MESERS TAKSAL HOSPITALITY PRIVATE LIMITED , SRINAGAR V. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-3, SRINAGAR

ITA 511/ASR/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 5374 (ITAT-AMRITSAR)
• Duration Of Justice: 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 22-08-2019
• Assessment Year: 2014-2015
• Appeal Filed On: 17-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Earning of tax free income; Rule 8D; Set aside
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE SH. B. R. BASKARAN, ACCOUNTANT MEMBER AND SH. N. K. CHOUDHRY, JUDICIAL MEMBER I.T.A. NO. 511/ASR/2018 A SSESSMENT YEAR: 2014-15 TAKSAL HOSPITALITY PVT. LTD., KAMAL VILLA, SRINAGAR [PAN: AAACT 0403F] VS. ACIT CIRCLE-3, SRINAGAR (APPELLANT) (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY: SH. CHARAN DASS (D.R.) DATE OF HEARING: 22.08.2019 DATE OF PRONOUNCEMENT: 22.08.2019 ORDER PER B. R. BASKARAN, ACCOUNTANT MEMBER: THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINS T THE ORDER DATED 06-08- 2018 PASSED BY LD CIT(A), JAMMU AND IT RELATES TO T HE ASSESSMENT YEAR 2014-15. 2. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD CIT(A) IN CONFIRMING THE DISALLOWANCE TO THE EXTENT OF RS.1,72,500/- MADE BY THE AO UNDER SECTION 14A OF THE ACT. 3. NONE APPEARED ON BEHALF OF THE ASSESSEE. CONSIDE RING THE ISSUE CONTESTED IN THIS APPEAL, WE PREFERRED TO DISPOSE OF THE APPEAL EX-PARTE, WITHOUT PRESENCE OF THE ASSESSEE. 4. WE HEARD THE LD DR AND PERUSED THE RECORD. ITA NO. 511/ASR/2018 (AY 2014-15) TAKS AL HOSPITALITY PVT. LTD. V. ACIT 2 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, TH E AO NOTICED THAT THE ASSESSEE COMPANY HAS MADE INVESTMENTS IN SHARES/MUTUAL FUNDS /BONDS ETC. THE AO HELD THE PROVISIONS OF SEC.14A READ WITH RULE 8D OF THE INCO ME TAX RULES SHALL APPLY TO THE ASSESSEE. ACCORDINGLY, HE COMPUTED DISALLOWAN CE OF RS.1,77,552/- UNDER RULE 8D OF IT RULES. THE AO CONSIDERED INTEREST EXPENDI TURE OF RS.2,12,140/- IN COMPUTING THE ABOVE SAID DISALLOWANCE. THE LD CIT (A) UPHELD THE ORDER OF AO, BUT CONFIRMED DISALLOWANCE TO THE EXTENT OF RS.1,72 ,500/-. 6. THE CASE OF THE ASSESSEE BEFORE TRIBUNAL IS THAT IT DID NOT EARN ANY EXEMPT INCOME AND HENCE NO DISALLOWANCE IS CALLED FOR UNDE R SECTION 14A OF THE ACT. THE ASSESSEE HAS ALSO SUBMITTED THAT THE AMOUNT OF RS.2 ,12,140/- CONSIDERED BY THE AO FOR MAKING DISALLOWANCE IS NOT INTEREST EXPENDITURE , BUT IT IS BANK CHARGES. HOWEVER, FROM THE ORDERS PASSED BY THE TAX AUTHORIT IES, IT IS NOT CLEAR AS TO WHETHER THE ASSESSEE HAS EARNED ANY EXEMPT INCOME O R NOT. THE ASSESSEE HAS ALSO CONTENDED THAT THE DISALLOWANCE UNDER SECTION 14A O F THE ACT SHOULD NOT EXCEED THE EXEMPT INCOME. IF THE ASSESSEE HAS NOT EARNED ANY DIVIDEND INCOME, THEN THE QUESTION OF CONSIDERING THE BANK CHARGES OF RS.2,12 ,140/- DOES NOT ARISE. IN ANY CASE THE CONTENTION OF THE ASSESSEE THAT THE ABOVE SAID AMOUNT REPRESENTS BANK CHARGES ALSO REQUIRE VERIFICATION. THE AO HAS OBSE RVED THAT THE ASSESSEE HAS DISALLOWED DIRECT EXPENSES. 7. THE ABOVE SAID DISCUSSIONS WOULD SHOW THAT T HERE IS LACK OF CLARITY IN THE MATTER. THE ISSUE RELATING TO DISALLOWANCE TO BE M ADE U/S 14A OF THE ACT HAS SINCE BEEN SETTLED BY THE ORDERS OF VARIOUS HIGH COURTS. HENCE, WE ARE OF THE VIEW THAT THIS ISSUE REQUIRES FRESH EXEMPTION AT THE END OF T HE AO. ACCORDINGLY WE SET ASIDE THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE AND RES TORE THE SAME TO THE FILE OF THE ASSESSING OFFICER FOR EXAMINING THIS ISSUE AFRESH. AFTER CONSIDERING THE ITA NO. 511/ASR/2018 (AY 2014-15) TAKS AL HOSPITALITY PVT. LTD. V. ACIT 3 CONTENTIONS OF THE ASSESSEE, THE AO MAY TAKE APPROP RIATE DECISION IN ACCORDANCE WITH LAW. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN CO URT ON AUGUST 22, 2019 SD/- SD/- (N. K. CHOUDHRY) (B. R. BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 22.08.2019 /GP/SR. PS. COPY OF THE ORDER FORWARDED TO: (1) THE APPELLANT: (2) THE RESPONDENT: (3) THE CIT(APPEALS) (4) THE CIT CONCERNED (5) THE SR. DR, I.T.A.T TRUE COPY BY ORDER