Indian Chronicle Ltd., Ahmedabad V. The Dy.CIT, Circle-4, Ahmedabad

ITA 2924/AHD/2015

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2725 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 19-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K DEV
• Assessee Lawyers: P M MEHTA WITH G M THAKOR
• Keywords: Depreciation; Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH (BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) ITA. NO: 2924/AHD/2015 (ASSESSMENT YEAR: 2012-13) INDIAN CHRONICLE LTD. GUJART SAMACHAR BHAVAN, KHANPUR, J.P. CHOWK, AHMEDABAD-380001 V/S DCIT, CIRCLE-4, AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AAACI0793H APPELLANT BY : SHRI P.M. MEHTA WITH G. M. THAKOR RESPONDENT BY : SHRI S. K. DEV, SR. D.R. ( )/ ORDER DATE OF HEARING : 30 -07-201 8 DATE OF PRONOUNCEMENT : 28 -10-2018 PER MAHAVIR PRASAD, JUDICIAL MEMBER 1. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-2, AHMEDABAD DATED 31.08.2015 PERTAINING TO A.Y. 2012- 13 AND FOR UPHOLDING THE ITA NO . 292 4/AHD/2015 . A.Y. 2012-1 3 2 DISALLOWANCE IN RESPECT OF ADMINISTRATIVE EXPENSES FOR RS. 775624/- MADE U/S. 14A OF THE ACT. 2. FACTS OF THE CASE ARE THAT THE LD. ASSESSING OFFICE R AT PARA-3 OF THE IMPUGNED ASSESSMENT ORDER HAS OBSERVED THAT THE APPELLANT CO MPANY HAS EARNED DIVIDEND INCOME OF RS.1,39,87,793/- AS EXEMPT INCOM E. IT WAS FURTHER OBSERVED THAT THE APPELLANT COMPANY HAS FAILED TO F URNISH AND TO PROVE NEXUS FROM WHICH IT CAN BE ESTABLISHED THAT THE INVESTMEN T MADE IN SHARE ARE FROM ITS OWN FUND OR FROM NON INTEREST BEARING FUND. THEREFO RE, IN VIEW OF THE LD. ASSESSING OFFICER, SECTION 14A OF THE ACT WAS APPLI CABLE THE CASE OF ASSESSEE AND HENCE BY APPLYING RULE 8D THE DISALLOWANCE WAS COMPUTED AS UNDER: INVESTMENT FROM WHICH EXEMPT INCOME DERIVED IN F.Y. 2010 - 11 RS. 20,57,70,351/ - INVESTMENT FROM WHICH EXEMPT INCOME DERIV ED IN F.Y. 2011 - 12 RS. 20,59,40,351/ - AVERAGE OF INVESTMENT FROM WHERE EXEMPTED INCOME GENE RATED (B) RS. 20,58,55,351 TOTAL ASSETS AS ON 31.03.2011 RS. 62,88,73,811 TOTAL ASSETS AS ON 31.03.2011 RS. 66,48,17,375 AVERAGE ASSETS (C) RS. 64,68,45,593 IN TEREST EXPENSES (A) RS. 14,725 DISALLOWANCE OF INTEREST (AXB/C) RS. 4,686/ - DISALLOWANCE OF ADMINISTRATIVE EXP - AMOUNT EQUAL TO 0.5% OF THE AVERAGE OF THE VALUE OF INVESTMENT RS. 10,29,277 TOTAL DISALLOWANCE RS. 10,33,963/ - THE APPELLANT HAS SHOWN TO TAL EXPENDITURE OF RS. 30,25,327/ - IN PROFIT & LOSS ACCOUNT OUT OF WHICH RS. 24,96,409 PERTAINING TO DEPRECIATION AS PE R BOOKS WAS DISALLOWED IN RETURN OF INCOME. THE APPELLANT HAS CLAIMED DEPRECIATION AS P ER PROVISIONS OF INCOME TAX ACT AT RS. 2,46,706/- HENCE TOTAL EXPENDITURE CLAIMED IN RETUR N OF INCOME WORKS OUT TO RS. 7,75,624(30,25,327-24,96,409+2,46,706) HENCE DISALL OWANCE IS RESTRICTED AT RS. 7,75,624/-. ITA NO . 292 4/AHD/2015 . A.Y. 2012-1 3 3 3. AGAINST THE ADMINISTRATIVE EXPENSES FOR RS. 775624/ - MADE U/S. 14A, APPELLANT PREFERRED FIRST STATUTORY APPEAL BEFORE THE LD. CIT (A) BUT TO NO AVAIL. 4. NOW APPELLANT HAS COME BEFORE US BY WAY OF SECOND A PPEAL. THE ONLY EFFECTIVE GROUND IN THIS APPEAL IS REGARDING DISALLOWANCE OF ADMINISTRATIVE EXPENSES OF RS. 775624/- MADE U/S. 14A OF THE ACT BY ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(A). 5. REGARDING DISALLOWANCE OF ADMINISTRATIVE EXPENSES, THE ASSESSEE HAS EXPLAINED IN DETAIL IN STATEMENT OF FACTS FILED BEFORE THE LD . CIT(A), THE NATURE AND BREAK UP OF EXPENDITURE DEBITED TO THE PROFIT AND LOSS AC COUNT, AS AGAINST THE INCOME EARNED BY THE ASSESSEE. 6. AS WE CAN SEE THE ASSESSEE HAS EARNED RS. 4,98,693/ - ONLY DIVIDEND INCOME. IT WILL BE FAIR IF WE RESTRICT DISALLOWANCE OF RS. 1 L AKHS FOR EARNING OF DIVIDEND INCOME OF RS. 4,98,693/-. WE RESTRICT DISALLOWANCE OF RS. 1 LAKHS. 7. IN THE RESULT, WE ALLOW THE APPEAL OF THE ASSESSEE. ORDER PRONOUNCED IN OPEN COURT ON 28 - 10- 2018 SD/- SD/- (PRADIP KUMAR KEDIA) (MAHAVIR PRASAD) ACCOUNTANT MEMBER TRUE COPY JUDICIAL MEMBER AHMEDABAD: DATED 28 /10/2018 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS)