Goyal & Co. (Construction) Pvt.Ltd., Ahmedabad V. The DCIT Circle-2(1) (1), Ahmedabad

ITA 306/AHD/2023

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 8853 (ITAT-AHMEDABAD)
• Duration Of Justice: 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-02-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 08-11-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 27-04-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 2; 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, AHMEDABAD BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER & Ms. MADHUMITA ROY, JUDICIAL MEMBER आयकर अपील सं./ I. T. A. Nos. 306 & 307 /Ahd/2023 ( नधा रण वष / As se ss ment Year s : 2 017-18 & 2020 -2 1) Go y a l a n d C o . ( Co n s tr uc ti o n ) Pv t . L t d . 10 t h Fl oo r , C o mm e r c e H o us e I V , B es id e R eli a n c e Pe t ro l Pu m p , 1 0 0F t . R o a d, Sa t el li te, A h me d ab ad बनाम/ Vs . DC I T C ir c l e- 2( 1) ( 1) , A h m e d ab a d थायी लेखा सं./जीआइआर सं./P A N/ G I R N o . : A A B C G 5 4 5 9 R (Appellant) . . (Respondent) Assessee by : Shri Biren Shah & Shri Dhrunal Bhatt, A.Rs. Revenue by : Shri Rajdeep Singh, Sr. DR स ु नवाई क तार ख / D a t e o f H e a r i ng 09/11/2023 घोषणा क तार ख /D a t e o f P ro n o u nc e me n t 05/02/2024 O R D E R PER Ms. MADHUMITA ROY - JM: The instant appeals have been filed at the instance of the assessee are directed against the orders dated 07.03.2023 & 09.03.2023 passed by Ld. Commissioner of Income Tax (Appeals)-11, Ahmedabad (in short ‘CIT(A)’) arising out of the orders dated 12.12.2019 & 29.03.2022 passed by the DCIT, Circle-2(1)(1), Ahmedabad & ACIT, Central Circle 1(2), Ahmedabad, respectively; under Section 143(3) of the Income Tax Act, 1961, (hereinafter referred to as ‘the Act’) for Assessment Years 2017-18 & 2020-21. ITA Nos. 306 & 307/Ahd/2023 (Goyal & Co. (Construction) Pvt. Ltd. vs. DCIT) A.Y.– 2017-18 & 2020-21 - 2 - 2. Sin ce both the appeals filed b y the same assessee relate to si milar is sue, these are heard analogously and are b eing disposed of by a co mmon o rder for the sake of co nven ience. We take ITA No. 30 6/Ahd/2023 fo r A. Y. 2 017-18 as a lead case. 3. Th e brief fact s lead in g to the case is this th at th e ass es see filed its return o f in come on 31. 10.2017 d eclarin g total income at Rs. 14, 28, 86, 06 0/- also mad e suo moto disallo wances of expense s of R s. 4, 6 2,259 /- under Section 14A o f th e Act. T he appellant’s main bu siness activ ity is construction and develop men t of vario us pro jects. It ma de inv estments i n partnership firm which are strateg ic invest ments and n ot fo r ear ning any ex empt in co me. The appellant h as iden tified specific ex pend itu re pertaining to those in vest ments wh i ch had earned exempt income and made disallo wance o f R s. 4, 62, 259/- under Section 14A of the Act in the fo llo wing mann er: P a r t i c ul a r s A mo u n t ( R s . ) S a l ar y p a i d t o E m p l o ye e 1 , 9 5 , 0 0 0 / - D i r e c t o r R e mu n e r at i o n 1 , 5 0 , 0 0 0 / - P F a t t r i b u t a b l e t o e m p l o ye e 2 1 , 6 0 0 / - 1 0 % o f O f f i c e , I n s u r a n c e, St a t i o n a r y an d T e l ep h o n e E x p en s es ( 9 , 5 6 , 5 8 6 * 1 0 % ) 9 5 , 6 5 9 / - T o t a l di s a l l o w a n c e u n d e r s e c t i o n 1 4 A o f t he A c t 4 , 62 , 2 5 9 / - 4. Relevant to mention that th e suo moto disallowance made abov e was duly au dited and certified by Chartered Accountant as th e sa me amoun t of Rs. 4, 62 , 259/- is disclosed in tax aud it repo rt fo r A. Y. 2017-1 8 in resp ect of exp enses disallo wed under Section 14A o f th e Act. On th e contrary, the Ld. AO, h owever, disallowed ITA Nos. 306 & 307/Ahd/2023 (Goyal & Co. (Construction) Pvt. Ltd. vs. DCIT) A.Y.– 2017-18 & 2020-21 - 3 - expenditure to the ex tent of R s. 85, 61 , 316/- u nder Section 14A o f th e Act u pon application o f Rule 8D o f Inco me Tax Rules. Fin ally, upo n reducing the suo moto disallowance o f Rs. 4 , 62, 259 /- mad e by the as ses see the ulti mate disallowance under Section 1 4A read with Rule 8D re mains at Rs. 80 , 99, 05 7/- which stood confir med by the First Ap pellate Au th ority . It is a trite law that in th e even t the Ld. AO i s not s atis fied with the suo moto disallo wance mad e b y the asse ss ee u nder Section 14A of the Act, he simply cannot reject the same withou t assigning any reaso n fo r th e dissatis factio n to that effect which is also not refl ectin g in the ord er passed by the Ld. AO in th e instant case. 5. It is the case of t he asses see that the Ld. AO has not fo und th at other expenditure debited in Pro fit & Lo ss Account is attrib utable to earning of exempt inco me an d even if the app ellant wou ld not have made such investments, such ex pend itu re was fo und to be incu rred . Hence, th ere wa s no rea son on the p art o f th e Ld. AO to apply Rule 8D. The asses see reli ed upon the ju dgment pas sed b y Hon’ble Sup reme Court in the case o f PC IT vs. Hero Corpo rate Service Ltd . , reported in [20 19] 103 tax mann. com 200 (SC), wherein it has upheld th e decision made by the Trib unal in deleting disallowance made und er Section 1 4A of the Act holding that ex planation o f the asse ssee and amount offered to tax under s aid section co uld not have been rejected by th e Ld. AO in arb itrary man ner. ITA Nos. 306 & 307/Ahd/2023 (Goyal & Co. (Construction) Pvt. Ltd. vs. DCIT) A.Y.– 2017-18 & 2020-21 - 4 - 6. Th e Ld. DR has failed to controvert su ch su b mi s sion made by the Ld. AR, neither been able to cite any o ther judgment contrary to the judgment passed by the Hon’ble Supreme Court as cited hereinabo ve. Th us, respectfu lly relyin g u pon the ratio laid down by the Hon’b le Sup re me Co urt, we find that th e addition mad e by th e Ld. AO by making i mpugn ed disallowan ce under Section 14A read with Rule 8D is not su stain able and thu s deleted . 7. In th e result, app eal p referred by the asse ssee is allo wed. 8. Th e decision in ITA No . 306/Ahd/20 23 for A. Y. 2017-18 shall also apply mutatis mu tandis in ITA No. 307/Ahd/20 23. 9. In th e result, both appeals p referred by asses see are allowed . This Order pronounced on 05/02/2024 Sd/- Sd/- (WASEEM AHMED) (MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 05/02/2024 S. K. SINHA True Copy आदेश क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. !"यथ / The Respondent. 3. संबं$धत आयकर आय ु &त / Concerned CIT 4. आयकर आय ु &त(अपील) / The CIT(A)- 5. )वभागीय !,त,न$ध, आयकर अपील य अ$धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड2 फाईल / Guard file. आदेशान ु सार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपील$य अ%धकरण, अहमदाबाद / ITAT, Ahmedabad