ACIT, Circle, Panipat, Panipat V. Paliwal Overseas Pvt. Ltd., Panipat

ITA 6266/DEL/2017

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 2639 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 4 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2011-2012
• Appeal Filed On: 09-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ATIQUE AHMED
• Keywords: Earning of tax free income; Tax effect; Rule 8D
• Section: 14A; 254(2); 119

Judgement Text

ITA NO.-6266/DEL/2017 M/S. PALIWAL OVERSEAS P. LTD. PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH: F: NEW DELHI) BEFORE SHRI SUDHANSHU SRIVASTAVA, JUDICIAL M EMBER AND SHRI ANADEE NATH MISSHRA, ACCOUNTANT MEM BER ITA NO:- 6266/DEL/2017 ( ASSESSMENT YEAR: 2011-12) A CIT, CIRCLE, PANIPAT VS. M/S. PALIWAL OVERSEAS PVT. LTD., G.T.ROAD, PANIPAT PAN NO: AABCP1067E APPELLANT RESPONDENT REVENUE BY : SH. ATIQUE AHMED, SR. DR ASSESSEE BY : NONE PER ANADEE NATH MISSHRA, AM (A) THIS APPEAL BY REVENUE IS FILED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)- KARNAL, [LD. CIT(A), FOR SH ORT], DATED 03.08.2017 FOR ASSESSMENT YEAR 2011-12. GROUNDS TAKEN IN THIS APP EAL OF REVENUE ARE AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS), KARNAL HAS DE LETED THE ADDITION OF RS. 33,06,204/- ON ACCOUNT OF INTEREST FREE ADVANCE S. SINCE THE ASSESSEE FAILED TO PROVE THAT ADVANCES MADE WERE STRICTLY FO R BUSINESS PURPOSE, HENCE THE PRIMARY ONUS FOR ESTABLISHING THE NEXUS B ETWEEN BORROWED FUNDS AND THE PURPOSE OF BUSINESS IS ON THE ASSESSE E AND THE ASSESSEE COULD NOT DISCHARGE THE ONUS OF ESTABLISHING THE NE XUS. ITA NO.-6266/DEL/2017 M/S. PALIWAL OVERSEAS P. LTD. PAGE 2 OF 4 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS), KARNAL HAS DE LETED THE ADDITION OF RS. 15,52,008/- ON ACCOUNT OF EXPENSES RELATED TO E XEMPT INCOME U/S 14A IN ACCORDANCE WITH RULE 8D OF I.T.RULES. CBDT IN EX ERCISE OF ITS POWERS U/S 119 OF THE ACT HEREBY CLARIFIES THAT RULE 8D RE AD WITH SECTION 14A OF THE ACT PROVIDES FOR DISALLOWANCE OF EXPENDITURE EV EN WHEN TAXPAYER IN A PARTICULAR YEAR HAS NTO EARNED ANY EXEMPT INCOME. 3. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND THE GROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD OR DISPOSED OFF. (B) AT THE OUTSET, IT WAS NOTICED BY US AT THE TIME OF HEARING THAT TOTAL TAX EFFECT REPORTED AT SL. NO. 10 IN FORM 36 OF THE APPEAL FIL ED BY REVENUE IS WELL BELOW RS.50,00,000/-. THIS WAS ALSO HIGHLIGHTED IN LETTER DATED 15.02.2021 FILED FROM THE ASSESSEES SIDE. VIDE RECENT CBDT CIRCULAR NO. 17/2 019 DATED 08.08.2019 READ WITH EARLIER CBDT CIRCULAR NO. 3 OF 2018, DATED 11.07.20 18, MINIMUM THRESHOLD LIMIT OF TAX EFFECT FOR FILING OF APPEALS BY REVENUE IN INCOME T AX APPELLATE TRIBUNAL (ITAT, FOR SHORT) HAS BEEN ENHANCED TO RS. 50,00,000/-. IN A SUBSEQUENT CLARIFICATION ISSUED BY CBDT VIDE F.NO. 279/MISC/M-93/2018-ITJ, DATED 20/08 /2019, IT HAS BEEN CLARIFIED BY CBDT THAT THE AFORESAID REVISED MONETARY LIMIT IS A LSO APPLICABLE TO ALL PENDING APPEALS IN ITAT. VIDE THE AFORESAID LETTER DATED 15.02.202 1 IT WAS CONTENDED ON BEHALF OF THE ASSESSEE THAT THE APPEAL DESERVES TO BE DISMISSED I N VIEW OF MONETARY LIMIT. IN VIEW OF THE FOREGOING, LEARNED SENIOR DEPARTMENTAL REPRESEN TATIVE AGREED THAT THIS APPEAL WAS NOT MAINTAINABLE; AND HE DID NOT PRESS THE APPEAL. THEREFORE, THIS APPEAL IS DISMISSED BEING NOT PRESSED, AND ALSO BEING NOT MAINTAINABLE HAVING REGARD TO AFORESAID CBDT CIRCULAR NO. 17/2019 DATED 08.08.2019 READ WITH AFO RESAID CBDT CIRCULAR NO. 3 OF 2018 IN THE LIGHT OF AFORESAID CLARIFICATION DATED 20/08 /2019. ITA NO.-6266/DEL/2017 M/S. PALIWAL OVERSEAS P. LTD. PAGE 3 OF 4 (C) BEFORE LEAVING, WE CLARIFY THAT REVENUE WILL BE AT LIBERTY TO APPROACH INCOME TAX APPELLATE TRIBUNAL U/S 254(2) OF INCOME TAX ACT, 1961 SEEKING RECALL OF THIS ORDER AND, FOR RESTORATION OF THIS A PPEAL, IF IT IS FOUND THAT APPEAL OF REVENUE IS NOT COVERED BY AFORESAID CBDT CIRCULARS DATED 08.08.2019 AND 11.07.2018. (D) IN THE RESULT, THIS APPEAL BY REVENUE IS DISMISSED. OUR ORDER WAS ALREADY PRONOUNCED ORALLY ON 22.02.2 021 IN THE PRESENCE OF THE LEARNED SR. DR; AFTER CONCLUSION OF HEARING. NOW TH IS ORDER IN WRITING IS RELEASED TODAY, ON 23/02/21. SD/- SD/- (SUDHANSHU SRIVASTAVA) (ANAD EE NATH MISSHRA) JUDICIAL MEMBER ACCOUN TANT MEMBER DATED: 23/02/2021 *BINITA* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI