Aflon Alplast Pvt.Ltd., Ahmedabad V. The Income tax Officer,Ward-1(1), Ahmedabad

ITA 2810/AHD/2013

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9267 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 09-12-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 02-12-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUMIT KR VARMA
• Assessee Lawyers: ANIL R SHAH
• Keywords: Depreciation
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER ./ ITA NO. 2810/AHD/2013 / ASSESSMENT YEAR : 2010-11 AFLON ALPLAST PVT LTD, CITY MILL COMPOUND, KANKARIA ROAD, KANKARIA, AHMEDABAD-22 PAN : AACCA 3742 L VS INCOME TAX OFFICER, WARD 1(1), AHMEDABAD / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI ANIL R. SHAH, AR REVENUE BY : SHRI SUMIT KR. VARMA, DR DATE OF HEARING : 09 /12/2016 DATE OF PRONOUNCEMENT IN COURT : 06/02/20 17 / O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-III, A HMEDABAD DATED 15.10.2013 FOR ASSESSMENT YEAR 2010-11. 2. THE GROUNDS RAISED ARE TO THE EFFECT THAT THE LD . CIT(A) ERRED IN LAW AND ON FACTS IN:- (I) CONFIRMING THE DISALLOWANCE OF EXPENSES OF RS.3,92, 910/- U/S 14A/RULE 8D. (II) CONFIRMING MOTOR CAR EXPENSES OF DISALLOWANCE OF RS .31,647/- AND MOTOR CAR DEPRECIATION OF RS.24,307/- AS NON-BUSINE SS EXPENDITURE. (III) INVOKING THE PROVISION OF SECTION 40A(2)(B) AND IN CONFIRMING DISALLOWANCE OF RS.7,58,656/-. (IV) WITHOUT PREJUDICE TO ABOVE AND IN THE ALTERNATIVE, IT IS SUBMITTED THAT DISALLOWANCE U/S 40(A)(2B) OF RS.7,58,656/- AN D DISALLOWANCE OF RS.3,92,910/- U/S 14A/RULE 8D AMOUNT TO DOUBLE TAXATION/MULTIPLE ADDITION OF THE SAME AMOUNT WHICH IS AGAINST SMC-ITA NO. 2810/AHD/2013 AFLON ALPLAST PVT LTD VS. ITO AY : 2010-11 2 PRINCIPLES OF EQUITY AND JUSTICE AND THEREFORE IT I S SUBMITTED THAT THE DISALLOWANCE OF RS.7,58,656/- MADE U/S 40A(2B) BE DELETED. 3. THE LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT A LL THESE ISSUES AROSE IN ASSESSEES OWN CASE AND IN THE CASE OF SISTER CONCE RN NAMELY AFLON ENGINEERING PVT LTD IN ITA NO. 1186/AHD/2012 VIDE O RDER DATED 30.01.2015 AND ITA NO.2950/AHD/2011 DATED 28.12.2015 RESPECTIV ELY. THE RELEVANT ISSUES HAVE BEEN DECIDED IN ASSESSEES OWN CASE AND ASSOCIATED CONCERN IN THE CASE OF AFLON ENGINEERING PVT LTD (SUPRA). IN THE CASE OF AFLON ENGINEERING PVT LTD, VIDE A CONSOLIDATED ORDER DATE D 28.12.2015, THE ITAT RELYING ON THE CASE OF AFLON ALPLAST PVT LTD DATED 30.01.2015 IN ITA NO.1186/AHD/2012, APROPOS 14A DISALLOWANCE, DECIDED THE ISSUE AS UNDER:- 6. WE HAVE NOTED THAT IN THE PRECEDING YEARS, THER E HAS BEEN NO DISALLOWANCE UNDER SECTION 14A WHICH ESSENTIALLY PR OCEEDS ON THE ACCEPTED POSITION THAT THERE HAS BEEN NO USE OF BORROWED FUN DS IN THIS CASE. SO FAR AS FRESH INVESTMENTS MADE IN THE PRESENT YEAR ARE CONC ERNED, IT IS NOT IN DISPUTE THAT THE SALE PROCEEDS OF THE MUTUAL FUND INVESTMEN TS DURING THE YEAR HAS BEEN USED IN MAKING THE INVESTMENTS. IN VIEW OF THE SE FINDINGS OF FACT AND HON'BLE JURISDICTIONAL HIGH COURT'S JUDGMENT IN THE CASE OF PCITVS INDIA GELATINE & CHEMICALS LTD (TA NOS 276 AND 277 OF 201 5; JUDGMENT DATED 27 TH APRIL 2015), NO PART OF THE INTEREST CAN BE DISA LLOWED BY INVOKING SECTION 14A. THE DISALLOWANCE EVEN UNDER RULE 8D MUST THERE FORE REMAIN RESTRICTED TO THE AMOUNT WORKED OUT UNDER RULE 8D(2)(III), 0.5 % OF THE AVERAGE VALUE OF INVESTMENTS APPEARING IN THE BALANCE SHEET AS ON 31 .3.2007 AND 31.3.2008, WHICH WORKS OUT TO RS 26,951. WE, THEREFORE, RESTRI CT THE DISALLOWANCE TO RS 26,951 AND DELETE THE REMAINING DISALLOWANCE. THE A SSESSEE GETS THE RELIEF ACCORDINGLY. 4. APROPOS OTHER ISSUES, LD. COUNSEL FOR THE ASSESS EE SUBMITTED THAT THE DISALLOWANCE IN RESPECT OF MOTOR CAR EXPENSES AND D EPRECIATION ON MOTOR CAR WERE DELETED BY ITAT IN ASSESSEES OWN CASE IN ITA NO.1186/AHD/2012 VIDE ORDER DATED 30.01.2015. DISALLOWANCE U/S 14A( 2)(B) WAS ALSO DELETED HOLDING THAT THE INTEREST PAID TO SPECIFIED PERSONS WAS NOT UNREASONABLE. LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT THE ISSU ES IN QUESTION ARE SMC-ITA NO. 2810/AHD/2013 AFLON ALPLAST PVT LTD VS. ITO AY : 2010-11 3 SQUARELY COVERED IN FAVOUR OF THE ASSESSEE. THE LD . DR, ON THE OTHER HAND, RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 5. I HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. IN MY CONSIDERED VIEW, ON THE ISSUE OF 14A DISALLOWANCE, THE ITAT DECISION IN SISTER CONCERN CASE STANDS COVERED IN FAVOUR OF THE ASSESSEE AND FOLLOWING THE ITAT DECISION IN THE CASE OF AFLON ENGINEERING PVT LTD (SUPRA), I HOLD THAT THE DISALLOWANCE U/S 14A IS TO BE RESTRICTED T O 0.5% OF THE AVERAGE VALUE OF INVESTMENTS APPEARING IN THE BALANCE-SHEET AS DI RECTED BY THE ITAT VIDE ORDER DATED 28.12.2015. THIS GROUND OF THE ASSESSE E IS ACCORDINGLY PARTLY ALLOWED. 6. APROPOS THE ISSUE OF MOTOR CAR EXPENSES, DEPRECI ATION ON MOTOR CAR AND 14A(2)(B) DISALLOWANCE, RESPECTFULLY FOLLOWING THE CO-ORDINATE BENCH DECISION (SUPRA), THESE ADDITIONS ARE DELETED. 7. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY A LLOWED. SD/- R.P. TOLANI (JUDICIAL MEMBER) AHMEDABAD; DATED 06/02/2017 *BIJU T., SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD