Shri Manish P. Kiri, Ahmedabad V. The Dy.CIT (OSD) - I, Circle-4, Ahmedabad

ITA 2417/AHD/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 6268 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2011-2012
• Appeal Filed On: 28-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V K SINGH
• Assessee Lawyers: T P HEMANI
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) ITA. NO: 2417/AHD/2014 (ASSESSMENT YEAR: 2011-12) SHRI MANISH P. KIRI, 53,MANIKBAUG SOCIETY, S.M. ROAD, AMBAWADI, AHMEDABAD-380015 V/S THE DCIT (OSD)-I, CIRCLE- 4, AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AIGPK7830A APPELLANT BY : SHRI T.P. HEMANI, AR RESPONDENT BY : SHRI V.K. SINGH, SR. D.R. ( )/ ORDER DATE OF HEARING : 09 -01-201 8 DATE OF PRONOUNCEMENT : 11-01-2018 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST TH E ORDER OF THE LD. CIT(A)- VIII, AHMEDABAD DATED 27.06.2014 PERTAINING TO A.Y. 2011-12. ITA NO. 2417 /AHD/2014 . A.Y. 2011-12 2 2. THE SUM AND SUBSTANCE OF THE GRIEVANCE OF THE ASSES SEE IS THAT THE LD. CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 54,57,2 44/- MADE U/S 14A R.W.R. 8D OF THE ACT. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT DURIN G THE COURSE OF THE SCRUTINY ASSESSMENT PROCEEDINGS, THE A.O. NOTICED THAT THE A SSESSEE HAS RECEIVED AN AMOUNT OF RS. 17,21,707/- AS DIVIDEND INCOME WHICH WAS CLAIMED TO BE EXEMPT FROM TAX. THE A.O. FURTHER NOTICED THAT THE ASSESSEE HAS CLAIMED INTEREST EXPENSES OF RS. 91,02,491/-. THE A.O. FOUN D THAT THE ASSESSEE HAS NOT CLAIMED ANY EXPENDITURE INCURRED FOR EARNING EXEMPT INCOME. THE ASSESSEE WAS ASKED TO EXPLAIN WHY DISALLOWANCE SHOULD NOT BE MAD E U/S. 14A R.W.R. 8D OF THE ACT. IN ITS REPLY, THE ASSESSEE STRONGLY OBJECT ED FOR THE PROPOSED DISALLOWANCE CLAIMING THAT THE INTEREST INCOME EARN ED BY THE ASSESSEE IS MORE THAN THE INTEREST EXPENSES AND THEREFORE NO DISALLO WANCE NEED TO BE MADE U/S 14A OF THE ACT. THE EXPLANATION OF THE ASSESSEE DI D NOT FIND ANY FAVOUR WITH THE A.O. WHO PROCEEDED BY COMPUTING THE DISALLOWANC E ON ACCOUNT OF INTEREST EXPENDITURE AT RS. 54,57,244/-. 4. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) B UT WITHOUT ANY SUCCESS. 5. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE REITERA TED WHAT HAS BEEN STATED BEFORE THE LOWER AUTHORITIES. PER CONTRA, THE LD. D .R. STRONGLY SUPPORTED THE FINDINGS OF THE A.O. 6. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORD ERS OF THE AUTHORITIES BELOW. WE HAVE ALSO CONSIDERED THE RELEVANT DOCUMEN TARY EVIDENCES BROUGHT ON RECORD IN THE FORM OF PAPER BOOK IN THE LIGHT OF RULE 18(6) OF THE ITAT ITA NO. 2417 /AHD/2014 . A.Y. 2011-12 3 RULES. A PERUSAL OF THE INCOME STATEMENT OF THE ASS ESSEE SHOWS THAT UNDER THE HEAD INCOME FROM OTHER SOURCES, THE ASSESSEE HAS SHOWN INTEREST INCOME ON DEPOSIT AT RS. 1,36,52,091/-. FROM WHICH THE ASSES SEE HAS CLAIMED DEDUCTION OF INTEREST PAID AMOUNTING TO RS. 91,02,491/-. THE ASSESSEE HAS SHOWN TAXABLE INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES A T RS. 45,94,059/-. WE FURTHER FIND THAT THE ASSESSEE HAS INCURRED TOTAL I NTEREST EXPENDITURE OF RS. 3,85,43,423/- BUT HAS CLAIMED ONLY RS. 91,02,491/- WHICH MEANS THAT THE ASSESSEE HAS SUO MOTO DISALLOWED THE INTEREST EXPEN DITURE OF RS. 2.94 CRORES. AS MENTIONED ELSEWHERE, THE ASSESSEE HAS SHOWN INTERES T INCOME MORE THAN THE INTEREST EXPENDITURE, THEREFORE, NO DISALLOWANCE IS TO BE MADE U/S. 14A R.W.R. 8D OF THE ACT. THE CONCEPT OF NETTING OFF HAS BEEN APPROVED BY THE HONBLE SUPREME COURT IN THE CASE OF ACJ ASSOCIATED CAPSULE S PVT. LTD. 343 ITR 89. ONCE BENEFIT OF NETTING OF IS GRANTED, THERE REMAIN S NO INTEREST EXPENDITURE AND THEREFORE DISALLOWANCE U/S14A IS UNWARRANTED. WE AC CORDINGLY SET ASIDE THE FINDINGS OF THE LD. CIT(A) AND DIRECT THE A.O. TO D ELETE THE DISALLOWANCE OF RS. 54,27,244/-. 7. APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 11 - 01- 20 18 SD/- SD/- (MAHAVIR PRASAD) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY ACCOUNTANT MEMBER AHMEDABAD: DATED 11/01/2018 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT.