Gokul Texprints Private Limited, Surat V. Deputy Commissioner of Income Tax Circle (1)(1)(2), Surat

ITA 569/SRT/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 5361 (ITAT-SURAT)
• Duration Of Justice: 3 year(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 20-08-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANUPAMA SINGLA
• Keywords: Capital asset; Earning of tax free income; Rule 8D
• Section: 143(3); 14A; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER ITA NO. 569/SRT/2018 (AY 2013-14) (H EARING IN VIRTUAL COURT) GOKUL TEXPRINTS PVT. LTD., B 74-77, CENTRAL PARK, PANDESARA, GIDC, SURAT- 394221 PAN : AABCG 3252 C VS DEPUTY COMMISSIONER OF INCOME TAX OFFICER, CIRCLE- (1)(1)(2), ROOM NO. 105, 1 ST FLOOR, AAYKAR BHAVAN, MAJURA GATE, SURAT- 395001 ASSESSEE / APPELLANT REVENUE /RESPONDENT ASSESSEE BY SHRI LOKESH KHADARIA, C.A REVENUE BY MS. ANUPAMA SINGLA SR - DR DATE OF HEARING 16.09.2021 DATE OF PRONOUNCEMENT 16 .0 9 .2021 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER : 1. THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-1, SURAT DATED 01.06.2018 FOR ASSESSMENT YEAR (AY) 2013-14. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THE LEARNED CIT(A) HAS ERRED IN CONFIRMING ADDITION MADE BY ASSESSING OFFICER OF RS.276631/ U/S 14A OF THE ACT. 2. THE LEARNED CIT(A) HAS IGNORED THE FACT THAT APPELLANT HAS NOT EARNED ANY EXEMPTED INCOME DURING RELEVANT ASSESSMENT YEAR SO14A IS NOT APPLICABLE. 3. THE LEARNED CIT(A) HAS ERRED CONFIRMING ADDITION OF RS.40131/- ON ACCOUNT OF LATE PAYMENT OF EMPLOYEES CONTRIBUTION TO PROVIDENT FUND AND ESIC. 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS A COMPANY ENGAGED IN TRADING OF TEXTILE, FILED ITS RETURN OF INCOME FOR IMPUGNED ASSESSMENT YEAR (A.Y.) ITA NO.569/SRT/2018 (A.Y. 13-14) M/S GOKUL TEXPRINTS PVT. LTD. 2 SHOWING TAXABLE INCOME OF RS.94,07,710/- ON 30.09.2013. THE CASE WAS SELECTED FOR SCRUTINY. THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). DURING THE ASSESSMENT, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS MADE INVESTMENT IN EQUITY INSTRUMENTS OF RS.1,01,12,800/-. THE ASSESSEE WAS ASKED TO EXPLAIN THE EXPENSES INCURRED FOR SUCH INVESTMENT. THE ASSESSING OFFICER RECORDED THAT NO EXPLAINED WAS FURNISHED BY THE ASSESSEE. THE ASSESSING OFFICER WAS OF THE VIEW THAT IT IS NOT POSSIBLE TO EARN ANY INCOME WHETHER EXEMPT OR NON-EXEMPT WITHOUT INCURRING CERTAIN EXPENSES. THE ASSESSING OFFICER INVOKED THE PROVISION OF SECTION 14A READ WITH RULE 8D AND WORKED OUT THE DISALLOWANCE OF RS.2,76,631/-. THE ASSESSING OFFICER ALSO NOTED THAT THE ASSESSEE MADE DELAY IN DEPOSIT OF EMPLOYEES CONTRIBUTION TOWARDS ESIC AND PF. IN RESPONSE TO THIS SHOW CAUSE NOTICE, THE ASSESSEE CONTENDED THAT THE EMPLOYEES CONTRIBUTION TO THE PF HAD BEEN DEPOSITED BEFORE FILING RETURN OF INCOME BY DUE DATE AND THE SAME IS ALLOWABLE. THE CONTENTION OF ASSESSEE WAS NOT ACCEPTED BY THE ASSESSING OFFICER. THE ASSESSING OFFICER HELD THAT THE HON'BLE JURISDICTIONAL HIGH COURT IN TAX APPEAL IN THE CASE OF GUJARAT STATE ROAD TRANSPORT CORPORATION [2014] 41 TAXMANN.COM 100, (GUJ) DATED 26.12.2013 HELD THAT ANY AMOUNT RECEIVED BY EMPLOYER FROM HIS EMPLOYEES TO WHICH PROVISION OF SECTION 2(24)(X) APPLIES, THE ASSESSEE FAILED TO ENTITLE TO PROTECTION IN COMPUTING THE INCOME REFERRED TO IN SECTION 28 WITH RESPECT TO SUCH SOME CREDITED BY THE ASSESSEE TO THE EMPLOYEES ACCOUNTS IN THE RELEVANT FUND OR FUNDS BEFORE THE DUE DATE AS PRESCRIBED IN SECTION 36(1)(VA). ACCORDINGLY, THE ASSESSING OFFICER DISALLOWED A SUM OF RS.40,131/-. ON APPEAL BEFORE THE LD. CIT(A) AND BOTH THE DISALLOWANCES WERE UPHELD. FURTHER, AGGRIEVED ASSESSEE IS FILED PRESENT APPEAL BEFORE THIS TRIBUNAL. ITA NO.569/SRT/2018 (A.Y. 13-14) M/S GOKUL TEXPRINTS PVT. LTD. 3 3. WE HAVE HEARD THE SUBMISSION OF LD. AUTHORIZED REPRESENTATIVE (AR) FOR THE ASSESSEE AND LD. SENIOR DEPARTMENTAL REPRESENTATIVE (DR) FOR THE REVENUE. AT THE TIME OF HEARING THE LD. AR OF THE ASSESSEE SUBMITS THAT HE IS NOT PRESSED GROUND NO.3, WHICH RELATES TO CONFIRMATION OF DISALLOWANCE ON ACCOUNT OF LATE PAYMENT OF EMPLOYEES CONTRIBUTION TO PF AND ESIC. CONSIDERING THE SUBMISSION OF LD. AR OF THE ASSESSEE GROUND NO.3 RAISED BY ASSESSEE, IS DISMISSED AS NOT PRESSED. 4. GROUND NO.1 AND 2 RELATE TO DISALLOWANCE OF RS.2,76,631/- UNDER SECTION 14A. THE LD.AR FOR THE ASSESSEE SUBMITS THAT DURING THE RELEVANT PERIOD, THE ASSESSEE HAS NOT EARNED ANY EXEMPT INCOME AND THERE IS NO QUESTION OF DISALLOWANCE UNDER SECTION 14A. THE LD. AR OF THE ASSESSEE SUBMITS THAT THIS FACT WAS BROUGHT TO THE NOTICE OF LOWER AUTHORITIES AND LOWER AUTHORITIES DISREGARD THE CONTENTION OF ASSESSEE AND INVOKED THE PROVISION OF SECTION 14A R.W.S. RULE 8D AND MADE THE DISALLOWANCE OF RS. 247,817/- UNDER RULE 8D(2)(II) AND RS.28,814/- UNDER RULE 8D(2)(III) THEREBY MADE TOTAL DISALLOWANCE OF RS.2,76,631/-.THE LD. AR OF THE ASSESSEE RETREATED THAT IT IS A SETTLED LAW THAT IF NO EXEMPT INCOME IS EARNED BY THE ASSESSEE, NO DISALLOWANCE UNDER SECTION 14A R.W.S RULE 8D IS WARRANTED. TO SUPPORT OF HIS CONTENTION LD. AR OF THE ASSESSEE RELIED UPON THE DECISION OF HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS. M/S CHETTINAD LOGISTIC (P) LTD. T.C.A. NO. 24 OF 2017 DATED 13.03.2017. 5. ON THE OTHER HAND LD. SR. DR FOR THE REVENUE SUPPORTED THE ORDER OF LD. CIT(A). 6. WE HAVE CONSIDERED THE SUBMISSION OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD AND ORDERS OF LOWER AUTHORITIES. WE HAVE ALSO SEEN THE COMPUTATION OF TOTAL INCOME, COPY OF WHICH IS FURNISHED BY ASSESSEE. WE FIND THAT THE ASSESSEE HAS NOT SHOWN ANY EXEMPT INCOME DURING THE ITA NO.569/SRT/2018 (A.Y. 13-14) M/S GOKUL TEXPRINTS PVT. LTD. 4 RELEVANT PERIOD. THIS FACT IS NOT CONTROVERTED BY THE LOWER AUTHORITIES. WE FURTHER FIND IT THAT ASSESSEE BEFORE LD. CIT(A) IS SPECIFICALLY PLEADED THAT ASSESSEE HAS NOT EARNED ANY EXEMPT INCOME. THIS FACT IS DULY RECORDED IN PARA-5 OF THE IMPUGNED ORDER. IT IS A SETTLED LAW THAT IF NO EXEMPT INCOME DURING THE RELEVANT PERIOD IS EARNED THEN NO DISALLOWANCE UNDER SECTION 14A IS TO BE MADE. THIS VIEW IS SUPPORTED BY THE DECISION OF HON'BLE MADRAS HIGH COURT IN THE CASE OF M/S CHETTINAD LOGISTICS PVT. LTD. (SUPRA).THEREFORE, IN VIEW OF THE AFORESAID DISCUSSION, WE DIRECT THE ASSESSING OFFICER TO DELETE THE ENTIRE DISALLOWANCE MADE UNDER SECTION 14A. THE GROUND NO. 1 AND 2 OF THE ASSESSEE ARE ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER ANNOUNCED AT THE TIME OF HEARING OF APPEAL ON THURSDAY, 16 TH SEPTEMBER 2021 IN THE VIRTUAL COURT HEARING. SD/- SD/- ( DR ARJUN LAL SAINI) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER SURAT, DATED: 16/09/2021 DKP. OUT SOURCING SR.P.S COPY TO: 1. APPELLANT-GOKUL TEXPRINTS PVT, LTD. B-74-77, CENTRAL PARK, PANDESARA, GIDC SURAT-394221 2. RESPONDENT- DCIT CIR-(1)(1)(2),R.NO.105, 1 ST FLOOR, AAYKAR BHAWAN, MAJURA GATE 3. CIT(A)-1, SURAT 4. CIT 5. DR 6. GUARD FILE TRUE COPY/ BY ORDER / / TRUE COPY / / ASSISTANT REGISTRAR, ITAT, SURAT TRUE COPY/