Amin Equipments Pvt.Ltd., Ahmedabad V. The Dy. CIT.,Circle-1, Ahmedabad

ITA 620/AHD/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0469 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 27-09-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 03-03-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S N DIVETIA
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) ITA. NO: 620/AHD/2014 (ASSESSMENT YEAR: 2009-10) AMIN EQUIPMENTS PVT. LTD. PLOT NO. 222, MAKARBA NR. SARKHEJ SANAND CROSS ROAD, AHMEDABAD-382210 V/S THE DCIT, CIRCLE-1, AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AABCA5995J APPELLANT BY : SHRI S.N. DIVETIA, AR RESPONDENT BY : SHRI PRASOON KABRA, SR. D.R. ( )/ ORDER DATE OF HEARING : 27 -09-201 6 DATE OF PRONOUNCEMENT : 29 -09-2016 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST TH E ORDER OF LD. CIT(A)-6, AHMEDABAD DATED 13.12.2013 PERTAINING TO A.Y. 2009-10. ITA NO. 620/ AHD/2014 . A.Y. 2009-1 0 2 2. THE ASSESSEE IS AGGRIEVED BY THE DISALLOWANCE MADE U/S. 14A OF THE ACT AT RS. 1,43,724/- CONFIRMED BY THE LD. CIT(A). 3. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PROCEE DINGS, THE A.O. NOTICED THAT THE ASSESSEE HAS EARNED DIVIDEND INCOM E OF RS. 13,09,529/- WHICH IT CLAIMED TO BE EXEMPT FROM TAX. THE A.O. WAS OF THE FIRM BELIEF THAT PROVISIONS OF SECTION 14A READ WITH RULE 8D ARE ATTRACTED ON THE FACTS OF THE CASE AND ACCORDINGLY PROPOSED TO MAKE DISALLOWANCE U/S. 14A READ WITH RULE 8D OF THE ACT. 4. THE ASSESSEE STRONGLY OBJECTED TO THIS PROPOSITION OF THE A.O. STATING THAT IT HAS NOT MADE ANY INVESTMENT FROM BORROWED F UNDS. IT WAS FURTHER EXPLAINED THAT THE INTEREST FREE FUNDS WITH THE ASSESSEE ARE FAR MORE IN EXCESS OF THE INVESTMENT; THEREFORE, NO DIS ALLOWANCE SHOULD BE MADE. THE CLAIM OF THE ASSESSEE DID NOT FIND ANY FAVOUR WITH THE A.O. WHO PROCEEDED BY COMPUTING THE DISALLOWANCE AS PER THE FORMULA GIVEN IN RULE 8D AND COMPUTED THE DISALLOWANCE AT R S. 1,43,724/-. 5. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) B UT WITHOUT ANY SUCCESS. 6. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE REITERA TED WHAT HAS BEEN STATED BEFORE THE LOWER AUTHORITIES. PER CONTRA, TH E LD. D.R. STRONGLY SUPPORTED THE FINDINGS OF THE REVENUE AUTHORITIES. 7. WE HAVE CAREFULLY CONSIDERED THE ORDERS AND RIVAL C ONTENTIONS. WE FIND THAT THE SHARE CAPITAL AND FREE RESERVES OF THE ASS ESSEE IS AT RS. 8.99 CRORES WHEREAS THE INVESTMENT MADE IN MUTUAL FUND I S 59.03 LACS. THIS CLEARLY SHOWS THAT THE ASSESSEE WAS HAVING SUFFICIE NT OWN FUNDS FOR ITA NO. 620/ AHD/2014 . A.Y. 2009-1 0 3 MAKING THE INVESTMENT. SINCE, THE INTEREST FREE FUN DS ARE IN EXCESS OF THE INVESTMENT; THE PRESUMPTION IS THAT THE INVESTM ENT IS MADE OUT OF INTEREST FREE FUNDS. FOR THIS PROPOSITION, WE DRAW SUPPORT FROM THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CA SE OF RELIANCE UTILITIES AND POWER 313 ITR 340 FOLLOWED IN THE CAS E OF HDFC LTD. 366 ITR 505. 8. RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY THE H ONBLE HIGH COURT, WE DO NOT FIND ANY REASON FOR MAKING THE DISALLOWAN CE OF RS. 95,480/- ON ACCOUNT OF INTEREST UNDER RULE 8D(2)(II). INSOFA R AS THE DISALLOWANCE OF ADMINISTRATIVE EXPENSE OF RS. 48,244/- UNDER RUL E 8D(2)(III) IS CONCERNED, WE DECLINE TO INTERFERE. THE A.O. IS DIR ECTED TO DELETE THE ADDITION OF RS. 95,480/-. ADDITION OF RS. 48,244/- IS SUSTAINED. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 29 - 09- 2016 . SD/- SD/- (MAHAVIR PRASAD) (N. K. BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD