Dalmia Finance Ltd., New Delhi V. Addl.CIT, Special Range-3, New Delhi

ITA 5107/DEL/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1699 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 25-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Earning of tax free income; Rule 8D
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC, NEW DELHI BEFORE SH. R. K. PANDA, ACCOUNTANT MEMBER ITA NO.5107/DEL/2018 ASSESSMENT YEAR: 2015-16 DALMIA FINANCE LTD. C/O. VINOD KUMAR BINDAL & CO. CHARTERED ACCOUNTANTS, D-219, VIVEK VIHAR, PHASE-I, NEW DELHI-110095 PAN NO. AABCD5533H VS ADDL. CIT SPECIAL RANGE-3 NEW DELHI (APPELLANT) (RESPONDENT) APPELLANT BY SHRI VINOD KUMAR BINDAL, CA MS. RINKY SHARMA, ITP RESPONDENT BY SH. S. L. ANURAGI, SR. DR DATE OF HEARING: 09/05/2019 DATE OF PRONOUNCEMENT: 13/06/2019 ORDER PER R.K. PANDA, AM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 15.05.2018 OF THE CIT(A)-34, NEW DELHI RELATING TO A. Y. 2015-16. 2. THE ONLY EFFECTIVE GROUND RAISED BY THE ASSESSEE READS AS UNDER :- 1. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMING AN ADDITION OF RS.1,35,696/- U/S. 14 A OF THE ACT BY A PPLYING RULE 8D THOUGH ACTUALLY NO EXPENSES AS SUCH WERE INCURRED T O EARN THE TAX PAGE | 2 EXEMPT INCOME ON VERY OLD INVESTMENTS AS AGAINST TH E AMOUNT OF RS.31,780/- DISALLOWED VOLUNTARILY BY THE ASSESSEE WHILE IGNORING THE JUDGMENT OF THE APEX COURT, FACTS, WRITTEN SUBM ISSIONS AND EVIDENCES PLACED ON RECORD AND REJECTING THE BONAFI DE EXPLANATION OF THE ASSESSEE. THUS, THE ADDITION SHOULD BE DELETED . 3. FACTS OF THE CASE, IN BRIEF ARE THAT THE ASSESSE E IS A NON BANKING FINANCE COMPANY REGISTERED WITH RBI. IT FI LED ITS RETURN OF INCOME ON 29.05.2015 DECLARING LOSS OF RS.1,06,0 67/-. THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT P ROCEEDINGS COMPARED THE BALANCE SHEET AS ON 31.03.2014 AND 31. 03.2015 AND NOTED THAT THE COMPANY HAS SHOWN TO HAVE INVEST ED ITS FUNDS IN EQUITY SHARES, WHICH STOOD AT RS.3,18,47,955/- A S AT THE BEGINNING OF THE YEAR AND AT RS.3,51,42,432/- AS AT THE END OF THE YEAR. HOWEVER, THE ASSESSEE HAS DISALLOWED RS.31,78 0/- AS EXPENSES WHICH HAVE BEEN INCURRED TO CARRY OUT THE ACTIVITY OF INVESTMENTS AND EARNING OF EXEMPT INCOME. HE, THER EFORE, ASKED THE ASSESEE TO EXPLAIN AS TO WHY DISALLOWANCE U/S. 14A R/W RULE 8D SHOULD NOT BE MADE. 4. REJECTING THE VARIOUS EXPLANATION GIVEN BY THE A SSESSEE, THE ASSESSING OFFICER MADE DISALLOWANCE OF RS.1,35,696/ -. WHILE DOING SO, HE COMPUTED THE DISALLOWANCE U/S. 14A R/W RULE 8 D AT RS. 1,67,476/-. AFTER DEDUCTING THE AMOUNT OF RS.3 1,780/- ALREADY DISALLOWANCE BY THE ASSESSEE ITSELF, THE AS SESSING OFFICER MADE THE DISALLOWANCE OF RS.1,35,656/-. PAGE | 3 5. IN APPEAL THE LD. CIT(A) UPHELD THE ACTION OF TH E ASSESSING OFFICER. 6. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSE SSEE IS IN APPEAL BEFORE THE TRIBUNAL. 7. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT NO BORROWED FUNDS HAVE BEEN UTILIZED FOR INVESTMENT IN SHARE THE INCOME OF WHICH IS EXEMPT. HE SUBMITTED THAT SINE NO INTEREST EXPENDITURE HAS BEEN INCURRED FOR INVESTMENT IN THE SHARES AND ASSESSEE HAS ALREADY SUO MOTO DISALLOWED AN AMOUNT OFRS.31,780/- TOWARDS ADMINISTRATIVE EXPENSES WHICH IS IN CONSONANCE WITH PRECEEDINGS YEARS DISALLOWANCE, THE REFORE, NO FURTHER DISALLOWANCE IS CALLED FOR. 8. HE RELIED UPON THE FOLLOWING DECISIONS :- 1. RESURGERE MINES & MINERALS INDIA LTD. VS. ADDITI ONAL CIT VIDE ITA NO.6601/DEL/2014 2. PCIT VS. SINTEX INDUSTRIES LTD. 2018 TIOL-104-SC -IT 3. PCIT VS. SINTEX INDUSTRIES LTD. 2017-TIOL-104-SC -IT 4. PCTI VS. SINTEX INDUSTRIES LTD. 2017-TIOL-1025-H C- AHM-IT 5. MAXOPP INVESTMENT LTD. VS, CIT [2018] 91 TAXMANN.COM 154 (SC) PAGE | 4 9. THE LD. DR ON THE OTHER HAND HEAVILY RELIED ON T HE ORDER OF THE CIT(A). 10. I HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. I HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE ME. I FIND THE ASSESSING OFFICER INVOKING THE PROVISIONS OF SECTIO N 14A R/W RULE 8D COMPUTED THE DISALLOWANCE OF RS.1,67,476/- AS THE EXPENSES INCURRED IN RELATION TO EARNING TAX FREE I NCOME. AFTER DEDUCTING THE DISALLOWANCE OF RS.31,780/- MADE BY T HE ASSESSEE ITSELF, THE ASSESSING OFFICER MADE ADDITIO N OF RS.1,35,696/- TO THE TOTAL INCOME OF THE ASSESSEE U /S. 14A RULE 8D WHICH HAS BEEN CONFIRMED BY THE CIT(A). I FIND THE ASSESSING OFFICER WHILE MAKING THE DISALLOWANCE HAS GIVEN A FINDING THAT INVESTMENT IN SHARES AND SECURITIES HA VE BEEN MADE OUT OF BORROWED FUNDS. IT IS THE SUBMISSION O F THE LD. COUNSEL FOR THE ASSESSEE THAT NO BORROWED FUNDS HAV E BEEN UTILIZED FOR MAKING THE INVESTMENT AND NO NEW INVES TMENTS HAVE BEEN MADE DURING THE YEAR. CONSIDERING THE TO TALITY OF THE FACTS OF THE CASE AND IN THE INTEREST OF JUSTICE I DEEM IT PROPER TO RESTORE THE ISSUE TO THE FILES OF THE ASSESSING OFF ICER WITH A DIRECTION TO VERIFY THE RECORDS PROPERLY AND DECIDE THE ISSUE AS PER FACT AND LAW AFTER GIVING A REASONABLE OPPORTUN ITY OF BEING HEARD TO THE ASSESSEE. I HOLD AND DIRECT ACCORDING LY. THE GROUND RAISED BY THE ASSESSEE IS ALLOWED FOR STATIS TICAL PURPOSE. PAGE | 5 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 13.06.2019. SD/- (R.K PANDA) ACCOUNTANT MEMBER *NEHA* DATE:- 13.06.2019 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS /PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/ PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT 13.06.2019 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH FILE GOES TO THE HEAD CLERK. THE DATE ON WHICH FILE GOES TO THE ASSISTANT REGIST RAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER