IT Enfraservices Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 2993/DEL/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87016 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 18-03-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 06-06-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: T VASANTHAN
• Assessee Lawyers: RAJEEV JAIN
• Keywords: Earning of tax free income
• Section: 143(3); 14A; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : C : NEW DELHI BEFORE SH. R.S. SYAL , A.M. & SH. C.M. GARG , J.M. ITA NO. 299 3 /DEL / 2011 ASSESSMENT YEAR: 2006 - 07 I.T. ENFRASERVICES PVT. LTD. VS. DY. COMMISSIONER OF INCOME D - 922, NEW FRIENDS COLONY, TAX, CIRCLE 11(1), NEW DELHI NEW DELHI (PAN: AABCI0514K ) (APPELLANT) (RESPONDENT) APPELLANT BY : SH. RAJEEV JAIN, CA RESPONDEN T BY: SH. T. VASANTHAN, SR . DR DATE OF HEARING: 18.03.2015 DATE OF PRONOUNCEMENT: 19.03.2015 ORDER PER R.S. SYAL, A.M. : THIS APPEAL BY THE ASSESS E E IS DIRECTED AGAINST THE ORDER DATED 16.03.2011 PASSED BY THE LEARNED CIT(A) IN RELATION TO THE ASSESSMENT YEAR 2006 - 07. 2. IT IS A RECALLED MATTER INASMUCH AS THE EARLIER EX - PARTE ORDER PASSED BY THE TRIBUNAL WAS SUBSEQUENTLY RECALLED VIDE ITS LATER ORDER DATED 26.09.2014. 3 . THE ONLY ISSUE RAISED IN THIS APPEAL IS AGAINST THE SUSTENANCE OF DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDER SECTION 14A OF THE INCOME - TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) . 4 . BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE EARNED DIVIDEND INCOME OF RS. 66 , 50 , 450/ - WHICH WAS CLAIMED AS EXEMPT. A SUM OF RS. 38,13,687/ - WAS VOLUNTARILY OFFERED AS INTEREST RELATABLE TO THE EXEMPT INCOME. 2 ITA NO. 29 9 3/DEL /2011 AY: 2006 - 07 THE ASSESSING OFFICER INVOKED THE PROVISIONS OF RULE 8D AND COMPU T ED DISALLOWANCE TO THE TUNE OF RS. 39,38,727/ - UNDER SECTION 14A OF THE ACT COMPRISING OF, INTEREST AT RS. 34,06,384/ - AND OTHER ADMINISTRATIVE EXPENSES AT RS. 5,32,343/ - , BEING % OF THE AVERAGE VALUE OF INVESTMENT . THE ASSESSEE FILED APPLICATION UNDER SECTION 154 CONTENDING THAT IT HAD VOLUNTARILY DISALLOWED A SUM OF RS. 38,13,687/ - UNDER SECTION 14A AND THE ASSESSING OFFICER AFTER FINALIZING THE ASSESSMENT MADE THE ADDITION FOR A SUM OF RS. 39,38,727/ - WITHOUT ALLOWING REDUCTIO N FOR THE AMOUNT SUO MOTU DISALLOWED BY THE ASSESSEE. VIDE ORDER UNDER SECTION 154, THE ASSESSING OFFICER REDUCED THE AMOUNT OF DISALLOWANCE BY RS. 34,06,384/ - , BEING THE AMOUNT OF INTEREST DISALLOWED BY HIM UNDER SECTION 14A IN THE ORDER PASSED U/S 143(3) OF THE ACT . THE LEARNED CIT(A) OBSERVED IN THE IMPUGNED ORDER THAT AFTER ALLOWING RELIEF BY THE ASSESSING OFFICER, THE DISALLOWANCE STOOD REDUCED TO RS. 5,32,343/ - ( RS. 39,38,727 RS. 34,06,384) . HE, THEREFORE, FOUND THAT A SUM OF RS. 4,07,003/ - (RS. 38, 13,687 RS. 34,06,684) WAS FURTHER TO BE ALLOWED BY THE ASSESSING OFFICER OUT OF TOTAL DISALLOWANCE REMAINING AT RS. 5,32,343/ - . HE, THEREFORE, SUSTAINED SUCH DISALLOWANCE AT RS. 1,25,340/ - WHICH RESULTED INTO DISMISSAL OF THE ASSESSEE S APPEAL. 5 . WE H AVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. IN PRINCIPLE, WE HOLD THAT RULE 8D CANNOT BE APPLIED TO THE ASSESSMENT YEAR UNDER CONSIDERATION AND THE DISALLOWANCE IS REQUIRED TO BE MADE ONLY ON 3 ITA NO. 29 9 3/DEL /2011 AY: 2006 - 07 SOME REASONABLE BASIS. IT CAN BE SEEN FROM THE COMPUTATION OF INCOME FILED BY THE ASSESSEE ALONG WITH ITS RETURN OF INCOME THAT IT V OLUNTARILY DISALLOWED A SUM OF RS. 38,13,687/ - BY GIVING THE NARRATION I NTEREST DISALLOWED . IT IS NOT A CASE WHERE THE ASSESSEE OFFERED DISALLOWA NCE UNDER SECTION 14A FOR A SUM OF RS. 38.13 LACS COVERING BOTH INTEREST AND OTHER EXPENSES. IN OTHER WORDS, THE DISALLOWANCE OFFERED B Y THE ASSESSEE AT RS. 38.13 LAC WAS ONLY TOWARDS INTEREST RELATABLE TO INVESTMENTS MADE IN SECURITIES FETCHING EXEMPT INC OME. WHEN THE ASSESSEE APPLIED FOR RECTIFICATION, THE ASSESSING OFFICER WITHDREW THE AMOUNT OF INTEREST DISALLOWANCE MADE BY HIM IN THE ASSESSMENT ORDER TO THE TUNE OF RS. 34.06 LACS. THUS, THE TOTAL DISALLOWANCE UNDER SECTION 14A STANDS AT RS. 5,32,343/ - . IF WE CONSIDER TH E AMOUNT OFFERED AS DISALLOWABL E BY THE ASSESSEE AND THE AMOUNT STILL REMAINING AS DISALLOWABLE , IT TURNS OUT THAT ONLY A SUM OF RS. 1,25,340/ - REMAINS AS ADDITIONAL LY DISALLOWABLE UNDER SECTION 14A OTHER THAN INTEREST. IN OUR CONSIDERED OPINION, THE AMOUNT OF SUCH DISALLOWANCE IS REASONABLE AND NO FURTHER INTERFERENCE IS WARRANTED. 6 . IN THE RESULT, THE APPEAL IS DISMISSED. THE DECISION IS PRONOUN CED IN THE OPEN COURT O N 1 9 T H MARCH , 2015. S D / - S D / - (C.M. GARG) (R.S. SYAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 9 T H MARCH, 2015. RK/ - COPY FORWARDED TO: 1. APPELLANT 4 ITA NO. 29 9 3/DEL /2011 AY: 2006 - 07 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI