The ACIT, Circle-4, Ahmedabad V. Galaxy Real Estate Developers Pvt.Ltd., Ahmedabad

ITA 2429/AHD/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1588 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 03-05-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 31-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY RANJAN
• Assessee Lawyers: A K
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH (BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER & SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER) ITA. NO: 2313 & 2429/AHD/2012 (ASSESSMENT YEAR: 2009-10) GALAXY REAL ESTATE DEVELOPERS PVT. LTD. 4 TH 10 TH FLOOR, COMMERCE HOUSE NR. JUDGES BUNGLOW BODAKDEV, AHMEDABAD ACIT CIRCLE-4, AHMEDABAD V/S V/S ACIT CIRCLE-4, AHMEDABAD GALAXY REAL ESTATE DEVELOPERS PVT. LTD. 4 TH 10 TH FLOOR, COMMERCE HOUSE NR. JUDGES BUNGLOW BODAKDEV, AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AABCG4180H APPELLANT BY : SHRI VIJAY RANJAN, AR RESPONDENT BY : SHRI A.K. PANDE, SR. D.R. ( )/ ORDER DATE OF HEARING : 03 -05-2 016 DATE OF PRONOUNCEMENT : 04 -05-2016 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: ITA NO. 2313 & 2429/AHD/2012 A.Y. 2009-10 2 1. ITA NOS. 2313 & 2429/AHD/2012 ARE CROSS APPEALS BY THE ASSESSEE AND THE REVENUE DIRECTED AGAINST THE VERY SAME ORDE R OF THE LD. CIT(A)-VIII, AHMEDABAD DATED 30.08.2012 PERTAINING TO A.Y. 2009-10. 2. SINCE THE FACTS IN ISSUES RELATE TO THE COMMON GRIE VANCE, BOTH THESE APPEALS WERE HEARD TOGETHER AND ARE DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE A SSESSEE IS A BUILDERS AND DEVELOPERS AND TRADING IN CLOTH FABRIC. 4. THE RETURN FOR THE YEAR UNDER CONSIDERATION WAS SEL ECTED FOR SCRUTINY ASSESSMENT AND ACCORDINGLY STATUTORY NOTICES WERE I SSUED AND SERVED UPON THE ASSESSEE. 5. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PROCEE DINGS, THE A.O NOTICED THAT THE ASSESSEE HAS MADE INVESTMENT IN SH ARES AND OTHERS AMOUNTING TO RS. 17.02 CRORES. THE A.O FURTHER OBSE RVED THAT THE ASSESSEE IS NOT ABLE TO JUSTIFY THAT THE INVESTMENT MADE IN SHARES IS FROM ITS OWN FUND OR FROM THE FUNDS ON WHICH NO INT EREST PAYMENT IS MADE. THE A.O FURTHER OBSERVED THAT THE ASSESSEE HA S FAILED TO FURNISH AND TO PROVE NEXUS FROM WHICH IT CAN BE ESTABLISHED THAT THE INVESTMENT MADE IN SHARES ARE FROM ITS OWN FUND OR FROM NON INTEREST BEARING FUND. 6. INVOKING THE PROVISIONS OF SECTION 14A READ WITH RU LE 8D, THE A.O COMPUTED THE DISALLOWANCE AT RS. 88,07,624/-. ITA NO. 2313 & 2429/AHD/2012 A.Y. 2009-10 3 7. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) A ND REITERATED ITS CONTENTION THAT IT HAS SUFFICIENT OWN FUNDS FOR THE INVESTMENTS. IT WAS FURTHER BROUGHT TO THE NOTICE OF THE LD. CIT(A) THA T THE INVESTMENT IN SHARES OF KALUPUR CO-OPERATIVE BANK WHEREFROM DIVID END INCOME HAS BEEN EARNED IS NOT A TAX-FREE INCOME BUT IT HAS BEE N SUBJECTED TO TAXATION. THE LD.CIT(A) WAS CONVINCED WITH THIS CLA IM OF THE ASSESSEE. IT WAS ALSO BROUGHT TO THE NOTICE OF THE LD. CIT(A) THAT THE ASSESSEE IS HAVING INTEREST INCOME AND, THEREFORE, INTEREST EXP ENDITURE SHOULD BE NETTED OF WITH THE INTEREST INCOME AND, THEREFORE, DISALLOWANCE, IF ANY, SHOULD BE MADE U/S. 14A OF THE ACT. THE LD. CIT(A) WAS ALSO CONVINCED WITH THIS CLAIM OF THE ASSESSEE AND DIRECTED THE A. O TO RE-COMPUTE THE DISALLOWANCE. 8. AFTER CONSIDERING THE FACTS AND SUBMISSIONS , THE LD. CIT(A) RESTRICTED THE DISALLOWANCE TO RS. 55,08,541/- AND DELETED THE ADDITION OF RS. 32,99,083/-. 9. THE ASSESSEE IS IN APPEAL FOR THE ADDITIONS SUSTAINED BY THE LD. CIT(A) AND THE REVENUE IS IN APPEAL FOR THE ADDITIO NS DELETED BY THE LD. CIT(A). 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE CAREFU LLY PERUSED THE ORDERS OF THE AUTHORITIES BELOW. WE HAVE ALSO G ONE THROUGH THE RELEVANT DOCUMENTARY EVIDENCES BROUGHT TO THE NOTIC E BY THE LD. COUNSEL. THE UNDISPUTED FACT IS THAT THE INVESTMEN TS OF THE ASSESSEE HAVE BEEN TAKEN AT RS. 17.02 CRORE, ASSESSEES OWN FUNDS ARE AT RS. 17.60 CRORES. THUS, IT CAN BE SAFELY CONCLUDED THAT THE ASSESSEE WAS HAVING SUFFICIENT OWN FUNDS TO MAKE THE INVESTMENTS AND, THEREFORE, THE RATIO LAID DOWN BY THE HONBLE HIGH COURT OF BO MBAY IN THE CASE OF ITA NO. 2313 & 2429/AHD/2012 A.Y. 2009-10 4 RELIANCE UTILITIES & POWER LTD. 313 ITR 340 SQUAREL Y APPLY. WHEREIN THE HONBLE HIGH COURT HAS HELD THAT IF THE ASSESSE E IS HAVING MIXED FUNDS I.E. OWN FUNDS PLUS BORROWED FUNDS THAN THE P RESUMPTION IS THAT THE INVESTMENTS HAVE COME OUT OF OWN FUNDS. THIS RA TIO HAS BEEN FOLLOWED BY THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF HDFC BANK 366 ITR 505. RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY THE HONBLE HIGH COURT OF BOMBAY, NO DISALLOWANCE IS TO BE MADE IN SO FAR AS INTEREST IS CONCERNED. 11. IN SO FAR AS DISALLOWANCE RELATING TO ADMINISTRATIV E EXPENSE IS CONCERNED, WE FIND THAT THE ASSESSEE HAS SUO MOTU D ISALLOWED RS. 3.50 LACS WHILE COMPUTING THE INCOME FOR THE YEAR UNDER CONSIDERATION. IN OUR CONSIDERED OPINION, THIS DISALLOWANCE OF RS. 3. 50 LACS SHOULD MEET THE ENDS OF JUSTICE AND NO FURTHER DISALLOWANCE IS REQUIRED. WE ACCORDINGLY DIRECT THE A.O TO DELETE THE IMPUGNED D ISALLOWANCE MADE U/S. 14A OF THE ACT. 12. APPEAL FILED BY THE ASSESSEE IS ALLOWED AND THAT OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 04 - 05 - 201 6. SD/- SD/- (R.P. TOLANI) (N. K. BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED.