Alcom Investment Pvt. Ltd, Mumbai V. Assistant Commissioner of Income-Tax, Central Circle -1, Aurangabad

ITA 571/PUN/2020

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 8375 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2016-2017
• Appeal Filed On: 22-10-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Earning of tax free income; Rule 8D
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, PUNE SINGLE MEMBER CASE SHRI S.S. GODARA, JUDICIAL MEMBER ITA No. 571/PUN/2020: Assessment Year : 2016-17 Alcom Investment Pvt. Ltd. 10 th floor, Gold Crest NS Road, No. 10, JVPD Scheme, Vile Parle (W) Mumbai. PAN: AACCG 1658 B :Appellant Vs. The Asstt. CIT Central Cir. 1, Aurangabad : Respondent Appellant by : Shri Deepak R. Shah (through virtual) Respondent by : Shri M.G. Jasnani Date of Hearing : 28-07-2022 Date of Pronouncement : 11-08-2022 ORDER This assessee’s appeal for A.Y. 2016-17 arises against the CIT(A)-12, Pune’s order dated 21-08-2020 passed in case No. ITBA/APL/S/250/2020- 21/1027767063(1), involving proceedings u/s 143(3) of the Income-tax Act, 1961, in short “the Act”. Heard both the parties. Case file perused. 2. The assessee’s sole substantive grievance raised in the instant appeal challenges correctness of both the lower authorities’ action making section 14A r.w. rule 8D disallowance of Rs. 16,54,398/- in the course of assessment dated 14-12-2018 as restricted to the extent of exempt income itself only amounting to Rs. 2,71,111/-; in the CIT(A)’s order. 3. Learned counsel’s first and foremost argument is that this is a case of scrutiny under “CASS” not warranting an issue of assessed exempt income u/s 14A r.w. rule 8D of the I.T. Rules. The same hardly carries any substance as it is evident from the perusal of page 27 in the assessee’s paper book that its return had been picked up for scrutiny for the reason “whether deduction claimed on account of interest expenses is admissible”. There could be hardly 2 ITA No. 571/PUN/2020 Alcom Investment Pvt. Ltd. A.Y. 2016-17 any denial of the fact that the impugned section 14A r.w. rule 8D disallowance also includes proportionate interest expenditure which is not allowable under the normal business head. The assessee’s instant first argument is rejected. 4. Next comes assessee’s second argument that it had sufficient interest bearing funds as per as per CIT(A)’s detailed discussion in para 3.5 indicating figures of Rs. 2.29 crores followed by investment in shares at mutual funds of Rs. 9.85 crores. Learned Counsel submitted that both the lower authorities have wrongly picked up the corresponding value of stock in trade as well as involvement in light of Maxopp Investment Ltd. Vs. CIT (2018) 91 taxmann.com 154 (SC). It thus emerges that the instant issue of computation of proportionate expenditure prima facie requires fresh verification of the assessee’s interest free funds vis-à-vis the total value of its investments made in shares/mutual funds forming subject matter of the impugned disallowance. Faced with this situation, I deem it proper to appropriate this second argument back to the Assessing Officer to be adjudicated afresh as per law. Ordered accordingly. 5. Next comes administrative expenses disallowance component. The assessee’s sole plea during the course of hearing in light of ACB India Ltd. Vs. CIT (2015) 374 ITR 108 and ACIT Vs. Vireet Investments (P) Ltd. (2017) 106 ITD 27 (Del) (SB) is that only exempt income yielding investments have to be considered. Mr. Jasnani fails to dispute that the foregoing settled legal proposition has nowhere been considered in the learned lower authorities’ respective orders. Faced with this situation, I restore the instant administrative expenditure disallowance(s) issue as well back to the Assessing Officer for his fresh computation. Ordered accordingly. 6. No other arguments have been raised during the course of hearing. 3 ITA No. 571/PUN/2020 Alcom Investment Pvt. Ltd. A.Y. 2016-17 This assessee’s appeal is partly allowed for statistical purposes in above terms. Order pronounced in the open Court on this 11 TH August 2022. Sd/- (SATBEER SINGH GODARA) JUDICIAL MEMBER Pune; Dated, this 11 th day of 2022 Ankam Copy of the Order forwarded to : 1. The Appellant. 2. The Respondent. 3. The Pr. CIT - Central, Nagpur 4. The CIT(A)-12, Pune 5. The SMC Bench, ITAT Pune. 6. Guard File BY ORDER, Sr. Private Secretary /// TRUE COPY /// ITAT, Pune. 4 ITA No. 571/PUN/2020 Alcom Investment Pvt. Ltd. A.Y. 2016-17 Date 1 Draft dictated on 02-08-2022 Sr.PS 2 Draft placed before author 04-08-2022 Sr.PS 3 Draft proposed and placed before the second Member JM/AM 4 Draft discussed/approved by second Member AM/JM 5 Approved draft comes to the Sr. PS/PS Sr.PS/PS 6 Kept for pronouncement on 11-08-2022 Sr.PS/PS 7 Date of uploading of order 11-08-2022 Sr.PS/PS 8 File sent to Bench Clerk 11-08-2022 Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order