Vepar Pvt. Ltd., Ahmedabad V. DCIT, Circle-4(1)(2), Ahmedabad

ITA 336/AHD/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 6323 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 8 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 12-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: UMA PRASAD
• Assessee Lawyers: P M MEHTA
• Keywords: Earning of tax free income; Rule 8D
• Section: 143(3); 14A; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH (BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER & SHRI WASEEM AHMED, ACCOUNTANT MEMBER) ITA. NO: 336/AHD/2018 (ASSESSMENT YEAR: 2013-14) VEPAR PVT. LTD. KAIVANNA, 9 TH FLOOR, PANCHVATI, ELLISBRIDGE, AHMEDABAD- 380009 V/S DCIT CIRCLE-4(1)(2), AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AAACV3821F APPELLANT BY : SHRI P.M. MEHTA, A.R. RESPONDENT BY : SHRI UMA PRASAD, SR. D.R. ( )/ ORDER DATE OF HEARING : 11 -10-201 9 DATE OF PRONOUNCEMENT : 21 -10-2019 PER MAHAVIR PRASAD, JUDICIAL MEMBER 1. THIS APPEAL FILED BY THE ASSESSEEE IS DIRECTED AGA INST THE ORDER OF THE LD. CIT(A)-8, AHMEDABAD DATED 04.01.2018 PERTAINING TO A.Y. 2013-14 AND FOLLOWING GROUNDS HAVE BEEN TAKEN: ITA NO. 336/ AHD/2018 . A.Y. 2013-14 2 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) GROSSLY ERRED IN CONFIRMING THE ADDITION MADE BY ASSESSING OFFICER OF RS. 15,16,860/- TO THE BOOK PROFIT COMPUTED AS PER THE PROVISIONS OF SECTION 115JB OF THE ACT CONSIDERING 4HE SAME AS EXPENSES DIRECTLY RELATED T O INVESTMENT ACTIVITY WHICH HAS RESULTED IN EXEMPT INCOME. 2. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND/OR WITHDRAW ANY GROUND OR GROUNDS OF APPEAL EITHER BEFORE OR DURING THE CO URSE OF HEARING OF THE APPEAL. 2. FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURES & EXPORT OF GARMENTS AND ACCESSORIES. 3. ON PERUSAL OF THE COMPUTATION IT, IS NOTED THAT THE ASSESSEE HAS ALREADY DISALLOWED THE AMOUNT OF RS.20,11,668/-(I.E. RS.15, 16,860/- BEING PAID TO JEETAY INVESTMENTS PVT. LTD. AND RS.4,94,808/- U/S. 14A). HENCE NO FURTHER DISALLOWANCE; IS CALLED FOR, WHILE COMPUTING THE IN COME OF THE ASSESSEE UNDER NORMAL PROVISIONS OF THE IT. ACT. HOWEVER THE ABOVE AMOUNT OF RS.20,11,668/- IS NOT TOTALLY ADDLED WHILE COMPUTIN G THE INCOME CHARGEABLE TO TAX U/S. 115JB OF THE ACT. THE ASSESSEE HAS ADDED O NLY RS.4,94,808/- IN THE COMPUTATION BUT THE AMOUNT OF RS.15,16,860/-(BEING PAID TO JEETAY INVESTMENT) IS MOT ADDED BACK. SINCE THE AMOUNT OF RS.15,16,860/- IS THE EXPENSES DIRECTLY RELATED TO THE DIVIDEND INCOME EA RNED, BEING EXEMPT, IT VERY FALLS WITHIN THE AMBIT OF RULE 8D, PART (I) OF CALC ULATION FOR DISALLOWANCE. THE COMPUTATION U/S. 115JB OF THE ACT. SR.NO PARTICULARS AMOUNT 1. BOOK PROFIT U/S .115JB OF THE A CT. RS.1,09,13,688/- 2. ADDITIONS/ DISALLOWANCES 3. DISALLOWANCE U/S. 14A : (RESTRICTED TO THE AMOUNT NOT ADDED) RS.15,16,860/- ITA NO. 336/ AHD/2018 . A.Y. 2013-14 3 BOOK PROFIT U/S.115JB RS.1,24,36348/- 4. AGAINST THE ADDITION OF RS. 15,16,860/- TO THE BOOK PROFIT COMPUTED AS PER THE PROVISIONS OF SECTION 115JB OF THE ACT, ASSESSEE PR EFERRED FIRST STATUTORY APPEAL BEFORE THE LD CIT(A) WHO CONFIRMED THE ACTION OF TH E LD. ASSESSING OFFICER. 5. NOW ASSESSEE HAS COME BEFORE US BY WAY OF SECOND AP PEAL. 6. AT THE OUTSET, LD. A.R. CITED AND SUBMITTED A COPY OF OUR OWN BENCH IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2012-13 WHE REIN IN SIMILAR FACTS AND CIRCUMSTANCES, RELIEF WAS GRANTED TO THE ASSESSEE A ND COPY OF THE SAID ORDER IS REPRODUCED: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-7, AHMEDABAD ('CIT(A)' IN SHORT), DATED 05.04.2016 ARI SING IN THE ASSESSMENT ORDER DATED 25.02.2015 PASSED BY THE ASSESSING OFFI CER (AO) UNDER S. 143(3) OF THE INCOME TAX ACT, 1961 (THE ACT) CONCER NING AY 2012-13. 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE REA D AS UNDER: '1. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN HOLDI NG THAT THE FIRST GROUND OF THE APPELLANT'S APPEAL CHALLENGING THE VA LIDITY OF THE ASSESSMENT ORDER IMPUGNED BEFORE HIM WAS GENERAL IN NATURE AND THEREFORE, NOT REQUIRED TO BE ADJUDICATED UPON BY H IM. 2. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING AD JUSTMENTS/ DISALLOWANCE OF RS.19,24,673/- WHILE COMPUTING BOOK PROFIT UNDER SEC.115JB OF THE ACT WHEN NO SUCH ADDITION OUGHT TO HAVE BEEN MADE. THE SAME MAY BE DIRECTED TO BE DELETED.' 3. GROUND NO.1 IS DISMISSED AS NOT PRESSED. 4. GROUND NO.2 CONCERNS ADJUSTMENTS/DISALLOWANCE OF RS.19,24,673/- WHILE COMPUTING 'BOOK PROFIT' UNDER S.115JB OF THE ACT. ITA NO. 336/ AHD/2018 . A.Y. 2013-14 4 5. WITH THE ASSISTANCE OF THE LEARNED AR FOR THE AS SESSEE, WE FIND THAT THE AO HAD MADE DISALLOWANCE OF RS.19,24,673/- BY RESOR TING TO SECTION 14A OF THE ACT. THE DISALLOWANCE COMPUTED WITH REFERENC E TO RULE 8D FOR THE PURPOSES OF SECTION 14A WAS IMPORTED TO SPECIAL PRO VISIONS OF SECTION 115JB OF THE ACT FOR ADJUSTMENT OF BOOK PROFITS. WE FIND THAT THE ISSUE IS NO LONGER RES INTEGRA IDENTICAL ISSUE CAME UP BEFOR E THE SPECIAL BENCH IN ACIT VS. VIREET INVESTMENTS LTD. 165 ITD 27 (SB). I N THE LIGHT OF THE DECISION OF SPECIAL BENCH, WE FIND MERIT IN THE PLE A OF THE ASSESSEE. THE AO IS ACCORDINGLY DIRECTED TO DELETE ADJUSTMENTS MA DE TO THE BOOK PROFIT ON THIS SCORE. 6. IN PARITY, THE ISSUE REQUIRES TO BE DECIDED IN F AVOUR OF THE ASSESSEE. THE ADJUSTMENT MADE BY THE REVENUE AUTHORITIES IN THE B OOK PROFIT TOWARDS DISALLOWANCE UNDER S.14A OF THE ACT IS THUS DIRECTE D TO BE DELETED. 7. IN THE RESULT, GROUND NO.2 OF THE ASSESSEE'S APP EAL IS ALLOWED. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 7. SINCE RELIEF HAS ALREADY BEEN GRANTED BY OUR OWN BE NCH IN ASSESSEES OWN CASE FOR PRECEDING YEARS. 8. THUS, IN PARITY WITH THE ITAT ORDER IN ITA NO. 1506 /AHD/2016, WE ALLOW APPEAL OF THE ASSESSEE. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN OPEN COURT ON 21- 10- 2019 SD/- SD/- (WASEEM AHMED) (MAHAVIR PRASAD) ACCOUNTANT MEMBER TRUE COPY JUDICIAL MEMBER AHMEDABAD: DATED 21/10/2019 RAJESH COPY OF THE ORDER FORWARDED TO: -