M/s Raj Steel Rolling Mills, Mandi Gobindgarh V. Addl. CIT, Mandi Gobindgarh

ITA 675/CHANDI/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68481 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 03-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES B CHANDIGARH BEFORE SHRI T.R. SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 675/CHD/2013 ASSESSMENT YEAR: 2008-09 M/S RAJ STEEL ROLLING MILLS VS. THE ADDL. CIT, GURU KI NAGRI MANDI GOBINDGARH RANGE MANDI GOBINDGARH PAN NO. AABFR7828J (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ASHWANI KUMAR RESPONDENT BY : SHRI AKHILESH GUPTA DATE OF HEARING : 02/09/2013 DATE OF PRONOUNCEMENT : 20.09.2013 ORDER PER T.R.SOOD, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 18/03/2013 OF CIT(APPEALS), PATIALA. 2. FOLLOWING GROUND HAS BEEN RAISED IN THIS APPEAL: - THAT ORDER PASSED U/S 250(6) OF THE INCOME TAX ACT , 1961 BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS), PA TIALA IS AGAINST LAW AND FACTS OF THE FILE IN AS MUCH AS HE WAS NOT JUSTIFIED TO ARBITRARILY UPHOLD THE DISALLOWANCE OF RS. 12,00,000/- OUT OF INTEREST ACCOUNT ON THE GROUND T HAT THE APPELLANT HAD MADE CERTAIN INVESTMENTS IN PURCHASE OF MUTUAL FUNDS WHICH WERE NOT RELATED TO THE BUSINESS OF THE APPELLANT. 3. AFTER HEARING BOTH THE PARTIES, WE FIND THAT DUR ING ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICED THAT ASSE SSEE HAD MADE AN 2 INVESTMENT OF RS. 1 CRORE IN A MUTUAL FUND. IT WAS FURTHER NOTICED THAT ASSESSEE WAS ALSO PAYING INTEREST ON VARIOUS BORROW INGS. ACCORDING TO ASSESSING OFFICER THIS INVESTMENT OF RS. 1 CRORE HA S NOTHING TO DO WITH THE BUSINESS OF THE ASSESSEE AND, THEREFORE, PROPORTION ATE INTEREST WAS REQUIRED TO BE DISALLOWED. IN RESPONSE TO THE QUERY IT WAS SUBMITTED THAT INVESTMENT WAS MADE IN THE PREVIOUS YEAR. THE INVESTMENT WAS MADE TO EARN BETTER RETURN. HOWEVER, THE ASSESSING OFFICER DID NOT AGRE E WITH THE SUBMISSIONS AND MADE A DISALLOWANCE OF RS. 12 LAKHS @ 12 %. ON APPEAL, THE DISALLOWANCE HAS BEEN CONFIRMED BY LD. CIT(A). 4. BEFORE US, LD. COUNSEL FOR THE ASSESSEE SUBMITTE D THAT IT IS NOT CLEAR WHETHER DISALLOWANCE WAS MADE U/S 14A OR 36(1)(III) . FURTHER, THE ASSESSEE PAID INTEREST AMOUNTING TO APPROX RS. 1.5 CRORES OU T OF WHICH MAJOR ELEMENT OF INTEREST WAS RS. 1.25 CRORES PAID TO THE PARTNER S WHICH WAS @ 6% AND THEREFORE, AT BEST THE DISALLOWANCE COULD HAVE BEEN MADE ONLY AT THE RATE OF 6%. 5. ON THE OTHER HAND, THE LD. DR SUBMITTED THAT CA REFUL READING OF THE APPELLATE ORDER SHOW THAT DISALLOWANCE WAS MADE U/S 14A. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFUL LY. THE REPLY FIELD BEFORE THE ASSESSING OFFICER ITSELF SHOWS THAT ASSE SSEE WAS CLEAR THAT DISALLOWANCE, IF ANY, WOULD BE MADE U/S 14A WHICH B ECOMES CLEAR FROM THE FIRST LINE OF THE REPLY DATED 5.10.2010, WHICH READ S AS UNDER:- REGARDING YOUR HONOURS QUERY RELATING TO ANY DISALLOWANCE U/S 14A IN RESPECT OF INVESTMENT MADE IN HDFC MUTUAL FUND . 7. FROM THE ABOVE, IT BECOME CLEAR THAT DISALLOWANC E WAS MADE ONLY U/S 14A. HOWEVER, WE FIND FORCE IN THE SUBMISSIONS THA T ASSESSING OFFICER HAS 3 NOT GIVEN ANY JUSTIFICATION FOR DISALLOWANCE OF INT EREST @ 12%. AT THE SAME TIME THE DETAILS OF INTEREST PAID BY THE ASSESSEE A RE NOT BEFORE US. THEREFORE, IN THE INTEREST OF JUSTICE, WE SET ASIDE THE ORDER OF LD. CIT(A) AND REMAND THE MATTER TO THE FILE OF ASSESSING OFFICER WITH A DIRE CTION THAT INTEREST SHOULD BE DISALLOWED AT A REASONABLE PERCENTAGE AFTER EXAMINI NG THE DETAILS OF INTEREST PAID BY THE ASSESSEE. 8. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 20.09.20 13 SD/- SD/- (SUSHMA CHOWLA) (T.R.SOOD) JUDICIAL MEMBER ACCOUNTANT MEMER DATED : 20 TH SEPTEMBER, 2013 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR BY ORDER ASSISTANT REGISTRAR ITAT, CHANDIGARH