Micromatic Grinding Technology Ltd., Ghaziabad V. JCIT, Special Range, Ghaziabad

ITA 6756/DEL/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 1195 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 7 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2014-2015
• Appeal Filed On: 09-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Earning of tax free income; Rule 8D
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E NEW DLEHI BEFORE SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER AND SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER ITA NO. 6756/DEL/2017 ASSESSMENT YEAR: 2014-15 MICROMATIC GRINDING TECHNOLOGY LTD., VS. JCIT, SPEC IAL RANGE, C-27, INDUSTRIAL AREA, MEERUT ROAD, GHAZIABAD. GHAZIABAD. PAN : AAACM9654P (APPELLANT) (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY: SH. RAMESH KUMAR, SR. DR DATE OF HEARING: 05/07/2021 DATE OF ORDER : 08/07/2021 ORDER PER K. NARASIMHA CHARY, J.M. AGGRIEVED BY THE ORDER DATED 16/08/2017 PASSED BY T HE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-GHAZIABAD ('LD . CIT(A)') FOR THE ASSESSMENT YEAR 2014-15, MICROMATIC GRINDING TECHNO LOGY LTD.(THE ASSESSEE) FILED THIS APPEAL. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND SALE OF HIGH PREC ISION CYLINDRICAL GRINDING MACHINES. FOR THE ASSESSMENT YEAR 2014-15, THEY HAVE FILED THEIR RETURN OF INCOME ON 28.11.2014 DECLARING NIL INCOME AND CURRENT 2 YEAR LOSS OF RS.81,56,113/-. DURING THE YEAR ASSESS EE RECEIVED DIVIDEND INCOME OF RS.22,61,700/- AND THE ASSESSEE HAD DISAL LOWED A SUM OF RS.92,485/- ON ACCOUNT OF DISALLOWANCE U/S. 14A REL ATING TO EXEMPT INCOME. ASSESSING OFFICER, HOWEVER, NOT HAVING BEEN SATISFIED BY SUCH DISALLOWANCE, PROCEEDED TO CALCULATE THE DISALLOWAN CE IN TERMS OF RULE 8D OF THE INCOME-TAX RULES (THE RULES FOR SHORT) AND MADE AN ADDITION OF RS.5,10,411/- OVER AND ABOVE THE DISALLOWANCE OF RS.92,485/- MADE BY ASSESSEE. 3. AGGRIEVED BY THE SAME, ASSESSEE PREFERRED AN APP EAL BEFORE THE CIT(A) AND CONTENDED THAT THEY HAVE GOT SUFFICIENT OWN FUNDS TO MAKE THE IMPUGNED INVESTMENTS AND THEREFORE, NO INTEREST COMPONENT UNDER RULE 8D(2)(II) COULD BE ADDED BACK. ASSESSEE FURTHE R SUBMITTED THAT TOWARDS ADMINISTRATIVE EXPENSES U/S. 80(2)(III) THE Y HAVE DISALLOWED RS.92,485/- WHICH IS SUFFICIENT AND ALSO FOUND TO B E CORRECT BY THE LD. ASSESSING OFFICER. 4. WHEN THE MATTER IS CALLED, THERE IS NO REPRESENT ATION FROM THE ASSESSEE. NOTICE WAS SENT TO THE ADDRESS GIVEN IN F ORM NO. 36. IF THE ASSESSEE IS AVAILABLE IN SUCH ADDRESS, SUCH NOTICE SHOULD HAVE BEEN SERVED ON THE ASSESSEE. IF FOR ANY REASON, THE ASSE SSEE IS NOT AVAILABLE THERE, IT IS FOR THE ASSESSEE TO MAKE ARRANGEMENTS FOR SERVICE OF SUCH NOTICE BY FURNISHING THE ADDRESS WHERE THE ASSESSEE WOULD BE AVAILABLE, OR TO DELIVER IT TO SOME AUTHORISED PERSON, OR BY M AKING REQUEST TO THE POSTAL DEPARTMENT TO DETAIN THE MAIL TILL THE ASSES SEE CLAIMS THE SAME. NON-SERVICE OF NOTICE IS SOLELY ATTRIBUTABLE TO THE CONDUCT OF ASSESSEE. IN THESE CIRCUMSTANCES, WE PROCEED TO DECIDE THE APPEA L BASING ON THE MATERIAL AVAILABLE ON RECORD. 3 5. LEARNED DR PLACES RELIANCE ON THE ORDERS OF THE AUTHORITIES BELOW. 6. WE HAVE GONE THROUGH THE RECORD IN THE LIGHT THE SUBMISSIONS MADE BY LD. DR. FROM THE ORDER OF CIT(A) AT PAGE 4 PARA-4, WE FIND THAT DURING THE RELEVANT ASSESSMENT YEARS OF INVESTMENTS , THE ASSESSEE HAD SUFFICIENT FUNDS AT THEIR DISPOSAL. THE TABLE REVEA LS THAT AT THE BEGINNING OF ASSESSMENT YEAR 1995-96, IN WHICH YEAR THE INVES TMENT TO THE TUNE OF RS. 5,00,000/- WAS MADE, THE ASSESSEE HAD RS.141.95 LACS IN THEIR HANDS. SAME IS THE CASE WITH OTHER INVESTMENTS AND ASSESSM ENT YEARS. THERE IS NO MATERIAL TO THE CONTRA. WE, THEREFORE, HOLD THAT THERE IS NO REASON FOR THE ASSESSING OFFICER TO COMPUTE THE DISALLOWANCE I N TERMS OF RULE 8D(2)(II) OF THE RULES. IN SO FAR AS RULE 8D(2)(III ) IS CONCERNED, THE ASSESSEE VOLUNTARILY DISALLOWED 0.5% OF THE AVERAGE VALUE OF INVESTMENT AND EVEN THE ASSESSING OFFICER ALSO REACHED THE SAME FIGURE. IN THESE CIRCUMSTANCES, WE FIND THAT THE DISALLOWANCE OF ANY AMOUNT UNDER RULE 8D(2)(II) CANNOT BE SUSTAINED. ASSESSEE, ACCORDINGL Y, SUCCEEDS AND WE DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION MADE UNDER RULE 8D(2)(II) OF THE RULES. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 8 TH DAY OF JULY, 2021. SD/- SD/- (PRASHANT MAHARISHI) (K. NARASIMHA CHARY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 08/07/2021 AKS