M/s. Dynemic Products Ltd., Ahmedabad V. The Addl. CIT, Range-1, Ahmedabad

ITA 2745/AHD/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0143 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 17-08-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 25-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VILAS V SHAH
• Assessee Lawyers: RAJESH D SHAH
• Keywords: Earning of tax free income
• Section: 143(3); 14A

Judgement Text

I.T.A. NO. 2745 /AHD/201 3 ASSESSMENT YEAR: 200 9 - 10 PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH, AHMEDABAD [CORAM: PRAMOD KUMAR AM AND S S GODARA JM ] I.T.A. NO. 2745 /AHD/201 3 ASSESSMENT YEAR: 20 0 9 - 10 DYNEMIC PRODUCTS LTD., ..... ...... . ... . APPELLANT B - 301, SATYMEV COMPLEX - 1, OPP. NEW GUJA RAT HIGH COURT, S.G. HIGH WAY ROAD, SOLA, AHMEDABAD 380 063. [ PAN: AAACD 4067 D ] VS. ADDL. COMMISSIONER OF INCOME TAX, RANGE - 1, AHMEDABAD. ............... . RESPONDENT APPEARANCES BY: RAJESH D. SHAH FOR THE A PPELLANT VILAS V. SHAH FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : 17 .0 8 .2016 DATE OF PRONOUNC ING THE ORDER : 28 . 1 0.2016 O R D E R PER PRAMOD KUMAR , AM : 1. BY WAY OF THIS APPEAL, THE ASSESSEE APPELLANT HAS CHALLENGED CORRECTNESS OF THE ORDER DA TED 08.11.2013 PASSED BY THE LEARNED CIT(A) IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT,1961, FOR THE ASSESSMENT YEAR 200 9 - 10 . 2. GRIEVANCE RAISED BY THE APPELLANT ARE AS FOLLOWS : - 1. THE LEARNED CIT (A) HAS ERRED IN LAW AND ON T HE FAC T S AND IN CIRCUMSTANCES OF THE CASE BY CONFIRMING T HE FOLLOWING A D DITION MADE BY THE ASSESSING OFFICE R (IN CHRONOLOGICAL ORDER AS PER THE ORDER OF THE LEARNED CIT ( A ): I.T.A. NO. 2745 /AHD/201 3 ASSESSMENT YEAR: 200 9 - 10 PAGE 2 OF 3 GROUND (1) ( 1 ) DISALLOWANCE OF NOTIONAL EXPENDITURE U/S 14A RS.8,13,336 (CALCULATED AS PER UL 8D OF IT RULES) 3. TO ADJUDICATE ON THIS APPEAL , ONLY A FEW MATERIAL FACTS NEE D TO BE TAKEN NOTE OF. IN THIS CASE, TH E ASSESSEE HAD OFFER E D DISALLOWANCE OF RS.2,84,191/ - , BUT, WITHOUT ASSIGN ING A NY REASONS FOR DISREGARDING TH E DISALLOWANCE SO O FFERED BY THE A S SES S EE ON HIS OWN, THE ASSESSING OFFICER REJECTED THE DISALLOWANCE AND RECOMPUTED THE SAME AS THE BASIS OF RULE 8D R.W.S. 14A. AGGRIEVED , A SSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LEARNED CIT ( A ) BUT WITHOUT ANY SUCCESS. NOT SATISFI ED, THE A SSESSEE IS IN SECOND APPEAL BEFORE US. 4 . WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. 5. AS LEARNED REPRESENTATIVES FAIRLY AGREE, THE ISSU E IN A PPEAL IS SQUARELY COVERED BY THE DECISION OF A CO - ORDINAT E BENCH IN ASSESSEE S OWN CASE FOR THE ASSESSMENT YEAR 2008 - 09 WHEREIN IT I S, INTER ALIA , OBSERVED AS FOLLOWS : - 8. FROM THE ABOVE, IT IS EVIDENT THAT IN THE FIRST PARAGRAPH, THE ASSESSING OF FICER HAS RECORDED THE FINDING THAT SOME DISALLOWANCE U/S 14A OF THE INCOME - TAX ACT IS WARRANTED. IN PARAGRAPH 2, THE ASSESSING OFFICER HAS RECORDED THAT THE ASSESSEE HAS OFFERED THE EXPENSES OF RS.18,43,737/ - AS EXPENDITURE INCURRED FOR EARNING OF EXEMPT INCOME AND ADDED BACK THE SAME TO THE TOTAL INCOME. IN THE THIRD PARAGRAPH, THE ASSESSING OFFICER REJECTED THE ASSESSEE S CLAIM ON THE GROUND THAT THE DISALLOWANCE IS TO BE MADE AS PER RULE 8D OF THE INCOME - TAX RULES. IN OUR OPINION, THE DISALLOWANCE IS TO BE MADE AS PER RULE 8D ONLY AFTER THE ASSESSING OFFICER RECORDS HIS SATISFACTION THAT THE AMOUNT OF EXPENDITURE CLAIMED TO HAVE BEEN INCURRED BY THE ASSESSEE FOR THE PURPOSE OF EARNING OF EXEMPT INCOME IS INCORRECT. THE CLAIM OF THE ASSESSEE CANNOT BE SAI D TO BE INCORRECT MERELY ON THE GROUND THAT THE WORKING OF THE EXPENDITURE HAS NOT BEEN MADE BY THE ASSESSEE AS PER RULE 8D. IF THE INTERPRETATION OF THE ASSESSING OFFICER IS ACCEPTED, THEN THE WORKING OF DISALLOWANCE UNDER RULE 8D WOULD COME COMPULSORY M AKING THE PROVISIONS OF SECTION 14A(2) AS WELL AS RULE 8D(1) REDUNDANT. THE ASSESSING OFFICER HAS NOT GIVEN ANY OTHER REASON FOR NOT ACCEPTING THE ASSESSEE S WORKING OF THE EXPENDITURE CLAIMED TO HAVE BEEN I.T.A. NO. 2745 /AHD/201 3 ASSESSMENT YEAR: 200 9 - 10 PAGE 3 OF 3 INCURRED FOR EARNING OF EXEMPT INCOME. THEREFORE, WE ARE OF THE OPINION THAT NO SATISFACTION WAS RECORDED BY THE ASSESSING OFFICER FOR REJECTING THE ASSESSEE S CLAIM WITH REGARD TO EXPENDITURE INCURRED FOR EARNING OF EXEMPT INCOME. WITHOUT RECORDING SUCH SATISFACTION, THE ASSESSING OFFICER CANNOT PROCEED TO COMPUTE THE DISALLOWANCE AS PER RULE 8D(2). IN VIEW OF ABOVE, WE DELETE THE ADDITION MADE BY THE ASSESSING OFFICER U/S 14A READ WITH 8D(2) OF THE INCOME - TAX RULES. 6. RESPECTFULLY FOLLOWING THE ESTEEMED VIEWS OF TH E CO ORDINATE BE N CH, WE UPHOLD TH E G RIEVANCE OF THE ASSESSEE. THE A SSESSING OFFICER IS ACCORDINGLY DIRECTED T O DELETE THE DISALLOWANCE OF RS.8,13,336/ - 7. IN THE RESULT, THE APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT TODAY ON 28 TH DAY OF OCTOBER, 2016. SD/ - SD/ - S S GODARA PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) DATED: 28 TH DAY OF OCTOBER , 2016. COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUA RD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD