Ardor In-Fin Pvt. Ltd., Ahmedabad V. The Deputy Commissioner of Income Tax, Circle-1(1)(1), Ahmedabad

ITA 275/AHD/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 1058 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 02-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ANKIT TALSANIA
• Keywords: Earning of tax free income; Question of law; Rule 8D
• Section: 143(3); 14A

Judgement Text

SMC-ITA NO. 275/AHD/2017 ARDOR IN-FIN PVT LTD VS. DCIT ASSESSMENT YEAR: 2012-13 PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD [ BEFORE SHRI PRAMOD KUMAR, VICE PRESIDENT ] ITA NO. 275/AHD/2017 ASSESSMENT YEAR : 2012-13 ARDOR IN-FIN PRIVATE LIMITED ........ ....APPELLANT ARDOR HOUSE, MONDEAL BUSINESS PARK, B/S. GURUDWARA, THALTEJ, AHMEDABAD 380 059 [PAN AAGCA 2925 B] VS. DY. COMMISSIONER OF INCOME-TAX .......................RESPONDENT CIRCLE 1(1)(1), AHMEDABAD APPEARANCES BY: ANKIT TALSANIA FOR THE APPELLANT APOORVA BHARDWAJ FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : 13.02.2019 DATE OF PRONOUNCING THE ORDER : 14.03.2019 O R D E R 1. BY WAY OF THIS APPEAL, THE ASSESSEE APPELLANT HA S CHALLENGED CORRECTNESS OF LEARNED CIT(A)S ORDER DATED 28 TH NOVEMBER 2016 IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 FOR THE ASSESSMENT YEAR 2012-13. 2. GRIEVANCES RAISED BY THE APPELLANT ARE AS FOLLOW S:- 1. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS GR OSSLY ERRED IN LAW AND ON FACTS OF THE CASE IN CONFIRMING THE ACTION O F THE LD. ASSESSING OFFICER IN APPLYING PROVISIONS OF S. 14A OF THE ACT WITHOUT APPRECIATING AND IGNORING THE FACTS THAT THE APPELLANT HAD NEITHER EARNED NOR CLAIMED ANY EXEMPT INCOME, AND THEREFORE, PROVISIONS OF S. 14A OF THE ACT WAS NOT APPLICABLE IN THE PRESENT CASE. 2. BOTH THE LD. AUTHORITIES HAVE FURTHER FAILED TO APPRECIATE THAT WHEN THE PROVISIONS OF S. 14A OF THE ACT ARE NOT APPLICABLE IN THE PRESENT CASE, THE DISALLOWANCE OF RS.1,26,30,113/- MADE U/S 14A OF TH E ACT, BY THE APPELLANT WHILE FILING RETURN OF INCOME, OUGHT TO HAVE BEEN R EDUCED WHILE COMPUTING THE TOTAL INCOME BY THE LD. AO IN THE ASSESSMENT PR OCEEDINGS. 3. ALTERNATIVELY AND WITHOUT PREJUDICE TO ABOVE RAI SED GROUNDS, BOTH THE LOWER AUTHORITIES HAVE FAILED TO APPRECIATE THAT IN ANY C ASE PROVISIONS OF S. 14A OF THE ACT ARE NOT APPLICABLE IN THE PRESENT CASE, AND THEREFORE, NO DISALLOWANCE ON ACCOUNT OF S. 14A READ WITH RULE 8D COULD HAVE B EEN MADE WHILE COMPUTING TOTAL INCOME OF THE APPELLANT. SMC-ITA NO. 275/AHD/2017 ARDOR IN-FIN PVT LTD VS. DCIT ASSESSMENT YEAR: 2012-13 PAGE 2 OF 3 4. BOTH THE LOWER AUTHORITIES HAVE PASSED THE ORDER S WITHOUT PROPERLY APPRECIATING THE FACT AND THAT THEY FURTHER ERRED I N GROSSLY IGNORING VARIOUS SUBMISSIONS, EXPLANATIONS AND INFORMATION SUBMITTED BY THE APPELLANT FROM TIME TO TIME WHICH OUGHT TO HAVE BEEN CONSIDERED BE FORE PASSING THE IMPUGNED ORDER. 3. TO ADJUDICATE ON THIS APPEAL, ONLY A FEW MATERIA L FACTS NEED TO BE TAKEN NOTE OF. THERE IS NO DISPUTE THAT THERE IS NO EXEMPT INC OME CLAIMED BY THE ASSESSEE IN THE PRESENT YEAR AND YET DISALLOWANCE UNDER SECTION 14A HAS BEEN SUSTAINED BY THE CIT(A) TO THE EXTENT THE ASSESSEE HAS OFFERED THE D ISALLOWANCE ON HIS OWN. AS TO WHETHER DISALLOWANCE UNDER SECTION 14A CAN BE LAWFU LLY SUSTAINED IN SUCH A SITUATION, I FIND GUIDANCE FROM HONBLE JURISDICTIO NAL HIGH COURTS JUDGMENT IN THE CASE OF CIT VS. CORRTECH ENERGY PVT LTD [(2015) 37 2 ITR 97 (GUJ.)] AS FOLLOWS:- .........................SUB-SECTION(1) OF SECTION 14A PROVIDES THAT FOR THE PURPOSE OF COMPUTING TOTAL INCOME UNDER CHAPTER IV OF THE ACT, NO DEDUCTION SHALL BE ALLOWED IN RESPECT OF EXPENDITURE INCURRED BY THE A SSESSEE IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THE ACT. IN THE PRESENT CASE, THE TRIBUNAL HAS RECORDED THE FINDING OF FACT THAT THE ASSESSEE DID NOT MAKE ANY CLAIM FOR EXEMPTION OF ANY INCOME FROM PAYMENT OF TAX. IT WAS ON THIS BASIS THAT THE TRIBUNAL HELD THAT DISAL LOWANCE UNDER SECTION 14A OF THE ACT COULD NOT BE MADE. IN THE PROCESS TRIBUNAL RELIED ON THE DECISION OF DIVISION BENCH OF PUNJAB AND HARYANA HIGH COURT IN CASE OF CIT V WINSOME TEXTILE INDUSTRIES LTD. [2009] 319 ITR 204 IN WHICH ALSO THE COURT HAD OBSERVED AS UNDER : '7. WE DO NOT FIND ANY MERIT IN THIS SUBMISSION. TH E JUDGEMENT OF THIS COURT IN ABHISHEK INDUSTRIES LTD (2006) 286 ITR 1 W AS ON THE ISSUE OF ALLOWABILITY OF INTEREST PAID ON LOANS GIVEN TO SIS TER CONCERNS, WITHOUT INTEREST. IT WAS HELD THAT DEDUCTION FOR INTEREST W AS PERMISSIBLE WHEN LOAN WAS TAKEN FOR BUSINESS PURPOSE AND NOT FOR DIV ERTING THE SAME TO SISTER CONCERN WITHOUT HAVING NEXUS WITH THE BUSINE SS. THE OBSERVATIONS MADE THEREIN HAVE TO BE READ IN THAT C ONTEXT. IN THE PRESENT CASE, ADMITTEDLY THE ASSESSEE DID NOT MAKE ANY CLAIM FOR EXEMPTION. IN SUCH A SITUATION SECTION 14A COULD HA VE NO APPLICATION.' 5. WE DO NOT FIND ANY QUESTION OF LAW ARISING, TAX APPEAL IS THEREFORE DISMISSED. 4. I MAY ALSO ADD THAT THE ASSESSEE, ON HIS OWN, H AD OFFERED THE DISALLOWANCE UNDER SECTION 14A AND, AS HE DID SO, HE WAS OBLIVIO US OF THE JUDICIAL DEVELOPMENTS AS ABOVE. THE CIT(A) DELETED THE DISALLOWANCE BY TH E CIT(A) BUT LEFT THE DISALLOWANCE OFFERED BY THE ASSESSEE ON HIS OWN INT ACT. HAVING REALISED HIS MISTAKE, THE ASSESSEE DID MAKE THE CLAIM BEFORE THE CIT(A) A ND SOUGHT TO WITHDRAW THE SUO MOTU DISALLOWANCE OFFERED BY HIM MISTAKENLY BUT THE CIT (A) DECLINED TO GRANT ANY RELIEF IN THE MATTER, AS, IN HIS OPINION, HONBLE S UPREME COURTS JUDGMENT IN THE CASE OF GOETZE INDIA LTD VS CIT (284 ITR 223), CAME IN T HE WAY. NO CLAIM COULD BE MADE BY THE ASSESSEE EXCEPT BY WAY OF REVISING THE INCOM E TAX RETURN. THAT BAR ADMITTEDLY APPLIES ONLY ON THE AUTHORITIES BELOW AND THIS TRIB UNAL, IN THE LIGHT OF HONBLE SUPREME COURTS JUDGMENT IN THE CASE OF NTPC VS CIT (229 ITR 383), IS EMPOWERED TO DEAL WITH ANY QUESTION OF LAW PARTICUL ARLY ARISING OUT OF UNDISPUTED FACTS ON RECORD. ON MERITS, THE CLAIM OF THE ASSESS EE IS LEGALLY CORRECT INASMUCH AS SMC-ITA NO. 275/AHD/2017 ARDOR IN-FIN PVT LTD VS. DCIT ASSESSMENT YEAR: 2012-13 PAGE 3 OF 3 WHEN THERE IS NO EXEMPT INCOME, THERE CANNOT BE ANY QUESTION OF DISALLOWANCE OF EXPENSES- EVEN IF MISTAKENLY OFFERED BY THE ASSESSE E ON HIS OWN. THE ASSESSEE THUS INDEED DESERVES TO SUCCEED. IN THIS VIEW OF TH E MATTER, EVEN THE SUO MOTU DISALLOWANCE OFFERED BY THE ASSESSEE, IS HEREBY DEL ETED. TO THAT EXTENT, ASSESSEE MUST NOW SUCCEED AS WELL. 5. IN THE RESULT, THE APPEAL IS ALLOWED IN THE TERM S INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT TODAY ON THE 14 TH MARCH, 2019. SD/- PRAMOD KUMAR (VICE PRES IDENT) AHMEDABAD, THE 14 TH DAY OF MARCH, 2019 **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 1. DATE OF DICTATION: .....ORDER PREPARED AS PER 2 PAGES MANUSCRIPT OF HONBLE VP...14.02.2019....... ... 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: ... 14.02.2019...... 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR . P.S./P.S.: .. 14.03.2019........ . 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: 14.03.2019... 5. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK : .... 14.03.2019........ 6. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK : . 7. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 8. DATE OF DESPATCH OF THE ORDER: ......