The ACIT(OSD)-I,Range-4, Ahmedabad V. Gujarat State Financial Corporation, Gandhinagar

ITA 328/AHD/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9749 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 11 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 02-12-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 07-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R I PATEL
• Assessee Lawyers: PF JAIN
• Section: 14A; 11

Judgement Text

IT A NO. 328 / AHD/ 201 1 ASSESSMENT YEAR: 200 4 - 05 PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD A BENCH, AHMEDABAD [CORAM : PRAMOD KUMAR AM AND S S GODARA JM] I TA NO. 328 /AHD/201 1 A SSESSMENT Y EAR : 20 0 4 - 05 ACIT (OSD) - I .APPELLANT RANGE - 4, AHMEDABAD . VS. GUJARAT STATE FINAN CIAL CORPORATION . RESPONDENT BLOCK NO.10, SECTION 11 UDYOG BHAVAN, GANDHINAGAR. [ P AN: AABCG 2924 M ] APPEARANCES BY: R.I. PATEL , FOR THE A PPELLANT P.F. JAIN , FOR THE RESPONDENT D ATE OF CONCLUDING THE HEARING: DECEMBER 2 ND , 201 5 DATE OF PRONOU NCING THE ORDER : JANUARY 27 TH , 201 6 O R D E R PER PRAMOD KUMAR , AM : THIS APPEAL IS DIRECTED AGAINST LEARNED CIT(A) S ORDER DATED 4 TH NOVEMBER, 2010 FOR THE ASSESSMENT YEAR 2004 - 05 . 2. IN THE FIRST GROUND OF APPEAL, THE ASSESSING OFFICER HA S RAISED THE FOLLOWING GRIEVANCES: 1. THE LD . CIT ( A ) - XX, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.65,16,70,000/ - MADE BY THE AO ON ACCOUNT OF NON CHARGING OF INTEREST ON NON PERFORMING ADVANCES, WITHOUT PROPERLY APPRECIATING THE FACTS OF THE C A SE AND THE MATERIAL BROUGHT ON RECORD BY THE AO . IT A NO. 328 / AHD/ 201 1 ASSESSMENT YEAR: 200 4 - 05 PAGE 2 OF 3 1.2 THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE AFORESAID ADDITION WITHOUT VERIFYING WHETHER THE CONDITIONS LAID DOWN UNDER THE PROVISIONS OF SECTION 43D OF THE A CT WER E ACTUALLY FULFILLED IN THE CASE OF THE A SSESSEE . 1.3 IN DOING SO, THE LD . CIT ( A ) HAS ERRED IN LAW AND ON FACT S IN NOT EXAMINING WHETHER THE A SS ESSEE H AD CLASSIFIED THE NPAS ON THE BASIS OF THE RBI GUIDELINES , KEEPING IN VIEW THE PROVISIONS OF SECTION 43D O F THE I.T. A CT, 1961 . 3. LEARNED REPRESENTATIVES FAIRLY AGREE THAT THIS ISSUE IS SQUARELY COVERED BY A CO - ORDINATE BENCH S DECISION S , IN ASSESSEE S OWN CASE FOR THE ASSESSMENT YEA RS 2001 - 02, 2002 - 03 AND 2003 - 04. COPIES OF THESE DECISIONS WERE ALSO PLACE D BEFORE US. THE RELIEF GRANTED BY THE LEARNED CIT(A) IS THUS CONSISTENT WITH THE STAND OF THE TRIBUNAL. 4. IN VIEW OF THE ABOVE DISCUSSIONS, WE UPHOLD THE RELIEF GRANTED BY THE LEARNED CIT(A) AND DECLINE TO INTERFERE IN THE MATTER. 5. GROUND NO.1 IS TH US DISMISSED. 6. IN THE SECOND GROUND OF APPEAL, THE ASSESSING OFFICER HAS RAISED THE FOLLOWING GRIEVANCES: - 2. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE AO THAT FOR THE PURPOSE OF COMPUTATION OF DISALLOWANCE U/S.14A OF THE ACT, ONLY THE NET INTEREST IS TO BE CONSIDERED, WITHOUT PROPERLY APPRECIATING THE FACTS OF T HE C A SE AND THE MATERIAL BROUGHT ON RECORD BY THE AO. 2.2 IN DOING SO, THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THAT SINCE THE MONEY INVESTED FOR MA KING ADVANCES IS LOCKED UP IN SUCH ADVANCES AND COULD NOT HAVE BEEN UTILISED FOR MAKING INVESTMENT IN TAX FREE SECURITIES , HE WAS NOT JUSTIFIED IN DIRECTING THE AO TO CONSIDER ONLY THE NET INTE REST FOR THE PURPOSE OF COMPUTATION OF DISALLOWANCE U/S. 14A OF THE ACT. IT A NO. 328 / AHD/ 201 1 ASSESSMENT YEAR: 200 4 - 05 PAGE 3 OF 3 7. WE FIND THAT THE ISSUE, AS TO WHETHER THE NET INTEREST EXPENDITURE SHOULD BE CONSIDERED FOR DISALLOWANCE UNDER SECTION 14A OR THE GROSS INTEREST EXPENDITURE, IS NOW COVERED, IN FAVOUR OF THE ASSESSEE, BY A CO - ORDINATE BENCH DECISION IN THE C ASE OF ITO VS. KARNAVATI PETROCHEM PVT . LTD . (ITA NO. 2228/AHD/2012 ; ORDER DATED 5 TH JULY 2013). LEARNED DEPARTMENTAL REPRESENTATIVE DOES NOT DISPUTE THIS BUT HE NEVERTHELESS RELIE S UPON THE STAND OF THE ASSESSING OFFICER. 8. WE SEE NO REASONS TO TAKE ANY OTHER VIEW OF THE MATTER THAN THE VIEW TAKEN BY THE CO - ORDINATE BENCH IN THE CASE OF KARNAVATI PETROCHEM (SUPRA). ACCORDINGLY, WE HOLD THAT THE LEARNED CIT(A) WAS JUSTIFIED IN PROCEEDING ON THE BASIS THAT ONLY NET FIGURE OF INTEREST IS TO BE TAKEN INTO AC COUNT FOR COMPUTING DISALLOWANCE UNDER SECTION 14A OF THE ACT. NO INTERFERENCE IS THUS CALLED FOR. 9. GROUND NO.2 IS ALSO THUS DISMISSED. 10. IN THE RESULT, THE APPEAL IS DISMISSED. PRONOUNCED IN T HE OPEN COURT ON THIS 2 7 TH DAY OF JANUARY, 2016. SD/ - SD/ - S S GODARA PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) DATED: THE 27 TH DAY OF JANUARY , 201 6 . PBN/ * COPIES TO : (1) THE APPE LLANT ( 2) THE RESPONDENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD