Sharma Commerical Private Limited, 91-91A Jhotwara Industrial Area, Jaipur-302012, Jhotwara Industrial, Area, Jaipur V. Income Tax Officer Ward-3(1), Jaipur, Ward-3(1) Jaipur

ITA 271/JPR/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4654 (ITAT-JAIPUR)
• Duration Of Justice: 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 28-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MISS CHANCHAL MEENA
• Keywords: Earning of tax free income; Rule 8D; Set aside
• Section: 143(3); 14A

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S,B JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA. NO. 271/JP/2019 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2015-16 M/S SHARMA COMMERCIAL PVT. LTD. 90-91-A, INDUSTRIAL AREA, JHOTWARA, JAIPUR. CUKE VS. THE ITO, WARD-3(1), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AADCS 4350 H VIHYKFKHZ@ APPEL LANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : NONE (A.D. ON RECORD) JKTLO DH VKSJ LS @ REVENUE BY : MISS CHANCHAL MEENA (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 17/02/2020 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 18/02/2020 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD. CIT(A), ALWAR DATED 20.12.2018 FOR THE ASSESSMENT Y EARS 2015-16 WHEREIN THE LIMITED ISSUE RELATES TO CONFIRMATION O F ADDITION OF RS. 6,71,879/- U/S 14A OF THE IT ACT. 2. AT THE OUTSET, IT IS NOTED THAT THE MATTER WAS I NITIALLY FIXED FOR HEARING ON 16.04.2019 HOWEVER, NONE APPEARED ON BEH ALF OF THE ASSESSEE. THE MATTER WAS AGAIN LISTED FOR HEARING O N 07.01.2020 AGAIN ITA NO. 271 /JP/2019 M/S SHARMA COMMERCIAL PVT. LTD. VS. ITO 2 NONE APPEARED ON BEHALF OF THE ASSESSEE AND THE MAT TER HAS NOW COME UP FOR HEARING TODAY I.E. 17.02.2020, AGAIN THERE I S NO APPEARANCE ON BEHALF OF THE ASSESSEE NOR ANY WRITTEN SUBMISSIONS HAVE BEEN FILED. ACCORDINGLY, IT WAS DECIDED TO HEARING THE MATTER EX-PARTE QUA THE ASSESSEE AFTER HEARING THE LD. DR AND CONSIDERING T HE MATERIAL AVAILABLE ON RECORD. 3. IN THIS CASE, THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT WHEREIN THE AO HAD MADE A DISALLOWANCE OF RS. 6,71, 879/- U/S 14A OF THE ACT WHICH ON APPEAL HAS BEEN CONFIRMED BY THE L D. CIT(A). FROM PERUSAL ON RECORDS, THE UNDISPUTED FACTS WHICH ARE EMERGING FROM THE RECORDS ARE THAT THE ASSESSEE HAS MADE INVESTMENT I N SHARES OF JAIPUR SYNTEX LTD., M/S SHREE SHARMA STEEL ROLLING MILLS PVT. LTD. AND SHREE SHARMA STEEL TECH (INDIA) PVT. LTD. TOTALING TO RS. 97,17,500/-. THESE INVESTMENTS WERE MADE IN THE PREVIOUS FINANCIAL YEA RS AND THERE ARE NO FRESH INVESTMENTS WHICH HAVE BEEN MADE DURING THE Y EAR. FURTHER, THE ASSESSEE HAS NOT EARNED ANY INCOME ON THIS INVESTME NT WHICH HAS BEEN CLAIMED AS EXEMPT DURING THE YEAR UNDER CONSIDERATI ON. HOWEVER, GIVEN THAT THE ASSESSEE HAS CLAIMED INTEREST EXPEND ITURE IN ITS PROFIT AND LOSS ACCOUNT, THE AO HAD MADE DISALLOWANCE U/S 14A OF THE ACT R/W RULE 8D AMOUNTING TO RS. 6,71,879/-. 4. GIVEN THE FACT THAT THE ASSESSEE HAS NOT MADE AN Y FRESH INVESTMENT DURING THE UNDER CONSIDERATION AND ALL T HIS INVESTMENTS WERE MADE IN THE PREVIOUS FINANCIAL YEARS, THERE CANNOT BE ANY DISALLOWANCE OF INTEREST EXPENDITURE WHICH CAN BE RELATED TO MAK ING OF SUCH INVESTMENTS DURING THE YEAR. FURTHER, THERE IS NOT HING ON RECORD TO ITA NO. 271 /JP/2019 M/S SHARMA COMMERCIAL PVT. LTD. VS. ITO 3 SUGGEST THAT IN THE PREVIOUS FINANCIAL YEARS, THE I NVESTMENTS HAVE BEEN MADE OUT OF THE BORROWED FUNDS AND THERE IS RECURRI NG INTEREST LIABILITY RELATABLE TO BORROWED FUNDS WHICH WERE UTILIZED TO MAKE SUCH INVESTMENTS. FURTHER, GIVEN THAT THERE IS NO MOVEME NT DURING THE YEAR IN THE INVESTMENTS SO MADE, AND THE INVESTMENTS AT THE BEGINNING OF THE YEAR AND THE INVESTMENTS AT THE END OF THE YEAR ARE THE SAME, THEY CANNOT BE ANY ADMINISTRATIVE EXPENDITURE WHICH CAN BE RELATED TO HAVE BEEN INCURRED IN RELATION TO SUCH INVESTMENTS. IN L IGHT OF THE SAME AND GIVEN THE FACT THAT THERE IS NO EXEMPT INCOME DURIN G THE YEAR WHICH HAS BEEN CLAIMED AS EXEMPT BY THE ASSESSEE IN RESPECT O F ITS INVESTMENTS, THE DISALLOWANCE SO MADE BY THE ASSESSING OFFICER U /S 14A OF THE ACT IS HEREBY DELETED AND THE ORDER OF THE LOWER AUTHORITI ES ARE SET ASIDE TO THIS EXTENT. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOW ED. ORDER PRONOUNCED IN THE OPEN COURT ON 18/02/2020. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 18/02/2020. * SANTOSH VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S SHARMA COMMERCIAL PVT. LTD., JAI PUR. 2. IZR;FKHZ@ THE RESPONDENT- ITO, WARD-3(1) JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) ITA NO. 271 /JP/2019 M/S SHARMA COMMERCIAL PVT. LTD. VS. ITO 4 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE { ITA NO. 271/JP/2019} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR.