The ACIT, Circle-8, Ahmedabad V. Veeda Clinical Research Pvt.Ltd., Ahmedabad

ITA 600/AHD/2012

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6208 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 1 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-04-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 12-01-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 09-03-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: TUSHAR P HEMANI H EARING CONC

Judgement Text

ITA NO. 600 / AHD/201 2 ASSESSMENT Y EAR: 20 07 - 08 PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH, AHMEDABAD [CORAM: PRAMOD KUMAR AM AND S S GODARA JM] ITA NO. 600 /AHD/201 2 ASSESSMENT Y EAR : 20 07 - 08 ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 8 , AHMEDABAD. .. ......... A PPELLANT VS. VEEDA CLINICAL RESEARCH PRIVATE LIMITED, ... .......... .RESPONDENT SHIVALIK PLAZA - A, NEAR IIM, AMBAVADI, AHMEDABAD. [PAN: AA CCS 3633 Q ] APPEARANCES BY JAMES KURIAN FOR THE A PPELLANT TUSHAR P. HEMANI FOR THE R E SPONDENT HEAR ING CONCLUDED ON: 1 2 .01.2017 ORDER PRONOUNCED ON : 11 . 0 4 .2017 O R D E R PER PRAMOD KUMAR , AM: 1. BY WAY OF THIS APPEAL, THE ASSESSING OFFICER HAS CALLED INTO QUESTION CORRECTNESS OF THE ORDER DATED 26.12.2011 PASSED BY THE LEARNED CIT( A) , IN THE MATTER OF ASSESSMENT UNDER SECTION 143( 3 ) OF THE I NCOME TAX ACT 1961, FOR THE ASSESSMENT YEAR 20 07 - 08 . 2. IN THE FIRST GROUND OF APPEAL, THE ASSESSEE HAS RAISED THE FOLLOWING GRIEVANCE: THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) - XIV, AHM EDABAD HAS ERRED IN LAW AND ON FACTS IN RESTRICTING THE DISALLOWANCE OF INTEREST EXPENSE AT RS.19,417/ - AND ADMINISTRATIVE EXPENSES AT RS.1,38,349/ - OUT OF TOTAL DISALLOWANCE OF RS.60,25,728/ - MADE BY THE ASSESSING O FFICER U/S.14A OF THE ACT R.W.R 8D. ITA NO. 600 / AHD/201 2 ASSESSMENT Y EAR: 20 07 - 08 PAGE 2 OF 3 3. T O ADJUDICATE ON THIS APPEAL, ONLY A FEW MATERIAL FACTS NEED TO BE TAKEN NOTE OF. THE ASSESSMENT YEAR BEFORE US IS 2007 - 08, I.E. AN ASSESSMENT YEAR IN RESPECT OF WHICH RULE 8D IS ADMITTEDLY NOT APPLICABLE. YET, THE ASSESSING OFFICER PROCEEDED TO INVOKE RULE 8D, AND, BASED THEREON, MADE A DISALLOWANCE OF RS 60,25,728. WHEN MATTER TRAVELLED IN APPEAL BEFORE THE CIT(A), WHILE RULE 8D WAS HELD TO BE INADMISSIBLE, LEARNED CIT(A) CONFIRMED THE DISALLOWANCE OF RS 19,471 IN RESPECT OF INTEREST, AS THE ASSESSEE COULD NOT SHOW AVAILABILITY OF FUNDS FOR INVESTMENT OF RS 1 CRORE IN BIRLA CASH PLUS MUTUAL FUND ON 5 TH JUNE 2006, AND OF RS 1,38,349, BASED ON RULE 8D DISALLOWANCE, IN RESPECT OF ADMINISTRATIVE EXPENSES. THE ASSESSEE IS STILL NOT SATISFIED AND IS IN FURTHER AP PEAL BEFORE US. 4. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. 5. WE HAVE NOTED THAT AS REGARDS THE DISALLOWANCE FOR INTEREST, THE ASSESSEE HAS NOT PRESSED ANY GRIEVANCE AGAINST THE SAME. THE GRIEVANCE IS CONFINED TO DISALLOWANCE OF RS 1,38,349 AGAINST THE ADMINISTRATIVE EXPENSES. IT IS CASE OF THE ASSESSEE THAT SINCE INVESTMENTS ARE IN MUTUAL FUNDS, AND SINCE MARKETING STAFF OF MUTUAL FUNDS DOES ALL THE NECESSARY TECHNICAL PRESENTATION AND ANALYSIS ETC, NO PART OF THE ADMINISTRATIVE EXPENSES NEED BE DISALLOWED. AS FOR THE DIVIDEND, THE AMOUNT GETS CREDITED IN THE BANK ACCOUNT DIRECTLY, THROUGH ECS, NO EXPENSES ARE INCURRED IN RESPECT OF THE SAME EITHER. EVEN THOUGH THERE ARE ADMITTEDLY NO COSTS IN COLLECTION OF DIVIDEND ETC AND EVEN THOUGH MARKETING STAFF FOR THE MUTUAL FUND DOES INDEED DO ALL THE NECESSARY GROUND WORK FOR TECHNICAL PRESENTATION AND ANALYSIS, IN OUR CONSIDERED VIEW, A SMALL DISAL LOWANCE OF RS 10,000, IN RESPECT OF THE ADMINISTRATIVE EXPENSES IN THE DECISION MAKING PROCESS, WILL BE IN ORDER. WE, THEREFORE, RESTRICT THE DISALLOWANCE TO RS 29,471 (I.E. RS 19,471 ON ACCOUNT OF INTEREST AND RS 10,000 FOR ADMINISTRATIVE EXPENSES). THE ASSESSEE GETS THE RELIEF ACCORDINGLY . 6. GROUND NO. 1 IS THUS PARTLY ALLOWED. 7. IN GROUND NO. 2, THE ASSESSEE HAS RAISED THE FOLLOWING GRIEVAN CE: ITA NO. 600 / AHD/201 2 ASSESSMENT Y EAR: 20 07 - 08 PAGE 3 OF 3 (2) THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) - XIV, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DIRECTI NG THE ASSESSING OFFICER TO RECOMPUTE THE INCOME U/S.115JB OF THE ACT O N LY TO THE EXTENT OF AMOUNT OF DISALLOWANCE MADE U/S.14A WHICH HAS BEEN UPHELD BY HIM. 8. THE RELIEF PRAYED IN THIS GROUND OF APPEAL IS ONLY CONSEQUENTIAL IN NATURE. THE ASSESSEE IS D IRECTED TO BE GIVEN THE CONSEQUENTIAL RELIEF. 9. GROUND NO. 2 IS THUS ALLOWED IN THE TERMS INDICATED ABOVE. 10. GROUND NOS. 3 AND 4 ARE GENERAL IN NATURE AND DO NOT CALL FOR ANY SPECIFIC ADJUDICATION. 11. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED IN T HE TERMS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT TODAY ON THE 11 TH DAY OF APRIL, 2017. SD/ - SD/ - S S GODARA PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) DATED: 11 TH DAY OF APRIL , 201 7 . PBN/* COPI ES TO : (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD