DISALLOWANCE. THE LD.AR POINTED OUT THAT ENTIRE EX PENDITURE INCURRED IS IN THE NATURE OF CAPITAL EXPENDITURE AND HAS BEEN C APITALIZED AS CAPITAL WORK IN PROGRESS BEING PROJECT DEVELOPMENT EXPENDIT URE - EXPLORATION PHASE. THE LD.AR SECONDLY ARGUED THAT THE DIVIDEND INCOME HAS BEEN GENERATED FROM INVESTMENTS IN MUTUAL FUNDS WHERE TH E ADMINISTRATIVE EXPENDITURE ARE INCURRED BY THE FUND ARE FACTORED I N THE COST PRICE. THE LD.AR THIRDLY SUBMITTED THAT DIVIDEND FROM MUTUAL F UNDS HAVE BEEN REDUCED FROM THE COST OF CAPITAL WORK-IN-PROGRESS ( WIP) AND THEREFORE ANY DISALLOWANCE MADE UNDER S.14A OF THE ACT WOULD REQUIRE TO BE CORRESPONDINGLY ADJUSTED IN THE CAPITAL WORK-IN-PRO GRESS ITEM OF THE FINANCIAL STATEMENT. ITA NO.1948/AHD /2016 ADANI WELSPUN EXPLORATION LTD. VS. ITO ASST.YEAR 2012-13 - 3 - 4. THE LD.DR RELIED UPON THE ORDER OF THE CIT(A). 5. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND ME RIT IN THE APPEAL OF THE ASSESSEE ON FIRST GLANCE. IN THE ABSENCE OF ANY EXPENDITURE INCURRED OF REVENUE NATURE, THE DISALLOWANCE OF THE SAME AND ADDITION TO THE TOTAL INCOME IS NOT PERMISSIBLE. SECTION 14A H AS NO APPLICATION FOR ADJUSTMENTS TOWARDS CAPITAL EXPENDITURE. THE SCOPE AND SPHERE OF SECTION 14A OF THE ACT IS RESTRICTED TO THE COMPUTA TION OF TOTAL INCOME WHICH MEANS COMPUTATION OF CHARGEABLE INCOME. ITS SCOPE DOES NOT EXPEND TO ENCOMPASS EXPENDITURE OF CAPITAL NATURE W HICH HAS BEARING IN COMPUTATION OF CHARGEABLE INCOME. THEREFORE, WE FI ND CONSIDERABLE FORCE IN THE PLEA OF THE ASSESSEE. 6. ACCORDINGLY, WE DIRECT THE AO TO REVERSE THE EFF ECT OF DISALLOWANCE MADE UNDER S.14A OF THE ACT. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . THIS ORDER PRONOUNCED IN OPEN COURT ON 20/ 03 /2018 SD/- SD/- ( ) ( ) ( MAHAVIR PRASAD ) ( PRADIP KUMAR KEDIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 20/ 03 /2018 4 ..*,.*../ T.C. NAIR, SR. PS ITA NO.1948/AHD /2016 ADANI WELSPUN EXPLORATION LTD. VS. ITO ASST.YEAR 2012-13 - 4 - !'#' / COPY OF THE ORDER FORWARDED TO : 1. #& / THE APPELLANT 2. '#& / THE RESPONDENT. 3. 567, 8, / CONCERNED CIT 4. 8, ( ) / THE CIT(A)-1, AHMEDABAD 5. 9:;,*67 , 670 , 5 / DR, ITAT, AHMEDABAD 6. ;<+ / GUARD FILE. / BY ORDER, '9 ,, //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 8.3.18 (DICTATION-PAD 5-PA GES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 9.3.18 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.20.3.18 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 20.3.18 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER