Lumax Auto Technologies Ltd, Pune V. Assistant Commissioner of Income-tax, Circle - 9, Pune

ITA 3088/PUN/2017

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 1281 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-02-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 28-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Keywords: Rule 8D
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE (THROUGH VIRTUAL COURT) BEFORE SHRI INTURI RAMA RAO, AM AND SHRI PARTHA SARATHI CHAUDHURY, JM . / ITA NO.3088/PUN/2017 / ASSESSMENT YEAR : 2012-13 LUMAX AUTO TECHNOLOGIES LTD., PLOT 70, SECTOR 10, PCNTDA, BHOSARI, PUNE- 411026. PAN : AAACD4090Q ....... / APPELLANT / V/S. ACIT, CIRCLE- 9, PUNE. / RESPONDENT ASSESSEE BY : MS. SHWETA BANSAL REVENUE BY : SHRI S. P. WALIMBE / DATE OF HEARING : 04.02.2021 / DATE OF PRONOUNCEMENT : 04.02.2021 / ORDER PER INTURI RAMA RAO, AM: THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)- 6, PUNE (CIT(A) FOR SHORT) DATED 10.10.2017 FOR THE ASSESSMENT YEAR 2012-13. 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE APPELLANT IS A FIRM ENGAGED IN THE BUSINESS OF MANUFACTURING OF AUTOMOTIVE COMPONENTS. THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2012-13 WAS FILED ON 29.09.2012 DECLARING TOTAL INCOME OF RS.32,61,90,370/-. AGAINST THE SAID RETURN OF INCOME, THE 2 ITA NO.3088/PUN/2017 ASSESSMENT WAS COMPLETED BY THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-9 (THE ASSESSING OFFICER FOR SHORT) VIDE ORDER DATED 10.02.2015 AT A TOTAL INCOME OF RS.32,73,75,960/-. THE DISPARITY BETWEEN THE RETURNED INCOME AND THE ASSESSED INCOME IS ON ACCOUNT OF ADDITION OF RS.11,34,302/- U/S 14A OF THE INCOME TAX ACT, 1961 (THE ACT FOR SHORT) REJECTING THE CONTENTION OF THE APPELLANT THAT NO BORROWED FUNDS WERE UTILIZED FOR THE PURPOSE OF MAKING THE INVESTMENTS YIELDING DIVIDEND INCOME. THE ASSESSING OFFICER HAD COMPUTED THE AMOUNT OF DISALLOWANCE INVOKING THE PROVISIONS OF RULE 8D OF THE INCOME TAX RULES, 1962 (THE RULES FOR SHORT) R.W.S. 14A OF THE ACT. EVEN THE LD. CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 3. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE APPELLANT IS BEFORE US IN THE PRESENT APPEAL. 4. BEFORE US, IT IS SUBMITTED THAT THE ASSESSEE MADE SUO-MOTU DISALLOWANCE OF RS.1,57,500/- TOWARDS EXPENDITURE INCURRED TOWARDS EARNING DIVIDEND INCOME OF RS.31,50,000/-. IT IS SUBMITTED THAT THE DIVIDEND INCOME WAS RECEIVED FROM LUMAX INDUSTRIES LIMITED IN WHICH THE INVESTMENTS WERE MADE IN THE EARLIER YEARS AND IT WAS ALSO DEMONSTRATED BEFORE US THAT IN THE EARLIER YEAR NO BORROWED FUNDS WERE UTILIZED FOR THE PURPOSE OF MAKING INVESTMENTS. IT IS FURTHER CONTENDED THAT WITHOUT RECORDING SATISFACTION AS TO HOW THE CONTENTION OF THE APPELLANT THAT NO EXPENDITURE WERE INCURRED TOWARDS THE DIVIDEND INCOME NO FURTHER DISALLOWANCE CAN BE MADE, PLACED RELIANCE ON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE, 328 ITR 81 (BOM.). FURTHER, IT IS SUBMITTED THAT THE 3 ITA NO.3088/PUN/2017 APPELLANT HAD OWN SUFFICIENT FUNDS TO MAKE INVESTMENTS AND NO BORROWINGS WERE MADE FOR THE PURPOSE OF MAKING THE INVESTMENT WHICH YIELDED THE DIVIDEND INCOME DURING THE YEAR UNDER CONSIDERATION. 5. ON THE OTHER HAND, LD. SR. CIT-DR RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. 6. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ONLY ISSUE IN THE PRESENT APPEAL RELATES TO THE COMPUTATION OF AMOUNT OF DISALLOWANCE U/S 14A OF THE ACT. IT IS A MATTER OF RECORD THAT THE ASSESSEE OFFERED A SUO-MOTU DISALLOWANCE OF RS.1,57,500/- TOWARDS THE EXPENDITURE TO EARN DIVIDEND INCOME. IT WAS SPECIFICALLY CONTENDED BEFORE THE ASSESSING OFFICER AND THE LD. CIT(A) THAT NO BORROWED FUNDS WERE UTILIZED FOR THE PURPOSE OF MAKING THE INVESTMENTS WHICH YIELDED THE DIVIDEND INCOME FOR THE YEAR UNDER CONSIDERATION. THE LOWER AUTHORITIES WITHOUT CONSIDERING THE SUBMISSIONS MADE IN PROPER PERSPECTIVE HAD PROCEEDED TO MAKE THE DISALLOWANCE. ON PERUSAL OF THE MATERIAL PLACED AT PAGE NO.3 OF THE PAPER BOOK FILED BEFORE US, IT IS CLEAR THAT NO BORROWINGS WERE UTILIZED FOR THE PURPOSE OF MAKING THE INVESTMENTS WHICH YIELDED THE DIVIDEND INCOME. THE BORROWINGS SHOWN IN THE BOOKS OF ACCOUNT WERE MADE FOR SPECIFIC PURPOSE. IN THE ABSENCE OF EVIDENCE TO THE CONTRARY, IT CANNOT BE PRESUMED THAT THE BORROWED FUNDS HAVE BEEN UTILIZED FOR THE PURPOSE OF MAKING THE INVESTMENTS WHICH YIELDED THE DIVIDEND INCOME. THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT NO FURTHER DISALLOWANCE U/S 14A OF THE ACT IS WARRANTED. 4 ITA NO.3088/PUN/2017 ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION OF RS.11,34,302/- MADE U/S 14A OF THE ACT. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED ON THIS 04 TH DAY OF FEBRUARY, 2021. SD/- SD/- (PARTHA SARATHI CHAUDHURY) (INTURI RAMA RAO) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; / DATED : 04 TH FEBRUARY, 2021. SUJEET / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(A)-6, PUNE. 4. THE PR. CIT- 5, PUNE. 5. , , , / DR, ITAT, A BENCH, PUNE. 6. / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE.