M/s. MOIRA STEEL LTD., Indore V. The DCIT 1(1), Indore

ITA 565/IND/2014

• Counselvise Citation: 56522714 RSA 2014
• Duration Of Justice: 1 year(s) 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 29-12-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 27-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G S GAUTAM
• Assessee Lawyers: C P RAWKA
• Keywords: Earning of tax free income
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI B.C.MEENA, ACCOUNTANT MEMBER I.T.A.NO. 565/IND/2014 A.Y. : 2010-11. M/S.MOIRA STEEL LIMITED, DY. CIT, INDORE VS. 1(1), INDORE. APPELLANT RESPONDENT PAN NO. AABCM2051K APPELLANTS BY : SHRI C.P.RAWKA, CA RESPONDENT BY : SHRI G.S.GAUTAM, DR O R D E R PER D.T.GARASIA, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A)-I, INDORE, DATED 02.06.2014 FOR THE ASSES SMENT YEAR 2010-11. DATE OF HEARING : 29 . 12 .201 5 DATE OF PRONOUNCEMENT : 29 . 12 .201 5 M/S. MOIRA STEEL LIMITED, INDORE VS. DY. CIT, 1(1), INDORE - I.T.A.NO. 565/IND/2014 A.Y. 2010-11 2 2 2. THE ASSESSEE HAS TAKEN FOLLOWING GROUND OF APPEAL : - THAT THE LD. CIT(A) ERRED IN LAW AND FACTS OF THE CASE AND CONFIRMED THE DISALLOWANCE MADE BY THE ASSESSIN G OFFICER U/S 14A OF RS. 6,89,000/- WITHOUT CONSIDERI NG FULL FACTS. THE DISALLOWANCE MADE BY THE ASSESSING OFFIC ER AND CONFIRMED BY THE LD. CIT(A) IS TOTALLY WRONG AN D ILLEGAL ON THE FACTS OF THE CASE. 3. THE SHORT FACTS OF THE CASE ARE THAT THE ASSESSEE H AS FILED RETURN OF INCOME DECLARING TOTAL INCOME AT RS . 1,36,70,390/-. THE ASSESSEE IS ENGAGED IN THE BUSIN ESS OF TRADING & MANUFACTURING OF IRON AND STEELS. DURING THE YEAR UNDER CONSIDERATION, ON EXAMINATION OF THE BALANCE SHEET, IT WAS NOTICED THAT THE ASSESSEE HAD INVESTED RS. 2,75 ,00,000/- IN EQUITY SHARES OF M/S. JAIDEEP ISPAT AND ALLOYS A ND M/S.PARDA STEELS PVT. LTD. IT WAS ALSO NOTICED THAT THE AFORESAID INVESTMENT WAS MADE IN EARLIER YEARS. ON EXAMINATION OF BOOKS OF ACCOUNT, IT WAS NOTICED THA T THE ASSESSEE HAD MADE THE INVESTMENT FROM THE INTEREST BORROWING FUNDS. THE ASSESSEE HAD INCURRED CERTAIN EXPENDITUR E IN RELATION TO THE ABOVE INVESTMENT FROM WHICH NO INCO ME HAD BEEN EARNED. THE DISALLOWANCE U/S 14A IN RESPECT OF SAID INVESTMENT YIELDED NO INCOME FOR ASSESSMENT YEARS 2 008-09 M/S. MOIRA STEEL LIMITED, INDORE VS. DY. CIT, 1(1), INDORE - I.T.A.NO. 565/IND/2014 A.Y. 2010-11 3 3 AND 2009-10 AS PER ORDER U/S 143(3) . HAVING TAKEN A NOTE OF THIS, THE ASSESSEE WAS CATEGORICALLY ASKED TO, EXPL AIN AS TO WHY THE EXPENDITURE INCURRED IN RELATION TO THE AFORESA ID INVESTMENT SHOULD NOT BE DISALLOWED U/S 14A R.W.R.8 D OF I. T. RULES. THE ASSESSEE WAS GIVEN SHOW CAUSE NOTICE AND ASSESSEE DID NOT REPLY TO SHOW CAUSE NOTICE. THEREFORE, THE AO HAS MADE THE ADDITION OF RS. 6,89,000/-. 4. THE MATTER CARRIED TO THE LD. CIT(A) AND THE LD. C IT(A) HAS CONFIRMED THE ADDITION. 5. DURING THE COURSE OF HEARING OF THE APPEAL, THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE INVEST MENT IN SHARES AND MUTUAL FUND WAS MADE DURING ASSESSMENT Y EAR 2007-08 AND AT THAT PERIOD THERE WERE NO BORROWING. THE INTEREST PAYMENT AND INTEREST RECEIPTS FOR THAT YEA R WAS RS. 4,80,779/-, RS. 4,15,660/- RESPECTIVELY. THE INVEST MENT DURING THAT YEAR WAS AT RS. 2,35,50,000/- AND THERE WAS INCREASE IN INVESTMENT DURING ASSESSMENT YEAR 2008- 09 ESPECIALLY IN EQUITY SHARES IN HOUSE COMPANY I.E. J AIDEEP ISPAT & ALLOYS PVT. LTD. AND IT WAS NOT FOR EARNING THE E XEMPT M/S. MOIRA STEEL LIMITED, INDORE VS. DY. CIT, 1(1), INDORE - I.T.A.NO. 565/IND/2014 A.Y. 2010-11 4 4 INCOME. THERE IS NO INVESTMENT OF RS. 2,50,000/- I N PARDA STEELS PRIVATE LIMITED. THE ASSESSEE HAS SUBMITTED THE COPY OF ACCOUNT FOR ASSESSMENT YEAR 2008-09 AND THERE WAS I NTEREST PAYMENT. THE ASSESSEE HAS PAID THE INTEREST OF RS. 17,90,347/-, WHICH INCLUDED CC ACCOUNT AND REST OF THE PAYMENT. THEREFORE, DISALLOWANCE SHOULD NOT BE MADE . THE LD. AUTHORIZED REPRESENTATIVE FURTHER SUBMITTED THAT TH IS ASPECT HAS NOT BEEN LOOKED INTO BY THE LD. CIT(A). THEREFO RE, THIS MATTER MAY BE RESTORED TO THE FILE OF AO. 6. THE LD. DR HAS NO OBJECTION. 7. HAVING HEARD BOTH THE PARTIES, WE FIND THAT THE ASSESSEE HAS MADE THE SUBMISSION BEFORE THE CIT(A) THAT HE HAS MADE INVESTMENT IN SHARES DURING THE ASSESSMENT YEAR 2007-08 AND AT THAT PERIOD THERE WAS NO BORROWING. THE INTEREST PAYMENT RECEIPT FOR THAT YEAR WAS RS. 4,80 ,779/- AND RS. 4,15,660/- RESPECTIVELY. INVESTMENT DURING THAT YEAR WAS AT RS. 2,35,50,000/- AND IN THAT YEAR THERE WAS IN CREASE IN THE INVESTMENT I.E. DURING ASSESSMENT YEAR 2008-09, ESPECIALLY IN EQUITY SHARES IN HOUSE COMPANY AND IT WAS NOT FO R EARNING M/S. MOIRA STEEL LIMITED, INDORE VS. DY. CIT, 1(1), INDORE - I.T.A.NO. 565/IND/2014 A.Y. 2010-11 5 5 THE EXEMPT INCOME AND THE SAID INVESTMENT IS CONTIN UED TILL ASSESSMENT YEAR 2010-11. THEREFORE, IN THIS YEAR NO NEW INVESTMENT HAS BEEN MADE. WE FOUND THAT THE AO HAS NOT EXAMINED THIS ISSUE IN THE LIGHT OF ABOVE SUBMISSIO N. THEREFORE, WE RESTORE BACK THIS ISSUE TO THE FILE O F AO. THE ASSESSEE IS DIRECTED TO REMAIN PRESENT BEFORE THE A O WITHIN 2 MONTHS AFTER THE RECEIPT OF THIS ORDER. THE AO SHOU LD DECIDE THE APPEAL AFTER GIVING DUE OPPORTUNITY OF HEARING TO THE ASSESSEE AS PER LAW. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 29 TH DECEMBER, 2015. SD/- (B.C.MEENA) ACCOUNTANT MEMBER SD/- ( D.T.GARASIA) JUDICIAL MEMBER DATED : 29 TH DECEMBER, 2015. CPU*