M/s Ashok Sales Company Pvt. Ltd., Kanpur V. Dy. Commissioner of Income Tax -VI, Kanpur

ITA 418/LKW/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4588 (ITAT-LUCKNOW)
• Duration Of Justice: 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 22-02-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 24-06-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Section: 14A

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.418/LKW/2015 ASSESSMENT YEAR: 2012-13 D.C.I.T. CIRCLE 6, KANPUR VS M/S ASHOK SALES COMPANY PVT. LTD., 51/92, NAYAGANJ, KANPUR. PAN:AABCA1683M (RESPONDENT) (APPELLANT) SHRI NARPAT JAIN, ADVOCATE APPELLANT BY SHRI AMIT NIGAM, D. R. RESPONDENT BY 22/02/2016 DATE OF HEARING 15/03/2016 DATE OF PRONOUNCEMENT O R D E R PER A. K. GARODIA, A.M. THIS IS ASSESSEES APPEAL DIRECTED AGAINST THE OR DER PASSED BY LEARNED CIT (A) II, KANPUR DATED 08/04/2015 FOR THE ASSESSMENT YEAR 2012 13. 2. THE ASSESSEE HAS RAISED AS MANY AS 4 GROUNDS BUT THE ONLY GRIEVANCE OF THE ASSESSEE IS REGARDING DISALLOWANCE OF RS. 544,6 42/- U/S 14A OF THE ACT. 3. LEARNED A. R. OF THE ASSESSEE SUBMITTED THAT THE WRITTEN SUBMISSIONS ARE AVAILABLE ON PAGES 1 & 2 OF THE PAPER BOOK. RELIANC E WAS PLACED ON THE TRIBUNAL ORDER RENDERED IN THE CASE OF ITO VS. KARNAWATI PET RO CHEM PVT. LTD. IN ITA NO. 2228/AHD/2012 DATED 05.07.2013, COPY ON PAGES 65 TO 70 OF THE PAPER BOOK AND ALSO ON A JUDGMENT OF HONBLE ALLAHABAD HIGH COURT RENDERED IN THE CASE OF ACIT VS. DHAMPUR SUGAR MILLS PVT. LTD. IN ITA NO. 220 OF 2014 DATED 05.11.2014, COPY ON PAGES 71 TO 85 OF THE PAPER BOOK. LEARNED D. R. OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. FIRST , WE EXAMINE THE APPLICABILITY OF THE JUDGMENT OF HONBLE ALLAHABAD HIGH COURT RENDERED IN THE CASE OF ACIT VS. DHAMPUR SUGAR MILLS PVT. LTD. (SUPRA). IN THIS CASE, THE TRIBUNAL HAS GIVEN A CATEGORICAL FINDING THAT THE ENTIRE INTERES T EXPENDITURE IN THAT CASE WAS 2 ATTRIBUTABLE TO BUSINESS IN WHICH THE RESULTANT INC OME WAS ASSESSABLE TO TAX. IN THE PRESENT CASE, THE ASSESSEE HAS NOT BEEN ABLE TO ESTABLISH ANY DIRECT NEXUS BETWEEN THE INTEREST EXPENDITURE AND BUSINESS IN WH ICH THE RESULTANT INCOME WAS ASSESSABLE TO TAX. HENCE, IN THE FACTS OF THE PRESE NT CASE, THIS JUDGMENT IS NOT APPLICABLE. 5. NOW WE EXAMINE THE APPLICABILITY OF THE TRIBUNAL ORDER RENDERED IN THE CASE OF ITO VS. KARNAWATI PETRO CHEM PVT. LTD. (SUPRA). IN THIS CASE, THE TRIBUNAL UPHELD THE FINDING OF CIT (A) IN THAT CASE AS PER W HICH, HE HELD THAT WHEN THE ASSESSEE IS HAVING NET POSITIVE INTEREST INCOME, IN TEREST EXPENDITURE CANNOT BE CONSIDERED FOR DISALLOWANCE U/S 14A BUT UPHELD THE DISALLOWANCE OUT OF ADMINISTRATIVE EXPENSES TO THE EXTENT OF 0.5% OF TH E AVERAGE INVESTMENTS. IN THE PRESENT CASE, THE INTEREST INCOME IS RS. 31.47 LACS AND INTEREST EXPENDITURE IS RS. 13.99 LACS AND AS A RESULT, THERE IS NET POSITIVE I NTEREST INCOME OF RS. 17.48 LACS AND THEREFORE, BY RESPECTFULLY FOLLOWING THIS TRIBU NAL ORDER, WE HOLD THAT NO DISALLOWANCE SHOULD BE MADE U/S 14A OUT OF INTEREST EXPENDITURE BUT CONFIRM THE DISALLOWANCE OF RS. 240,296/- BEING 0.5 % OF THE AV ERAGE VALUE OF INVESTMENT OUT OF ADMINISTRATIVE EXPENSES. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS PARTLY ALLOWED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GAROD IA ) JUDICIAL MEMBER ACCOUNTANT ME MBER DATED:15 TH MARCH, 2016 *SINGH COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW A SSTT. REGISTRAR