Anil Bansilal Lodha, Nashik V. Deputy Commissioner of Income tax, Nashik

ITA 449/PUN/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 1675 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 6 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 06-09-2019
• Assessment Year: 2012-2013
• Appeal Filed On: 22-02-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: P S SHINGTE
• Keywords: Earning of tax free income; Rule 8D
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER . / ITA NO. 449/PUN/2017 / ASSESSMENT YEAR : 2012-13 DARSHAN ANIL LODHA, L/H OF LATE SHRI ANIL BANSILAL LODHA, MANGAL BHAVAN, PANCHAWATI KARANJA, NASHIK 422 003 PAN : AAGPL1981M VS. DCIT, CIRCLE-1, NASHIK / ORDER PER R.S. SYAL, VP : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-1, NASHIK ON 09-01-2017 IN RELATION TO THE ASSESSMENT YEAR 2012-13. 2. THE FIRST GROUND IN THE REVISED MEMORANDUM OF APPEAL IS AGAINST THE MAKING OF AN ADDITION OF RS.1.00 LAKH ON ACCOUNT OF DIS ALLOWANCE OF PART OF AGRICULTURAL INCOME. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSE E DECLARED AGRICULTURAL INCOME OF RS.4,50,357/-. IN THE ABSENCE OF THE ASSESSEE PRODUCING DETAILS OF AGRICULTURAL PRODUCE AND SALE RECEIPTS ETC ., THE ASSESSEE BY SHRI P.S. SHINGTE REVENUE BY SHRI SUDHENDU DAS DATE OF HEARING 06-09-2019 DATE OF PRONOUNCEMENT 09-09-2019 ITA NO. 449/PUN/2017 ANIL BANSILAL LODHA 2 ASSESSING OFFICER (AO) DISALLOWED RS.1.00 LAKH OUT OF SUCH AGRICULTURAL INCOME AND TREATED THE SAME AS INCOME FROM O THER SOURCES. THE LD CIT(A) CONFIRMED THE DISALLOWANCE. 4. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERUSING THE R ELEVANT MATERIAL ON RECORD, WE FIND THAT SIMILAR ISSUE CAME UP FOR CONSIDERATION BEFORE THE TRIBUNAL IN THE ASSESSEES OWN CAS E FOR THE A.Y. 2010-11. VIDE ITS ORDER DATED 03-06-2016 IN ITA NO.2176/PUN/2013, THE TRIBUNAL REDUCED THE DISALLOWANCE FROM RS.1.00 LAKH TO RS.50,000/- AGAINST THE DECLARED AGRICULTU RAL INCOME AT RS.4,52,530/-. SINCE THE REASONS OF DISALLOWANCE AND QUA NTUM OF THE AGRICULTURAL INCOME DECLARED BY THE ASSESSEE FOR THE INSTANT Y EAR IS ALMOST CLOSE TO THAT OF THE A.Y. 2010-11, FOLLOWING THE PREC EDENT, WE ALSO DIRECT TO REDUCE THE DISALLOWANCE TO RS.50,000/-. 5. THE ONLY OTHER ISSUE WHICH SURVIVES IN THIS APPEAL IS AGAIN ST THE CONFIRMATION OF DISALLOWANCE U/S.14A OF THE ACT. 6. THE FACTS CONCERNING THIS ISSUE ARE THAT THE ASSESSEE E ARNED EXEMPT INCOME. HOWEVER, NO DISALLOWANCE WAS OFFERED U/S. 14A. THE AO COMPUTED THE TOTAL DISALLOWANCE U/S.14A AT RS.6,62,620/-, BEING, A SUM OF RS.5,35,635/- UNDER RULE 8D(2)(II) AND RS.1,26 ,985/- UNDER RULE 8D(2)9III). THE LD. CIT(A) CONFIRMED THE ADDITION. ITA NO. 449/PUN/2017 ANIL BANSILAL LODHA 3 7. HAVING HEARD BOTH THE SIDES AND GONE THROUGH THE RELEV ANT MATERIAL ON RECORD, IT IS OBSERVED THAT IN SO FAR AS THE FIRS T COMPONENT OF DISALLOWANCE OF RS.5,35,635/- IS CONCERNED, WE FIND FROM THE ASSESSEES BALANCE SHEET THAT IT HAS CAPITAL OF RS.5,78,52, 020/- AS ON 31-03-2012. AS AGAINST THIS, INVESTMENTS IN SECURITIES YIELDING EXEMPT INCOME IS ROUGHLY RS.5.55 CRORE. 8. THIS ISSUE IS NOW NO MORE RES INTEGRA IN VIEW OF THE JUDGMENT DELIVERED BY THE HON'BLE SUPREME COURT IN GODREJ & BOYCE MANUFACTURING COMPANY LTD. VS. DCIT (2017) 394 ITR 449 (S C) , UPHOLDING THE VIEW OF THE LOWER AUTHORITIES THAT WHEN INTEREST F REE FUNDS IN THE FORM OF SHARE CAPITAL AND RESERVES ETC. ARE MORE THAN THE AMOUNT OF INVESTMENT, THEN NO DISALLOWANCE OF INTEREST CAN B E MADE U/S 14A. SIMILAR VIEW HAS BEEN TAKEN BY THE HON'BLE BOMBAY HIGH COURT IN CIT VS. HDFC BANK LTD. (2014) 366 ITR 515 (BOM). THE HON'BLE KARNATAKA HIGH COURT IN CIT & ANR VS. MICROLABS (2016) 383 ITR 490 (KAR) HAS ALSO HELD THAT WHEN INVESTMENTS ARE MADE FROM A COMMON POOL AND NON-INTEREST BEARING FUNDS ARE MORE THAN THE INVESTMENT IN TAX FREE SECURITIES, NO DISALLOWANCE OF INTEREST EXPENDITURE U/S 14A CAN BE MADE. RESPECTFULLY FOLLOWING THE PRECEDENTS, WE ORDER TO DELETE THE DISALLOWANCE UNDER RULE 8 D(2)(II) TO THE TUNE OF RS.5,35,635/-. ITA NO. 449/PUN/2017 ANIL BANSILAL LODHA 4 9. IN SO FAR AS THE SECOND COMPONENT OF DISALLOWANCE UND ER RULE 8D(2)(III) AMOUNTING TO RS.1,26,985/- IS CONCERNED, WE FIN D THAT THE SAME IS STRICTLY IN ACCORDANCE WITH THE PROVISIONS AND DOES N OT WARRANT ANY FURTHER INTERFERENCE. 10. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 09 TH SEPTEMBER, 2019. SD/- SD/- (PARTHA SARATHI CHAUDHURY) (R.S.SYAL) JUDICIAL MEMBER VIC E PRESIDENT PUNE; DATED : 09 TH SEPTEMBER, 2019 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. THE CIT(A)-1, NASHIK 4. 5. 6. THE PR.CIT-1, NASHIK , , / DR B, ITAT, PUNE; / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR P RIVATE SECRETARY , / ITAT, PUNE ITA NO. 449/PUN/2017 ANIL BANSILAL LODHA 5 DATE 1. DRAFT DICTATED ON 06-09-2019 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 06-09-2019 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *