RUBY MERRY ENTERPRISES PVT. LTD., Kota V. JCIT, Jaipur

ITA 475/JPR/2015

• Counselvise Citation: 47523114 RSA 2015
• Duration Of Justice: 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 14-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: VIJAY GOYAL C A SHR
• Section: 14A

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH IH-DS-CALY] YS[KK LNL; DS LE{K BEFORE: SHRI P.K. BANSAL, ACCOUNTANT MEMBER VK;DJ VIHY LA-@ ITA NO. 475/JP/2015 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10. M/. RUBY MERRY ENTERPRISES PVT. LTD., 1-GHA-1, DADA BADI EXTENSION, KOTA. CUKE VS. THE JOINT COMMISSIONER OF INCOME TAX (OSD), CENTRAL CIRCLE-3, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AADCR 2727 D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI VIJAY GOYAL, C.A. JKTLO DH VKSJ LS@ REVENUE BY : SHRI M.S. MEENA, CIT LQUOKBZ DH RKJH[K@ DATE OF HEARING : 06/11/2015 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 6/11/2015 VKNS'K@ ORDER PER P.K. BANSAL, A.M. THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT (A) DATED 17.03.2015. THE ONLY ISSUE INVOLVED IN THIS APPEAL RELATES TO THE DISALLOWANCE OF INTEREST UNDER SECTION 14A AMOUNTING TO RS. 6,00,00 0/-. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE AO NOTE D THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY AND DERIVED INCOME FROM BUSINESS OF SALE AND PURCHASE OF SHARES. THE ASSESSEE FILED THE RETURN OF INCOME UNDER SECTION 1 53A ON 20.10.2010 DECLARING A LOSS OF RS. 4,92,080/-. THE ASSESSMENT WAS COMPLETED ON AN INCOME OF RS. 1,07,920/- BY 2 ITA NO. 475/JP/2015 A.Y. 2009-10. M/S. RUBY MERRY ENTERPRISES PVT. LTD. DISALLOWING INTEREST UNDER SECTION 14A AMOUNTING TO RS. 6,00,000/- FROM THE INVESTMENT IN SHARE APPLICATION MONEY OF RS. 1,60,00,000/-. 3. I HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONS IDERED THE SAME ALONG WITH ORDERS OF TAX AUTHORITIES BELOW. I NOTED THAT THE AO NOTED THAT THE ASSESSEE HAD PAID INTEREST @ 9% ON THE INVESTMENT MADE AGAINST THE SH ARE APPLICATION MONEY. THE BANK STATEMENT OF THE ASSESSEE REVEALED THAT THE PAYMENT OF RS. 80,00,000/- WAS MADE BY THE ASSESSEE ON 13.2.2008 AND ANOTHER PAYMENT OF RS . 80,00,000/- WAS MADE ON THE SAME DATE AGAINST THE SHARE APPLICATION MONEY OF M/ S. CAREER POINT INFOSYSTEM LTD. NO SHARES WERE ALLOTTED AGAINST THE INVESTMENT IN SHAR E APPLICATION MONEY. THE AMOUNT OF RS. 1,60,00,000/- WAS RETURNED BACK ON 28.8.2008. T HE AO, THEREFORE, WORKED OUT THE INTEREST @ 9% ON THE INVESTMENT MADE AGAINST SHARE APPLICATION MONEY FROM 1.4.2008 TO 28.8.2008 AT RS. 6,00,000/- AND DISALLOWED THE S AME UNDER SECTION 14A. IT IS THE UNDISPUTED FACT THAT THE ASSESSEE HAS NOT CLAIMED A NY DISALLOWANCE IN RELATION TO THE INVESTMENT MADE IN SHARE APPLICATION MONEY UNDER TH E PROVISIONS OF SECTION 14A. THE PROVISIONS OF SECTION 14A(1) STATES THAT NO DEDUCTI ON SHALL BE MADE IN RESPECT OF THE EXPENDITURE INCURRED BY THE ASSESSEE IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME. SUB-SECTION (2) OF SECTION 14A EM POWERS THE AO TO DETERMINE THE AMOUNT OF EXPENDITURE INCURRED IN RELATION TO SUCH INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THIS ACT IN ACCORDANCE WITH SUCH METHOD AS MAY BE PRESCRIBED, IF THE AO, HAVING REGARD TO THE ACCOUNTS OF THE ASS ESSEE IS NOT SATISFIED WITH THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE IN RESPECT OF SUCH EXPENDITURE IN RELATION TO THE INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME . FURTHER, SUB-SECTION (3) OF 3 ITA NO. 475/JP/2015 A.Y. 2009-10. M/S. RUBY MERRY ENTERPRISES PVT. LTD. SECTION 14A EMPOWERS THE AO TO APPLY SUB-SECTION (2 ) IN A CASE WHERE THE ASSESSEE CLAIMS THAT NO EXPENDITURE HAS BEEN INCURRED BY HIM IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME. IN THIS CASE I NOTED THAT EVEN THOUGH THE AO HAS MADE THE DISALLOWANCE BY RELYING ON THE PROVISIONS OF SECTION 14A BUT HE DID NOT COMPLY WITH THE CONDITIONS AS STIPULATED IN SECTION 14A(2). HE HAS NOT RECORDED ANY SATISFACTION WITH REGARD TO THE INCORRECTNESS OF CL AIM OF THE ASSESSEE HAVING REGARD TO THE ACCOUNTS OF THE ASSESSEE HAVING NO SUCH EVIDENC E OR MATERIAL BROUGHT TO MY NOTICE BY THE LD. D/R WHICH MAY SHOW THAT THE AO HAS GIVEN A FINDING ON THE BASIS OF ACCOUNTS MAINTAINED BY THE ASSESSEE THAT HE IS NOT SATISFIED WITH THE CLAIM OF THE ASSESSEE. EVEN THE AO HAS NOT RECORDED THE SATISFACTION AS REGARDS TO THE CLAIM OF THE ASSESSEE. HE IS BOUND TO COMPUTE THE DISALLOWANCE IN ACCORDANCE WIT H SUCH METHOD AS MAY BE PRESCRIBED. IN THIS REGARD IT IS THE RULE 8D WHICH HAS BEEN NOTIFIED WITH EFFECT FROM 24.03.2008. THE ASSESSMENT YEAR INVOLVED IS THE AS SESSMENT YEAR 2009-10. I DO NOT FIND ANY WHISPER WHATSOEVER BY THE AO OR BY THE LD. D/R THAT THE AO HAS COMPUTED THE DISALLOWANCE BY APPLYING RULE 8D. IN VIEW OF THIS FACT, I AM OF THE VIEW THAT IT IS A CASE WHERE NO DISALLOWANCE CAN BE MADE. I ACCORDINGLY SE T ASIDE THE ORDER OF LD. CIT (A). 4. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 6/11/2015. SD/- IH-DS-CALY ( P.K. BANSAL ) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 6/11/ 2015 DAS/ 4 ITA NO. 475/JP/2015 A.Y. 2009-10. M/S. RUBY MERRY ENTERPRISES PVT. LTD. VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S. RUBY MERRY ENTERPRISES PVT. LTD. , KOTA. 2. IZR;FKHZ@ THE RESPONDENT- THE JCIT (OSD), CENTRAL CIRCLE-3, JAIPUR. 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 475/JP/2015) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR