The Asstt. Commissioner of Income-tax, Jalandhar V. M/s. Hansa Export Corporation, Jalandhar

ITA 394/ASR/2012

• Counselvise Citation: 39420914 RSA 2012
• Duration Of Justice: 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 05-09-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 23-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMRIK CHAND
• Assessee Lawyers: Y K SUD
• Keywords: Earning of tax free income; Assessment record
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P. JAIN, ACCOUNTANT MEMBER I.T.A. NO. 394(ASR)/2012 ASSESSMENT YEAR: 2009-10 PAN: AAAFH4498M THE ASSTT. COMMISSIONER OF VS. M/S HA NSA EXPORT CORPORATION, INCOME TAX, RANGE-I, 15-A, BASTI NAU, JALANDHAR JALANDHAR (APPELLANT) (RESPONDENT) APPELLANT BY: SH. AMRIK CHAND, DR RESPONDENT BY: SH. Y.K. SUD, CA DATE OF HEARING: 05.09.2013 DATE OF PRONOUNCEMENT: 12.09.2013 ORDER PER BENCH 1) THE REVENUE HAS FILED THE PRESENT APPEAL A GAINST IMPUGNED ORDER DATED 02.08.2012 PASSED BY THE COMMISSIONER O F INCOME TAX (APPEALS), JALANDHAR, FOR THE ASSESSMENT YEAR 2009- 10 ON THE FOLLOWING GROUNDS: I. THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED IN LAW IN DELETING THE ADD ITION OF DISALLOWANCE OF RS. 15,01,460/- OUT OF THE EXPENSES U/S 14(A) OF THE INCOME-TAX ACT, 1961. 2 I.T.A. NO. 394(ASR)/2012 ASSESSMENT YEAR: 2009-10 II. THAT, IT IS PRAYED THAT THE ORDER OF LEARNED CIT(A) BE SET-ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. III. THAT THE APPELLANT REQUESTS FOR LEAVE TO ADD TO OR AMEND OR ALTER THE GROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD AN D DISPOSED OFF. 2) FACTS NARRATED BY THE REVENUE AUTHORITY ARE NOT DISPUTED BY BOTH THE PARTIES; THEREFORE, THERE IS NO NEED TO RE PEAT THE SAME. 3) AT THE TIME OF HEARING, LEARNED COUNSEL FOR THE ASSESSEE STATED THAT THE LEARNED FIRST APPELLATE AUTHORITY HAS DECI DED THE ISSUE IN DISPUTE IN FAVOUR OF THE ASSESSEE BY RESPECTFULLY FOLLOWING THE ORDER OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. HERO CYCLES LTD. REPORTED IN 323 ITR 518 (P&H), THEREFORE THE APPEAL FILED BY THE REVENUE DESERVES TO BE DISMISSED. 4) LEARNED DR RELIED UPON THE ORDER PASSED BY THE A SSESSING OFFICER. HE HAS ALSO FILED HIS WRITTEN SUBMISSION D ATED 05.09.2013 AND STATED THAT AFTER EXAMINING THE ASSESSMENT RECORDS OF THE ASSESSEE, THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE CLAIM OF ASSESSEE THAT NO EXPENDITURE HAS BEEN INCURRED IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THE ACT FOR SUCH PRE VIOUS YEAR, AND HE DETERMINED THE AMOUNT OF EXPENDITURE IN RELATION TO SUCH INCOME IN 3 I.T.A. NO. 394(ASR)/2012 ASSESSMENT YEAR: 2009-10 ACCORDANCE WITH THE PROVISIONS OF SUB-RULE 2(III) O F RULE 8D. HE STATED THAT THE ASSESSING OFFICER HAS PASSED A WELL REASON ED ORDER BY DISALLOWING THE AMOUNT IN DISPUTE UNDER SECTION 14A OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) READ WITH RULE 8 D(2 )(III) OF THE RULES. AS REGARDS TO THE CASE LAW I.E. HERO CYCLES LTD. (SUPRA) RELIED UPON BY LEARNED COUNSEL FOR THE ASSESSEE AS WELL AS LEARNED FIRST APPELLATE AUTHORITY, LEARNED DR STATED THAT THE SAME IS NOT A PPLICABLE IN THE CASE OF THE ASSESSEE. 5) WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ELEVANT RECORDS AVAILABLE WITH US AS WELL AS THE WRITTEN SUBMISSION FILED BY ASSESSEE. IT IS A MATTER OF RECORD THAT THE ASSESSEE-FIRM HAD INVES TED MONEY IN MUTUAL FUNDS ETC. AND THE INCOME FROM WHICH DID NOT FORM P ART OF THE TOTAL INCOME OF THE ASSESSEE. AFTER EXAMINING THE RECORD OF THE ASSESSEE, THE ASSESSING OFFICER ASKED THE ASSESSEE WHY THE DISALL OWANCE AMOUNTING TO RS. 15,01,460/- AS PER RULE 8 D (2) (III) OF THE RU LES SHOULD NOT BE MADE IN ITS CASE. IN REPLY, THE ASSESSEE OBJECTED THE PR OPOSAL FOR DISALLOWANCE AS POINTED OUT BY THE ASSESSING OFFICER AND SUBMITT ED THAT ALL THE INVESTMENTS ON WHICH DIVIDEND HAS BEEN RECEIVED HAD BEEN MADE THROUGH AN ASSET MANAGEMENT COMPANY OR FUND MANAGER. ASSESS EE FURTHER 4 I.T.A. NO. 394(ASR)/2012 ASSESSMENT YEAR: 2009-10 SUBMITTED THAT ALL THE EXPENSES THAT HAD BEEN INCUR RED FOR THE PURPOSE OF LONG TERM OR SHORT TERM CAPITAL GAINS IN THE FORM O F DEPOSITORY CHARGES, MANAGEMENT FEE, CUSTODIAN FEES ETC, HAD BEEN ADDED BACK TO THE INCOME OF THE ASSESSEE WHILE COMPUTING THE TAXABLE INCOME AND THAT, THEREFORE, NO SEPARATE DISALLOWANCE WAS CALLED FOR. ASSESSEE A LSO SUBMITTED THAT ALL THE INVESTMENTS WERE MADE OUT OF ITS OWN FUNDS AND THE ASSESSEE HAS PAID NO INTEREST TO THE PARTNERS OR TO ANY BANK OR ANY O THER INSTITUTION. ASSESSEE ALSO STATED THAT THE DISALLOWANCE COULD BE MADE ONLY WHERE THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE CLAIM MADE BY THE ASSESSEE ABOUT ITS EXPENDITURE INCURRED. THE ASSESSEE RELIED UPON THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. HERO CYCLES LTD (SUPRA) IN WHICH HON'BLE HIGH COURT HAS BEEN HELD THAT DIS ALLOWANCE UNDER SECTION 14A OF THE ACT REQUIRED FINDING OF IN CURRING OF EXPENDITURE AND THAT IF IT WAS FOUND THAT FOR EARNING EXEMPT IN COME NO EXPENDITURE HAD BEEN INCURRED, DISALLOWANCE UNDER SECTION 14A O F THE ACT COULD NOT STAND. AS PER THE RECORD, THERE WAS NO EVIDENCE WHI CH SHOW THAT THE ASSESSEE HAS INCURRED EXPENDITURE IN RELATION TO EA RNING OF EXEMPT INCOME. IF NO EXPENDITURE HAS BEEN INCURRED AT ALL IN RELATION TO EARNING OF EXEMPT INCOME, THEN IN VIEW OF THE PROVISIONS OF SE CTION 14A OF THE ACT, 5 I.T.A. NO. 394(ASR)/2012 ASSESSMENT YEAR: 2009-10 THE ASSESSING OFFICER CANNOT DISALLOW THE EXPENDITU RE CLAIMED FOR EARRING TAXABLE INCOME ONLY BECAUSE SECTION 14A(3) OF THE A CT GIVES ASSESSING OFFICER THE POWER TO INVOKE SECTION 14A OF THE ACT WHERE THE ASSESSEE CLAIMS THAT NO EXPENDITURE HAS BEEN INCURRED FOR EA RNING EXEMPT INCOME. WHERE NO EXPENDITURE IS CLAIMED AS DEDUCTION AT ALL , OR THE EXPENDITURE CLAIMED HAS BEEN IDENTIFIED AND QUANTIFIED, AND THE ASSESSING OFFICER CANNOT NOT BRING ON RECORD ANY EVIDENCE TO SHOW INC URRING OF ANY EXPENDITURE FOR EARNING EXEMPT INCOME OR MORE EXPEN DITURE THAN THAT CLAIMED BY THE ASSESSEE, SECTION 14A OF THE ACT DOE S NOT PERMIT DISALLOWANCE OF EXPENDITURE. 6) KEEPING IN VIEW THE AFORESAID DISCUSSION, WE ARE OF THE CONSIDERED VIEW THAT LEARNED FIRST APPELLATE AUTHOR ITY HAS PASSED A WELL REASONED ORDER BY RESPECTFULLY FOLLOWING THE DECISI ON OF HON'BLE JURISDICTION HIGH COURT IN THE CASE OF HERO CYCLES LTD. (SUPRA) AND BY HOLDING THAT NO DISALLOWANCE UNDER SECTION 14A OF T HE ACT IN RESPECT OF EXPENDITURE INCURRED FOR EARNING EXEMPT INCOME COUL D BE MADE BY THE ASSESSING OFFICER AND DISALLOWANCE OF RS. 15,01,460 /- HAS RIGHTLY BEEN DELETED BY HIM IN THE IMPUGNED ORDER. ACCORDINGLY, WE DISMISS THE 6 I.T.A. NO. 394(ASR)/2012 ASSESSMENT YEAR: 2009-10 APPEAL FILED BY THE REVENUE AND UPHOLD THE IMPUGNED ORDER DATED 02.08.2012 PASSED BY LEARNED CIT(A), JALANDHAR. 7) IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH SEPTEMBER, 2013 SD/./- SD/./- (B.P. JAIN) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 12 TH SEPTEMBER, 2013 /RK/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: M/S HANSA EXPORT CORPORATION, 15-A, B ASTI NAU, JALANDHAR. 2. THE ACIT, RANGE-I, JALANDHAR 3. THE CIT(A), JALANDHAR 4. THE CIT, JALANDHAR 5. THE SR DR, I.T.A.T., AMRITSAR TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.