M/s. Rocket Engineering Corporation, Kolhapur V. Income-tax Officer, Ward - 2(2), Kolhapur

ITA 631/PUN/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6307 (ITAT-PUNE)
• Duration Of Justice: 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 09-04-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Earning of tax free income
• Section: 143(3); 14A

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI , AM . / ITA NO S . 631 & 632 /P U N/201 8 / ASSESSMENT YEAR S : 2013 - 14 & 20 14 - 15 M/S. ROCKET ENGINEERING CORPORATION, D - 19, MIDC, SHIROLI, KOLHAPUR 416122 . / APPELLANT PAN: A AA CL5602N VS. THE INCOME TAX OFFICER, WAD 2(2) , KOLHAPUR . / RESPONDENT / APPELLANT BY : SHRI M.K. KULKARNI / RESPONDENT BY : SHRI RAJESH GAWALI / DATE OF HEARING : 02 . 0 1 .201 9 / DATE OF PRONO UNCEMENT: 25 . 0 1 .201 9 / ORDER PER SUSHMA CHOWLA, J M : BOTH T HE APPEAL S FILED BY ASSESSEE ARE AGAINST CONSOLIDATED ORDER OF CIT (A) - 2 , KOLHAPUR , DATED 05 . 0 2 .201 8 RELATING TO ASSESSMENT YEAR S 2013 - 14 AND 20 14 - 15 AGAINST RESPECTIVE ORDER S PASSED UNDER SECTION 143(3) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . ITA NO S . 631 & 632 /P U N/201 8 M/S. ROCKET ENGINEERING CORPORATI ON 2 2. BOTH THE APPEALS RELATING TO THE SAME ASSESSEE ON SIMILAR ISSUE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. HOWEVER, IN OR DER TO ADJUDICATE THE ISSUE, REFERENCE IS BEING MADE TO THE FACTS AND ISSUE IN ITA NO.631/PUN/2018, RELATING TO ASSESSMENT YEAR 2013 - 14. 3. THE ASSESSEE IN ITA NO.631/PUN/2018, RELATING TO ASSESSMENT YEAR 2013 - 14 HAS RAISED THE FOLLOWING GROUND S OF APPEAL : - 1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS NOT JUSTIFIED IN APPLYING HIS OWN FORMULA TO COMPUTE DISALLOWANCE OF U/S 14A WHICH HAS NO BASIS EITHER UNDER THE PROVISIONS OF SECTION OR RULE 8 - D. THEREFORE, THE DISALLOWANCE MADE BY THE LD. CIT(A) RESULTING INTO ADDITION OF RS.229567/ - . 2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) OUGHT TO HAVE CONSIDERED THE CONTENTION PLACED BEFORE HIM THAT THE DISALLOWANCE U/S 14A CANNOT EXCEED THE EXEMPT INCOME ITSELF WHICH HAS BEEN ACCEPTED. THE NOTIONAL DISALLOWANCE APPLYING RULE 8D CANNOT EXCEED THE AMOUNT OF EXEMPT INCOME WHICH IS A SETTLED LAW. IT BE HELD ACCORDINGLY. 4. THE ISSUE RAISED IS AGAINST DISALLOWANCE MADE UNDER SECTION 14A OF THE ACT. THE ASSE SSEE HAS RAISED TWO GROUNDS OF APPEAL. VIDE GROUND OF APPEAL NO.1, IT HAS CHALLENGED THE AFORESAID DISALLOWANCE MADE UNDER SECTION 14A OF THE ACT READ WITH RULE 8D OF THE INCOME TAX RULES, 1962 (IN SHORT THE RULES). HOWEVER, IN GROUND OF APPEAL NO.2, T HE ISSUE RAISED IS THAT THE DISALLOWANCE AT BEST BE RESTRICTED TO THE AMOUNT OF TAX EXEMPT INCOME UNDER SECTION 14A OF THE ACT. 5. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT IN ASSESSMENT YEAR 2013 - 14, EXEMPT INCOME WAS 80,6 76/ - , WHEREAS THE CIT(A) HAS DISALLOWED SUM OF 2,30,000/ - UNDER SECTION 14A OF THE ACT. IN ASSESSMENT YEAR 2014 - 15, EXEMPT INCOME WAS 84,105/ - AND THE DISALLOWANCE MADE UNDER SECTION 14A OF THE ACT WAS 2,29,560/ - . ITA NO S . 631 & 632 /P U N/201 8 M/S. ROCKET ENGINEERING CORPORATI ON 3 6. THE LEARNED DEPARTMENTAL REPRESE NTATIVE FOR THE REVENUE PLACED RELIANCE ON THE ORDERS OF AUTHORITIES BELOW. 7. WE FIND THAT THE ISSUE RAISED IN THE PRESENT APPEAL IS SQUARELY COVERED BY THE JUDGMENT OF THE HONBLE HIGH COURT OF DELHI IN DCIT VS. JOINT INVESTMENT PVT. LTD. (2015) 372 ITR 694 (DEL) . 8. APPLYING THE SAID RATIO TO THE FACTS OF THE PRESENT CASE, WE DIRECT THE ASSESSING OFFICER TO RESTRICT DISALLOWANCE UNDER SECTION 14A OF THE ACT TO THE EXTENT OF EXEMPT INCOME ONLY. THE GROUND OF APPEAL NO.2 RAISED BY THE ASSESSEE IS THUS, PARTLY ALLOWED AND THE GROUND OF APPEAL NO.1 RAISED BY ASSESSEE IS DISMISSED. 9. THE FACTS AND ISSUE IN ITA NO.632/PUN/2018 ARE IDENTICAL TO THE FACTS AND ISSUE IN ITA NO.631/PUN/2018 AND THE DECISION IN ITA NO.631/PUN/2018 SHALL APPLY MUTATIS MU TANDIS TO ITA NO.632/PUN/2018. 10 . IN THE RESULT, BOTH THE APPEAL S OF ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 25 TH DAY OF JANUARY , 201 9 . SD/ - SD/ - (ANIL CHATURVEDI) (SUS HMA CHOWL A ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 25 TH JANUARY , 201 9 . GCVSR ITA NO S . 631 & 632 /P U N/201 8 M/S. ROCKET ENGINEERING CORPORATI ON 4 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) - 2, KOLHAPUR ; 4. THE PR. CIT - 2 , KOLHAPUR ; 5. 6. , , , - / DR SMC , ITAT, PUNE; / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE