The DCIT, Circle-2(1)(2), Baroda V. M/s. Munjal Auto Industries Ltd., Baroda

ITA 3313/AHD/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7900 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2011-2012
• Appeal Filed On: 11-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V K SINGH
• Keywords: Earning of tax free income
• Section: 143(3); 14A

Judgement Text

ITA NO. 3313/AHD/2014 ACIT VS. MUNJAL AUTO INDUSTRIES LTD ASSESSMENT YEAR : 2011-12 PAGE 1 OF 2 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH, AHMEDABAD [CORAM: PRAMOD KUMAR AM AND S S GODARA JM] ITA NO. 3313/AHD/2014 ASSESSMENT YEAR: 2011-12 ASSISTANT COMMISSIONER OF INCOME-TAX ....... ......APPELLANT CIRCLE 2(1)(2), BARODA VS. MUNJAL AUTO INDUSTRIES LTD. .......................RESPONDENT 187, GIDC ESTATE, WAGHODIA, BARODA-391760 [PAN : AAACG 8588 L] APPEARANCES BY: VK SINGH FOR THE APPELLANT SURENDRA MODIANI FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : 18.12.2017 DATE OF PRONOUNCING THE ORDER : 19.12.2017 O R D E R PER PRAMOD KUMAR AM: 1. BY WAY OF THIS APPEAL, THE APPELLANT ASSESSING O FFICER HAS CHALLENGED CORRECTNESS OF THE ORDER DATED 23 RD SEPTEMBER 2014, PASSED BY THE CIT(A)-III, BARODA, IN THE MATTER IN THE MATTER OF ASSESSMENT U NDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961, FOR THE ASSESSMENT YEAR 2011- 12. 2. GRIEVANCE RAISED BY THE APPELLANT IS AS FOLLOWS: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT(A) ERRED IN DELETING THE ADDITION TO THE EXTENT OF RS. 56,85,132/- MADE U/S 14A READ WITH RULE 8D BY MERELY ACCEPTING THE ASSESSEE S SUBMISSION AND WITHOUT CONSIDERING THE FACTS OF THE CASE. 3. LEARNED REPRESENTATIVES FAIRLY AGREE THAT THE AF ORESAID ISSUE IS COVERED, IN FAVOUR OF THE ASSESSEE, BY THE ORDER DATED 28.11.20 16 PASSED BY THE COORDINATE BENCH, IN ASSESSEES OWN CASE FOR THE ASSESSMENT YE AR 2009-10, WHEREIN THE TRIBUNAL HAS HELD AS UNDER:- 12. WE FIND THAT THE SUBMISSION OF THE ASSESSEE BE FORE THE CIT(A) A SUM OF RS.50,000/- HAS BEEN DISALLOWED BY THE ASSESSEE ITS ELF SUO MOTU HAS REMAINED UNCONTROVERTED. ON A BROADER CONSIDERATION , WE ALSO NOTE THAT THE INVESTMENTS WERE LARGELY MADE IN THE EARLIER YEARS AND HAS BEEN CARRY FORWARDED IN THE CURRENT YEAR WITH A VERY FEW MOVEM ENTS THEREIN. THE ITA NO. 3313/AHD/2014 ACIT VS. MUNJAL AUTO INDUSTRIES LTD ASSESSMENT YEAR : 2011-12 PAGE 2 OF 2 ASSESSEE HAS COMPUTED DISALLOWANCE WHICH WAS CLAIME D TO BE SUFFICIENT BY THE ASSESSEE HAVING REGARD TO THE FACTS AND CIRCUMS TANCES OF THE CASE. NOTWITHSTANDING THE AFORESAID STAND OF THE ASSESSEE ON THIS ACCOUNT, THE AO MECHANICALLY APPLIED RULE 8D(2)(III) WITHOUT EXAMIN ING THE MERITS OF THE ASSESSEE'S STAND AND WITHOUT RECORDING ANY SATISFAC TION AS TO HOW THE DISALLOWANCE OFFERED BY THE ASSESSEE IS INCORRECT H AVING REGARD TO ACCOUNT OF THE ASSESSEE. WE NOTE THAT NO LACK OF SATISFACTION WITH REGARD TO THE CORRECTNESS OF THE ACCOUNTS OF THE ASSESSEE IN RESP ECT OF SUCH EXPENDITURE IN RELATION TO THE EXEMPT INCOME HAS BEEN RECORDED BY THE AO AS CONTEMPLATED UNDER SECTION 14A(2) OF THE ACT. WE ARE OF THE CONS IDERED VIEW THAT UNDER THE CIRCUMSTANCES, WHERE THE REVENUE HAS FAILED TO RECO RD DISSATISFACTION ON THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE WITH RESPE CT TO DISALLOWANCE OFFERED, IT IS NOT OPEN FOR IT TO RESORT RULE 8D(2)(III) IN TERMS OF IT RULES, 1962. WE FIND THAT IN TERMS OF SECTION 14AOF THE IT ACT R.W.RULE 8D OF IT RULES, THE ONUS IS ON THE AO TO SHOW HOW THE ASSESSEE'S CLAIM IS INCOR RECT. A BARE READING OF SECTION 14A OF THE ACT WOULD SUGGEST THAT ITS AP PLICABILITY IS NOT AUTOMATIC. IT IS HEDGED BY CONDITION PRESCRIBED THEREIN. SECTION 14A INHERES IN IT THE CONCEPT OF REASONABLENESS. THE FORMIDABLE AMOUNT OF EXPENDITURE CANNOT BE SAID TO BE ATTRIBUTABLE TO TAX-FREE INCOME BY APPLY ING A STRAIGHT JACKET FORMULA AS PER RULE 8D(2)(III) OF THE IT RULES WITHOUT DEMO NSTRATING INCORRECTNESS IN THE OFFER OF DISALLOWANCE MADE BY THE ASSESSEE. HEN CE, WE ARE DISPOSED TO ADJUDICATE THE ISSUE IN FAVOUR OF THE ASSESSEE. THU S, THE ORDER OF CIT(A) ON DISALLOWANCE OF ADMINISTRATIVE AND MANAGERIAL EXPEN SES STANDS VACATED. 4. WE SEE NO REASONS TO TAKE ANY OTHER VIEW OF THE MATTER THAN THE VIEW SO TAKEN BY THE CO-ORDINATE BENCH. RESPECTFULLY FOLLOW ING THE VIEWS SO TAKEN BY THE CO- ORDINATE BENCH (SUPRA) IN ASSESSEES OWN CASE FOR A Y 2009-10 VIDE ITA NOS.1998 & 2044/AHD/2012, THE ISSUE RAISED BY THE ASSESSING OF FICER IN THIS APPEAL IS DISMISSED. 5. IN THE RESULT, THE APPEAL IS DISMISSED. PRONOUNC ED IN THE OPEN COURT TODAY ON THE 19 TH DAY OF DECEMBER, 2017. SD/- SD/- S S GODARA PRAMOD KUM AR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) *BT AHMEDABAD, THE 19 TH DAY OF DECEMBER, 2017 COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER TRUE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD