The Asstt. Commissioner of Income Tax, Circle-2(1)(2), Ahmedabad V. M/s. Mas Financial Services Ltd., Ahmedabad

ITA 585/AHD/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 0224 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2013-2014
• Appeal Filed On: 08-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Earning of tax free income; Rule 8D
• Section: 143(3); 14A

Judgement Text

, D IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ./ I.T.A. NO. 585/AHD/2017 ( ASSESSMENT YEAR : 2013-14) ASSTT. COMMISSIONER OF INCOME TAX CIR. 2(1)(2), AHMEDABAD 1 ST FLOOR, NAVJIVAN TRUST BUILDING, AHMEDABAD - 3800149 / VS. M/S. MAS FINANCIAL SERVICES LIMITED 6, GROUND FLOOR, NARAYAN CHAMBERS, B/H. PATANG HOTEL, ASHRAM ROAD, AHMEDABAD - 380009 ./ ./ PAN/GIR NO. : AABCM0640A ( APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI VINOD TANWANI, SR. DR / RESPONDENT BY : NONE DATE OF HEARING 27/03/2019 !'# / DATE OF PRONOUNCEMENT 29/03/2019 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF IN COME TAX (APPEALS)-2, AHMEDABAD (CIT(A) IN SHORT), DATED 2 3.12.2016 ARISING IN THE ASSESSMENT ORDER DATED 21.03.2016 PASSED BY THE ASSESSING ITA NO. 585/AHD/17 [ACIT VS. M/S. MAS FINANCIAL SERVICES LTD.] A.Y. 2013-14 - 2 - OFFICER (AO) UNDER S. 143(3) OF THE INCOME TAX ACT, 1961 (THE ACT) CONCERNING AY 2013-14. 2. AS PER THE CAPTIONED APPEAL, THE REVENUE HAS CHA LLENGED THE ACTION OF THE CIT(A) IN RELATING DISALLOWANCE MADE UNDER S.14A OF THE ACT TO THE EXTENT OF RS.76,44,797/- MADE BY THE AO. 3. NONE APPEARED FOR THE ASSESSEE DESPITE SEVERAL N OTICES. ACCORDINGLY, THE MATTER IS PROCEEDED EX PARTE AND IN THE ABSENCE OF THE ASSESSEE. 4. WITH THE ASSISTANCE OF THE LEARNED DR FOR THE RE VENUE, WE FIND THAT THE AO HAS COMPUTED DISALLOWANCE OF RS.89,50,1 16/- AS PER FORMULA PRESCRIBED UNDER RULE 8D OF THE INCOME TAX RULES R.W.S. 14A OF THE ACT. IT WAS FURTHER OBSERVED BY THE AO THAT THE ASSESSEE HAS SUO MOTTO MADE DISALLOWANCE OF RS.13,05,319/- WHILE FILING R ETURN OF INCOME. THE AO ACCORDINGLY COMPUTED ADDITIONAL DIS ALLOWANCE OF RS.76,44,797/- AND OVER AND ABOVE WHAT WAS DISALLOW ED BY THE ASSESSEE AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. THE CIT(A) IN FIRST APPEAL, HOWEVER DELETED THE ADDITIO NAL DISALLOWANCE OF RS.76,44,797/-. THE REVENUE IS IN APPEAL AGAINST T HE AFORESAID ACTION OF THE CIT(A). 5. WE STRAIGHTWAY NOTICE THAT THE ASSESSEE HAS REPO RTED TAX FREE INCOME BY WAY OF DIVIDEND TO THE EXTENT OF RS.10,18 8/- ONLY. IN VIEW OF THE DECISION OF HONBLE GUJARAT HIGH COURT IN TH E CASE OF CIT VS. CORRTECH ENERGY PVT. LTD. 372 ITR 97; DCIT VS. TGB BANQUETS HOTELS LTD. IN TAX APPEAL NO. 470 OF 2012 DATED 21.06.2016 (GUJARAT) AND JOINT INVESTMENT PVT. LTD. VS. CIT (2015) 372 ITR 6 94 (DELHI) THE DISALLOWANCE CANNOT EXCEED THE EXEMPT INCOME. WE A LSO NOTE THAT HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. V ISION FINSTOCK ITA NO. 585/AHD/17 [ACIT VS. M/S. MAS FINANCIAL SERVICES LTD.] A.Y. 2013-14 - 3 - LTD. TAX APPEAL NO. 486 OF 2017 JUDGMENT DATED 31.0 7.2017 HAS ONCE AGAIN EXPRESSED THE SIMILAR VIEW AND HELD THAT DISA LLOWANCE OF EXPENDITURE IN TERMS OF SECTION 14A R.W. RULE 8D CA NNOT EXCEED THE EXEMPT INCOME ITSELF. IT IS NOTICED THAT SLP(CIVIL ) [DIARY NO. 13152/2018] FILED BY THE REVENUE AGAINST THE JUDGME NT OF THE HONBLE GUJARAT HIGH COURT IN VISION FINSTOCK LTD. (SUPRA) HAS BEEN DISMISSED ON MERITS BY THE HONBLE SUPREME COURT VIDE ORDER D ATED 07.05.2018. THE ASSESSEE HIMSELF HAS COMPUTED EXPENDITURE ATTRI BUTABLE TO EXEMPT INCOME MORE THAN THE EXEMPT INCOME ITSELF. THEREFO RE, NO FURTHER DISALLOWANCE IS CALLED FOR. THE CIT(A), IN OUR VIE W, HAS RIGHTLY CONCLUDED THE ISSUE. WE THUS DECLINE TO INTERFERE. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. SD/- SD/- (MAHAVIR PRASAD) (PRADIP KUMA R KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 29/03/2019 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 29/03/2019