Aquagel Chemicals(Bhavnagar)P. Ltd., Bhavnagar V. DCIT, Circle-1, Bhavanagar

ITA 424/AHD/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 9361 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-10-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2014-2015
• Appeal Filed On: 21-02-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: PARIMAL B PARMAR
• Keywords: Principle of natural justice; Rule 8D
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO. 424/AHD/2018 (ASSESSMENT YEAR : 2014-15) AQUAGEL CHEMICALS (BHAVNAGAR) PVT. LTD., 251, NAVAGAM, KARDEJ, DIST. BHAVNAGAR 364 060. VS. DCIT, CIRCLE 1, BHAVNAGAR. [PAN NO. AAKCA 9462 B] ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI PARIMAL B. PARMAR, A.R. RESPONDENT BY : SHRI SATISH SOLANKI, SR. D.R. DATE OF HEARING 30/09/2019 DATE OF PRONOUNCEMENT 01/10/2019 O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE PERTAINING TO THE ASSES SMENT YEAR (A.Y.) 2014-15 IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 6, AHMEDABAD (CIT FOR SHORT) DATED 16.01.2018. THE A SSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THE LEARNED CIT(A) HAS ERRED BOTH IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING THE ACTION OF THE AO OF INVOKING THE PRO VISIONS OF RULE 8D WITHOUT RECORDING ANY DISSATISFACTION TO THE CLAIM OF APPELLANT. 2. THE LEARNED CIT(A) HAS ERRED BOTH IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING DISALLOWANCE MADE BY THE AO U/S.14A OF T HE ACT R.W.R. 8D OF THE INCOME-TAX RULES, 1962 OF RS.11,08,135/-. - 2 - ITA NO.424/AHD/2018 AQUAGEL CHEMICALS VS. DCIT ASST.YEAR 2014-15 3. THE LEARNED CIT(A) HAS ERRED BOTH IN LAW AND ON THE FACTS OF THE CASE IN NOT FOLLOWING THE BINDING DECISIONS OF HON'BLE GUJARAT HIGH COURT ALLOWING CREDIT OF OWNED FUNDS WHILE COMPUTING THE DISALLOWA NCE U/S 14A R W RULE 8D. 4. BOTH THE LOWER AUTHORITIES HAVE PASSED THE ORDER S WITHOUT PROPERLY APPRECIATING THE FACTS AND THEY FURTHER ERRED IN GR OSSLY IGNORING VARIOUS SUBMISSIONS, EXPLANATIONS AND INFORMATION SUBMITTED BY THE APPELLANT FROM TIME TO TIME WHICH OUGHT TO HAVE BEEN CONSIDERED B EFORE PASSING THE IMPUGNED ORDER. THIS ACTION OF THE LOWER AUTHORITIE S IS IN CLEAR BREACH OF LAW AND PRINCIPLES OF NATURAL JUSTICE AND THEREFORE DESERVES TO BE QUASHED. 5. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN CONFIRMING ACTION OF THE LD. AO IN LEVYING INTEREST U/S.234A/B /C OF THE ACT. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER, ED IT, DELETE, MODIFY OR CHANGE ALL OR ANY OF THE GROUNDS OF APPEAL AT THE T IME OF OR BEFORE THE HEARING OF THE APPEAL. 2. THE ONLY EFFECTIVE GROUND OF THIS APPEAL IS AGAI NST DISALLOWANCE MADE U/S 14A R.W.R. 8D OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED AS TO THE ACT). 3. THE FACTS GIVING RISE TO THE PRESENT APPEAL ARE THAT THE CASE OF THE ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMEN T U/S 143(3) OF THE ACT WAS FRAMED VIDE ORDER DATED 11.11.2016. WHILE FRAMING THE ASSE SSMENT THE ASSESSING OFFICER MADE DISALLOWANCE BY INVOKING THE PROVISION OF SECTION 1 4A AND APPLYING RULE 8D OF THE INCOME TAX RULES, 1962 (HEREINAFTER REFERRED AS TO THE RULE) AMOUNTING TO RS.11,08,135/- THUS THE ASSESSING OFFICER ASSESSED THE INCOME AT RS.1,18,39,508/- AGAINST THE INCOME DECLARED AT RS.1,07,31,373/-. AGGRIEVED BY THIS THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LEARNED CIT(A) WHO AFTER CONTENDI NG THE SUBMISSION SUSTAINED THE ADDITION. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. - 3 - ITA NO.424/AHD/2018 AQUAGEL CHEMICALS VS. DCIT ASST.YEAR 2014-15 4. AT THE OUTSET, THE LEARNED COUNSEL FOR THE ASSES SEE CONTENDED THAT SO FAR DISALLOWANCE QUA INTEREST IS CONCERNED AUTHORITIES BELOW ARE NOT JUSTIFIED IN MAKING THE ADDITION AS THE ASSESSEE HAS SUFFICIENT INTEREST FR EE FUND OF ITS OWN PER CONTRA THE LEARNED DR OPPOSED THE SUBMISSION. LEARNED COUNSEL PLACED R ELIANCE IN THE FOLLOWING CASES: CIT VS. RELIANCE INDUSTRIES LTD. - 410 ITR 466 (SC) ; CIT VS. TORRENT POWER LTD. - 363 ITR 474 (GUJ); CIT VS. SUZLON ENERGY LTD. - 354 ITR 630 (GUJ); CIT VS. GUJARAT POWER CORPORATION LTD. - 352 ITR 58 3 (GUJ); CIT VS. HITACHI HOME & LIFE SOLUTIONS (I). LTD. - ( 2014) 41 TAXMANN.COM 540 (GUJ); CIT VS. RELIANCE UTILITIES & POWER LTD. - 313 ITR 3 40 (BOM); MUNJAL SALES CORPORATION VS. CIT - 298 ITR 298 (SC) ; IN REJOINDER, LEARNED COUNSEL FOR THE ASSESSEE PLAC ED RELIANCE WORKING MADE IN THE CHART. THE ASSESSEE HAS STATED IN CHART AS UNDER: PARTICULARS BALANCE AS AT 31.03.2014 (RS.) BALANCE AS AT 31.03.2013 (RS.) (A) INTEREST FREE FUNDS : SHARE CAPITAL RESEARCH & SURPLUS 22,00,00,000 1,06,49,675 23,06,49,675 22,00,00,000 -53,090 21,99,46,910 (B) INVESTMENTS 6,84,11,238 19,89,87,795 (C) RATIO OF INTEREST FREE FUNDS & INVESTMENTS ( A/B * 100 ) 3.37 TIMES 1.11 TIMES 5. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIALS AVAILABLE ON RECORDS AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELO W. THE FACT THAT THE ASSESSEE HAS SUFFICIENT FREE FUNDS IS NOT REBUTTED BY THE REVENU E BY PLACING ANY CONTRARY MATERIAL ON RECORD, THEREFORE, WE DIRECT THE ASSESSING OFFICER TO DELETE ADDITION RELATED TO INTEREST - 4 - ITA NO.424/AHD/2018 AQUAGEL CHEMICALS VS. DCIT ASST.YEAR 2014-15 COMPONENT AND REST OF THE ADDITION IS SUSTAINED. GR OUND RAISED IN THIS APPEAL IS PARTLY ALLOWED. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IN ITA NO. 424/AHD/2018 FOR A.Y. 2014-15 IS PARTLY ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 01/10/2019 SD/- SD/- ( WASEEM AHMED ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 01/10/2019 PRITI YADAV, SR.PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. () / THE CIT(A)-6, AHMEDABAD. 5. , ! ' , #$%% / DR, ITAT, AHMEDABAD 6. &' () / GUARD FILE. / BY ORDER, //TRUE COPY// / ( DY./ASSTT. REGISTRAR) !, #$ / ITAT, AHMEDABAD 1. DATE OF DICTATION 30.09.2019 + 01.10.2019 (COVERE D CASE 3) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 01.10.2019 3. OTHER MEMBER. 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S 01.10.2019 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER