M/s. Ranchhodddas Zinabhai Dhoilakiya, Shihor V. The ACIT, Circle-2, Bhavnagar

ITA 597/AHD/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 6154 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-02-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 08-03-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N P PATEL SR DR
• Assessee Lawyers: RANJIT LALCHANDANI
• Section: 143(3); 14A

Judgement Text

, D , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD .. , , BEFORE SHRI S.S. GODARA, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ! ' ./ I.T.A. NO.597/AHD/2016 ( / ASSESSMENT YEAR : 2012-13) M/S. RANCHHODDAS JINABHAI DHOLAKIA, PLOT NO. 13 & 16, BHAVNAGAR ROAD, SIHOR, DIST. BHAVNAGAR. / VS. THE ACIT CIRCLE-2, BHAVNAGAR $ ./ %!&! ./ PAN/GIR NO. : AACFR5136L ( ' $' / APPELLANT ) .. ( ($' / RESPONDENT ) ' $' ) / APPELLANT BY : SHRI RANJIT LAL CHANDANI, A.R ($' * ) / RESPONDENT BY : SHRI N.P. PATEL, SR.DR + , * - / DATE OF HEARING 23/01/2018 ./0 * - / DATE OF PRONOUNCEMENT 01/ 02 /2018 ! 1 / 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 COMMISSIONER OF INCOME TAX (APPEALS)-6, AHMEDABAD [CIT(A) IN SHORT] DATED 25/01/2016 ARISING IN THE ASSESSMENT ORDER DATED 10.07.2014 PASSED UNDER SEC TION 143(3) OF THE ACT RELEVANT TO ASSESSMENT YEAR 2012-13. ITA NO.597/AHD/ 2016 RANCHHODDAS JINABHAI DHOLAKIA. VS. ACIT ASST.YEAR 2012-13 - 2 - 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF AP PEAL:- 1. THE COMMISSIONER OF INCOME TAX[APPEALS] ERRED IN CONFIRMING THE DISALLOWANCE OF RS 111734 UNDER THE PROVISIONS OF S ECTION 36[1][VA] OF THE ACT. THE AMOUNT WAS DEPOSITED WITH THE GOVERNMENT I N DUE TIME AND ALSO BEFORE FILING OF THE RETURN OF INCOME. THE DISALLOW ANCE IS NOT JUSTIFIED. 2. THE COMMISSIONER OF INCOME TAX [APPEALS] ERRED I N CONFIRMING THE DISALLOWANCE DISALLOWING RS 93000/- OUT OF SHOP EXP ENSES AS BEING UNSUPPORTED EXPENSES. 3. THE COMMISSIONER OF INCOME TAX [APPEALS] ERRED I N CONFIRMING THE DISALLOWANCE RS 339383/- UNDER THE PROVISIONS OF SE CTION 14A OF THE ACT. 3. GROUND NO. 1 CONCERNS DISALLOWANCE OF RS. 1,11,7 34/- BY INVOKING THE PROVISIONS OF SECTION 36(1)(VA) OF THE INCOME T AX ACT. 4. WITH THE ASSISTANCE OF THE LD. AUTHORISED REPRES ENTATIVE FOR THE ASSESSEE WE NOTE THAT THE ASSESSEE CLAIMS THAT THE EMPLOYEES CONTRIBUTION OF P.F WAS MADE IN TIME. HOWEVER THE SAME WAS RETUR NED UNCLEARED AS HE WAS DIRECTED TO MAKE E-PAYMENT. IN THIS CONNECTION, OUR ATTENTION WAS ADVERTED TO THE COPY OF REJECTED CHALLAN AND UNCLEA RED CHALLAN WHICH SHOWS THAT THE PAYMENT WAS ACTUALLY ATTEMPTED TO BE MADE WITHIN DUE DATE. HOWEVER THE PAYMENT GOT BELATED DUE TO TECHNI CAL HINDRANCE. WE THUS FIND MERIT IN THE PLEA OF THE ASSESSEE. THE AV ERMENTS MADE BY THE ASSESSEE ARE CORROBORATED BY UNCLEARED CHALLAN ETC. THEREFORE WE ARE OF THE VIEW THAT DEDUCTION AVAILABLE UNDER SECTION 36( 1)(VA) CANNOT BE DENIED TO THE ASSESSEE IN THE PECULIAR FACTS OF THE CASE. ITA NO.597/AHD/ 2016 RANCHHODDAS JINABHAI DHOLAKIA. VS. ACIT ASST.YEAR 2012-13 - 3 - 5. GROUND NO. 1 OF ASSESSEE APPEAL IS ACCORDINGLY A LLOWED. 6. GROUND NO. 2 IS DISMISSED AS NOT PRESSED. 7. GROUND NO. 3 CONCERNS DISALLOWANCE OF RS. 3,39,3 83/- UNDER THE PROVISIONS OF SECTION 14A OF THE ACT. ON PERUSAL OF RECORD WE FIND THAT THE DISALLOWANCE COMPRISES OF ADMINISTRATIVE EXPENS ES AMOUNTING TO RS. 31,437/- AND REMAINING AMOUNT TOWARDS DISALLOWANCE OF INTEREST. WE FIND THAT DISALLOWANCE OF ADMINISTRATIVE EXPENDITURE HAS BEEN RIGHTLY MADE BY THE A.O HAVING REGARD TO THE STATUTORY PRESUMPTION AVAILABLE FOR QUANTIFICATION IN TERMS OF RULE 8D(2)(III) OF THE I NCOME TAX RULES. IT IS NOT GAINSAYING TO OBSERVE THAT SOME ADMINISTRATIVE EXPENDITURES ARE BOUND TO INCUR FOR HOLDING AND FOR CHANGE OF INVEST MENT ETC. GIVING RISE TO TAX FREE INCOME. THE ASSESSEE HAS DERIVED TAX FR EE DIVIDEND INCOME OF RS. 3,39,383/- DURING THE YEAR. THEREFORE THE DISAL LOWANCE TOWARDS ADMINISTRATIVE EXPENSES JUSTIFIED AS SOME COMPONENT OF EXPENDITURE INCURRED IS ATTRIBUTABLE TO SUCH INVESTMENT. THEREF ORE DISALLOWANCE OF RS. 31,437/- TOWARDS ADMINISTRATIVE EXPENDITURE IS CONF IRMED. THE DISALLOWANCE OF REMAINING EXPENDITURE TOWARDS OUT O F INTEREST REQUIRED TO BE REVERSED, IN VIEW OF THE FACT THAT OWN CAPITAL O F THE ASSESSEE FIRM EXCEEDS THE CORRESPONDING INVESTMENT. THE CAPITAL O F THE ASSESSEE FIRM STANDS AT RS. 462.86 LAKHS AS AGAINST THE CORRESPON DING INVESTMENTS OF RS. 397.27 LAKHS. THEREFORE PRESUMPTION TOWARDS DEE MED UTILISATION OF ITA NO.597/AHD/ 2016 RANCHHODDAS JINABHAI DHOLAKIA. VS. ACIT ASST.YEAR 2012-13 - 4 - OWN FUNDS TOWARDS CORRESPONDING INVESTMENTS REQUIRE D TO BE ACCEPTED IN VIEW OF THE PLETHORA OF DECISIONS IN THIS REGARD. 8. WE ALSO FIND MERIT IN ALTERNATIVE PLEA OF THE AS SESSEE THAT IN VIEW OF THE FACT THAT INTEREST EXPENDITURE IN THE INSTAN T CASE HAS BEEN INCURRED ON PARTNER CAPITAL, SUCH PAYMENT OF INTEREST TO PAR TNERS DOES NOT BEARS THE CHARACTER OF EXPENDITURE AT THE FIRST PLACE. THIS VIEW IS FORTIFIED THE DECISION OF THE PUNE TRIBUNAL IN QUALITY INDUSTRIES VS. ACIT 73 TAXMAN.COM 363 (PUNE). THUS WHERE THE INTEREST ON P ARTNER CAPITAL IS NOT EXPENDITURE PER SE WHICH IS A CONDITION PRECEDENT FOR DISALLOWANCES UNDER SECTION 14A OF THE ACT, THE DISALLOWANCE OF INTEREST UNDER RULE 80D(2)(II) IS A NON-STARTER. THEREFORE, THE ASSESSE E GETS RELIEF TOWARDS THE DISALLOWANCE MADE UNDER SECTION 14A IN RESPECT OF I NTEREST EXPENSES. HENCE GROUND NO. 3 IS PARTLY ALLOWED. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 01 / 02 /201 8 SD/- SD/- (.. ) ( ) ( S.S. GODARA ) (PRADIP KUMAR KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 01/02/2018