MESSAGE. COTTAGE INDUSTRIES EXPOSITION LIMITED, SRINAGAR V. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-3, SRINAGAR

ITA 255/ASR/2019

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 8674 (ITAT-AMRITSAR)
• Duration Of Justice: 3 year(s) 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 21-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANPREET SINGH DUGGAL
• Keywords: Rule 8D
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR. BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. ANIKESH BANERJEE, JUDICIAL MEMBER I.T.A. No. 255/Asr/2019 Assessment Year: 2013-14 M/s Cottage Industries Exposition Ltd. Shalimar Srinagar (J & K) [PAN:AAACC6815A] (Appellant) Vs. ACIT, Circle-3, Srinagar. (Respondent) Appellant by Sh.None.( Written Submission) Respondent by Sh.Manpreet Singh Duggal, Sr. DR. Date of Hearing 21.06.2022 Date of Pronouncement 10.08.2022 ORDER Per:Anikesh Banerjee, JM: The instant appeal is filed by the assessee against the order of the ld. Commissioner of Income Tax(Appeals)-1, Amritsar, [in brevity the CIT(A)] bearing appeal no. 309/2015-16, date of order 27.021.2019, the order passed u/s 250(6) of the IT Act 1961, [in brevity the Act] for A.Y.2013-14. I.T.A. No. 255/Asr/2019 2 The impugned order was originated from the order of the ld. ACIT, Circle-3, Srinagar (in brevity the AO) order passed u/s 143(3) of the Act date of order 28.10.2015. 2. The brief facts of the case are that the assessee is a private limited company incorporated under the Companies Act 2013. As per the ld. AO the assessee made investment in Indian Companies amounting to Rs.3,43,44,980/-. As per the assessee the investment was out of no interest-bearing funds which was not accepted by the ld AO, as no evidence in this regard was furnished during assessment. The ld. AO had disallowed the interest amount of Rs.6,23,215/- under Rule 8D r.w.s. 14A of the Act. The assessee filed an appeal before the ld. CIT(A). After adjudication the ld. CIT(A) upheld the order of the ld. AO. Accordingly, the aggrieved assessee filed an appeal before us. 3. The ld. Counsel for the assessee filed a written submission which is kept in the record, and he prayed for adjudication the issue on the basis of the written submission. The ld DR had not made any objection for hearing. The assessee informed that the investment in Indian Company was out of own fund of assessee. Also informed that the same issue was assessed for A.Y. 2009-10, 2010-11 and 2011-12 by the revenue authorities. But the Hon’ble ITAT has passed the order in favour of the assessee. 3.1 Here, we extract the part of appeal order passed by ld. CIT(A) as under: I.T.A. No. 255/Asr/2019 3 “ii. The ground of appeal no. 2 is against disallowance of Rs 623,215/- u/s 14A of the act. As per assessment order the balance sheet of the assessee revealed that assessee has taken secured loan from bank and was paying interest on these loans and on the other side had made investment in shares of overseas as well and domestic companies. Income earned from domestic companies does not form part of taxable income. The version of the assessee in respect of investment in Indian Companies amounting to Rs 343,44,980/- out of no interest-bearing funds was not accepted as no evidence in this regard was furnished and accordingly the AO disallowance the interest of Rs 623,215/- was disallowed under rule 8D read with section 14A. In the written submissions filed by the appellant in the appeal proceedings theappellant filed adjournment letter to the notice dated 26.9.2018 on the ground that my predecessor had decided the appeal of AY 2009-10, 2010-11 and 2011-12 against the assessee, whose appeal is pending before the hon’ble ITAT and this appeal may be taken up after the disposal of the appeal by the hon’ble ITAT.However, without waiting for the disposal of the appeal by the hon’ble ITAT, this appeal is decided here under- Decision- As per assessment order the balance sheet of the assessee revealed that assessee has taken secured loan from bank and was paying interest on these loans and on the other side had made investment in shares of overseas as well and domestic companies. Income earned from domestic companies does not form part of taxable income. Therefore, the AO made disallowance u/s 14A of the act read with rule 8D of the act of Rs 623,215/-. I.T.A. No. 255/Asr/2019 4 The facts of the case of the appellant in the year under c as in earlier AY 2009-10, 2010-11 and 2011-12 and therefore, following the decision of my predecessor and for the same reasons given by the CIT(A), Jammu in those appeals, the impugned addition of Rs.623,215/- u/s 14A of IT Act read with rule 8D of IT rule is confirmed.” 4. The ld. Counsel relied on vide order of assessee’s own case bearing ITA No. 05 to 07/Asr/2017 date of order 28.02.2019. The relevant part of order is extracted as below: “4. We have heard the parties and perused the material on record. True, the onus qua a disallowance u/s. 14A, it is well-settled, is on the assessee. However, when the assessee makes a claim, based on facts and figures, even as in the instant case, the same has to be rebutted by the AO before applying section 14A r/w rule 8D. Section 14A(2) itself makes this abundantly clear. The fact of the borrowed funds being for working capital needs, with the net current assets exceeding, on each value date, the bank borrowing, on which interest has been paid and, is consequently disallowed, has been verified by us. There could not be any adverse inference qua application of term loans, secured against the assets financed, as well. There is, under the circumstances, no occasion for invoking s. 14A, which cannot be applied mechanically. In our view, therefore, no case for disallowance u/s. 14A is made out.” 5. The ld. Sr. DR argued & relied on the order of ld. CIT(A). There is no such any contrary view or any judgment against the submission of assessee. I.T.A. No. 255/Asr/2019 5 6. We made a thoughtful consideration as per the documents available in the record. The assessee invested the funds of his excess fund which is its own funds. The interest cannot be disallowed on the part of the section 14A r.w.r. 8D. The issue was already adjudicated by the Coordinate Bench which is discussed above. 6.1 It is clear that this particular issue of investment was continuing from A.Y. 2009-10 so the fund of the assessee invested in share of Indian Company from its own fund. We are inclining the observation of the coordinate bench. So, the addition amount of Rs.623,215/- for A.Y. 2013-14 is deleted. 7. In the result, the ITA No. 255/Asr/2019 is allowed. Order pronounced in the open court on 10.08.2022 Sd/- Sd/- (Dr. M. L. Meena) (ANIKESH BANERJEE) Accountant Member Judicial Member AKV Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By Order