M/s. Geetganga Investment Pvt. Ltd., Baroda V. The Dy.CIT, Circle-1(1), Baroda

ITA 514/AHD/2015

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6111 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 10 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 09-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Section: 143(3); 14A

Judgement Text

, SMC IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMEBR ./ I.T.A. NO. 514/AHD/2015 ( ASSESSMENT YEAR : 2011-12) M/S. GEETGANGA INVESTMENT PVT. LTD. 9 TH FLOOR, ABS TOWER, OLD PADRA ROAD, BARODA - 390010 / VS. DY. COMMISSIONER OF INCOME TAX CIRCLE 1(1), BARODA - 390007 ./ ./ PAN/GIR NO. : AAACG6937B ( APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI SUNIL TALATI, A.R. / RESPONDENT BY : SMT. SONIA KUMAR, SR.D.R. DATE OF HEARING 22/01/2019 !'# / DATE OF PRONOUNCEMENT 29/01/2019 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE CIT(A)-1, VADODAR A (CIT(A) IN SHORT), DATED 12.12.2014 ARISING IN THE ASSESSMENT ORDER DATED 27.02.2014 PASSED BY THE ASSESSING OFFICER (AO) UND ER S. 143(3) OF THE INCOME TAX ACT, 1961 (THE ACT) CONCERNING AY 20 11-12. ITA NO. 514/AHD/15 [M/S. GEETGANGA INVESTMENT PVT. LTD. VS. DCIT] A.Y. 2011-12 - 2 - 2. THE SOLITARY GRIEVANCE OF THE ASSESSEE IN THE INSTANT APPEAL IS TOWARDS DISALLOWANCE OF GENERAL AND ADMINISTRATIVE EXPENSES OF RS.4,84,060/- IN TERMS OF RULE 8D(2)(III) OF THE IN COME TAX RULES (THE RULES) UNDER THE UMBRELLA OF SECTION 14A OF THE ACT. 3. WHEN THE MATTER WAS CALLED FOR HEARING, THE LEA RNED AR FOR THE ASSESSEE AT THE OUTSET REFERRED TO THE AUDITED FINA NCIAL STATEMENTS AND SUBMITTED WITH REFERENCE TO THE VARIOUS TYPES OF EX PENDITURE INCURRED UNDER THE HEAD ADMINISTRATIVE EXPENSES THAT ASSES SEE HAS NOT MANIFESTLY INCURRED ANY EXPENDITURE WHICH IS RELATA BLE TO INVESTMENTS YIELDING TAX FREE INCOME. THE LEARNED AR THUS SUBM ITTED THAT IN THE ABSENCE OF EXPENDITURE CLAIMED OF GENERAL NATURE, T HERE IS NO SCOPE FOR APPLICABILITY OF RULE 8D(2)(III) OF THE RULES. THE LEARNED AR THUS SUBMITTED THAT IN THE GIVEN FACTS THERE COULD BE NO SATISFACTION ON THE PART OF THE AO TO INVOKE SECTION 14A OF THE ACT. 4. THE LEARNED DR, ON THE OTHER HAND, RELIED UPON T HE ORDERS OF THE LOWER AUTHORITIES. 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. THE STATUTORY DISALLOWANCE OF GENERAL/ADMINISTRATIVE EX PENSES HAVING REGARD TO RULE 8D(2)(III) OF THE RULES R.W.S. 14A O F THE ACT IS IN QUESTION. THE AO HAS NOTICED CERTAIN TAX FREE INCO ME IN THE FORM OF DIVIDEND AND HAS ACCORDINGLY INVOKED SECTION 14A OF THE ACT TO DISALLOW THE EXPENDITURE RELATABLE TO EARNING OF SU CH TAX FREE INCOME IN TERMS OF FORMULA LAID DOWN UNDER RULE 8D OF THE RULES. HOWEVER, AS POINTED OUT ON BEHALF OF THE ASSESSEE, IT IS OST ENSIBLY CLEAR THAT ASSESSEE HAS NOT CLAIMED ANY EXPENDITURE WHICH COUL D BE SAID TO BE ATTRIBUTABLE TO INVESTMENTS GIVING RISE TO TAX FREE INCOME. THEREFORE, IN THE ABSENCE OF ANY EXPENDITURE CLAIMED, NO DISAL LOWANCE THEREOF IS POSSIBLE. HENCE, IN THE FACTS OF THE CASE THE REVE NUE AUTHORITIES HAVE ITA NO. 514/AHD/15 [M/S. GEETGANGA INVESTMENT PVT. LTD. VS. DCIT] A.Y. 2011-12 - 3 - COMMITTED ERROR IN MECHANICALLY APPLYING RULE 8D(2) (III) FOR QUANTIFICATION OF DISALLOWANCE UNDER S.14A OF THE A CT. WE THUS SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE AO TO DELETE THE DISALLOWANCE UNDER S.14A OF THE ACT ON THIS SCORE. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . SD/- SD/- (MAHAVIR PRASAD) (PRADIP KUMA R KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 29/01/2019 TRUE COPY S. K. SINHA !'#' / COPY OF ORDER FORWARDED TO:- &. / REVENUE 2. / ASSESSEE (. )*+ , / CONCERNED CIT 4. ,- / CIT (A) /. 012 33*+4 *+#4 56) / DR, ITAT, AHMEDABAD 7. 289 : / GUARD FILE. BY ORDER / 4 /5 *+#4 56) THIS ORDER PRONOUNCED IN OPEN COURT ON 29/01/20 19