Global Trading & Investment, Ahmedabad V. The Income Tax Officer, Ward-5(2)(3), Ahmedabad

ITA 271/AHD/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7989 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-06-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 01-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V K SINGH
• Keywords: Earning of tax free income
• Section: 143(3); 234B; 14A

Judgement Text

ITA NO. 271/AHD/2017 GLOBAL TRADING & INVESTMENT VS. ITO ASSESSMENT YEAR: 2013-14 PAGE 1 OF 2 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH, AHMEDABAD [CORAM: PRAMOD KUMAR, AM AND MS. MADHUMITA ROY, JM] ITA NO. 271/AHD/2017 ASSESSMENT YEAR: 2013-14 GLOBAL TRADING & INVESTMENT ................ ..APPELLANT 101, AKASHGANGA BUILDING, NR. GUJARAT, COLLEGE ROAD, ELLISBRIDGE, AHMEDABAD-380006 [PAN : AAIFG 3547 L] VS. INCOME TAX OFFICER ...........................RESPONDENT WARD-5(2)(3), AHMEDABAD APPEARANCES BY: NONE FOR THE APPELLANT VK SINGH FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : 22.06.2018 DATE OF PRONOUNCING THE ORDER : 26.06.2018 O R D E R PER PRAMOD KUMAR, AM: 1. BY WAY OF THIS APPEAL, THE ASSESSEE APPELLANT HA S CHALLENGED CORRECTNESS OF THE ORDER DATED 21 ST NOVEMBER, 2016 PASSED BY THE CIT(A), AHMEDABAD-5 I N THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE IN COME-TAX ACT, 1961, FOR THE ASSESSMENT YEAR 2013-14. GRIEVANCES RAISED BY THE ASSESSEE ARE AS FOLLOWS: 1. THE ID CIT APPEAL ERRED IN UPHOLDING THE ORDER OF THE A.O. IN MAKING THE DISALLOWANCE OF RS.5,22,140/- U/S 14A R.W. RULE 8D WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAS DIRECTLY INCURRED THE EX PENDITURE OF RS. 2,476/- DURING THIS YEAR FOR EARNING EXEMPT INCOME AND THE SAME HAS BEEN DISALLOWED WHILE FILING THE TAX RETURN AND THAT THE INVESTMENTS IN SHARES WERE MADE OUT OF OWN FUNDS AND NOT OUT OF BORROWED FUNDS AND HENCE DISALLOWANCE U/S.14A R.W. RULE 8D MAY BE DELETED AN D THE ORDER OF THE ID CIT APPEAL AND ID A.O. BE REVERSED. 2. THE ID CIT APPEAL ERRED IN UPHOLDING THE ORDER O F THE A.O. AND FAILED TO APPRECIATE THAT DIVIDEND INCOME IS DIRECTLY CREDITE D TO BANK ACCOUNT AND APPELLANT DOES NOT HAVE TO INCUR ANY EXPENDITURE FO R EARNING EXEMPT INCOME AND HENCE DISALLOWANCE U/S. 14A R.W. RULE 8D MAY BE DELETED AND THE ORDER OF THE ID CIT APPEAL AND ID A.O. BE REVERSED. 3. THE ID CIT APPEAL ERRED IN CONCLUDING THAT THE LEARNED A.O. HAS RECORDED THE SATISFACTION REGARDING THE ACCOUNTS OF THE ASSE SSEE WHICH IN FACT SUCH SATISFACTION HAS NOT BEEN RECORDED AND ONLY JOURNAL COMMENT/OBSERVATION HAS BEEN MADE AND THE ID A.O. HAS MECHANICALLY INVOKED SEC 14A R.W. RULE 8D ITA NO. 271/AHD/2017 GLOBAL TRADING & INVESTMENT VS. ITO ASSESSMENT YEAR: 2013-14 PAGE 2 OF 2 AND WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAS ALREADY MADE THE DISALLOWANCE WHILE FILING THE TAX RETURN AND THE LE ARNED CIT AND ID A.O. DID NOT REJECT THE SAME AND STILL THE LEARNED CIT UPHOLD TH E ORDER OF THE ID A.O. WHO HEAVILY RELIED ON THE CIRCULAR ISSUED BY THE HONORA BLE CBDT AND THE ORDER OF THE ID CIT APPEAL AND ID A.O. BE REVERSED. 4. THE LEARNED CIT (A) ERRED IN UPHOLDING THE ORDER OF THE A.O. THAT THE DISALLOWANCE U/S 14A READ WITH RULE 8D CANNOT EXCEE D EXEMPT INCOME THE ID CIT APPEAL AND ID A.O. BE REVERSED. 5. THE LEARNED CIT(A) ERRED IN NOT PASSING THE ORD ER AND NOT MAKING SPECIFIC OBSERVATION OF GROUND OF APPEAL NO.5 THAT THE DIVID END RECEIVED DURING THIS YEAR IS ONLY RS.508/- AND HENCE THE DISALLOWANCE MA Y BE RESTRICTED TO MAXIMUM RS.508/-. THE ORDER OF THE ID CIT APPEAL AN D ID A.O. BE REVERSED. 6. THE LEARNED CIT (A) ERRED IN UPHOLDING THE ORDER OF THE A.O. THAT ON FACTS AND IN LAW FOR CHARGING OF INTEREST U/S 234B OF THE ACT WHEN NO SUCH INTEREST IS LEVIABLE. THE APPELLANT DENIES ITS LIABILITY TO PAY INTEREST. THE ID CIT APPEAL AND ID A.O. BE REVERSED. 2. WHEN THIS APPEAL WAS CALLED OUT FOR HEARING, IT HAS BEEN NOTICED THAT THE ENTIRE DIVIDEND INCOME DURING THE YEAR WAS RS. 508/ -; WHEREAS THE DISALLOWANCE MADE BY THE ASSESSING OFFICER U/S 14A, AS SUSTAINED BY THE LEARNED CIT(A), IS RS.5,22,140/-. LEARNED DEPARTMENTAL REPRESENTATIVE FAIRLY ACCEPTS THAT BY NOW THE LEGAL POSITION IS WELL SETTLED BY SERIES OF ORDERS OF THIS TRIBUNAL, INCLUDING IN THE CASE OF TATA INDUSTRIES LIMITED VS. ITO, [2016] 181 TTJ 600 (MUMBAI - TRIB.), THAT THE DISALLOWANCE U/S 14A CANNOT EXCEED THE EXEMPT INCOM E IN RESPECT OF WHICH THE DISALLOWANCE HAS BEEN SO INVOKED. IN THIS VIEW OF THE MATTER AND FOLLOWING THE LEGAL POSITION SO SETTLED, WE DEEM IT FIT AND PROPER TO R ESTRICT THE DISALLOWANCE TO RS.508/-. WE ORDER ACCORDINGLY. 3. IN THE RESULT, APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT TODAY ON THE 26 TH JUNE, 2018 SD/- SD/- MS. MADHUMITA ROY PRA MOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) AHMEDABAD, THE 26 TH DAY OF JUNE, 2018 **BT COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER TRUE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD